
USCA1 Opinion

	




                            United States Court of Appeals                                For the First Circuit                                For the First Circuit                                 ____________________        No. 96-2195                                   DAVID L. PRINTY,                                      Appellant,                                          v.                             DEAN WITTER REYNOLDS, INC.,                                      Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                      [Hon. Nancy Gertner, U.S. District Judge]                                           ___________________                                 ____________________                                        Before                                Boudin, Circuit Judge,                                        _____________                            Bownes, Senior Circuit Judge,                                    ____________________                              and Lynch, Circuit Judge.                                         _____________                                 ____________________            Evan Slavitt, with whom Joseph S.U.  Bodoff, and Hinckley,  Allen,            ____________            ___________________      _________________        & Snyder were on brief for appellant.        ________            Mary DeNevi, with  whom Bingham, Dana  & Gould  LLP were on  brief            ___________             ___________________________        for appellee.                                 ____________________                                    April 10, 1997                                 ____________________                      BOWNES,  Senior Circuit  Judge.    The  overarching                      BOWNES,  Senior Circuit  Judge.                               _____________________            issue in this bankruptcy case is whether an arbitration award            of $1,009,820.00, made by a panel of the National Association            of Securities Dealers to appellee Dean Witter Reynolds, Inc.,            against appellant David L. Printy is a non-dischargeable debt            under  Chapter 11 of the Bankruptcy Code.  The district court            affirmed an  opinion of  the bankruptcy  court holding, on  a            summary judgment motion, that the debt was non-dischargeable.            We affirm.  There are a number of  subsidiary issues which we            address in the course of our opinion.                      Because  the appeal is  from the grant  of a motion            for  summary judgment, our review  is de novo  on all issues.                                                  _______            Hope  Furnace Assocs., Inc. v.  FDIC, 71 F.3d  39, 42-43 (1st            ____________________________________            Cir.  1995); Alexis  v. McDonald's  Restaurants of  Mass., 67                         ____________________________________________            F.3d 341,  346 (1st Cir. 1995); In  re Varrasso, 37 F.3d 760,                                            _______________            762-63 (1st Cir. 1994).                                          I.                                          I.                                      THE FACTS                                      THE FACTS                                      _________                      We  start  with  the  facts, keeping  in  mind  the            strictures  of Fed. R.  Civ. P. 56(c).1   Printy  and his two                                            ____________________            1.  The rule states in pertinent part:                      The  judgment  sought  shall be  rendered                      forthwith if  the pleadings, depositions,                      answers    to     interrogatories,    and                      admissions  on  file,  together with  the                      affidavits, if any, show that there is no                      genuine issue as to any material fact and                      that the  moving party  is entitled  to a                                         -2-                                          2            sons  were  the co-trustees  of The  Andrea L.  Printy Family            Trust, (the Trust)  which had been established in  1986 after            the  death  of Printy's  wife.    Printy was  an  experienced            investor and knowledgeable in the finance field.  At the time            of discovery in this  case he was a business  consultant with            eighteen  years' experience  in financial  services.   He had            been  issued  a  broker's  license and  had  held  management            positions in several financial services companies.                      On August 26, 1992, Printy transferred  the Trust's            account  to  the  office   of  Dean  Witter  in  Minneapolis,            Minnesota.   The  record  shows  that  Printy  made  all  the            decisions  about the  Trust; the  sons play  no part  in this            case.  Dean Witter is a national broker-dealer in securities.            It is registered with  the Securities and Exchange Commission            and is  a member of  the National  Association of  Securities            Dealers.  The account was opened in the name of the Trust and            funded with a deposit of $50,000.00.                      The account  executive at Dean Witter  in charge of            the  Trust account was Michael Krmpotich.  He and Printy were            acquainted.  Printy had tried to persuade Krmpotich to join a            broker-dealer  company  in  New Ulm,  Minnesota,  with  which            Printy  had  been  affiliated.    It  was  Krmpotich  who had            solicited the Trust account.                                            ____________________                      judgment as a matter of law.                                         -3-                                          3                      Printy  executed an Active Assets Account Agreement            with  Dean Witter, effective  September 30, 1992.   