
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                FOR THE FIRST CIRCUIT                                 ____________________        No. 94-1726                       RICHARD PICCICUTO D/B/A SHEEHAN'S CAFE,                                 Plaintiff-Appellant,                                          v.                                   RALPH E. DWYER,                                 Defendant-Appellee.                                 ____________________        No. 94-1735                                  RICHARD PICCICUTO,                                 Plaintiff-Appellant,                                          v.                                    LINDA L. REX,                                 Defendant-Appellee.                                 ___________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Nathaniel M. Gorton, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                                  Cyr, Circuit Judge,                                       _____________                            Bownes, Senior Circuit Judge,                                    ____________________                           and McAuliffe*, District Judge,                                           ______________                                 ____________________            Steven  Weiss, with whom Shatz, Schwartz and Fentin, P.C., Richard            _____________            ________________________________  _______        M. Howland, and  Law Offices of Richard M. Howland,  were on brief for        __________       _________________________________        appellant,  David J. Noonan, with whom Cohen, Rosenthal, Price, Mirkin                    _______________            _______________________________        & Wernick for trustee in bankruptcy.        _________            John A.  Burdick, Jr.,  with whom  Burdick &  DiLeo,  P.C. was  on            _____________________              _______________________        brief for appellees.                                 ____________________                                   November 9, 1994                                 ____________________        __________________        *Of the District of New Hampshire sitting by designation.                      BOWNES, Senior Circuit  Judge.   Creditor-appellant                      BOWNES, Senior Circuit  Judge.                              _____________________            Richard  M. Piccicuto commenced  this adversary proceeding in            the bankruptcy  court which  sought to  have a  judgment debt            owed him by  debtors-appellees Ralph E.  Dwyer and Linda  Rex            ("the landlords") declared nondischargeable under 11 U.S.C.              523(a)(6)  (1989).1   Subsequently,  he  filed  a motion  for            summary judgment on his claim.  The bankruptcy court not only            denied his motion, it sua sponte granted  summary judgment to                                  ___ ______            the landlords.  The district court affirmed.  Because we find            that summary judgment should have been entered for Piccicuto,                                                           ___            and not against him, we reverse.                                          I.                                          I.                                          __                      Throughout  1984  and  1985,  the  landlords  owned            commercial  rental property ("the  property") in Northampton,            Massachusetts.  Ralph Dwyer's son, Jeffrey Dwyer, managed the            property.   During that  same time period,  Richard Piccicuto            owned and operated Sheehan's Cafe,  Inc., which was a  tenant            of  several  units  (including  two basement  units)  of  the            property.  Until  July 13,  1984, when  the parties  executed            leases for these basement units, Sheehan's had been a tenant-            at-will therein.                      On July  20, 1984,  Jeffrey Dwyer met  with Timothy            and Paul  Driscoll, who  had been negotiating  with Piccicuto                                            ____________________            1.  Section  523(a)(6)  precludes   the  discharge  of  debts            incurred "for willful  and malicious injury by the  debtor to            another entity or to the property of another entity."                                         -3-                                          3            for  the  purchase  of  Sheehan's.    At  that  meeting,  the            Driscolls  requested that the leases of the basement units be            assigned  to them.    Jeffrey Dwyer  not  only declined  this            request, he denied  the existence  of the leases.   When  the            Driscolls reported this to  Piccicuto, he telephoned  Jeffrey            Dwyer,  who informed him that the  contemplated deal with the            Driscolls was too good, and that there would be no assignment            unless he  and  the landlords  were  paid $50,000  up  front.            Piccicuto did not accede to Dwyer's demand.                      For the ensuing ten months, Piccicuto attempted  to            rectify the situation with the Driscolls, and otherwise tried            to  sell  the  business  by placing  listings  with  brokers.            