In the Matter of: YELLOWSTONE MOUNTAIN CLUB, LLC, ROBERT SUMPTER v. MARC S. KIRSCHNER, Trustee of the Yellowstone Club Liquidating Trust

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. Rule 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In the Matter of: YELLOWSTONE
MOUNTAIN CLUB, LLC,
ROBERT SUMPTER,
Appellant,
v.
MARC S. KIRSCHNER, Trustee of the
Yellowstone Club Liquidating Trust,
Appellee.
No. 11-35368
D.C. No. 2:10-cv-00054-SEH
MEMORANDUM*
Appeal from the United States District Court
for the District of Montana
Sam E. Haddon, District Judge, Presiding
Argued and Submitted February 8, 2012
Seattle, Washington
Before: SCHROEDER, ALARCÓN, and GOULD, Circuit Judges.
This case arises out of the Chapter 11 proceedings of a group of entities
known as the Yellowstone Mountain Club (the “Club”), a private ski and golf
FILED
FEB 27 2012
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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community in Big Sky, Montana. Robert Sumpter served as the Club’s director of
development from September 1999 to August 2008. In July 2008, Sumpter
exchanged his Company Membership (a non-dues paying membership provided at
no cost as part of his compensation) for a special, non-dues paying Residential
Membership by paying a $250,000 deposit. In November 2008, the Club filed for
Chapter 11 bankruptcy protection. In June 2009, the bankruptcy court confirmed
the Club’s plan of reorganization, which rejected Sumpter’s Residential
Membership under 11 U.S.C. § 365(a).
The sole issue here is the proper measure of damages for that rejection.
Kirschner (the trustee of the Club’s Liquidating Trust, hereinafter “Appellee”)
argues that Sumpter may only gain the refund of his $250,000 deposit because that
is what his Membership Agreement provides if his membership is recalled by the
Club. Sumpter argues that he is entitled to a series of compensatory damages for
(1) his deposit, (2) the anticipated appreciation in the value of his membership,
which he argues he could realize by selling the membership after the Club is
converted to an “Equity Club,” (3) the amount of dues he would be required to pay
over the next 29 years if he were to obtain a standard, dues-paying membership,
and (4) the value of his option to “upgrade” his Residential Membership to a
National Membership by paying an additional $50,000 deposit, for a total deposit

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of $300,000, instead of the standard $1,000,000 deposit. The bankruptcy court
granted summary judgment to Appellee and the district court affirmed. We have
jurisdiction pursuant to 28 U.S.C. § 158(d)(1), and we AFFIRM.
The language of Sumpter’s Membership Agreement controls because it is
clear and unambiguous. In re Estate of Burrell, 358 Mont. 460, 465 (2010).
Sumpter’s Membership Agreement provides that “[m]embership is not an
investment in [the Club] . . . . A member only acquires a revocable license to use
the Club Facilities” and that the Club “reserves the right, in its sole discretion, . . .
to recall any membership at any time for any or no reason whatsoever.” In the
event Sumpter’s membership was recalled, the agreement provided that “the Club
will refund the Membership Deposit to the affected member within thirty (30)
days.” Sumpter also could terminate the agreement by resigning his membership,
in which case he would be “repaid the Membership Deposit, without interest,
within thirty (30) days after the membership has been reissued by the Club to a
new member.” The bankruptcy court interpreted this language as limiting
Sumpter’s rejection damages to the return of his $250,000 deposit.
Sumpter contends that the bankruptcy court erred by deciding to measure
Mr. Sumpter’s damages as if the contract had been revoked and to equate the

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debtor’s breach with the contract provisions governing a membership recall. The
bankruptcy court held:
Sumpter’s membership, described as a privilege, a revocable licence, and a
non-investment, could be recalled by the Club at any time and for any or
no reason whatsoever. The Debtor’s rejection of Sumpter’s Membership
Agreement is nothing more than a recall of the Membership Agreement.
Indeed, Webster’s Dictionary defines “recall” as “to call back” or “the act
of revoking.” Sumpter’s damages are limited by the plain language of his
Membership Agreement. Sumpter’s allowable damages under [11 U.S.C.]
§ 502(b) are $250,000, which corresponds to the amount specified in the
agreement if the Club recalled or revoked the membership.
Sumpter argues that his Membership Agreement was not recalled, it was deemed
breached the day before the petition was filed in 2008 by operation of 11 U.S.C. §
365(g), and that “the Membership Contract does not provide any remedy for either
party’s breach.” He further asserts that once the Club rejected his Membership
Agreement it could no longer exercise its right to recall the contract, because “[a]
party who breaches a contract cannot claim entitlement to that contract’s benefits
after such breach.” Western Media, Inc. v. Merrick, 232 Mont. 480, 485 (1988).
Sumpter would have us hold that when a contract is terminated under § 365(a),
contract provisions that provide what compensation is owed if the contract is
unilaterally terminated are no longer applicable to the calculation of damages. We
reject Sumpter’s position.

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The Membership Agreement clearly provides that it can be unilaterally
terminated by either party; Sumpter can resign or the Club can recall his
membership “at any time for any or no reason whatsoever.” In either case the
agreement provides that the Club will compensate Sumpter by returning his
$250,000 deposit. We agree with the bankruptcy court and hold that these
provisions limit Sumpter’s rejection damages to the return of his deposit.
AFFIRMED

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