47 F.3d 365 (9th Cir. 1995), 93-15495, In re Daily

Docket Nº:93-15495.
Citation:47 F.3d 365
Party Name:In re Sammy G. DAILY, Debtor. FEDERAL DEPOSIT INSURANCE CORP., Receiver for Indian Springs State Bank, Plaintiff-Appellee, v. Sammy G. DAILY, Defendant-Appellant.
Case Date:February 03, 1995
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 365

47 F.3d 365 (9th Cir. 1995)

In re Sammy G. DAILY, Debtor.

FEDERAL DEPOSIT INSURANCE CORP., Receiver for Indian Springs

State Bank, Plaintiff-Appellee,

v.

Sammy G. DAILY, Defendant-Appellant.

No. 93-15495.

United States Court of Appeals, Ninth Circuit

February 3, 1995

Argued and Submitted Nov. 3, 1994.

Page 366

Sammy G. Daily, in pro. per.

Kathryn R. Norcross, F.D.I.C., Washington, DC, for plaintiff-appellee.

Jerold K. Guben, Reinward, O'Connor, Marrack, Hoskins & Playdon, Honolulu, HI, for plaintiff-appellee.

Appeal from the United States District Court for the District of Hawaii.

Before: BROWNING, TROTT, and KLEINFELD, Circuit Judges.

PER CURIAM:

This is an appeal from an order of the district court holding that a debt owed by Sammy G. Daily to the Federal Deposit Insurance Corporation ("FDIC"), as receiver for Indian Springs State Bank, was for money obtained by fraud and, therefore, not dischargeable in bankruptcy. We affirm.

I

Daily filed a petition for relief in the United States Bankruptcy Court for the District of Hawaii. The FDIC filed an adversary complaint to determine the dischargeability of a debt allegedly owed the FDIC by Daily ("dischargeability complaint"). The FDIC alleged it had filed a civil action 1 in the United States District Court for the District of Kansas ("the RICO suit") under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), asserting that defendants had obtained money from Indian Springs State Bank by various fraudulent acts. The FDIC noted that Daily had not been named as a defendant in the RICO suit because of the automatic stay in effect in Daily's bankruptcy proceeding. The FDIC asked the Hawaii bankruptcy court to modify the automatic stay to permit the FDIC to join Daily as a defendant in the RICO suit. The FDIC asserted that any money judgment that might be entered against Daily in the RICO suit would be nondischargeable in bankruptcy, and it asked the bankruptcy court to stay further proceedings on the dischargeability complaint until the RICO suit was concluded.

Page 367

The FDIC and Daily then entered into a stipulation, which the bankruptcy court approved, agreeing to a modification of the automatic stay to permit the FDIC to proceed against Daily in the RICO action. The stipulation provided that any money judgment obtained against Daily in the RICO action would be proven and allowable against the bankruptcy estate, that the FDIC retained its right to enforce any nondischargeable judgment entered against Daily in the RICO action, and that proceedings on the FDIC's dischargeability complaint would be stayed "until conclusion of the [d]istrict [c]ourt proceedings [in the RICO action], which adjudication [would] be binding on the parties [to the stipulation]." 2

After the bankruptcy court approved the stipulation, the FDIC amended its complaint in the RICO suit to name Daily and his real estate brokerage firm as defendants. The FDIC then sought discovery. Nothing was forthcoming. After pressing its requests for discovery unsuccessfully for nearly two years, the FDIC sought relief under Rule 37. After full briefing and a hearing, the district court found that Daily's failure to provide discovery "was the result of a deliberate, dilatory course of conduct," that Daily had "chose[n] to delay responses until delay was no longer an option," and that Daily's "strategy of delay and evasiveness ... [had] significantly prejudiced the plaintiffs ... [and had] significantly interfered with the judicial process." Federal Deposit Ins. Corp. v. Renda, 126 F.R.D. 70, 72-73 (D.Kan.1989). The court ordered all allegations of the complaint deemed admitted by Daily and entered a default judgment in favor of the FDIC for the damages alleged, trebled pursuant to 18 U.S.C. Sec. 1964(c). 3 The Tenth Circuit affirmed, upholding the district court's determination that Daily's failure to provide discovery had been strategic rather than inadvertent and concluding that entry of judgment against Daily on the merits did not violate due process. FDIC v. Daily, 973 F.2d 1525, 1530-32 (10th Cir.1992).

Relying on the stipulation and on the orders entered by the Kansas district court and the Tenth Circuit in the RICO action, the FDIC moved for summary...

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