Samson v. W. Capital Partners LLC (In re Blixseth)

Decision Date18 March 2013
Docket NumberAdversary No. 10–00094.,Bankruptcy No. 09–60452–7.
Citation489 B.R. 154
PartiesIn re Edra D. BLIXSETH, Debtor. Richard J. Samson, Plaintiff. v. Western Capital Partners LLC, Defendant.
CourtU.S. Bankruptcy Court — District of Montana

OPINION TEXT STARTS HERE

Anna C. Conley, Datsopoulos MacDonald & Lind PC, David B. Cotner, Missoula,MT, Bradley Robert Duncan, Hugh Robert McCullough, Davis Wright Tremaine LLP, Seattle, WA, for Plaintiff.

Daniel J. Vedra, Joseph John Novak, Robert W. Hatch, II, Hatch Ray Olsen Sandberg LLC, Denver, CO, for Defendant.

MEMORANDUM of DECISION

RALPH B. KIRSCHER, Bankruptcy Judge.

In this Adversary Proceeding, trial was held June 6, 7, 8 and 11, 2012, in Missoula, Montana. Plaintiff Richard J. Samson (Samson) was represented at trial by David B. Cotner of Missoula, Montana, and Hugh Robert McCullough and Anthony Wisen of Seattle, Washington. Defendant Western Capital Partners, LLC (Western Capital) was represented at trial by Robert W. Hatch, II, Joseph John Novak, and Daniel J. Vedra of Denver, Colorado. Samson (the Chapter 7 Trustee appointed in Debtor's main bankruptcy case), Matthew Crocker, Debtor Edra Blixseth (“Debtor”), Jeffrey D. Adams (“Adams”), Joseph N. Karas, Raymond L. Dozier, Kristina A. Cook, and Don Bailey (“Bailey”) testified. Samson's Exhibits 2, 7, 8, 11, 12, 13, 14, 17, 18, 20, 22, 24, 30, 32, 34, 36, 38, 39, 40, 41, 47, 50, 53, 56, 57, 58, 68, 69, 73, 74, 75, 76, 79, 91, 96, 97, and 98, and WCP's 1, 2, 3, 4, 5, 6, 7, 9, 10, 11, 12, 13, 14, 15, 16, 17, 19, 20, 22, 23, 24, 25, 26, 29, 30, 31, 32, 33, 35, 36, 37, 40, 41, 42, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 57, 58, 59, 69, and 70, were admitted into evidence. Excerpts of Jeffrey Adams's and Don Bailey's deposition transcripts, identified as Samson's Exhibits 84 and 86, were not admitted into evidence because both individuals testified at trial. Excerpts of the deposition transcripts of Timothy L. Blixseth (“Blixseth”) and Brian Shloss (“Shloss”), identified as Exhibits 85 and 90, were admitted into evidence, and WCP was granted leave to file counter designations. WCP filed its counter designations on September 18, 2012, at docket entry no. 132. The Court tentatively admitted excerpts from Jory Russell's 2004 examination, and granted WCP leave to file counter designations. The Court, however, reserved a final ruling on the admissibility of the Jory Russell excerpts, which final ruling is addressed herein. At the conclusion of the trial, the Court granted the parties leave to file post-trial briefs. Samson's post-trial brief was filed August 13, 2012, WCP's post-trial brief was filed September 4, 2012, and Samson's reply was filed September 11, 2012. The matter is ready for decision.

JURISDICTION

WCP contends, in the Final Pre–Trial Order, that this Court lacks jurisdiction to hear the matters raised by the Trustee and enter a final order or judgment thereon. WCP also argues that Samson lacks standing to assert his claims as a result of 11 U.S.C. § 362(h). Notwithstanding the foregoing, at trial, WCP consented to this Court's entry of a final judgment. All matters, considered, this Court finds that it has jurisdiction of this cause under 28 U.S.C. § 1334, and that this is a core proceeding under 28 U.S.C. § 157(b). This Memorandum of Decision includes the Court's findings of fact and conclusions of law pursuant to F.R.B.P. 7052.

FACTUAL BACKGROUND
I. Debtor and Blixseth.