Under the            terms  of the  agreement, any  controversies relative  to the            account  were  subject to  arbitration.    The Active  Assets            Account permitted the holder to buy and sell securities.  The            account holder  could also write  checks on, or  receive wire            transfers from,  the Account.   Additionally,  the securities            held in the account could be used as collateral for borrowing            funds  from Dean  Witter "on  margin"   in order  to purchase            additional securities or  for other reasons.   The amount  of            money Dean Witter would permit an account holder to borrow on            margin was calculated based  on the value of the  assets held            in the  account.    Under  the agreement, if  the Trust  owed            money to Dean  Witter for margin borrowing  or other reasons,            Dean Witter  was  entitled  to  a security  interest  in  any            securities or property held in the Trust's account.                      In early  September of 1992,  Dean Witter  received            the  following assets from the  Trust:  a  U.S. Treasury Note            and stock  holdings in:   Baxter International,  Inc., Marion            Merrill Dow,  Inc., Vital Heart Systems,  Inc., Eastman Kodak            Co., Weyerhaeuser Co., Bank America Corp., and J. P. Morgan &            Co.   In  addition  to  these  assets, Dean  Witter  received            150,000 shares  of Health Concepts,  Inc. and an  interest in            MCI  Medical  Seed  Limited  Partnership.    Printy  was  the            president, secretary, and  a shareholder of  Health Concepts.                                         -4-                                          4            He knew  that the stock  was not  traded on  any exchange  or            over-the-counter market  and had  very little value,  if any.            The bankruptcy  judge points out in  connection with Printy's            bankruptcy schedules that in Schedule B - Personal Property -            Printy gave a zero  value to his holdings in  Health Concepts            and  did  not discuss  the stock  at  all in  the liquidation            analysis section  of his Disclosure Statement  submitted with            his Plan of Reorganization.                       As part  of its  services, Dean Witter  sent Printy            monthly  statements detailing  and  summarizing  the  Trust's            assets.   As of September 30, 1992, the Dean Witter statement            showed  the  market  value  of   the  Trust's  assets  to  be            $191,533.33,  with a  borrowing  limit of  $141,104.50.   The            statement did not reflect the  receipt of the Health Concepts            stock or the interest in the MCI Medical Seed Partnership.                      Next comes  the event  that led  to this law  suit.            The Dean  Witter  statement for  the  month of  October  1992            showed  receipt by the Trust  on October 28,  1992 of 150,000            shares  of   Coastal  HealthCare   stock  with  a   value  of            $3,637,500.00.  Coastal HealthCare  stock is publicly traded.            In his  deposition testimony  Printy stated  that he  did not            authorize the  purchase of  the Coastal HealthCare  stock and            never received stock-purchase confirmation slips.  The reason            for this  obviously mistaken increase  of over three  and one            half million  dollars in the asset  value of the Trust  was a                                         -5-                                          5            computer  error  by  Dean  Witter.    The  Trust's  virtually            worthless Health Concepts shares  had been given the computer            code for  Coastal HealthCare shares, thus  attributing to the            Trust ownership of Coastal HealthCare stock, which it did not            own.                      On  November 16,  1992,  Printy sent  a fax  to the            Trust's account  broker, Krmpotich,  and his  assistant, Lynn            Jorgenson, asking that 15,000 shares of Coastal HealthCare be            delivered  to  him  but  left  in  the  name  of  the  Trust.            Jorgenson informed Printy that  Dean Witter could not deliver            anything  but the entire  holding of 150,000  shares.  Printy            authorized  the delivery of the 150,000 shares.  In due time,            he  received  a  certificate  for 150,000  shares  of  Health            Concepts, not the Coastal HealthCare shares he had requested.                      The  computer mix-up  between  Health Concepts  and            Coastal HealthCare  continued through November of  1992.  The            November 1992 statement showed that 150,000 shares of Coastal            HealthCare valued at $3,712,500.00  had been debited from the            account.  As  a result,  the total asset  value of the  Trust            shrunk   to   $100,475.00   from   the   October   value   of            $3,775,925.00.                      Printy returned the  150,000 shares certificate  of            Health  Concepts to  Dean Witter  on December  1, 1992.   The            computer  continued on its merry way  in the wrong direction.            The Dean  Witter December  1992 statement showed  the Trust's                                         -6-                                          6            receipt  on   December  2   of  150,000  shares   of  Coastal            HealthCare, with an increase  in asset value from $100,475.00            to $4,984,275.00.                      The December statement,  however, showed more  than            the  return of  the  Coastal HealthCare  stock  to the  Trust            account.  It showed  that Printy purchased a total  of 22,409            shares of stock in twelve companies and withdrew through wire            transfers  or  checks,  $262,501.11  from the  account.    In            January  of 1993, Printy bought  a total of  16,763 shares of            stock in  eight companies  and withdrew $373,670.14  from the            account.   