Jeffrey Dwyer  interfered with  these efforts  by telephoning            the brokers and informing them  that the leases were invalid,            void,  or in litigation.   As a result,  the brokers withdrew            from listing and showing the property.  During this same time            period, whenever Piccicuto's rent payments  were a day or  so            late,  Jeffrey  Dwyer deluged  him  with  notices of  breach,            notices  of  termination,  and  notices  to quit.    He  also            commenced a barrage  of noise complaints to the  police, none            of  which was substantiated to  the point of  police or court            action.    In  addition,   in  January  1985,  the  landlords            initiated what became series of eviction  proceedings against            Piccicuto.   All  of  these proceedings  eventually concluded            with judgments in Piccicuto's favor.                                         -4-                                          4                      Piccicuto was not able to sell the property and, on            July  8, 1985, filed for  protection under Chapter  11 of the            Bankruptcy Code.   Subsequently, in September  1985, he filed            an action  in Massachusetts  Superior  Court against  Jeffrey            Dwyer and the landlords which sought damages for, inter alia,                                                              _____ ____            intentional  interference  with   an  advantageous   business            relationship  and  unfair  trade practices  in  a  commercial            context.   See Mass. Gen. L.  ch. 93A,   2 (1993).   The case                       ___            went to trial  in June  1989.  Although  all defendants  were            represented at  trial, only defendant Jeffrey  Dwyer chose to            appear  and testify.   At  the conclusion  of the  trial, the            court  submitted  the  common  law  intentional  interference            claims to the jury on special questions, reserving to  itself            Piccicuto's  claims  under ch.  93A.    The jury  returned  a            verdict in  favor  of  Piccicuto  for $371,000.    The  court            accepted this verdict  and doubled it to $742,000 under Mass.            Gen. L. ch. 93A,    11 (1993), which directs courts  to award            no  less than  double  and no  more  than triple  the  actual            damages resulting  from a  "willful or knowing"  violation of            ch. 93A,   2.  In conjunction with its decision, the superior            court  issued   a  comprehensive  memorandum   detailing  its            findings  and rulings.   The  memorandum clearly  states that            "the  defendants'   acts   [were]  willful,   malicious   and                           __            unjustified."   Appendix at 151-52 (emphasis  supplied).  The                                         -5-                                          5            Massachusetts  Appeals  Court   affirmed  in  all   respects.            Piccicuto v. Dwyer, 586 N.E.2d 38 (Mass. App. Ct. 1992).            _________    _____                      Meanwhile, in  September 1989, the  landlords filed            Chapter 11 petitions with  the United States Bankruptcy Court            for the District of  Massachusetts.  Subsequently,  Piccicuto            brought this adversary proceeding, and in due time  moved for            summary judgment.  As we have noted, Piccicuto argued that 11            U.S.C.     523(a)(6)  precludes  discharge  of  the  $742,000            judgment  debt.    He based  his  argument  on  two theories.            First, Piccicuto  contended that the  doctrine of  collateral            estoppel  precluded  the  landlords  from  attacking  in  the            bankruptcy court  the superior court's ch.  93A findings that            they had acted willfully, maliciously, and unjustifiably, and            that these  findings were, by virtue  of collateral estoppel,            binding on the bankruptcy  judge.  See Grogan v.  Garner, 498                                               ___ ______     ______            U.S. 279, 285 n.11 (1991) (principles of collateral estoppel,            as set forth in  the Restatement (Second) of Judgments    27,            apply  in   dischargeability  proceedings  brought   under               523(a)).  In the alternative, Piccicuto asserted that even if            Jeffrey  Dwyer  was  the  only defendant  who  willfully  and            maliciously caused  him injury,  Jeffrey's actions  should be            imputed  to  the  landlords   under  a  theory  of  vicarious            liability.                      The bankruptcy court rejected these arguments.  For            reasons that  are not  entirely clear, it  misapprehended the                                         -6-                                          6            thrust of Piccicuto's first  argument and looked only  to the            special  verdict   questions   submitted  to   the  jury   on            Piccicuto's common  law claims.  Relying  on these questions,            which referred only  to actions taken  by Jeffrey Dwyer,  the            bankruptcy  court  held that  "[i]t  is  undisputed that  the            verdict  and subsequent  judgment  was  rendered against  the            [landlords]  based  solely  upon  their  vicarious  liability            flowing  from the actions of Jeffrey Dwyer."   