Harris et al v. Appleberry

1All statutory and rule references are to the Bankruptcy
Code as it existed before the effective date of the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005. 	Federal
Rule of Bankruptcy Procedure 7056 adopts Federal Rule of Civil
Procedure 56.
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
CALVIN APPLEBERRY,
Debtor. 	No. 7-05-51063 SA
GLYNN DAVID HARRIS, et al.,
Plaintiffs,
v. 	Adv. No. 06-1090 S
CALVIN APPLEBERRY,
Defendant.
MEMORANDUM OPINION AND ORDER DENYING
PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT
ON NON-DISCHARGEABILITY OF DEBT
This matter is before the Court on Plaintiffs’ Motion for
Summary Judgment on Non-Dischargeability of Debt (“Motion”)(doc
12). 	Plaintiffs are represented by their attorney Miller
Stratvert P.A. (Ruth Fuess and Dylan O’Reilly). 	Defendant did
not file a response to the Motion. 	Federal Rule of Civil
Procedure 56(c) 1 provides in part:
The judgment sought shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to
a judgment as a matter of law.
(Emphasis added.) 	Because no response was filed to the Motion no
facts are in dispute. 	Therefore, the issue for the Court is
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whether Plaintiffs are entitled to a judgment as a matter of law.
The Court finds that under New Mexico law they are not.
The Motion seeks a declaration that Defendant’s debt is
nondischargeable based on the collateral estoppel effect of a
state court default judgment entered as a discovery sanction.
New Mexico law is quite clear that “default judgments do not have
collateral estoppel effect in future litigation, although they
may have res judicata effect.” 	Blea v. Sandoval, 107 N.M. 554,
558, 761 P.2d 432, 437 (Ct. App. 1988). 	Therefore, the Motion
should be denied.
Plaintiffs argue that, under the federal law of collateral
estoppel, default judgments based on sanctions do have collateral
estoppel effect. 	See, e.g., McCart v. Jordana (In re Jordana),
232 B.R. 469, 477 (10 th Cir. BAP 1999), aff’d. 216 F.3d 1087 (10 th
Cir. 2000)(“Several Circuit Courts have held that a default
judgment entered against a defendant for abuse of the discovery
process has preclusive effect in subsequent litigation.”) And,
citing Deflon v. Sawyers, 139 N.M. 637, 640, 137 P.3d 577, 580
(N.M. 2006), Plaintiffs argue that New Mexico law and federal law
are the same on the issue of collateral estoppel. 	See Motion at
10. 	However, Deflon states that federal law and New Mexico law
are not divergent on claim preclusion doctrine, which is res
judicata not collateral estoppel. 	Therefore, this argument
fails.
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Plaintiffs also argue that City of Sunland Park v. Macias,
134 N.M. 216, 220, 75 P.3d 816, 820 (Ct.App. 2003) allows a court
to apply collateral estoppel where a court has expended
significant resources or a party has behaved badly prior to the
entry of a default judgment. 	The Court does not read Macias to
stand for this proposition.
Finally, Plaintiffs argue that it is unfair to not apply
collateral estoppel in this case due to the extreme nature of
Defendant’s behavior in the state court case. 	Unfortunately for
Plaintiffs, unfairness is not an exception to the doctrine in New
Mexico that default judgments do not have collateral estoppel
effect in future litigation.
IT IS ORDERED that the Plaintiffs’ Motion for Summary
Judgment on Non-Dischargeability of Debt is denied.
Honorable James S. Starzynski
United States Bankruptcy Judge
copies to:
Dylan O'Reilly
Ruth Fuess
PO Box 25687
Albuquerque, NM 87499-0869
Ronald E Holmes
112 Edith Blvd NE
Albuquerque, NM 87102-3524
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