In both  months, the Coastal  HealthCare stock was            used to  calculate the authorized limit  for margin borrowing            and these  purchases and withdrawals were  made against these            erroneously inflated margin limits.                      It is  true, as Printy asserts,  that Krmpotich and            other brokers  from Dean  Witter urged  Printy to make  stock            purchases  on the basis of the Trust's borrowing limits.  But            none  of the brokers  at Dean Witter  knew of the  error that            inflated  the value of the Trust's assets.  They assumed that            Dean Witter's monthly statements were accurate.  The only one            who knew  the monthly statements were  grossly inaccurate was            Printy.    In his  deposition  Printy testified  that  he had            questions  about how his account  was being handled.   But he            never told Krmpotich that he did not own any stock in Coastal                                         -7-                                          7            HealthCare  and  that the  authorized  borrowing  limits were            wrong.                      Dean  Witter finally  corrected  the error  in  the            February  1993  statement.   The  150,000  shares of  Coastal            HealthCare, with a value  of $2,962,500.00, were debited from            the Trust account, and the 150,000 shares of Health Concepts,            with no value, were credited to it.  Dean Witter  also made a            margin  call.  After the margin call, the Trust's account had            a deficit of $600,230.82 that was not repaid to Dean Witter.                                         II.                                         II.                                  LEGAL PROCEEDINGS                                  LEGAL PROCEEDINGS                                  _________________                      On  March   30,  1993,  Dean  Witter  commenced  an            arbitration  proceeding against  Printy,  his  sons, and  the            Trust before the National  Association of Securities Dealers.            The  Statement  of Claim  consisted  of  eight counts,  which            included counts  for  theft and  receiving  stolen  property,            common-law fraud,  violations  of Minnesota  securities  law,            common-law  conversion, and common-law replevin.  Dean Witter            sought $603,548.00 in compensatory damages, plus interest and            attorney's fees,  against all respondents.   Punitive damages            were sought against Printy only.                      Printy  responded  to the  Statement  of  Claim and            raised  a number  of  affirmative allegations.   The  defense            consisted  of denial of wrongdoing and  shifting the blame to            Dean Witter.                                         -8-                                          8                      The  arbitration  award was  issued on  January 20,            1994.   It  found Printy,  his sons  as co-trustees,  and the            Trust  liable  for  compensatory  damages in  the  amount  of            $634,820.00 plus interest, from February 1, 1993, through the            date of payment  of the  award.  The  arbitration panel  also            foundPrinty liableforpunitivedamagesintheamountof$375,000.00.                      Printy filed a voluntary  petition under Chapter 11            of  the  Bankruptcy  Code  prior to  Dean  Witter  having the            arbitration award  confirmed.   Dean  Witter obtained  relief            from the automatic stay  imposed under the Code.   On January            30, 1995, the  Hennepin County District Court for  the Fourth            Judicial  District  of  Minnesota confirmed  the  arbitration            award.   Dean  Witter filed  an adversary  proceeding against            Printy in bankruptcy court on August 24, 1994.                                         III.                                         III.                                       ANALYSIS                                       ANALYSIS                                       ________                      The  first issue  is  whether the  bankruptcy  debt            falls under   523(a)(2)(A)  or   523(a)(6) of the  Bankruptcy            Code.  Section 523 of the Code provides in pertinent part:                        523.  Exceptions to discharge                        523.  Exceptions to discharge                           (a) A discharge  under section  727,                           (a)                      1141,  1228(a),  1228(b),  or 1328(b)  of                      this   title   does   not  discharge   an                      individual debtor from any debt--                           (2)  for money,  property, services,                           (2)                      or an extension, renewal,  or refinancing                      of credit, to the extent obtained by--                                         -9-                                          9                                (A)  false  pretenses,   a                                (A)                           false representation, or actual                           fraud,  other than  a statement                           respecting  the debtor's  or an                           insider's financial condition;                      . . .                           (6) for willful and malicious injury                           (6)                      by the debtor to another entity or to the                      property of another entity;            (Footnote omitted).                      Printy  argues  that  the  sections   are  mutually            exclusive and  the district  court erred in  proceeding under            (a)(6).  This is an ingenious argument but it is convincingly            rebutted by the words of the statute and the case law.  