609 F. App'x 390
9th Cir.2015Background
- Timothy L. Blixseth appealed the bankruptcy court’s order confirming the Third Amended Plan of Reorganization for Yellowstone Mountain Club and related entities.
- The district court dismissed Blixseth’s appeal for lack of appellate standing; Debtors sought dismissal on equitable-mootness grounds.
- Central to the dispute is an exculpation clause in the confirmed Plan that strips Blixseth of identifiable legal claims (choses in action).
- Blixseth also challenged approval of a Settlement Term Sheet and sought Rule 60(b) relief from the Confirmation Order to restore the status quo ante.
- The Plan has been substantially consummated and no stay was obtained in this Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to appeal (person aggrieved) | Blixseth: exculpation clause strips his legal claims, injuring him pecuniarily, so he has standing | Debtors/district court: Blixseth lacked appellate standing | Court: Blixseth is a person aggrieved because exculpation extinguished choses in action; REVERSED dismissal for lack of standing |
| Equitable mootness — exculpation clause | Blixseth: relief against exculpation is still plausible without vacating Plan | Debtors: Plan consummated; appeal is equitably moot and cannot be remedied | Court: Not equitably moot as effective, equitable remedies remain; AFFIRMED on different grounds and REMANDED to consider these challenges |
| Equitable mootness — Settlement Term Sheet & Rule 60(b) relief | Blixseth: these errors justify vacating confirmation and restoring status quo ante | Debtors: Plan consummation makes unwinding impossible; appeal equitably moot | Court: Appeal on these issues is equitably moot because the requested remedies would unravel a substantially consummated Plan; AFFIRMED as to these claims |
| Remedy and remand | Blixseth: asks for full relief and restoration | Debtors: oppose broad unwinding | Court: Remands to bankruptcy court/district court to consider exculpation challenges in the first instance; parties bear their own costs |
Key Cases Cited
- Motor Vehicle Cas. Co. v. Thorpe Insulation Co., 677 F.3d 869 (9th Cir. 2012) (defines "person aggrieved" and factors for equitable mootness)
- Fondiller v. Robertson, 707 F.2d 441 (9th Cir. 1983) (non-creditors may be persons aggrieved)
- C.I.R. v. Banks, 543 U.S. 426 (2005) (recognizing choses in action as property)
- Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) (property interests and procedural protections)
- United States v. Stonehill, 83 F.3d 1156 (9th Cir. 1996) (economic value of legal claims)
- Baker & Drake, Inc. v. Pub. Serv. Comm’n of Nev., 35 F.3d 1348 (9th Cir. 1994) (equitable mootness is reviewed de novo and factors to consider)
- Spirtos v. Moreno, 992 F.2d 1004 (9th Cir. 1993) (relief must not "knock the props" out from under a plan)