Marc Kirschner v. Timothy Blixseth

FILED
NOT FOR PUBLICATION
JUL 18 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
MARC S. KIRSCHNER, as Trustee of The No. 14-56182
Yellowstone Club Liquidating Trust,
D.C. No. 2:11-cv-08283-GAF-SP
Plaintiff-counter-defendant -
Appellee,
MEMORANDUM*
v.
TIMOTHY L. BLIXSETH,
Defendant-counter-claim-3rd-
party-plaintiff - Appellant.
Appeal from the United States District Court
for the Central District of California
Gary A. Feess, District Judge, Presiding
Argued and Submitted February 25, 2016
Pasadena, California
Before: KOZINSKI, PAEZ, and BERZON, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
1
Timothy Blixseth appeals the district court’s grant of summary judgment in
favor of the Yellowstone Club Liquidating Trust (“YCLT”), which sued Blixseth to
collect on a pair of promissory notes. We affirm the district court.
1. The district court correctly concluded that Blixseth’s defenses are barred
by collateral estoppel. In In re Yellowstone Mountain Club, LLC, 436 B.R. 598,
662 (Bankr. D. Mont. 2010), the bankruptcy court determined that Blixseth
executed the liability release in his marital settlement with the actual intent to
defraud the Yellowstone Mountain Club’s creditors. It was reasonable for the
district court in this case to treat the release of Blixseth’s obligations on the BLX
Notes as an integral aspect of that same transaction — the settlement of the
Blixseths’ divorce proceedings. Blixseth’s actual fraudulent intent had thus already
been litigated in the bankruptcy court. See Resolution Tr. Corp. v. Keating, 186
F.3d 1110, 1116 (9th Cir. 1999) (applying a four-factor test to determine whether an
issue is identical for collateral estoppel purposes). The district court therefore
correctly concluded that there was no genuine issue of material fact with respect to
Blixseth’s intent in releasing his promissory notes to BLX.
2. Even if the district court erred in construing the BLX note release as an
integral aspect of the same transaction the bankruptcy court found to be an actual
fraudulent transfer, the record establishes that, as a matter of law, the BLX note
2
release was a constructive fraudulent transfer. See Cal. Civ. Code § 3439.04(a)(2);
In re Bledsoe, 569 F.3d 1106, 1109 (9th Cir. 2009) (“Constructive fraud proceeds
on the theory that, although the debtor may not have had a fraudulent intent, the
court nevertheless should void the transfer, usually because the debtor received
inadequate consideration.”). Blixseth’s own expert determined that Edra was
insolvent when the marital settlement releases were executed. The promissory
notes that Edra gave BLX were therefore not “reasonably equivalent” to the value
of the claims against Blixseth that BLX gave up. See Cal. Civ. Code §
3439.04(a)(2). And upon the transfer, BLX became insolvent. See id. §
3439.04(a)(2)(B). There is thus ample support for the conclusion that Blixseth’s
release of his promissory notes to BLX was a constructive fraudulent transfer.
3. Blixseth’s remaining arguments are meritless.
AFFIRMED.
3