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In re Edwin Earl Elliott

Summarizing by Bradley Pearce

In re Donald and Jane Nichols

Summarizing by Lars Fuller

In re Robert Zuckerman

Case Type:
Case Status:
BAP No. CC-19-1200-TaFS (9th Circuit, Apr 10,2020) Published
State court judgment for fraud entered after debtor chose not to participate in trial had issue preclusive effect in subsequent nondischargeability litigation.
Procedural context:
After an evidentiary trial at which the debtor did not participate, the state court entered a fraud judgment against the debtor. The debtor then filed for bankruptcy and the creditor filed a nondischargeability complaint. The creditor moved for summary judgment based on issue preclusion, which the debtor opposed. The bankruptcy court granted summary judgment and the debtor appealed to the BAP. The BAP affirmed.
The creditor sued the debtor for fraud in state court. The debtor answered the complaint, but otherwise failed to comply with numerous discovery requests and sanctions orders. After the debtor failed to respond to a request for admissions, the state court entered an order deemed certain facts admitted, including that the debtor engaged in fraud. The state court then conducted a trial that included witnesses and documentary evidence. The debtor's lawyer appeared to make several unsuccessful procedural motions to stop the trial, but the debtor did not appear. The court entered judgment against the debtor after noting the deemed admissions.. After the debtor filed for bankruptcy, the creditor filed a nondischargeability complaint and then moved for summary judgment based on the preclusive effect of the state court judgment. The Bankruptcy Court held the state court judgment preclusive and granted summary judgment. The BAP affirmed, holding that the state court judgment was "actually litigated" because the judgment was not a default judgment, but based on a trial at which the debtor and his counsel chose not to attend, noting that the debtor answered the complaint and participated in the litigation before trial.. Further, judgments based on deemed admissions can be given preclusive effect. The BAP emphasized that the creditor proceeded by trial in abstentia under section 594 of the California Code of Civil Procedure, not by default judgment at which the answer had been stricken.

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