In re Rex, 150                                                           _________            B.R. 505, 506 (Bankr.  D. Mass. 1993).  The  bankruptcy court            then ruled that vicarious  liability cannot support a finding            that a debtor acted willfully and maliciously for purposes of            11 U.S.C.    523(a)(6).   Id. at 506-07.   Finding no genuine                                      ___            issue of  material fact  remaining for trial,  the bankruptcy            court, acting sua sponte, entered judgment for the landlords.                          ___ ______            Id. at 507.              ___                      The  district court  to  which  Piccicuto  appealed            these  rulings  agreed  with  the  bankruptcy  court's  legal            conclusion regarding  vicarious liability under    523(a)(6).            It  also upheld  as  "not clearly  erroneous" the  bankruptcy            court's  "finding" that  the landlords'  liability was  based            solely  on  the  actions   of  their  agent,  Jeffrey  Dwyer.            Accordingly, it affirmed the bankruptcy court's judgment.                                         II.                                         II.                                         ___                      On  appeal to  this  court, Piccicuto  makes  three            arguments.   First, he renews  his argument that the findings                                         -7-                                          7            of  the superior court in  connection with his  ch. 93A claim            conclusively  establish that the  landlords themselves caused            him  willful  and  malicious   injury,  as  those  terms  are            understood under 11 U.S.C.   523(a)(6).  Next, he  reiterates            his alternative argument that vicarious liability can support            a finding of willfulness and maliciousness under   523(a)(6).            Finally,  he  contends that  the  district  court abused  its            discretion in declining his request for oral argument in this            matter.  We need  not reach the merits of  Piccicuto's second            and third appellate arguments because we agree with his first            one.             A.  Summary Judgment in Bankruptcy Proceedings            A.  Summary Judgment in Bankruptcy Proceedings            ______________________________________________                      We very  recently elaborated upon the  operation of            summary  judgment  in  bankruptcy  proceedings.   See  In  re                                                              ___  ______            Varrasso, No. 94-1583,  slip op.  at 4-6 (1st  Cir. Oct.  18,            ________            1994).   We need not,  therefore, rehearse the relevant legal            principles  at  great length.   Suffice  it  to say  that our            review of  an order initially made under Bankruptcy Rule 7056            (governing summary judgment  in bankruptcy proceedings)  does            not  differ in  any material  respect from  our review  of an            order under Fed. R. Civ.  P. 56.  We review such an  order de                                                                       __            novo,  determining  whether the  lower courts  have correctly            ____            assessed  the  record  in  deciding that  genuine  issues  of            material fact  do, or do  not, remain for  trial.  See  In re                                                               ___  _____            Varrasso,  slip  op.  at  5.    As  always,  in  making  this            ________                                         -8-                                          8            determination,  we   will  read  the  record   and  draw  all            reasonable  inferences in  the manner  most favorable  to the            party opposing summary judgment.  Id.                                              ___            B.  Applying the Principles            B.  Applying the Principles            ___________________________                      As  an initial  matter, we  note that  the district            court applied  the wrong standard  of review  in ruling  upon            Piccicuto's  first argument.   The  bankruptcy court  did not            make any findings of fact entitled to  deference; instead, it            merely stated  its reading of the superior court's opinion in            the course of making a summary judgment ruling.  See id. at 6                                                             ___ ___            and n.2.   The district court therefore should  have reviewed            de novo  the bankruptcy court's legal determination regarding            __ ____            the effect of the superior court's findings.                       Although we could remand  to the district court for            reconsideration  under the  appropriate  standard of  review,            doing so would serve no useful  purpose.  As we explained  in            Varrasso:    "The  validity  vel non  of  a  summary judgment            ________                     ___ ___            entails a pure question  of law and, therefore, we  are fully            equipped  to  resolve  the question  as  a  matter of  first-            instance appellate  review."   Id.  at  6.   