1. INTRODUCTION- Defendant Lois Braman, a chapter 7 debtor, has filed a summary judgment motion to defensively establish that a state court default judgment obtained by plaintiff, Fred Meyer, does not collaterally estop defendant from litigating the issue of dischargeability.

In the briefing the parties have focused on whether a state court judgment taken by default is entitled to collateral estoppel in bankruptcy court. The statute which was the basis of the state court default judgment, AS 09.68.115, does not address essential elements for nondischargeability under any of the sections listed under 11 USC § 523(c), including § 523(a)(6), the section relied on by Fred Meyer. Therefore, I will grant summary judgment for the defendant establishing that collateral estoppel does not apply in this adversary proceeding.

2. FACTS- Lois Braman wrote five checks to Fred Meyer, all of which were returned for lack of sufficient funds. Fred Meyer of Alaska, Inc. sued her in the District Court for the State of Alaska in Fairbanks. The complaint, a copy of which is attached as Exhibit "A" to defendant's Memorandum in Support of Motion to Dismiss (Docket Entry 4), claimed civil penalties under AS 09.68.115 which provides:

Sec. 09.68.115 Bad check civil penalties.

5abr 39      (a) In an action against a person who issues a check that is dishonored, the plaintiff may recover damages in an amount equal to $100 or triple the amount of the check, whichever is greater, except that damages recovered under this section may not exceed the amount of the check by more than $1,000 and may be awarded only if

(1) the plaintiff makes a written demand for payment of the check at least 15 days before beginning the action; and

(2) the defendant fails to tender, before the action begins, an amount equal to at least the amount of the check plus costs incurred by the plaintiff up to a maximum of $25.

(b) An action under this section may be brought as a small claims action if the amount claimed does not exceed the jurisdictional limits for small claims actions, or may be brought in any other court that has jurisdiction.

(c) After the beginning of an action under this section but before the case is tried, the defendant may satisfy the claim by tendering an amount of money equal to the amount of the check plus court, legal, and service costs incurred by the plaintiff up to a maximum of $150.

(d) In this section

(1) "check" has the meaning given in AS 11.46.280;

(2) "dishonored" means the nonpayment of a check because of

(A) lack of funds;

(B) closure or nonexistence of an account; or

(C) a stop payment order issued without cause;

(3) "written demand" means a written notice to the issuer of a check personally delivered or sent by first class mail to the address shown on the dishonored check, advising the issuer that the check has been dishonored and explaining the civil penalties set out in this section.

Fred Meyer took a default judgment for $1,584.78, plus Rule 82 attorney fees 5abr 40      and costs of $253.48, or a total of $1,838.26, against the debtor after she did not appear in the state court action. Fred Meyer's judgment included treble damages related to the following checks and NSF fees:

$102.05 for Chk No 6402 tendered on 12/15/93, plus a $25 NSF fee
$245.71 for Chk No 6404 tendered on 12/19/93, plus a $25 NSF fee
$21.09 for Chk No 6405 tendered on 12/21/93, plus a $25 NSF fee
$16.07 for Chk No 6406 tendered on 12/21/93, plus a $25 NSF fee
$15.00 for Chk No 6409 tendered on 12/24/93, plus a $25 NSF fee

The debtor filed a voluntary chapter 7 bankruptcy sometime after the judgment was entered. Fred Meyer filed this adversary proceeding contesting the dischargeability of its judgment. It is alleging, apparently, only a claim of nondischargeability under 11 USC § 523(a)(6).

At a status conference, the issue of collateral estoppel was only discussed in terms of whether a default judgment in a case where the debtor had never participated in the state court action precluded the debtor from contesting the collateral estoppel effect of the state court judgment. It was agreed that the defendant would file an opening brief on this issue. Thus, the parties have focused on that question, and not whether the judgment under AS 09.68.115 covers the same elements as those determinative of dischargeability under § 523(a)(6).

3. LEGAL ANALYSIS- When a federal court, including a bankruptcy court, is asked to give res judicata or collateral estoppel effect to a state court judgment based on state law, it must follow the state court rules governing what collateral estoppel or res judicata effect the state court would give to its own judgment. In re Nourbakhsh, 67 F3d 798, 801 (9^th Cir 1995).

The elements of collateral estoppel in Alaska are discussed in Campion v. State of Alaska, 876 P2d 1096, 1098 (Alaska 1994):

1. The plea of collateral estoppel must be asserted against a party or one in privity with a party to the first action;

2. The issue to be precluded from relitigation by operation of the doctrine must be identical to that decided in the first action;

3. The issue in the first action must have been resolved by a final judgment on the merits.

5abr 41      There do not appear to be any Alaska Supreme Court cases which directly address the precise question about whether an Alaskan judgment taken by default for failure to participate at all is entitled to collateral estoppel in Alaska. In some states, a default judgment is entitled to collateral estoppel effect. The Bankruptcy Appellate Panel has held that a default judgment under California law satisfies the ``actually litigated'' requirement for collateral estoppel. In re Lake, 202 BR 751, 757 (9^th Cir BAP 1996).

I need not, however, predict how Alaska would decide the question of whether a default judgment entered for failure to participate in a state court litigation is entitled to collateral estoppel effect in state court vis a vis the requirement that a determination be on the merits. It is apparent that Fred Meyer could obtain the judgment it did, including treble damages, without showing that the debtor engaged in the type of conduct which gives rise to nondischargeability that is described in 11 USC § 523(a)(6). The conduct under § 523(a)(6) must be ``for willful and malicious injury by debtor to another entity or to the property of another entity.''

AS 09.68.115 does not require willful or malicious behavior as a condition of a judgment. Thus, that issue was not decided by the default judgment, and the bankruptcy court is not required to give collateral estoppel effect to that judgment with respect to those issues. Compare, Hikata v. Nichiro Gyo Gyo Kaisha, Ltd., 713 P2d 1197 at 1201 (Alaska 1986).

The requirements of nondischargeability, willful conduct, malice, and causation, were not pleaded or addressed in Fred Meyer's state court action. Proof of these items are necessary to establish nondischargeability. In re Butcher, 200 BR 675, 900 (Bankr CD Cal 1996).

DATED:   August 11, 1997

HERBERT A. ROSS
U.S. Bankruptcy Judge