There            is  no indication in    523 that Congress  intended these two            sections to  be mutually exclusive, nor  does the legislative            history of the statute so suggest.                      Printy candidly admits  that, "[a] number of  cases            have  either applied both provisions  to fraud claims or have                                         -10-                                          10            indicated an  inclination to do  so."2  The cases  do hold as            Printy says.                      Both parties have referred  us to Grogan v. Garner,                                                        ________________            498 U.S. 279, 282 n.2 (1991), which states:                           We  therefore  do  not consider  the                      question  whether    523(a)(2)(A) excepts                      from discharge that part of a judgment in                      excess of  the actual value  of money  or                      property received by  a debtor by  virtue                      of fraud.  See In re Rubin, 875 F.2d 755,                                     ___________                      758, n.1  (CA9  1989).   Arguably,  fraud                      judgments in cases in which the defendant                      did  not  obtain   money,  property,   or                      services  from  the plaintiffs  and those                      judgments  that include  punitive damages                      awards are more appropriately governed by                        523(a)(6).   See 11 U.S.C.    523(a)(6)                      (excepting  from   discharge  debts  "for                      willful  and  malicious  injury   by  the                      debtor  to  another  entity  or   to  the                      property  of  another  entity");   In  re                                                         ______                      Rubin, 875 F.2d, at 758, n. 1.                      _____                                            ____________________            2.  Printy cites the following cases for this proposition:                      See In  re Stokes, 995 F.2d  76 (5th Cir.                      ___ _____________                      1993); In  re Britton, 950 F.2d  602 (9th                             ______________                      Cir. 1991); In re Apte, 180 B.R. 223 (BAP                                  __________                      9th Cir.  1995); In  re Dorsey,  162 B.R.                                       _____________                      150  (Bankr.  N.D.  Ill.  1993);   In  re                                                         ______                      Berman,  154 B.R.  991 (Bankr.  S.D. Fla.                      ______                      1993); In re Horton, 152 B.R. 912 (Bankr.                             ____________                      S.D. Tex. 1993); In re Iommazzo, 149 B.R.                                       ______________                      767 (Bankr. D.N.J. 1993); In re Sims, 148                                                __________                      B.R. 553  (Bankr. E.D. Ark.  1992); In re                                                          _____                      Day, 137 B.R. 335 (Bankr. W.D. Mo. 1992);                      ___                      In  re Powell,  95 B.R. 236  (Bankr. S.D.                      _____________                      Fla.),  aff'd, 108  B.R.  343 (S.D.  Fla.                              _____                      1989),  aff'd sub  nom., Powell  v. Bear,                              _______________  ________________                      Stearns  & Co., 914  F.2d 268  (11th Cir.                      ______________                      1990).            Appellant's Br. at 11.                                           -11-                                          11            We  realize that this is  not a precedential  holding, but it            surely  does not  undercut the  bankruptcy court's  choice of              523(a)(6)  as the  relevant section  under which  to assess            Printy's conduct.                      The bankruptcy  court found that Printy "was using,            indeed  converting Dean  Witter's assets,  not assets  of the            Trust,  to  finance  his   trades  and  personal  and  family            expenditures."   We agree.   Viewing Printy's  actions as the            tort of  conversion, there are cases  holding that conversion            falls within the ambit of   523(a)(6).  See In re Stanley, 66                                                    ___ _____________            F.3d 664,  668 (4th Cir. 1995);  In re Lindberg, 49  B.R. 228                                             ______________            (Bankr. D. Mass. 1985);  In re Cardillo, 39 B.R.  548 (Bankr.                                     ______________            D. Mass. 1984).                      In In  re Dorsey,  162 B.R.  150 (Bankr.  N.D. Ill.                         _____________            1993), the bankruptcy court framed the issue as we see it:                      [T]here is nothing in the text of section                      523(a)(6)  which   precludes  its  proper                      invocation  by  an aggrieved  party whose                      claim  for  willful and  malicious injury                      sounds  in fraud.  The critical focus for                      relief  under  section  523(a)(6) for  an                      aggrieved   creditor   is   the   conduct                      committed by the debtor, if found willful                      and malicious under the facts, whether or                      not  such conduct  might also  fit within                      one or  more of  the other  exceptions to                      discharge under section 523(a).            162 B.R. at 155-56.                      Printy cites to  In re Price,  123 B.R. 42  (Bankr.                                       ___________            N.D.  Ill. 1991),  as  precedent for  its mutually  exclusive            argument.  Price, however, is the only case so holding and we                       _____                                         -12-                                          12            decline to follow it.  We hold that sections 523(a)(2)(A) and            (a)(6) are  not  mutually exclusive.    It follows  that  the            bankruptcy  court did  not err  in using    523(a)(6)  as the            section applicable to Printy's conduct.                      The  next issue  is whether  there  were sufficient            uncontroverted  facts  to  establish  that  Printy's  conduct            violated    523(a)(6).  We start our analysis with an attempt            to  determine   the  meaning   of  the  words   "willful  and            malicious."   The  House Judiciary  Committee's  Report  that            accompanied the  passage of the 1978  Bankruptcy Code defined            "willful"  as  "deliberate or  intentional"  and stated  that            "recklessness" was  no longer the standard for "willfulness."            H.R.  Rep. No.  95-595,  at  365  (1977), reprinted  in  1978                                                      _____________            U.S.C.C.A.N. 5787, 5963, 6320-21.  This, however, is only the            beginning of our task.                      As  the  bankruptcy  court  pointed  out, there  is            disagreement  among the  circuits as  to whether  the statute            requires  an intentional act that results in an injury or one            done with the intention of causing an injury, with variations            on  this theme.   In Piccicuto v.  Dwyer, 39 F.3d  37, 41 n.3                                 ___________________            (1st Cir.  1994), we noted "this  difficult and controversial            issue."   We declined to enter the fray, however, because the            parties  had agreed on a  definition which we  used to decide            the case:   "for  an act  to be willful  and malicious  under              523(a)(6), it must  be 'deliberate,' 'wrongful,'  and 'done                                         -13-                                          13            without  regard to  its consequences'. .  . ."   Id.  at 41.                                                              ___            That option is not available in this case.                      We start with  a survey of the cases.   The rule in            the Eleventh  Circuit is that "willful"  means an intentional            or deliberate act,  not done merely in  reckless disregard of            the rights of  another.   In re  Walker, 48  F.3d 1161,  1163                                      _____________            (11th  Cir. 1995).  "Malicious"  was defined as "wrongful and            without  just  cause  or  excessive even  in  the  absence of            personal hatred, spite or  ill-will."  Id. at 1164  (internal                                                   ___            quotation  marks  and citation  omitted).    Malice could  be            implied or constructive;  the specific intent to harm  is not            necessary.  Id.                        ___                      The  Third Circuit in In re Conte, 33 F.3d 303, 305                                            ___________            (3d  Cir. 1994), held:   "An injury is  willful and malicious            under  the Code only if the  actor purposefully inflicted the            injury or acted with  substantial certainty that injury would            result."                      The rule of the Tenth Circuit is that "'willful and            malicious   injury'   occurs   when   the   debtor,   without            justification  or  excuse, and  with  full  knowledge of  the            specific consequences  of his conduct,  acts notwithstanding,            knowing full well that  his conduct will cause particularized            injury."  In re Pasek, 983 F.2d 1524, 1527  (10th Cir. 1993).                      ___________                                         -14-                                          14                      The Sixth Circuit rule has been set forth in Vulcan                                                                   ______            Coals v. Howard, 946 F.2d 1226, 1228-29 (6th Cir. 1991):              _______________                      This court, when  interpreting the  terms                      "willful" and "malicious" in   523(a)(6),                      has  held  that   a  wrongful  act   done                      intentionally, which necessarily produces                      harm and is without just cause or excuse,                      may  constitute  a willful  and malicious                      injury.      We  rejected   the  stricter                      standard  that "willful"  and "malicious"                      requires  an act  with  intent  to  cause                      injury.            (Citation omitted).                      In re Littleton, 942 F.2d 551, 554 (9th Cir. 1991),                      _______________            states the  Ninth Circuit standard:   "Our court  has adopted            the  concept  that  'the  conversion  of  another's  property            without his  knowledge  or consent,  done  intentionally  and            without  justification and  excuse,  to the  other's injury,'            constitutes a willful and malicious injury within the meaning            of the   523(a)(6)."  (Citations omitted).                      The  Fifth Circuit,  in  Chrysler  Credit Corp.  v.                                               __________________________            Perry Chrysler  Plymouth, 783 F.2d 480, 486  (5th Cir. 1986),            ________________________            defined the words tersely:   "'Willful' means intentional and            'malicious'  means without just  cause or  excuse." (Footnote            omitted).                      In St. Paul Fire  & Marine Ins. Co. v.  