Accordingly,  we                                           ___            address on the merits Piccicuto's first appellate issue.                      The easiest way to  frame this issue is to  note at            the outset  that which is  not disputed.  First,  there is no            dispute  that  those  issues  necessarily  determined  by the            superior  court in  finding  that the  landlords and  Jeffrey                                         -9-                                          9            Dwyer  had violated  ch. 93A,     2 and  11, are  to be given            effect in  this proceeding.  "When an issue of fact or law is            actually  litigated  and  determined  by a  valid  and  final            judgment, and the determination is essential to the judgment,            the  determination  is  conclusive  in  a  subsequent  action            between  the parties,  whether  on the  same  or a  different            claim."  Restatement (Second) of Judgments   27 (1982).                        Nor  is there  any  dispute that  the findings  the            superior  court necessarily made under ch. 93A,    2 and 11,2            are  tantamount  to  findings  of  "willful  and   malicious"            behavior  under     523(a)(6).    The  landlords  agree  with            Piccicuto  that, for an act to be willful and malicious under              523(a)(6),  it must be "deliberate,"  "wrongful," and "done            without regard to its consequences,"   see Brief of Appellees                                                   ___            at 9-10, and that  the superior court's findings conclusively            establish  that  Piccicuto  was  the victim  of  willful  and            malicious  behavior  under  this  definition,  see  Brief  of                                                           ___                                            ____________________            2.  Under ch. 93A,    2, the superior court necessarily found            that  the landlords'  and  Jeffrey Dwyer's  actions (1)  were            outside the penumbra of established concepts of fairness; (2)            were unethical or unscrupulous;  and (3) caused Piccicuto and            his   business   substantial  injury.     See   Wasserman  v.                                                      ___   _________            Agnastopoulos,  497  N.E.2d 19,  23  (Mass.  App. Ct.),  rev.            _____________                                            ____            denied,  499 N.E.2d 298  (Mass. 1986).  Under  ch. 93A,   11,            ______            the superior court necessarily  found that the landlords' and            Jeffrey  Dwyer's  violation of  ch.  93A,     2 was  willful.            Wasserman, 497 N.E.2d at 24.            _________                                         -10-                                          10            Appellees at  4 (conceding  that Jeffrey Dwyer's  conduct was            willful and malicious).3                      Finally,  there is  no  real dispute  that, in  its            findings of  fact on Piccicuto's ch. 93A  claim, the superior            court  used  language indicating  that  it  was going  beyond            theories  of vicarious  liability and  holding the  landlords            liable for their own acts and conduct towards Piccicuto.  See                             ___                                      ___            Appendix at 151-52 ("[T]he damages awarded must be multiplied            under  [ch.  93A,    11]  particularly  where,  as  here, the            defendants' acts are  willful, malicious and  unjustified.");                     __            Appendix at 152 n.17 (describing the aforementioned "acts" as            "[o]f active and relentless campaign against [Piccicuto], and                                            ____________________            3.  We  are aware  that  some  federal  courts seem  to  have            construed  11 U.S.C.    523(a)(6)'s  "willful and  malicious"            provision more  strictly than the  Massachusetts courts  have            interpreted ch.  93A,   11's "willful  or knowing" provision.            While we have been unable to locate any authority which reads            ch. 93A,   11, as requiring an actual intent to injure, a few            federal courts have interpreted    523(a)(6) as imposing such            a  requirement.   See In re  Conte, 33 F.3d  303, 306-07 (3rd                              ___ ____________            Cir. 1994) (noting that the circuits have variously defined a            willful and malicious act under   523(a)(6) as a wrongful act            done with intent to  injure, a wrongful act that  will almost            certainly  produce harm, and a  wrongful act that  has a high            probability of causing harm)  (collecting cases); see also In                                                              ___ ____ __            re Scarlata,  979 F.2d 521,  536-39 (7th Cir.  1992) (Coffey,            ___________            J.,  dissenting) (noting the  same split in  the circuits but            arguing that most  courts have adopted a definition which, in            essence, looks  to whether  the debtor  has acted  in knowing            disregard  of the rights  of another  and whether  the debtor            should have  foreseen that  injury  could occur)  (collecting            cases).                   