* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### JUN 20 2000 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

In re: JONN M. JORDANA, doing business as Mediline Service Corporation, doing business as Intercorp Investment, Debtor.

MAGDELENA MORETTA MCCART,

Plaintiff-Appellee,

v. JONN M. JORDANA, doing business as Mediline Service Corporation, doing business as Intercorp Investment, Defendant-Appellant. No. 99-6194 (BAP No. WO 98-051) (Bankr. No. 97-17566) (Adv. No. 97-1400)

ORDER AND JUDGMENT *

Before TACHA , EBEL , and BRISCOE , Circuit Judges.-2-

After examining the briefs and appellate record, th is panel has determined unanimously to grant the parties’ request for a dec ision on the briefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. Debtor Jonn H. Jordana appeals a decision of the Te nth Circuit Bankruptcy Appellate Panel (BAP) affirming the bankruptcy court’s summary judgment in favor of creditor Magdelena Moretta McCart, denying Jordana a discharge of McCart’s judgment against him. McCart brought a fe deral securities fraud action against Jordana for fraudulently inducing her to in vest in worthless securities. Jordana refused to file an answer in that proceedin g, despite repeated warnings, refused to comply with discovery requests and absco nded with the original copy of his deposition transcripts, refusing to return i t. The district court in that proceeding eventually entered a default judgment ag ainst Jordana as a sanction for his misconduct and obstructive behavior. Jordana filed a Chapter 7 bankruptcy proceeding. M cCart filed an adversary proceeding in the bankruptcy court claimi ng the default judgment she had obtained against Jordana in the federal sec urities fraud action was nondischargeable under 11 U.S.C. § 523(a)(2)(A) and(B). The bankruptcy court ruled that McCart’s default judgment against Jordan a had collateral estoppel effect in the nondischargeability proceeding, and t hat Jordana was therefore-3-

estopped from contesting the dischargeability of that debt. See McCart v. Jordana (In re Jordana) , 221 B.R. 950, 954-56 (Bankr. W.D. Okla. 1998). The BAP affirmed the bankruptcy court’s decision. See McCart v. Jordana (In re Jordana) , 232 B.R. 469, 480 (10th Cir. BAP 1999). Although other issues were raised in the bankruptcycourt and the BAP, Jordana appeals only the finding that the prior def ault judgment had collateral estoppel effect in the nondischargeability proceedi ng. We review the bankruptcy court’s grant of summary judgment de novo applying the legal standards set forth in Fed. R. Civ. P. 56(c). See Hollytex Carpet Mills, Inc. v. Oklahoma Employment Sec. Comm’n (In re Hollytex Carpet Mills, Inc.) , 73 F.3d 1516, 1518 (10th Cir. 1996). We exercise jurisdiction pursuan t to 28 U.S.C. § 158(d), and we affirm. The bankruptcy court recognized the general rule th at a default judgment will not be granted preclusive effect because none of the issues was actually litigated. See McCart , 221 B.R. at 954. However, as both the bankruptcy court and the BAP recognized, there is an exception where the losing party has had a full and fair opportunity to participate in the p revious litigation, but has engaged in serious obstructive conduct resulting in a default judgment. See Wolstein v. Docteroff (In re Docteroff) , 133 F.3d 210, 216-17 (3d Cir. 1997) (affirming use of collateral estoppel in bankruptcy discharge proceeding where-4-

default entered because debtor wilfully obstructed discovery); Bush v. Balfour Beatty Bahams, Ltd. (In re Bush) , 62 F.3d 1319, 1323-24 (11th Cir. 1995) (same; debtor engaged in dilatory and deliberately obstructive conduct); FDIC v. Daily (In re Daily) , 47 F.3d 365, 368-69 (9th Cir. 1995) (same; debtordeliberately precluded resolution of factual issues by obstructi ng discovery process). In these circumstances, the “actual litigation” requirement of collateral estoppel may be satisfied because the party was afforded a reasonab le opportunity to defend himself on the merits but choose not to do so. See Bush , 62 F.3d at 1324. The circumstances in this case justify the applicat ion of collateral estoppel to the default judgment entered against Jordana. Like the debtors in Wolstein , Bush and Daily , Jordana did not simply default at the outset of t he federal securities fraud proceeding. Instead, he significa ntly participated in the litigation and engaged in serious obstructive behavior for mor e than two years before the default judgment was entered as a sanction. Jordan a has never disputed that he took his deposition transcript and refused to retur n it, refused to cooperate in discovery, and refused to answer McCart’s complaint , all in spite of repeated warnings from the district court that his conduct w as in violation of the court’s rules. See McCart , 221 B.R. at 955 (“It is illuminating to this court that the debtor-defendant does not dispute that he engaged i n this obstructive behavior.”). Further, it is clear from the record that Jordana w as repeatedly warned that his-5-

conduct could result in a default judgment against him. Jordana had every opportunity to fully and fairly litigate all of the relevant issues in the securities fraud action. Jordana contends on appeal that the BAP placed “[t] oo strong a reliance . . . on the allegations of misconduct” in the securities fraud action. Appellant’s Br. at 5. He contends the default judg ment was only entered because he failed to answer the complaint. We disagree. B ased upon our review of the record, the parties’ briefs, and our independent re search, we conclude that the BAP’s factual findings are supported by the record and that it properly considered and rejected Jordana’s arguments in a thorough and well-reasoned opinion. Therefore, we AFFIRM the judgment of the bankruptcycourt for substantially the same reasons set forth by the BAP in McCart , 232 B.R. 469.

Entered for the Court

Deanell Reece Tacha Circuit Judge