Bankr. No.:
05-50528
Adv. No.:
06-5006
Date of Decision:
April 30, 2007
Issue:
Whether Defendants-Creditors were entitled to summary judgment on Plaintiff-Debtor's ยง 523(a)(3) action where they had obtained a pre-petition default judgment against Plaintiff-Debtor in Arizona?
Ruling:
Summary judgment was denied. Under Arizona law, a default judgment, especially where the defendant makes no appearance in the action, is not entitled to preclusive effect. Therefore, Defendants-Creditors could not rely on the Arizona state court default judgment to establish in bankruptcy their late-filed claim against Plaintiff-Debtor arose from fraud and therefore was nondischargeable.
Full Bankruptcy Court Decision: