Date of Decision:
April 30, 2007
Whether Defendants-Creditors were entitled to summary judgment on Plaintiff-Debtor's § 523(a)(3) action where they had obtained a pre-petition default judgment against Plaintiff-Debtor in Arizona?
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: