the next matter on our calendar is in re a bankruptcy stuart scott snyder and we have an adversary proceed in within that bankruptcy thank you summary judge it was granted we took appeal from that to the district court district court affirmed and that brings us here today what did your our client do in the eastern district that didn't appear was sanctioned right there was judgment was the fault judgment was entered for discovery violations your right so that was a sanction it wasn't litigated it was not litigated but it was a sanction it was a discovery sanction yes you're our account climb the opportunity from that and many chances he had many chances many chances to there was a previous two defaults that were vacated correct i believe so your honor yes they were vacant they've also had one at least want full intent there were no findings of legal question is is whether a default judgment that's rendered after four years of attempted litigation that's entered as a sanction whether that can have pre means that there was a breach of the fiduciary relationships among the joint venture is a partner's right no not necessarily or are in order first of all set forth in the briefing in order to have  sherry duty under fire twenty three four is different than a breach of the standard for you sherry duties under state law to terminate federal common law they look certainly to the state law to inform their decision but it's essentially a federal common law standard and it's something more than you know of any federal and the state that doesn't find that there is a fiduciary duty that's owed by one partner to another actually new jersey or and four whereas perhaps they do under other state law the bankruptcy court and the district court just as sound because the underlying judgment was from the eastern district that new york law applied there was really no investigation into choice of law was there though there was a rider in fact the district court didn't really explain itself when it applied the york law either because it didn't necessarily have to there was diversity s certainly new jersey or connecticut i believe is somewhat similar to new york as far as state law what they hold as far as the for you sherry duty standard i mean there  one as you pointed out is that new york calls that the parties in a joint venture oh each other for do share duty in new jersey does not rector are the i see my time but my time as you say the federal that which is still in the blank which is that it is a in new jersey it is basically that there is a few sherry duty exist when there's an actual the issue of choice of law should have been raised in the eastern district of new york and i don't know if it was rape or not but but if that default judgment is binding doesn't i was just appealing to this court from a district court education on that issue judgement makes a number of findings at least implicitly that they are partners or joint ventures that there is a  fiduciary duty that they are damaged in the amount of foreigner fifty thousand dollars that that doreen was is liable if that judgment has precludes of fact are you able now to go back and say oh no there should have been a different law that applied in that case i think you can your are because this is a not destroyed ability proceeding as opposed to a proceeding in district court or the civil war only found only decided the issue of breach of contract that's correct or not fiduciary duty or default cation on the other issue that's correct your honor i understand that but but the question is once you have those factual finding that you're bound with you take them is there a genuine issue for a trial on the question of defalcation i mean that's the analysis he heat the bankruptcy court is not saying i find  cation because of the the prior proceeding it's but it's taking the factual findings that from the prior proceeding i now conclude as a matter of law that there was default cation actually analysis right actually or are where you should be an appeal is it didn't take those findings because there were not all there were is a determination that there were joint ventures and there was a breach of contract in order to find default cation you have to show at least recklessness and your state well she was it doing work she did she's a partner it did does matter you are because it goes back to intent it goes back to intent just because you're a partnership you're in a partnership and there's a breach of contract that doesn't necessarily mean stuart snyder you are ok and i say that allegation he's doing something which we set forth in the papers that he's always done where three years prior he paid he paid from his business personal expenses and threw it up at the end of the year on the tax return so it's not like he changed anything when it came to the proceeds of the second investment but it doesn't have anything to do with doreen your honor she wasn't even involved in the business at that time there's been no allegations of her involvement ever sell the bankruptcy court treated the east and district judgments as not divisible that is connecticut and new jersey in one pile do you argue that we should look at them separately the facts of them separately the facts of the two the new jersey investment and the connecticut just i do i did your honor and i do the there are two separate transactions there are two different chan's action with one hundred thousand dollars in december twenty two thousand and five into transmitted directly into the trustee account of an attorney now the police have always been cory about who whose client that attorney proceedings up until we get to the district court which basically said yes there's there's a difference but i'm going to you know the conduct of the second transaction means that the first one is also not a storage of will so still the district court isn't really making the distinction you should be made as far as the different actors the different circumstances my understanding and any of it you have three minutes left for a bridal thank you are here now f  under played the importance to note that the judgment did come from a sanction after what district court judge underhill referred to and probably characterized as a farcical four years of litigation in which the appellant's actively participated but chose not to conduct discovery in good faith didn't show hearings also throughout that period are only at the end on and off during the case counsel appeared counsel appeared in the middle of the case to move to vacate the first of all judgement which was vacated and then counsel asked for leave to be removed because they were paid so there's misbehavior and it's against this backdrop that the bankruptcy court in the district court probably did apply collateral estoppel to the eastern district court's findings both appellants are liable to the murphys the amount of the judgment in the bankruptcy court we asked the through summary judgment for the bankruptcy court defining judgment accepted from discharge under eleven u s c sections five twenty three we said eight to a forty six the bankruptcy court ruled on a four and a six and the connecticut district court affirmed and we believe they did so properly and very well reasoned decisions going through each of the elements with respect to five just discussed with opposing counsel the bankruptcy court and the district court treated this judgement is not divisible that is new jersey and connecticut work together treated as one investment isn't that correct i don't know if improperly prejudiced the creditors who have shown the statutory right to have that judgment except in a bad behavior only came from one of the investments is that correct well we would submit iran to that the under the especially the connecticut district court probably found if you apply the elements for example for a de facto asian both courts properly found independently with their review of the record and undisputed material facts that were presented that  applied to the determination in the underlying district court when should it have been raised it should have been raised if the choice of off a breach of producer duty claim was brought in connection with the eastern just take action and they could have had a fair opportunity to say our choice of laws new york if the district court own lee found that there was a breach of contract not a breach of for do share or duty and never did a choice of law analysis as i read that decision i agree you're on the court to not do a choice of law analysis however in that decision although the court did not grant a judgement for breach of fiduciary duty the court in fact did find in the context of it that there was a breach of a duty  almost think it doesn't matter because both the bankruptcy court and the connecticut district court analyzed the fiduciary duty standards for purposes of five twenty three a four independently applying federal law judge underhill in connecticut district not only the partnership arguing also i gather the choice of law issues waived yes your honor because in essence they defaulted and did not appeal from the full correct  yes i also note with respect to the few do sherry duty that judge underhill noted the superior knowledge that both the snyders head to this industry the murphys nancy murphy is a nurse joseph my views are retired at the time and still is retired new york city fire department first responder they didn't really know this industry they trusted their close family members who said put the money here and put the money there and with that fiduciary duty started had a duty to care for that money with respect to the first investment they didn't care for and they were liable for breach of contract but we believe also that debt should be excepted from just charging with respect to the second one that the bank records show as soon as the money came in they started had one job to a property but instead they started spending it here there and everywhere including dues and personal expenses to the point within eight weeks it was gone that's the kind of thing that should be held except if you discharge in a bankruptcy noted that even if you applied new york law it would still be a fiduciary duty under the facts and circumstances of this case is different than both new york and connecticut yes power is an argument for applying new jersey law that's where the investment was targeted right well your honor that's where the money went with respect to the first investment with your honor with respect to the choice of law the bankruptcy court sitting applying federal law is informed by state law but that doesn't necessarily mean that they're so driven that they can't separately conclude on the application of federal law of for do sherry duty says you apply the state law where you're sitting or look at the the contacts the range of contacts isn't that what federal or teaches us and where we're the most contacts connecticut new jersey or new york that analysis was never done that and it's the appellant's fault they didn't participate in the underlying action they were sanctioned despite four years of effort of litigation by the apaches in this case they have a right to litigated in the bankruptcy court your honor i think they raised in the bankruptcy court and the court the bankruptcy were considered it and  i believe both courts are properly held that the snyders have fiduciary duty and it's sounding based i feel i can't even articulate as well as they can and i refer to the rescissions you know your honor the being in a position of trust the murphys directed their money where the snyders told him to direct it they had no idea they were directing it somewhere where the studies didn't have control of the investment i think by them having control there's also a deceit element in in looking at the foundation so i also think you can infer intent from the facts and circumstances and undisputed material facts and circumstances presented by this record of the night or make money on the first i that it wasn't misuse it was the way they did business but they only misused funds from one of the investments isn't that correct your honor i can't be the law that the you know if you're found to be you can just you can embezzle a little no not can't be ok hawthorne project the other one was supposed to be for by a bible street property that was never purchased we you know we respectfully submit that the court properly applied the exception to discharge to the judgment that was ruled by the eastern  of four hundred fifty thousand dollars that that judgment that was what the bankruptcy court was asked to determine whether it was accepted from discharge and in a twenty two page well reasoned decision she concluded that it was and on appeal in another twenty two page well reasoned decision judge the district court iran or did make a finding that both parties had substantial knowledge in their construction business and that's one of the points are points on appeal there's nothing in the record that would ever suggest that doreen sire had any knowledge of the construction business in fact all of the evidence that we submitted said that she did not so they defining is not based anywhere in the record so in addition to follow up on your honor's point in the us mr snyder describes the fact that he lost hundreds of thousands of dollars in these investments in part because he was chasing the money trying to protect mr murphy's investment continuing to do work for mr mays l continuing to try to get the money back for both of them but all this was decided in the east and district was in it no it was not your own it was not these findings these are all findings that are in the affidavit these were never issues that were adjudicated to you do you concede that the bank records show that they spent all the money within eight weeks on things that weren't intended by the investment including yacht club dues and that kind of thing yes you are but with an explanation that's in the papers the my client's explanation for why other than the money spent on the personal expenses where it was spent was spent in the jersey projects i understand what the district what the district court interest in those other projects yes they did your honor they did  fact that that's what the district court held that what my argument is is that if we were appealing also what the what the the the court in the eastern district found as well by finding that awarding a breach of that particular think it is as a matter of why your honor i think he gets the opportunity do explain himself and all right and you've given us the explanation that was his explanation that the explanation is in the papers and i understand what the eastern district help and what  that that wasn't only oh it's been a long time since i looked at this but when when there is a default judgment you have you have a judgment but then you look at that at the factual allegations that result in that judgment and then those factual allegations are deemed minute because because of the default and they can't be challenged and that's how you come up with the four and fifty thousand dollars in damages i believe your honor that they can be challenge when we're talking about in the  in my client's explanations for why he did that's a different question but in terms of the amounts whether there was a relationship those factual underpinnings for the judgment those cannot be challenged and you argue you can argue there