Vaughn, 779                         ___________________________________________            F.2d 1003  (4th Cir. 1985), the Fourth Circuit enunciated its            rule  as  follows. "[S]pecific  or  'special'  malice is  not            required  on  the  part of  the  debtor:    'if  the  act  of            conversion is done deliberately and  intentionally in knowing                                         -15-                                          15            disregard  of  the rights  of  another, it  falls  within the            statutory exclusion [from discharge in bankruptcy].'"  Id. at                                                                   ___            1008 (citation omitted).                       We  have chosen not to go back further than 1985 in            our  review of  circuit  court cases.    Our final  case  is,            therefore, In re Long, 774 F.2d 875,  881 (8th Cir. 1985), in                       __________            which  the Eighth Circuit stated:   "When transfers in breach            of   security   agreements   are   in   issue,   we   believe            nondischargeability  turns  on  whether  the  conduct is  (1)            headstrong and  knowing ('willful') and, (2)  targeted at the            creditor  ('malicious'),  at  least  in the  sense  that  the            conduct  is  certain or  almost  certain  to cause  financial            harm."                      The majority rule followed by the bankruptcy courts            for the District of Massachusetts can be stated as follows:                      "[M]alicious"  means  an   act  done   in                      conscious disregard of  one's duties.  No                      special malice toward  the creditor  need                      be shown.                      . . .                       [T]he  term  "willful  and malicious"  in                        523(a)(6)  means  an act  intentionally                      committed, without just cause  or excuse,                      in conscious disregard  of one's duty and                      that necessarily produces an injury.            See In re Lubanski, 186 B.R. 160, 165 (Bankr. D. Mass. 1995).            ___ ______________                      We adopt  the rule of the  Massachusetts bankruptcy            courts and  the  further  refinement  of  it  in    Collier's            treatise on bankruptcy:                                         -16-                                          16                           To  fall  within  the  exception  of                      section  523(a)(6),  the  injury   to  an                      entity or property must have been willful                      and malicious.  An injury to an entity or                      property may be a malicious injury within                      this provision  if  it was  wrongful  and                      without just cause or excuse, even in the                      absence of personal hatred, spite or ill-                      will.                           The  word   "willfull"  [sic]  means                      "deliberate or intentional," referring to                      a  deliberate  and  intentional act  that                      necessarily leads to injury.   Therefore,                      a wrongful act done  intentionally, which                      necessarily  produces harm or which has a                      substantial certainty of causing harm and                      is without just cause or excuse, may be a                      willful  and  malicious  injury.    While                      something more than  a mere voluntary act                      is  necessary  to  satisfy  the  scienter                      requirement    of    section   523(a)(6),                      specific   intent   to   injure  is   not                      necessary.                           The   malice   element  of   section                      523(a)(6) requires an intent to cause the                      harm,  and the  fact that the  injury was                      caused through negligence or recklessness                      does not satisfy that standard  of proof.                      An  injury  inflicted willfully  and with                      malice  under  section  523(a)(6) is  one                      inflicted intentionally and deliberately,                      and either  with the intent to  cause the                      harm complained of,  or in  circumstances                      in which the  harm was certain or  almost                      certain to result from the debtor's act.            4 Collier on  Bankruptcy   523.12 (15th ed.  1996) (footnotes            omitted).                      We agree with  the bankruptcy court that,  whatever            standard is  applied here, summary judgment  was warranted on            the  uncontroverted facts.    There can  be no  question that            Printy willfully  and maliciously injured Dean  Witter by not                                         -17-                                          17            informing it that a mistake had been made by crediting to the            Trust account  the Coastal HealthCare stock  that Printy knew            he  did  not own.   Printy  took  advantage of  Dean Witter's            computer error  by borrowing  against  and withdrawing  funds            from the  false margin  account that  derived its  value from            shares  of  stock that  Printy  knew he  did not  own.   Such            conduct  by  Printy  translates  easily  into  an  intent  to            willfully and maliciously cause harm.                      Printy attempts  to blunt or obscure what he did by            arguing  that Dean Witter did not prove that "its own conduct            was  not an intervening cause  in the creation  of the debt."            Appellant's  Br.  at  21.     Printy  mischaracterizes   what            happened.  There is no question that Dean Witter's error gave            Printy the  opportunity to use  Dean Witter's assets  for his            own gain.    Printy  saw  the mistaken  transfer  of  Coastal            HealthCare shares as  a way to make  some money quickly.   To            put it bluntly, Printy saw a chance to make a killing at Dean            Witter's  expense and he took  it.  