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UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

IN RE GLEN FREDRIC SHORE,

Debtor.

BAP No. KS-04-032

McCAIN FOODS USA INC.,

Plaintiff – Appellee,

Bankr. No. 01-14096-7

Adv. No. 01-05277

 Chapter 7

v.

GLEN FREDRIC SHORE,

Defendant – Appellant.

JUDGMENT

Filed December 1, 2004

Before CORNISH, MICHAEL, and THURMAN, Bankruptcy Judges.

This case originated in the United States Bankruptcy Court for the District

of Kansas at Wichita.

The judgment of that court is AFFIRMED.

For the Panel:

Barbara A. Schermerhorn, Clerk of Court

By:

Deputy Clerk

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 1 of 12
* The parties did not request oral argument, and after examining the briefs

and appellate record, the Court has determined unanimously that oral argument

would not materially assist in the determination of this appeal. See Fed. R.

Bankr. P. 8012. The case is therefore ordered submitted without oral argument.

FILED

U.S. Bankruptcy Appellate Panel

of the Tenth Circuit

December 1, 2004

Barbara A. Schermerhorn

Clerk PUBLISH

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

IN RE GLEN FREDRIC SHORE,

Debtor.

BAP No. KS-04-032

McCAIN FOODS USA INC.,

Plaintiff – Appellee,

Bankr. No. 01-14096-7

Adv. No. 01-05277

 Chapter 7

v. OPINION

GLEN FREDRIC SHORE,

Defendant – Appellant.

Appeal from the United States Bankruptcy Court

for the District of Kansas

Submitted on the briefs:*

Mark J. Lazzo of Mark J. Lazzo, P.C., Wichita, Kansas, for Defendant –

Appellant.

W. Thomas Gilman of Redmond & Nazar, LLP, Wichita, Kansas, for Plaintiff –

Appellee.

Before CORNISH, MICHAEL, and THURMAN, Bankruptcy Judges.

CORNISH, Bankruptcy Judge.

Glen Fredric Shore (“Shore”) appeals a judgment of the United States

Bankruptcy Court for the District of Kansas that applied the collateral estoppel

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 2 of 12
1 Unless otherwise noted, all future statutory references are to Title 11 of the

United States Code. 

-2-

doctrine to a state court judgment and granted partial summary judgment on a

dischargeability complaint under 11 U.S.C. § 523(a)(6)1

 in favor of McCain

Foods USA, Inc. (“McCain”). Shore contends that the collateral estoppel doctrine

was wrongfully applied because in the state court proceeding, he did not have a

full and fair opportunity to litigate an essential element of the dischargeability

complaint. Alternatively, Shore argues that the bankruptcy court erred when it

applied the collateral estoppel doctrine because there was no identity of issues

between the state court judgment and the nondischargeability complaint. 

For the reasons stated below, we AFFIRM. 

I. BACKGROUND

Shore was an officer and a director of Allen Quality Foods, Inc. (“Allen”)

and Central Processing, Inc. (“Central”). Allen was a broker for food contracts,

securing both contracts to supply specific food items and contracts with providers. 

Central processed meat that Allen then provided under contract. Shore provided

direct loans to Allen and guaranteed both Allen’s and Central’s bank loans. Allen

and Central had commonality of officers and directors and operated from the same

premises.

In January 1999, Allen obtained a contract from the United States

Department of Agriculture to provide potato wedges to the government. Allen

contracted with McCain to supply the potatoes. Allen then failed to timely pay

McCain. Central ceased production operations in February 1999, and Allen

stopped operating a short time later. 

On April 15, 1999, an employee of Allen caused a $125,000 check to be

issued to McCain. Shore, acting on behalf of Allen, stopped payment on the

check although another director told Shore that the $125,000 check was

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 3 of 12
2 This statute provides in pertinent part:

(b) A transfer made by a debtor is fraudulent as to a creditor whose

claim arose before the transfer was made if the transfer was made to

an insider for an antecedent debt, the debtor was insolvent at that

time, and the insider had reasonable cause to believe that the debtor

was insolvent.

