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."
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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.
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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
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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
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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 ________
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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
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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.
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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. __________
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