There  was no intervening            cause.  The sole proximate cause was Printy's greed.                      The  final   issue  we   discuss  is   whether  the            bankruptcy court erred in  ruling that Printy's counterclaims            were barred by res judicata because they were decided against                           ___ ________            Printy in the arbitration proceedings.                      Count  I  of  the  counterclaim  asserts  breach of            contract by  Dean Witter.  The  essence of the claim  is that                                         -18-                                          18            Dean Witter  agreed that  it would accurately  administer the            Trust  account and  failed  to do  so.   It  is  specifically            alleged that Dean Witter refused to correct the statements in            the  Trust  account  when  "its  errors  were  called  to its            attention."   And it  is alleged  that Dean  Witter's broker,            Krmpotich,  "induced and  recommended that  the Family  Trust            engage in transactions based on the statements as provided by            Dean Witter."  There are four other allegations in this count            that do not warrant further discussion.3                      The  specific allegation  in the  counterclaim that            Dean  Witter refused to  correct the statements  in the Trust            account "when its errors were called to its attention" has no            support in  the record.  In  fact, the record  is directly to            the contrary.  At  his deposition Printy admitted that  at no            time did  he tell Krmpotich or his  assistant that he did not            own any stock in  Coastal HealthCare, and that the  stock the            Trust  held was Health  Concepts, whose value  was de minimis                                                               __ _______            compared to the three to four million dollar value of Coastal            HealthCare.  We find that there is no basis in the record for            Count I of the counterclaim.                                            ____________________            3.  "(9)  Failure by  Dean  Witter to  supervise its  Midwest            Operations  Center;   (10)   failure  to   supervise   broker            Krmpotich; (11) breach of the implied  covenant of good faith            and  fair  dealing; and  (12) that  as  a result,  Printy was            damaged."                                         -19-                                          19                      Count II of the counterclaim  sounds in negligence.            It alleges  that because  of Dean Witter's  negligence Printy            incurred damages.  We have already disposed of the negligence            claim  of  Printy.    It  has  no  merit  either  legally  or            factually.                      Count III  alleges a breach  by Dean Witter  of its            duty of good faith and fair dealing.  This claim  is based on            the following assertions:                      16.  As  part  of  the  arbitration  with                      Printy,   Dean  Witter   sought  punitive                      damages.                      17.  Dean  Witter has taken  the position                      throughout    the   country    in   other                      arbitrations  pursuant  to  its  customer                      agreements that punitive damages  are not                      available under New York law or any other                      law.                      18.  Dean Witter has stated  publicly its                      view  that  punitive   damages  are   not                      available in arbitrations pursuant to its                      customer agreements.                      19.  Having  taken  this  position  as  a                      matter of its  consistent practice,  Dean                      Witter is  acting in  bad  faith to  seek                      punitive  damages  against  Printy.   Its                      attempt  to  recover   such  damages   is                      fundamentally unfair and discriminatory.                      20.  As   a   result  of   Dean  Witter's                      actions, Printy has been damaged.                      Printy  has  cited no  cases supporting  this novel            claim.  We have not looked for any.  We have found nothing in            the record  that would factually support  the statements made                                         -20-                                          20            in  paragraphs 17 and 18.  We  find that this claim, like the            others asserted in the counterclaim, has no merit.                      We also  agree with  the bankruptcy court  that the            doctrine  of   res  judicata   bars   consideration  of   the                           ___  ________            counterclaim because  the issues asserted in the counterclaim            were   also  raised   as  affirmative   allegations  in   the            arbitration proceedings.  In Pujol v. Shearson/American Exp.,                                         _______________________________            829 F.2d 1201,  1208 (1st  Cir. 1987), we  held that where  a            party  had the  "full  power"  to  press  its  claim  in  the            arbitration   proceeding,    "[t]he   arbitration   decision,            therefore, stands  as a  res judicata bar  to these  claims."                                     ___ ________            See also  Aunyx Corp. v.  Canon U.S.A., 978 F.2d  3, 6-7 (1st            ___ ____  ____________________________            Cir. 1992).                      The summary judgment issued by the bankruptcy court            and affirmed by the district court is Affirmed.                                                  Affirmed                                                  ________                                         -21-                                          21