Kan. Stat. Ann. § 33-205(b) (2000). 

-3-

legitimately payable to McCain. Subsequently, on April 19, 1999, Shore

transferred $120,000 from Allen to Central. From those monies Inuit Bank was

repaid $79,495.00 on a loan Shore had guaranteed, and Shore was then paid

$45,000 for a loan he had made to Central. 

Thereafter, McCain brought suit against Shore and Central in Kansas state

court containing the following two claims: 1) the transfers from Allen to Central

and Central to Inuit and Shore were fraudulent under Kan. Stat. Ann. § 33-205(b)

(2000) as transfers to insiders on account of antecedent debt while the transferor

was insolvent and where the transferee knew or should have known of the

insolvency;2

 and 2) the transfers violated the Kansas Uniform Fraudulent

Transfers Act, Kan. Stat. Ann. § 33-204(a)(1) (2000). McCain was granted

summary judgment on its § 33-205(b) claim. The UFTA claim went to trial. At

trial the state court made extensive findings and conclusions holding that Shore’s

transfers, whether direct or indirect, were avoidable as transfers made with actual

intent to hinder, delay or defraud creditors. The state court also found that Shore

“acted toward McCain with willful conduct and fraud” and thereafter allowed

McCain to amend its claim to seek punitive damages under Kan. Stat. Ann. § 60-

3702(b). Ultimately, the state court entered judgment for McCain against Shore

in the amount of $124,495 plus punitive damages of $20,000. Shore appealed the

judgment to the Kansas Supreme Court. In a thorough and well-reasoned opinion,

the Kansas Supreme Court affirmed the state court. McCain Foods USA, Inc. v.

Central Processors, Inc., 61 P.3d 68 (Kan. 2002). 

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 4 of 12
3 McCain Foods USA, Inc. v. Shore (In re Shore), 305 B.R. 559 (Bankr. D.

Kan. 2004). 

4 Rule 7056 provides: “Rule 56 F. R. Civ. P. applies in adversary

proceedings.” Fed. R. Bankr. P. 7056. 

-4-

On August 24, 2001, Shore filed a voluntary petition under Chapter 7 of the

Bankruptcy Code. On October 11, 2001, McCain filed a “Complaint to Determine

Dischargeability of Debt,” alleging that its debt was nondischargeable under

§§ 523(a)(6) or 523(a)(2)(A). Subsequently, on April 9, 2003, McCain filed a

Motion for Summary Judgment solely on the § 523(a)(6) claim. In its Motion,

McCain argued that the UFTA judgment established all the elements of its

§ 523(a)(6) claim. The bankruptcy court entered an Order Granting the Summary

Judgment on January 29, 2004.3

 

On March 9, 2004, the bankruptcy court dismissed the remaining claim

under § 523(a)(2)(A) as moot, declaring that the judgment was now final. This

appeal is a timely appeal from a final order because following the partial

summary judgment the bankruptcy court certified a final order in accordance with

Federal Rule of Civil Procedure 54(b). The parties have consented to this Court’s

jurisdiction because they have not elected to have the appeal heard by the United

States District Court for the District of Kansas. 28 U.S.C. § 158(b)-(c); Fed. R.

Bankr. P. 8001(e). 

II. DISCUSSION

Summary judgment is provided for through Federal Rule of Bankruptcy

Procedure 7056,4

 which adopts the Federal Rule of Civil Procedure 56 (“Rule

56”). As explained in Rule 56(c), summary judgment is appropriate when after an

examination of the record, the court concludes that “there is no genuine issue as

to any material fact and that the moving party is entitled to a judgment as a matter

of law.” Fed. R. Civ. P. 56(c). The burden of establishing summary judgment is

on the moving party. Wolf v. Prudential Ins. Co. of Am., 50 F.3d 793, 796 (10th

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 5 of 12
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Cir. 1995). We review a bankruptcy court’s grant of summary judgment de novo.

