                United States Bankruptcy Appellate Panel

                          FOR THE EIGHTH CIRCUIT



                             No. 97-6026MNMI


In re:                                      *
                                            *
Kenneth L. Kasden,                          *
                                            *
           Debtor.                          *
                                            *
                                            *   Appeal from the United States
Thomas F. Miller,                           *   Bankruptcy   Court   for   the
                                            *   District of Minnesota
           Plaintiff-Appellee,              *
      v.                                    *
                                            *
Kenneth L. Kasden,                          *
                                            *
           Defendant-Appellant.      *




                          Submitted: May 16, 1997

                            Filed:       June 11, 1997


Before HILL, KOGER and SCOTT, Bankruptcy Judges



HILL, Bankruptcy Judge


      The Debtor, Kenneth L. Kasden, appeals pro se from a default judgment
entered by the bankruptcy court for the District of Minnesota, holding the
Chapter 7 bankruptcy estate to be the owner of certain personal property.1
We remand for further proceedings.




  1
  The Honorable Robert J. Kressel, United States Bankruptcy Judge,
District of Minnesota.
                                            1.


     As part of the Debtor's Chapter 7 estate, the trustee, Thomas F.
Miller, came into possession and control of real property located at 5521
Grove Street.    Located on the premises was a Corvette automobile along with
various other unidentified items of personal property.               In preparing the
real property for sale the trustee, in an exchange of correspondence with
the Debtor, asked him to remove the Corvette and any remaining personal
property advising him that failing to do so, the trustee would remove it
and charge him for any fees and expenses incurred.               Nothing happened and
the trustee had the personal property removed as part of the real estate
closing.    Thereafter, the trustee, by letter, advised the Debtor of the
removal and asked him to prove ownership of any of the items to which he
claimed ownership.    The letter indicated that if there was no response or
no proof of ownership, the property would be disposed of for the benefit
of the Chapter 7 estate.        In an oblique letter in reply, the Debtor charged
the trustee with an unlawful usurpation of his property and characterized
the request for proof of ownership as being absurd.


     By Complaint filed January 15, 1997, the trustee, noting that the
Debtor     had   refused   to    identify       his   personal   property,   sought   a
determination by the bankruptcy court that the personal property removed
from the premises was indeed property belonging to the Chapter 7 estate.
He further asked, in the event the court determined the estate to have no
interest in the personal property, that the Debtor be required to pay the
costs and fees associated with its removal and storage.


     Service of the Summons and Complaint was properly made on the Debtor
by mail.    The Debtor failed to answer or appear.          On February 25, 1997, the
trustee applied for entry of a default judgment asking the court to find
the bankruptcy estate to be the




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owner    of   the   personal   property    in   question.   Without    hearing,   the
bankruptcy court, on February 25, 1997, made its findings of fact and
conclusions of law, granting the trustee judgment as prayed for.                  The
findings of fact substantially repeat the Complaint allegations including
the following statements:


        16.   Kenneth Kasden has refused to identify which personal
        property, if any, in the possession of the trustee that he
        claims as his property.

        17.    In this adversary proceeding, the trustee seeks a
        determination by the court that the bankruptcy estate is the
        owner of the personal property removed from the Property.

                                           2.


        Entry of a default judgment under Rule 55 Fed. R. Civ. P. (made
applicable to adversary proceedings by Rule 55 Fed. R. Civ. P.) while
committed to the sound discretion of the trial court is not favored by the
courts and should be entered only in extreme cases.             Comiskey v. JFTJ
Corp., 989 F.2d 1007, 1009 (8th Cir. 1993); Edgar v. Slaughter, 548 F.2d
770, 773 (8th Cir. 1977).         On appeal our review is simply whether the
bankruptcy court abused its discretion in entering default judgment.
United States v. Harre, 983 F.2d 128, 130 (8th Cir. 1993).              The granting
of a default judgment for failure to defend, as is the situation now before
the court, is appropriate where the failure to comply with the time
requirements is more than a marginal failure and where the nonresponding
party's conduct includes "willful violations of court rules, contumacious
conduct, or intentional delay."           Harre, 983 F.2d at 130.     See also Ackra
Direct Marketing Corp. v. Fingerhut Corp., 86 F.3d 852, 855 (8th Cir.
1996).    However, a default judgment may not be entered on a complaint that
fails to support the claim for relief and on appeal, a defaulted defendant
may always challenge the legal sufficiency of the complaint allegations.
Alan Neuman Productions, Inc. v. Albright, 862 F.2d




                                            3
1388, 1392 (9th Cir. 1988).


     Upon entry of a default judgment, facts alleged to establish
     liability are binding upon the defaulting party, and those
     matters may not be re-litigated on appeal. However, it follows
     from this that facts which are not established by the pleadings
     of the prevailing party, or claims which are not well-pleaded,
     are not binding and cannot support the judgment. On appeal the
     defendant, although he may not challenge the sufficiency of the
     evidence, is entitled to contest the sufficiency of the
     complaint and its allegations to support the judgment.

Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978).

     The trustee's complaint asked the court to make a determination of
property ownership but did not allege any facts tending to establish that
ownership rested with the trustee as opposed to the Debtor, Kenneth L.
Kasden.   Indeed, nothing in the record before us plainly indicates who, in
fact, was the owner of the items in question, whether it was the Debtor or
perhaps some third party for whom he was holding them.                              The fact of
ownership was left unpleaded and was not established by any information
produced in the affidavit in support of the requested default which itself
merely parrots the complaint allegations.


     Although          courts   are    not    required     to   make   findings     of   fact    or
conclusions of law when ruling on motions, and the Eighth Circuit has not
articulated specific factors that must be considered in determining whether
a motion for default judgment for failure to defend should be granted (see
Ackra,    supra    at     856),   at    a    minimum   a   court     ought   to    consider     the
sufficiency       of    the     complaint.       Inasmuch       as   default      judgments     are
disfavored, courts have an independent duty to determine the sufficiency
of a claim as provided by Rule 55(b)(2), to wit:


     If, in order to enable the court to enter judgment . . . it is
     necessary to establish the truth of any averment by




                                                 4
     evidence or to make an investigation of any other matter, the
     court may conduct such hearings or order such references as it
     deems necessary and proper . . . .


Rule 55(b)(2) Fed. R. Civ. P.


Here we must conclude that the complaint on its face was insufficient to
support a judgment finding the estate to be owner of the personal property
to the exclusion of the Debtor.


     We do not hold that default judgment is inappropriate in this case
but do hold that the default judgment must be entered upon facts clearly
pleaded or otherwise established tending to prove the trustee is entitled
to the relief granted.    For this reason the case is REMANDED to the
bankruptcy court for further findings as may be appropriate under Rule
55(b)(2) of the Federal Rules of Civil Procedure.


A true copy.


     Attest:


                CLERK, U.S. BANKRUPTCY APPELLATE PANEL
                      FOR THE EIGHTH CIRCUIT




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