Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-10-06007/USCOURTS-ca8-10-06007-0/pdf.json

Parties Involved:
Harmon Autoglass Intellectual Property, LLC
Appellee
Scott Emmet Leiferman
Appellant

Document Text:

1

 The Honorable Nancy C. Dreher, Bankruptcy Judge, United States Bankruptcy Court

for the District of Minnesota.

United States Bankruptcy Appellate Panel

FOR THE EIGHTH CIRCUIT

_______________

No. 10-6007

_______________

In re: Scott Emmet Leiferman, *

*

Debtor *

*

Harmon Autoglass Intellectual * Appeal from the United States

Property, LLC, * Bankruptcy Court for the 

* District of Minnesota

Plaintiff - Appellee *

*

v. *

*

Scott Emmet Leiferman, *

*

Defendant - Appellant *

_______________

Submitted: April 13, 2010

Filed: April 30, 2010

_______________

Before FEDERMAN, MAHONEY, and SALADINO, Bankruptcy Judges

FEDERMAN, Bankruptcy Judge

Scott Emmet Leiferman appeals from the Order of the Bankruptcy Court1

striking his answer as a sanction for discovery abuses, entering default judgment

Appellate Case: 10-6007 Page: 1 Date Filed: 04/30/2010 Entry ID: 3660208
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against him and in favor of Plaintiff Harmon AutoGlass Intellectual Property, LLC in

the amount of $3,723,095.50, and finding such debt to be nondischargeable under 11

U.S.C. § 523(a)(2)(B). For the reasons that follow, we AFFIRM.

FACTUAL BACKGROUND

In October 2003, Lieferman, as president of Lieferman Enterprises, contracted

with Harmon AutoGlass Intellectual Property, LLC (“HAIP”) to purchase certain

assets for the operation of glass repair shops. On August 20, 2007, HAIP obtained a

state court judgment against Lieferman and Lieferman Enterprises in the amount of

$3,723,095.50, relating to that contract. On October 3, 2008, Leiferman filed a

Chapter 7 bankruptcy petition, seeking to discharge debts, including the judgment

debt to HAIP. On January 6, 2009, HAIP filed a six-count adversary complaint

against Lieferman, alleging, inter alia, that its judgment debt be declared

nondischargeable under 11 U.S.C. § 523(a)(2)(B). In essence, as relevant here, HAIP

asserted that Leiferman falsely represented on a financial statement given in

connection with the asset purchase that he had $1 million in cash at the time the

statement was given. Over the course of the following year, HAIP tried repeatedly to

obtain discovery from Leiferman, but Leiferman refused to cooperate, being especially

non-responsive to questions about his assets at the time he gave HAIP the financial

statement. On December 29, 2009, the Bankruptcy Court entered an Order striking

Lieferman’s answer as a sanction for the discovery abuses. The Court subsequently

entered Judgment in favor of HAIP, finding the debt to be nondischargeable under §

523(a)(2)(B). Lieferman appeals.

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 In re O’Brien, 351 F.3d 832, 836 (8th Cir. 2003).

3

 Id.; Hairston v. Alert Safety Light Prods., Inc., 307 F.3d 717, 718 (8th Cir. 2002). 

4

 Fed. R. Civ. P. 37(b)(2)(A)(vi).

3

STANDARD OF REVIEW 

We review the Bankruptcy Court’s legal conclusions de novo and its findings

of fact for clear error.2

 We review the Bankruptcy Court’s judgment entered as a

consequence of Lieferman’s failure to comply with a court order for abuse of

discretion.3

SANCTIONS PURSUANT TO RULE 37

Pursuant to Federal Rule of Civil Procedure 37, made applicable to this

proceeding by Federal Rule of Bankruptcy Procedure 7037, a party who fails to obey

an order to provide or permit discovery may be subject to a default judgment against

him.4

 Specifically, Rule 37(b)(2)(A) provides in pertinent part:

(2) Sanctions in the District Where the Action is Pending.

(A) For Not Obeying a Discovery Order. If a party or a party’s

officer, director, or managing agent–or a witness designated under

Rule 30(b)(6) or 31(a)(4)–fails to obey an order to provide or

permit discovery, including an order under Rule 26(f), 35, or

37(a), the court where the action is pending may issue further just

orders. They may include the following:

(i) directing that the matters embraced in the order or other

designated facts be taken as established for purposes of the

action, as the prevailing party claims;

(ii) prohibiting the disobedient party from supporting or

opposing designated claims or defenses, or from

introducing designated matters in evidence;

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 Fed. R. Civ. P. 37(b)(2) (emphasis added).

6

 Harmon Autoglass Intellectual Property, LLC v. Leiferman (In re Leiferman), Ch. 7

Case No. 08-45108, Adv. No. 09-4003, Order Granting Motion for Default Judgment Pursuant

to Rule 7037 (Doc. #38) at 7-8 (Bankr. D. Minn. Dec. 29, 2009).