In the late 1990s, Debtor and Blixseth began developing the “Yellowstone Club,” which was, and still is, a members only master-planned unit development, situated on 13,500 acres of private land in Madison County near Big Sky, Montana. Until August of 2008, the Yellowstone Club was owned and operated by Blixseth through four companies, namely Yellowstone Mountain Club, LLC, Yellowstone Development, LLC, Big Sky Ridge, LLC, and Yellowstone Club Construction Company, LLC. From their inception to August 12, 2008, Yellowstone Mountain Club, LLC and Yellowstone Development, LLC were controlled by Blixseth through his holding company, Blixseth Group, Inc. (“BGI”). Between August of 2001 and August of 2008, BGI owned 82.6532 percent of the Class A stock in Yellowstone Mountain Club, LLC and Yellowstone Development, LLC, and Blixseth Family Investments, LLC owned 5.1020 percent of Class A stock. The Class B Members, or Class B Shareholders, owned 12.25 percent of Yellowstone Mountain Club, LLC and Yellowstone Development, LLC. From 1999 to mid-August 2008, Blixseth was the sole owner, President, and CEO of BGI, an Oregon sub-S corporation.

In late 2004 or early 2005, Debtor was serving as the Chief Operating Officer of the Yellowstone Club.1 During that same time, Blixseth and Credit Suisse began negotiating the terms of a loan whereby the Yellowstone Club would borrow $125 to $150 million from Credit Suisse. The Yellowstone Club's management team, which consisted of Debtor as the Chief Operating Officer, Denise Tuohy, Charlie Callander, Hank Kashiwa, Bob Sumpter and Bruce Bales, felt comfortable that the Yellowstone Club entities could service a $150 million debt obligation. According to Debtor, the management team concluded $150 million was “a reasonable amount” that would allow the Yellowstone Club to continue operating. However, a “huge controversy” ensued when the loan amount began to creep up during the course of Blixseth's negotiations with Credit Suisse.

Blixseth, who Debtor referred to as a “self-proclaimed benevolent dictator,” ultimately caused certain of the Yellowstone Club entities to borrow $375 million from Credit Suisse in September of 2005.2 The consensus of the management team was that the Yellowstone Club did not have the financial wherewithal to service the $375 million loan.

On the day the loan was funded, Credit Suisse got “a substantial amount” for putting the loan together. Also, Blixseth transferred another $209 million of the loan proceeds from the Yellowstone Club entities to their parent company, BGI. The following day, Blixseth transferred $209 from BGI to “accounts [Blixseth] had set up under ‘TLB,’ Timothy L. Blixseth.”

Debtor explained that the Credit Suisse loan provided Blixseth and Debtor with “an extreme amount of cash flow that, that we hadn't had because we—although we had acquired a lot of assets and a lot of business and a lot of high-profile, you know, looking things, we always were kind of under the gun, let's say, of needing to make it work.”

With funds from the Credit Suisse loan, Blixseth bought yachts and airplanes. Blixseth also used the Credit Suisse loan proceeds to purchase, in March of 2006, properties around the world including the Chateau de Farcheville in France, a golf resort property in Manzanillo, Mexico (often referred to as Tamarindo), a private island in the Turks and Caicos which included a 30,000 square foot mansion, and a property located in the Kingdom of Fife, Scotland, commonly referred to as the St. Andrews Property. Blixseth's March 2006 real estate purchases were part of his plan to take his Yellowstone Club concept worldwide.

Blixseth also used $11,939,598.24 of the Credit Suisse loan proceeds to payoff an existing obligation owed to First Bank on a line of credit that Blixseth had used to build his and Debtor's residence in Rancho Mirage, California, which was commonly referred to as Porcupine Creek. Porcupine Creek was also going to be available for use by members of Yellowstone Club World. The Porcupine Creek property is a 265 acre “trophy property”, which included a 18,380 square foot estate residence with four guest suites, four additional guest houses, a private 19–hole PGA golf course, and two homes located on Gardess Road that were used for operations. When asked whether any of the foreign properties or Porcupine Creek were income producing, Debtor responded “absolutely not.” Debtor described the upkeep and maintenance costs associated with the foregoing properties as “extremely significant.”

