Steffen v. Menhise (In re Steffen), 2016 U.S. App. LEXIS 16329 (11th Cir. Sept. 6, 2016):

Terri Steffen, proceeding pro se in these three consolidated appeals, appeals the district court's order affirming the bankruptcy court's entry of default judgment in an adversary action by the Government and the district court's dismissal of an appeal from two related cases on procedural grounds. After review, we affirm the entry of default judgment in the Government's adversary action, case number 15-12554, and dismiss as moot case numbers 14-15093 and 14-15094.

I. PROCEDURAL BACKGROUND

Steffen sought discharge of her debts through a bankruptcy proceeding filed in 2001.¹ The Government and a trustee both filed separate adversary actions objecting to [*3]  the discharge of Steffen's debts. See 11 U.S.C. § 727(a)(2)(B) (prohibiting discharge when "the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred . . . property of the estate, after the date of the filing of the petition"); id. § 727(c)(1) (permitting "[t]he trustee [or] the United States trustee" to "object to the granting of a discharge under subsection (a)"). The adversary actions were consolidated by the bankruptcy court. After Steffen failed to attend a deposition in 2009, the bankruptcy court granted the Government's sanctions motion and ordered, among other things, that Steffen attend a deposition until completed despite any objections to the questions asked. Steffen appealed the 2009 sanction order to this Court, but she subsequently moved to dismiss her appeal with prejudice and this Court granted her motion. The Government provided notice to Steffen of a deposition scheduled in April 2011 but Steffen appeared without her attorney and refused to answer a question without asserting any claim of privilege. The bankruptcy court subsequently granted motions by the Government and the trustee for default judgment against Steffen [*4]  in the adversary cases as a sanction. As a result, the bankruptcy court entered a final judgment in Steffen's general bankruptcy case denying discharge of her debts. Steffen appealed to the district court, which affirmed the grant of default judgment in the Government's adversary case. The district court dismissed Steffen's appeals from the trustee's adversary case and the general bankruptcy case for failure to pay filing fees, file initial briefs, submit statements of the issues, and designate the record.

1   As the parties are familiar with the facts of this case, we will not recount them in detail. We include only those facts necessary to the discussion of each issue.

II. DISCUSSION

A. The Government's Adversary Action

We first consider Steffen's appeal from the Government's adversary action (case no. 15-12554). Steffen argues that the district court erred in affirming the bankruptcy court's entry of default judgment because the bankruptcy court abused its discretion in issuing the original 2009 sanction order as well as the sanction order granting default judgment. See Buchanan v. Bowman, 820 F.2d 359, 361 (11th Cir. 1987) (explaining that the entry of a default judgment as a sanction for a discovery violation is reviewed for an abuse of [*5]  discretion).

The district court did not err in affirming the entry of default judgment in the Government's adversary action. First, because the district court previously affirmed the 2009 sanction order and this Court dismissed Steffen's appeal from that order with prejudice, we may not review the merits of the 2009 sanctions order. Second, as to the sanction order granting default judgment, the bankruptcy court did not abuse its discretion in imposing default judgment as a sanction for failing to comply with its discovery order.² Under Rule 37, the court may impose sanctions for not obeying a discovery order, including rendering a default judgment against the disobedient party. Fed. R. Civ. P. 37(b)(2)(A)(vi); see also Bankruptcy R. 7037 (stating that Fed. R. Civ. P. 37 applies in adversary proceedings). Throughout the proceedings, Steffen engaged in an effort to avoid discovery and delay the proceedings. After being ordered to complete the deposition, Steffen appeared at her deposition without counsel despite receiving notice. Steffen then refused to answer a question without grounds to do so, despite the bankruptcy court's prior order that the deposition should continue despite objections. Steffen's efforts to interfere with and delay discovery show that [*6]  Steffen was not acting in a good faith attempt to complete her discovery requirements, see Malautea v. Suzuki Motor Co., Ltd., 987 F.2d 1536, 1542 (11th Cir. 1993) ("[A] default judgment sanction requires a willful or bad faith failure to obey a discovery order."), and that a lesser sanction would not suffice, see id. (default judgment is appropriate as a "last resort, when less drastic sanctions would not ensure compliance with the court's orders"). Accordingly, we affirm case number 15-12554.

2   In the bankruptcy context, we sit as a second court of review, examining the legal conclusions of the bankruptcy court and the district court de novo and the bankruptcy court's factual findings for clear error. Finova Capital Corp. v. Larson Pharmacy Inc. (In re Optical Techs., Inc.), 425 F.3d 1294, 1299-1300 (11th Cir. 2005).

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