Montana: Former billionaire can't sue state in federal court
In this Nov. 3, 2014 file photo, Tim Blixseth, left, leaves a U.S. courthouse after facing questions about his finances in Butte, Mont. A U.S. bankruptcy judge has dismissed an attempt by state officials to force the developer of Montana's Yellowstone Club resort into bankruptcy as a way to collect taxes he allegedly owed. (Matthew Brown/Associated Press)
HELENA (AP) — 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 Tuesday, 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.