Unfortunately, Blixseth's hopes of taking the Yellowstone Club concept worldwide failed “in reality, and in concept[.] Blixseth sold only eight Yellowstone Club World memberships at a price of $1.5 million each.

The lack of interest in the Yellowstone Club World project left Blixseth and Debtor saddled with numerous properties that did not produce income, and in fact, required large sums of money for general upkeep. Blixseth testified the expenses associated with Porcupine Creek alone were at least $500,000 per month.

Blixseth's use of the Credit Suisse loan proceeds also caused unrest at the Yellowstone Club, particularly when on May 31, 2006, Class B Shareholders Greg LeMond, Jorge V. Jasson, David L. Morris, Sacia B. Morris, and Sacia Enterprises, Inc. (the “LeMond Plaintiffs), filed a complaint in Madison County, Montana, captioned LeMond v. Blixseth Group, Inc., C.V. No. DV–29–06–26 (the “LeMond Litigation”), complaining that the $209 million Blixseth took from the Yellowstone Club entities was a distribution, not a loan. The LeMond Plaintiffs, as shareholders in the Yellowstone Club, argued they were entitled to their proportionate share of the distributions under Yellowstone Mountain Club, LLC and Yellowstone Development, LLC's applicable operating agreements. 3

Debtor testified that “the Credit Suisse loan was the beginning of the end of [her] personal and business relationship with [Blixseth.] Debtor and Blixseth separated and in December of 2006, Debtor filed a petition for dissolution of marriage in the Superior Court of the State of California for the County of Riverside (Superior Court of California). Blixseth and Debtor attempted to project their divorce to the public as an amicable divorce that was settled over a bottle of wine and a yellow legal pad. The divorce, however, was long, costly and acrimonious.

II. The Story Mill project.

During the period of time when Blixseth and Debtor were developing the YellowstoneClub, Debtor's son, Matthew Crocker (“Crocker”), was...

To continue reading

Request your trial
7 cases
  • Cap Call, LLC v. Foster (In re Shoot the Moon, LLC)
    • United States
    • U.S. Bankruptcy Court — District of Montana
    • 10 Septiembre 2021
    ...may have deterred CapCall from engaging in the transactions.128 11 U.S.C. § 550(d).129 See, e.g. , Samson v. W. Cap. Partners, LLC (In re Blixseth) , 489 B.R. 154, 202 (Bankr. D. Mont. 2013) (describing similar issue when there was an overlap between amounts recoverable based on fraudulent ......
  • In re Ideal Mortg. Bankers, Ltd.
    • United States
    • U.S. Bankruptcy Court — Eastern District of New York
    • 14 Octubre 2015
    ...claims purportedly arising from default judgments based on vague testimony and little documentation. See, e.g., In re Blixseth, 489 B.R. 154, 202 (Bankr.D.Mont.2013) (finding a creditor had only a general unsecured claim where no detailed accounting attached to its proof of claim and there ......
  • Laurence Holzer & Global Appraisal Solutions, LLC v. R. Kenneth Barnard, Chapter 7 Tr. of Ideal Mortg. Bankers, Ltd., 15-CV-6277 (JFB)
    • United States
    • U.S. District Court — Eastern District of New York
    • 27 Julio 2016
    ...Court properly found that Claim No. 27 should be reclassified as an unsecured claim. See, e.g., Samson v. Western Capital Partners (In re Blixseth), 489 B.R. 154, 202 (Bankr. D. Mont. 2013) (finding claim should be designated as unsecured where "[o]ther than the default judgment and vague t......
  • Se Prop. Holdings, LLC v. Braswell
    • United States
    • U.S. District Court — Southern District of Alabama
    • 7 Junio 2017
    ...value" analysis is "whether the parties exchanged comparable realizable commercial value") (citation omitted); In re Blixseth, 489 B.R. 154, 184 (Bankr.D. Mont. 2013) ("in the context of the California Fraudulent Transfer Act ... reasonably equivalent value must be determined from the credi......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT