

                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,                                                                              
&amp; Snyder were on brief for appellant.                
Mary DeNevi, with  whom Bingham, Dana  &amp; 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 &amp;

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  &amp; 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  &amp; 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