Spears v. St. Paul Ins. Co. (In re Ben Kennedy & Assocs., Inc.), 40 F.3d 318, 319

(10th Cir. 1994). When applying this standard, we review the factual record in

the light most favorable to the nonmoving party to determine if there are genuine

issues of material fact and to discern if the bankruptcy court correctly applied the

relevant substantive law. Jenkins v. Wood, 81 F.3d 988, 991 (10th Cir. 1996).

In this case the bankruptcy court granted summary judgment in favor of

McCain, finding its claim nondischargeable under § 523(a)(6). Specifically the

bankruptcy court held that when the state court found Shore liable to McCain

under the UFTA and assessed punitive damages for that violation, those findings

established all the elements of § 523(a)(6), and as a matter of law, the debt was

nondischargeable. Shore, 305 B.R. at 570. 

Collateral estoppel applies in bankruptcy court actions to determine the

dischargeability of a debt. Grogan v. Garner, 498 U.S. 279, 284 n.11 (1991). 

“‘Under collateral estoppel, ‘once a court has decided an issue of fact or law

necessary to its judgment, that decision may preclude relitigation of the issue in a

suit on a different cause of action involving a party to the first case.’” Sil-Flo,

Inc. v. SFHC, Inc., 917 F.2d 1507, 1520 (10th Cir. 1990) (quoting Allen v.

McCurry, 449 U.S. 90, 94 (1980)). While a bankruptcy court ultimately

determines whether a debt is dischargeable under § 523, under the collateral

estoppel doctrine, a state court judgment may preclude the relitigation of settled

facts. See Klemens v. Wallace (In re Wallace), 840 F.2d 762, 764-65 (10th Cir.

1988).

When a federal court applies the collateral estoppel doctrine to a state court

judgment, it must look to the preclusion law of the state where the judgment was

rendered. Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380

(1985) (holding that in cases exclusively within federal jurisdiction, state law

determines the preclusive effect of a prior state court judgment unless an

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 6 of 12
5 Pursuant to Kan. Stat. Ann. § 60-3702(c), fraud may only be established

upon clear and convincing evidence. 

6 The state court found the following six badges of fraud with respect to the

(continued...)

-6-

exception to the Full Faith and Credit Statute applies); see also Phelps v.

Hamilton, 122 F.3d 1309, 1318 (10th Cir. 1997); State of Mo. ex rel. Nixon v.

Audley (In re Audley), 275 B.R. 383, 387 (10th Cir. BAP 2002).

Because the state court proceedings occurred in Kansas, the Kansas

collateral estoppel doctrine applies. Kansas courts apply collateral estoppel when

the following elements are met:

1) a prior judgment on the merits which determined the rights and

liabilities of the parties on the issue upon ultimate facts as disclosed

by the pleadings and the judgment,

2) the parties must be the same or in privity, and

3) the issue litigated must have been determined and necessary to the

judgment. 

Vanover v. Cook, 260 F.3d 1182, 1187 (10th Cir. 2001) (quoting 

Jackson Trak Group, Inc. ex rel. Jackson Jordan, Inc. v. Mid States Port Auth.,

751 P.2d 122, 128 (Kan. 1988)). Shore argues that the bankruptcy court erred

when it applied the collateral estoppel doctrine, alleging that the requirements of

element three were not met because there was no identity of issues between the

state court judgment and the bankruptcy court proceedings. 

In state court Shore was found liable under the Kansas UFTA. The UFTA

provides in pertinent part: 

(a) A transfer made or obligation incurred by a debtor is

fraudulent as to a creditor, whether the creditor’s claim arose before

or after the transfer was made or the obligation was incurred, if the

debtor made the transfer or incurred the obligation: 

(1) With actual intent to hinder, delay or defraud any creditor

of the debtor . . . .

Kan. Stat. Ann. § 33-204(a)(1) (2000). The state court found that Shore’s

liability under the UFTA was established by clear and convincing evidence5

 of the

presence of six of the eleven badges of fraud delineated in § 33-204(b).6

 Based

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 7 of 12
6 (...continued)

transfers: 

1. The transfers were made to an insider

2. Under concealment;

3. After Allen had been sued or was threatened with collection

action

4. Including all or substantially all of the assets of Central and Allen

5. Central and Allen concealed or destroyed assets

6. While Central or Allen were insolvent. 

See Shore, 305 B.R. at 567. Kan. Stat. Ann. § 33-204(b)(1), (3), (4), (5), (7), (9). 

-7-

on its finding that Shore acted toward McCain with “willful conduct and fraud”

the state court awarded punitive damages for McCain against Shore.

The bankruptcy court found that it was estopped by the UFTA judgment

from reexamining the factual issues in McCain’s § 523(a)(6) nondischargeability

complaint. Section 523(a)(6) provides that a debt “for willful and malicious

injury by the debtor to another entity or to the property of another entity” will not

be discharged. 11 U.S.C. § 523(a)(6). The Supreme Court has explained that this

statute refers only to “acts done with the actual intent to cause injury.”

Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998). Nondischargeability under

§ 523(a)(6) requires proof of two elements–that the injury is both willful and

malicious. Panalis v. Moore (In re Moore), 357 F.3d 1125, 1129 (10th Cir. 2004)

(holding that there must be proof of both a “willful act” and “malicious injury” to

establish nondischargeability under § 523(a)(6)); see also Mitsubishi Motors

Credit of Am., Inc. v. Longley (In re Longley), 235 B.R. 651, 655 (10th Cir. BAP

1999) (collecting opinions interpreting § 523(a)(6)). A “willful act” is one in

which the debtor must “‘desire . . . [to cause] the consequences of his act or . . .

believe [that] the consequences are substantially certain to result from it.’”

Moore, 357 F.3d at 1129 (quoting Longley, 235 B.R. at 657). A malicious injury

occurs when there is proof that the debtor either intended the resulting injury or

intentionally took action that was substantially certain to cause the injury. Id.

The test for this element is a subjective one: the court must determine what the

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 8 of 12
7 McCain argues that these arguments should not be considered here as they

are new arguments not raised below. We disagree. In the bankruptcy court and in

the appeal before us, Shore argues that he did not have a full and fair opportunity

to litigate and that there was no identity of issues between the two proceedings. 

-8-

debtor knew or intended with respect to the consequences of his actions. Id. The

creditor bears the burden of establishing nondischargeability by a preponderance

of the evidence. Holaday v. Seay (In re Seay), 215 B.R. 780, 785 (10th Cir. BAP

1997).

In this appeal, Shore presents two arguments: first, he argues that he did

not have a full and fair opportunity to litigate the issue of his intent because in the

state court proceeding he could not present defenses relevant to a § 523(a)(6)

claim; second, he contends that there was no identity of issues between the state

court proceeding and the bankruptcy court proceeding because the state court did

not establish either the malicious injury element or that McCain had a property

interest that was injured as required under § 523(a)(6).7

 We will address each

argument in turn.

Before a federal court examines the state law rules of preclusion, it must

first determine whether the party who opposes collateral estoppel had a full and

fair opportunity to litigate the issue in the prior action. Allen v. McCurry, 449

U.S. 90, 95 (1980), Cobb v. Lewis (In re Lewis), 271 B.R. 877, 884 (10th Cir.

BAP 2002). Whether a party had a full and fair opportunity to litigate in a

proceeding that may later have collateral estoppel effect is examined by

questioning “whether there were significant procedural limitations in the prior

proceeding, whether the party had the incentive to litigate fully the issue, or

whether effective litigation was limited by the nature or relationship of the

parties.” Sil-Flo, 917 F.2d at 1521. Shore argues that he was denied a full and

fair opportunity to litigate because he was not given the chance to present

relevant defenses, including evidence that he was merely preferring one creditor

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 9 of 12
8 Roberts v. Beebe, 434 P.2d 789, 796 (Kan. 1967) (citing Pattern

Instructions Kansas 3.02 and 3.03 (current version Pattern Instructions Kansas 3d

Civil, §§ 103.03 and 103.04)).

