Contempt in the 9th for Ski Resort Founder

(CN) - The founder of an exclusive ski resort for the rich cannot escape a $40 million judgment by "smearing the reputation" of a bankruptcy judge, the 9th Circuit ruled.

Timothy Blixseth opened the Yellowstone Mountain Club near Big Sky, Mont., in 1997 with reported help from celebrities like iconic skiers Hank Kashiwa and Warren Miller.

The 2,200-acre club was "a haven for the ultrawealthy," but it "unsurprisingly" fell into bankruptcy after Blixseth in 2005 spent a $342 million loan mostly on himself, according to a withering, unsigned ruling published late Tuesday.

A bankruptcy court eventually found that Blixseth misappropriated the money for his own use and entered a $40 million judgment against him.

Blixseth had claimed that the bankruptcy judge should recuse himself for a variety of reasons, but U.S. District Judge Sam Haddon affirmed the bankruptcy court's denial of the move, and the 9th Circuit agreed in a memorandum ruling peppered with unconcealed contempt.

"Timothy Blixseth sounds the clarion call of many a disappointed litigant," the ruling states. "'It's not fair!' He insists that the judge who presided over the administration of the Yellowstone Mountain Club ski resort's bankruptcy was biased against him and should have recused himself."

Not only is there "no sign of antagonism requiring recusal," however, but "the bankruptcy judge, in fact, showed remarkable restraint given Blixseth's scorched-earth litigation tactics," according to the ruling.

The panel, which included Chief Judge Alex Kozinksi, noted that Blixseth's accusers wanted damages set at $286 million, "but the bankruptcy judge held Blixseth liable for only $40 million."

"Such favorable rulings cut strongly against any inference that the judge was unable to 'render fair judgment," the ruling states.

Ultimately the panel found no evidence for any of Blixseth's "extravagant accusations," which included ex parte communications, due-process violations and "biased statements.""Blixseth's claims are a transparent attempt to wriggle out of an unfavorable decision by smearing the reputation of the judge who made it," the panel found. "The bankruptcy court was correct in denying the recusal motion, as was the District Court in affirming."

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