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(iii) striking pleadings in whole or in part;

(iv) staying further proceedings until the order is obeyed;

(v) dismissing the action or proceeding in whole or in part;

(vi) rendering a default judgment against the disobedient

party; or

(vii) treating as contempt of court the failure to obey any

order except an order to submit to a physical or mental

examination.5

The Bankruptcy Court correctly stated the standard for issuing sanctions for discovery

abuses under this Rule:

A court should resort to the sanction of dismissal only “when the ‘failure

to comply has been due to . . . willfulness, bad faith, or any fault of

petitioner.’” Edgar v. Slaughter, 548 F.2d 770, 772 (8th Cir. 1977)

(quoting Societe Internationale v. Rogers, 357 U.S. 197 (1958)).

Generally, in order to enter a default judgment against a recalcitrant

party under Rule 37, the court must find that “‘there is: (1) an order

compelling discovery; (2) a willful violation of that order; and (3)

prejudice to the other party.’” Everyday Learning Corp. v. Larson, 242

F.3d 815, 817 (8th Cir. 2001) (quoting Keefer v. Provident Life &

Accident Ins. Co., 238 F.3d 937, 940 (8th Cir. 2000)); see also In re

O’Brien, 351 F.3d 832, 836 (8th Cir. 2003) (“a court may find willful

disobedience sufficient to support dismissal when a party employs stall

tactics and disregards court orders.”). The court’s “discretion is bounded

by the requirement of Rule 37(b)(2) that the sanction be ‘just’ and relate

to the claim at issue in the order to provide discovery.” Hairston v. Alert

Safety Light Prod., Inc., 307 F.3d 717, 719 (8th Cir. 2002) (quoting

Avionic Co. v. General Dynamics Corp., 957 F.2d 555, 558 (8th Cir.

1992)).6

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 See, e.g., Scheduling Order and Order of Trial dated March 31, 2009 (Doc. #9)

(“Failure to comply with this order may result in the imposition of sanctions . . . including, but

not limited to, . . . rendering default judgment against the disobedient party . . . .”); Amended

Scheduling Order and Order for Trial dated July 1, 2009 (Doc. #15) (same); Transcript of July

1, 2009 Hearing at 8-10; Transcript of October 8, 2009 Hearing, at 8-9, 16-17; Order dated

October 9, 2009 (Doc. #23) (expressly ordering Leiferman to, inter alia, deliver to counsel for

HAIP a list of assets in his possession on the date of the financing statement and warning that

“failure to comply with this order shall result in entry of judgment in favor of [HAIP] pursuant to

[Rule] 37(b)(2)(A)(vi) . . . .”).

8 Order Granting Motion for Default Judgment Pursuant to Rule 7037 at 10 (citing

Garrett v. Selby Connor Maddux & Janer, 425 F.3d 836, 840 (10th Cir. 2005) (holding that,

although a pro se litigant’s pleadings are to be construed liberally, pro se parties are required to

follow the same rules of procedure that govern other litigants); Prestige Equip. Corp. v. Case

Mach. Co., LLC, 2009 WL 2232859 at *1 (N.D. Ohio July 22, 2009) (“proceeding pro se does

not relieve [a party] of his obligation to follow the Federal Rules of Civil Procedure or his other

obligations with respect to this lawsuit”); Soto v. Erickson, 2007 WL 2209257 at *1 (E.D. Wis.

July 27, 2007) (“Even pro se litigants must follow the Federal Rules of Civil Procedure. . . .”)).

5

On appeal, Leiferman points out that he was representing himself pro se in the

adversary proceeding, and asserts that he essentially did everything within his power

to comply with all discovery requests and court orders. To the contrary, however, the

Bankruptcy Court set out in detail numerous examples of Leiferman’s lack of

cooperation in discovery over the nearly one-year period while the case was pending.

The Court expressly and repeatedly advised Leiferman that his lack of cooperation

could lead to sanctions, including striking his pleadings and rendering a default

judgment against him.7

 Nevertheless, despite the Court’s numerous extensions of

time, postponements of trial, and express warnings, Leiferman never meaningfully

complied with the discovery requests and court orders. The Court acknowledged that

Leiferman was representing himself pro se, but correctly pointed out that pro se

parties are required to follow the rules.8

The record amply supports the Bankruptcy Court’s findings (i) that it entered

orders compelling discovery; (ii) that Leiferman willfully violated those orders, and

(iii) that HAIP was prejudiced as a result. The record also supports the Court’s

findings that Leiferman’s conduct in avoiding discovery was in bad faith and,

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 See Hairston v. Alert Safety Light Prods., 307 F.3d at 719; Edgar v. Slaughter, 548

F.2d 770, 772 (8th Cir. 1977) (“the harsh remedies of dismissal and default should only be used

when the ‘failure to comply has been due to . . . willfulness, bad faith, or any fault of

petitioner.’”). 

6

therefore, that the sanction awarded was “just” and appropriate under the

circumstances.9

 As a result, the Bankruptcy Court did not abuse its discretion in

striking Leiferman’s answer and entering default judgment against him. The

judgment is, therefore, AFFIRMED.

 

Appellate Case: 10-6007 Page: 6 Date Filed: 04/30/2010 Entry ID: 3660208