Case Summary:
Desert Palace commenced this adversary proceeding against the Defendant to determine the nondischargeability of its claim under § 523(a)(2)(A) and (B). Before trial, Desert Palace moved for summary judgment arguing that its claim against the Defendant for fraud was already litigated in Nevada state court, and therefore the parties were barred from relitigating the issue of fraud in the Defendant’s bankruptcy case. Interpreting Nevada law, the Court held that the issue of fraud had not been “actually litigated” in state court, because the Defendant never filed an answer to Desert Palace’s allegations of fraud in the amended complaint. As a result, issue preclusion did not apply and the Court denied summary judgment.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - Fraud
11 U.S.C. § 523(a)(2)(B) -- Nondischargeability

Key Terms:
Actually Litigated
Default Judgment
Fraud
Issue Preclusion
Summary Judgment