At  any rate, because this circuit has not yet passed on            this  difficult  and  controversial  issue,  and because  the            landlords  have  expressly   adopted  Piccicuto's   favorable            construction of the statute,  we decline to delve into  it at            this time.                                         -11-                                          11            of  reckless disregard of the conduct of the business of this            property by the owners, who took no role in supervising, even                     __ ___ ______            though  they were the parties in at least five separate state            court  proceedings  and one  bankruptcy  court proceeding  in            which  they, in  the  final analysis  were not  successful");            Appendix at  153 ("[T]he  conduct of all  defendants violated                                      _______    ___            the  generally  accepted   standards,  falling  outside   the            penumbra of  established  concepts of  fairness.   It may  be            fairly  characterized  as   unethical,  unscrupulous,   [and]            causing substantial injury to [Piccicuto and his business].")            (emphases supplied).                         There is, however,  vehement disagreement about the            real meaning of the  superior court's findings on Piccicuto's            ch. 93A  claim.  Piccicuto  contends that the  superior court            meant exactly  what it said:   that the  landlords themselves                                                               __________            acted willfully  and  maliciously towards  Piccicuto and  his            business.   The landlords,  for their  part, assert  that the            court could not have meant what it said -- or more precisely,            that the court used  regrettably loose language in describing            their "acts" and  "conduct" -- because there was  no evidence            that they acted against  Piccicuto in any way.   In so doing,                 ____            the  landlords  paint  themselves  as   absentee  owners  who            recklessly failed to supervise their  out-of-control, on-site            agent.                                         -12-                                          12                      Leaving   aside   the  question   of   whether  the            principles underlying the issue preclusion doctrine  allow us            to  go beyond the unambiguous findings of a state court judge            and  assess whether  there was a  factual foundation  for the            findings, we find  the landlords' reading of  the state court            record  to be  myopic.   While  the  landlords may  not  have            personally led the charge  against Piccicuto, they themselves                                                               __________            brought at least two eviction proceedings against him when he            was  trying to  save  his  deal  with  the  Driscolls  and/or            otherwise  sell  his business.   The  superior court  made it            clear   that  these  eviction  proceedings,  which  ended  in            judgments  for  Piccicuto,  were  an  integral  part  of  the            campaign   of  harassment  and  intimidation  underlying  its            finding that  "all defendants," by their  "conduct," violated            ch.  93A,    2 and 11.   See Appendix at 151.4   In our view,                                     ___            this ends  the matter;  the superior court's  unambiguous and            factually  supported findings  must be  given effect  in this            action.  Piccicuto therefore should have been awarded summary            judgment  on his claim that the $742,000 judgment debt is not            dischargeable in bankruptcy.                                         III.                                         III.                                         ____                                            ____________________            4.  We  note  that  the  superior court's  reference  to  the            eviction  proceedings is  preceded  by a  statement that  the            proceedings  were brought  by Jeffrey  as agent  for debtors.            Piccicuto  has documented, however,  that this statement (and                                                      ____ _________            not  the court's  ultimate finding)  was a  slip of  the pen.            Debtors themselves, as owners  of the property, initiated the            eviction proceedings.  See Appendix at 96-97.                                   ___                                         -13-                                          13                      For the reasons stated above,  the bankruptcy court            erred  in awarding summary  judgment to the  landlords and in            not awarding summary judgment to  Piccicuto.  It follows that            the district court erred  in affirming the bankruptcy court's            mistaken order.  We therefore  reverse the judgment below and            enter summary judgment for Piccicuto.                      So ordered.                            So ordered.                      __________                                                       -14-                                          14
