

                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                                                                              
&amp; Wernick for trustee in bankruptcy.                 
John A.  Burdick, Jr.,  with whom  Burdick &amp;  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
