Brown v. Felsen

In Brown v. Felsen, 442 U.S. 127, 99 S.Ct. 2205, 60 L.Ed.2d 767 (1979), the Supreme Court held that in considering the nondischargeability of a debt, a bankruptcy court may consider all the relevant evidence, and is not barred by res judicata from considering evidence extrinsic to the judgment and record of a prior state court proceeding concerning the debtor's obligation to his creditor. The Court declined to reach the question of whether collateral estoppel would apply to bar relitigation of issues actually and necessarily decided in the prior proceeding, e.g., that the debtor had committed fraud. Id. at 139 n. 10, 99 S.Ct. at 2213 n. 10 The Supreme Court stated as follows: If, in the course of adjudicating a state-law question, a state court should determine factual issues using standards identical to those of the statute being applied in bankruptcy court, then collateral estoppel ... would bar relitigation of those issues in the bankruptcy court ... The Court has held that a bankruptcy court should give collateral-estoppel effect to a prior decision. Brown, 442 U.S. at 139 n. 1.