Sumpter v. Kirschner (In Re Yellowstone Mountain Club, LLC)

MEMORANDUM

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 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. Kir-schner (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…