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Montana: Former billionaire can’t sue state in federal court

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The Montana Department of Revenue is arguing in response to a lawsuit filed by Tim Blixseth, founder of the Yellowstone Club (pictured) that the court Blixseth filed his suit it in does not have jurisdiction to hear the case. The suit, filed in December, seeks hundreds of millions of dollars in damages. OUTLAW PARTNERS PHOTO


HELENA – Montana’s Department of Revenue has filed its response to a lawsuit filed by a former billionaire who claims he suffered hundreds of millions of dollars in damages when the state filed a petition to force him into bankruptcy to collect past-due taxes.

The agency, in a response filed Jan. 25, argued the U.S. Bankruptcy Court in Nevada does not have the jurisdiction to hear the case filed by Tim Blixseth, the Independent Record reported. The 11th Amendment of the U.S. Constitution prohibits federal courts from hearing certain lawsuits against states.

Blixseth filed his complaint in December and is seeking about $800 million in damages, including lost financial opportunities. The U.S. Bankruptcy Court had ruled in June that Montana did not have the legal standing to file its involuntary bankruptcy petition against Blixseth in 2011.

Montana was seeking to collect about $219,000 in taxes, but also hoped to use the bankruptcy filing to force payment of another $56 million in taxes that Blixseth had contested, then-Revenue Director Dan Bucks said at the time.

Blixseth and his third wife, Edra, founded the exclusive Yellowstone Club resort near Big Sky in the late 1990s. The private ski hill and golf course in the mountains near Yellowstone National Park attracts celebrities and other wealthy members.

The club spiraled into bankruptcy in 2008 following the couple’s divorce. That launched a legal saga that pitted Blixseth against the club’s creditors, Montana tax authorities and banking giant Credit Suisse, which had loaned the club $375 million it was unable to fully repay.

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