Therefore, a default judgment is a default judgment. See In re Green, 198 B.R. 564, 566 (9th Cir. BAP 1996) (a default judgment entered after defendant's answer was stricken was entitled to collateral estoppel effect); In re Lake, 202 B.R. 751, 754-55, 757 n. 6 (9th Cir. BAP 1996) (BAP determined that a default judgment satisfies the "actually litigated" prong where the facts showed that debtors did not participate in state court litigation; but it remanded on the issue of extrinsic fraud). In California, it is well settled that a default judgment is:
In California, a default judgment satisfies the "actually litigated" requirement for the application of collateral estoppel. In re Lake, 202 B.R. 751, 757, n. 6 (9th Cir. BAP 1996); In re Green, 198 B.R. 564, 566 (9th Cir. BAP 1996), citing Four Star Elec., Inc. v. F & H Constr., 7 Cal.App.4th 1375 (1992). Debtors contend in their Claim Objection that the bankruptcy court should not give preclusive effect to the default judgment because Debtors' failure to appear and defend against the State Court Action was due to extrinsic fraud or extrinsic mistake.
A default judgment satisfies the "actually litigated" requirement for the application of collateral estoppel in California, and thus in this case. Younie, 211 B.R. at 375; In re Lake, 202 B.R. 751, 757 & n. 6 (9th Cir. BAP 1996). Lombardo's allegations of extrinsic fraud which caused him to not attend are addressed below.
A default judgment satisfies the "actually litigated" requirement for the application of collateral estoppel in California, and thus in this case. Younie, 211 B.R. at 375; In re Lake, 202 B.R. 751, 757 n. 6 (9th Cir. BAP 1996). Lombardo's allegations of extrinsic fraud which caused him to not attend are addressed below.
The basic requirement for invoking the extrinsic fraud exception is that there has been no fair adversary trial at law, either because the aggrieved party was kept in ignorance of the action or proceeding, or in some other way fraudulently prevented from presenting his claim or defense.In re Lake, 202 B.R. 751, 758 (9th Cir. BAP 1996). However, in order to establish a case for vacating a California state court judgment the movant must plead and prove that he has a meritorious case.
Undeterred, the Houston brothers attempt to invoke the purported "void ab initio exception" to Rooker-Feldman, which provides that a state-court judgment that is void for want of subject-matter or personal jurisdiction, or that was obtained by fraud, is subject to collateral attack in federal court. See, e.g., In re Lake, 202 B.R. 751, 758 (B.A.P. 9th Cir. 1996). Neither this Court nor the Supreme Court has endorsed this exception as the Houston brothers advocate, and the cases that do recognize this exception—the Houston brothers cite none in their briefs—indicate that it is presently limited to the bankruptcy context.
The underlying concept is that “[a] state court judgment is subject to collateral attack if the state court lacked jurisdiction over the subject matter or the parties, or the judgment was procured through extrinsic fraud.” In re Lake, 202 B.R. 751, 758 (B.A.P. 9th Cir.1996). Although the Houston Brothers conflate the concepts of subject matter jurisdiction, personal jurisdiction, and fraud by officers of the state court, this Court will address those issues separately.
Extrinsic fraud is a broad concept which covers a number of situations and necessarily depends upon the facts of the case. SeeIn re Lake v. Capps, 202 B.R. 751, 758 (9th Cir. BAP 1996). In order to be considered extrinsic fraud, the alleged fraud must be such that it prevents a party from having an opportunity to present his claim or defense in court or deprives a party of his day in court.
[See Doc. 70 at ¶ 12 (citing Memorandum Decision Denying Motion to Dismiss, Petrelli v. JP Morgan Chase N.A. (In re Petrelli), Adv. Proc. No. 17-09040 (CGM) (Bankr. S.D.N.Y. Apr. 2, 2018), ECF No. 19; Lake v. Capps (In re Lake), 202 B.R. 751 (B.A.P. 9th Cir. 1996); Order,Davet v. Nationsbank Mortg. Corp., No. 07-3561 (6th Cir. Nov. 28, 2007), ECF No. 31 (a copy of the Order of the Sixth Circuit is accessible only on the district court docket, No. 1:06-cv-01875-PAG (N.D. Ohio Nov. 30, 2007), ECF No. 38); Sun Valley Foods Co. v. Detroit Marine Terminals, Inc. (In re Sun Valley Foods Co.), 801 F.2d 186 (6th Cir. 1986); McCormick v. Braverman, 451 F.3d 382 (6th Cir. 2006)).]
The underlying concept is that "[a] state court judgment is subject to collateral attack if the state court lacked jurisdiction over the subject matter or the parties, or the judgment was procured through extrinsic fraud." Lake v. Capps (In re Lake), 202 B.R. 751, 758 (9th Cir. BAP 1996). Extrinsic fraud on a court is, by definition, not an error by that court.