Blixseth v. Credit Suisse, No. 16-35304 (9th Cir. 2020)
Annotate this CaseThe Ninth Circuit affirmed, although on different grounds, the district court's dismissal of appellant's challenge to an exculpation clause approved by the bankruptcy court as part of a settlement and confirmation plan in Chapter 11 proceedings. As a preliminary matter, the panel declined to dismiss the appeal because of appellant's failure to reply to the show cause order. The panel remained bound by its earlier decision that appellant's challenge to the exculpation clause is not equitably moot. On the merits, the panel held that 11 U.S.C. 524(e) does not prohibit the exculpation clause at issue, because the clause covers only liabilities arising from the bankruptcy proceedings and not the discharged debt.
Court Description: Bankruptcy. The panel affirmed, on different grounds, the district court’s dismissal of a challenge to an exculpation clause approved by the bankruptcy court as part of a settlement and confirmation plan in Chapter 11 proceedings. The Chapter 11 proceedings were filed by Yellowstone Club companies founded by appellant Timothy Blixseth and his then-wife. The exculpation clause released certain non- debtors, including Credit Suisse, from liability for acts or omissions arising out of the Chapter 11 proceedings. In a prior appeal, this court affirmed the district court in part and reversed in part, holding that Blixseth had standing to challenge the bankruptcy court’s order approving the plan and that Blixseth’s challenge to the exculpation clause was not equitably moot. As an initial matter, the panel declined to dismiss Blixseth’s appeal as a sanction for his failure to respond to an order to show cause for why his appeal should persist in the wake of a purported global settlement. The panel held that, on remand, the district court erred by dismissing Blixseth’s challenge on the ground that it was barred by equitable mootness. The panel held that its prior holding on equitable mootness was law of the case and was sound. BLIXSETH V. CREDIT SUISSE 3 The panel nonetheless affirmed on the ground that the exculpation clause was valid, and the bankruptcy court properly released Credit Suisse, a creditor, from liability for certain potential claims against it. Consistent with the Third Circuit, the panel held that 11 U.S.C. § 524(e), providing that discharge of a debt of the debtor does not affect the liability of any other entity on such debt, did not bar the exculpation clause, which narrowly focused on actions of various participants in the plan approval process and related only to that process.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.