Adams v. Adams, 738 F.3d 861

Dawn Adams, a creditor, pursued Greg Adams for money owed under a note and security agreement tied to a former business (a monster truck venture) after their 2004 Georgia divorce.
Georgia state courts entered three final judgments against Greg finding Dawn owed money, culminating in an April 1, 2011 Upson County judgment for $74,612.25.
Greg argued defenses (credits for payments, duress/ fraud) but did not appeal the state court judgments.
Dawn registered the Upson County judgment in Putnam County, Indiana, where it was recognized for full faith and credit, and Greg did not appeal.
Greg later filed for Chapter 13 bankruptcy in the Southern District of Indiana; Dawn filed a proof of claim for $74,612.25, and Greg objected on the basis that Dawn’s claim had been satisfied by prior transactions.
The bankruptcy court denied Dawn’s claim on equity grounds, the district court affirmed, and the Seventh Circuit reverses and remands for proceedings consistent with issue preclusion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether issue preclusion bars re-litigation of Greg’s defenses in bankruptcy	Adams argues Georgia judgments resolved the defenses	Greg argues defenses may be re-litigated or exceptions apply	Yes, issue preclusion applies; the bankruptcy court erred by rehearing those defenses

In re Bulic, 997 F.2d 299 (7th Cir.1993) (issue preclusion applies in bankruptcy when state-court judgments resolve the issues)
Grogan v. Garner, 498 U.S. 279 (1991) (collateral estoppel applies in discharge exception proceedings under § 523(a))
Heiser v. Woodruff, 327 U.S. 726 (1946) (jurisdiction and fraud on the court concerns when challenging judgments)
Allen v. Santana, 303 Ga.App. 844, 695 S.E.2d 314 (Ga.App. 2010) (Georgia preclusion law includes actual adjudication or necessary decision to render prior judgment)
Waldroup v. Greene County Hosp. Auth., 265 Ga. 864, 463 S.E.2d 5 (1995) (Georgia approach to collateral estoppel)