-9-

over another and in so doing did not have the specific intent to harm McCain.

This argument fails because whether Shore had the specific intent to harm was an

element in the state court trial that was fully litigated. 

In proving its claim under the UFTA, McCain produced clear and

convincing evidence that Shore made the transfers with the “actual intent to

hinder, delay or defraud.” In establishing liability for punitive damages, McCain

had to establish intent to do wrong or cause injury.8

 Both of these elements were

established after a contested trial. Any justification defenses to the issue of

specific intent would have potentially negated the actual intent element for the

UFTA claim and the specific intent element of the punitive damages claim. 

Because intent was a crucial element with respect to both claims, Shore had the

incentive to fully litigate this issue.

Shore argues next that there was no identity of issues between the actual

intent element of the state court UFTA claim and malicious injury element of

§ 523(a)(6) because the former does not require proof of an absence of just cause

or excuse. Initially, we observe that the phrasing “without just cause or excuse”

is not found in the Geiger test but is found in the Supreme Court case Tinker v.

Colwell, 193 U.S. 473 (1904). In Tinker the Supreme Court discussed the concept

of legal malice as it applies to the discharge exception for wilful and malicious

injury under § 17(a) of the Bankruptcy Act of 1898. Under Tinker, a malicious

act is “‘a wrongful act, done intentionally, without just cause or excuse.’” Tinker,

193 U.S. at 486 (quoting Bromage v. Prosser, 4 Barn. & C. 247). At least one

bankruptcy court in the Tenth Circuit has examined this formulation and

concluded that the malice prong of § 523(a)(6) is satisfied on a showing that the

injury was inflicted without just cause or excuse. See Bombardier Capital, Inc v.

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 10 of 12
-10-

Tinkler (In re Tinkler), 311 B.R. 869, 880 (Bankr. D. Colo. 2004). Although

neither Geiger nor the Tenth Circuit have explicitly addressed whether a plaintiff

must demonstrate that an injury occurred without just cause or excuse in a

§ 523(a)(6) proceeding or even what circumstances might establish such an

element, we need not decide that here as the punitive portion of the UFTA

judgment clearly found that Shore intended, without just cause or excuse, to

commit an injury.

Next, Shore argues that the bankruptcy court erred when it applied the

collateral estoppel doctrine because McCain did not have a property interest in

the monies transferred and therefore, there could be no injury to McCain’s

interests. Shore supports this argument by citing to In re Saylor, 108 F.3d 219

(9th Cir. 1997).

In Saylor, the Ninth Circuit affirmed the bankruptcy court, which found

that a debt incurred through a state court judgment on a breach of contract claim

did not give a creditor an actual property interest in property debtors had

transferred to third parties for little or no consideration during the pendency of

the state court case. Because at the time the creditor brought the

nondischargeability complaint, the creditor had no property interest in the

property transferred, the bankruptcy court found that the creditor lacked standing

to argue injury under § 523(a)(6) based on that transfer. As stated by the Ninth

Circuit BAP, which had also affirmed the bankruptcy court: “Absent either a

right to payment or a damaged property interest, there is no debt which could be

nondischargeable, and the complaint does not state a claim for relief.” In re

Saylor, 178 B.R. 209, 215 (9th Cir. BAP 1995), aff’d, 108 F.3d 219 (9th Cir.

1997). 

The bankruptcy court determined that Saylor is distinguishable from this

case because in Saylor, at the time the transfers occurred, the creditor did not

have a UFTA judgment or an actual property interest in the transferred property

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 11 of 12
-11-

and the debtor was the transferee not the transferor of the property. In contrast to

Saylor, here the UFTA judgment established a right to payment based on the

damage Shore did to McCain’s interest when making the pertinent transfers. We

find no error in the bankruptcy court’s conclusions.

III. CONCLUSION

For the reasons stated above, we affirm the bankruptcy court.

BAP Appeal No. 04-32 Docket No. 35 Filed: 12/01/2004 Page: 12 of 12