UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: FERNANDO NESTORIO, 

Debtor.

FERNANDO NESTORIO,

Plaintiff-Appellant,  No. 00-1829

v.

ASSOCIATES COMMERCIAL

CORPORATION,

Defendant-Appellee. 

Appeal from the United States District Court

for the District of Maryland, at Greenbelt.

Deborah K. Chasanow, District Judge.

(CA-99-3842-DKC, BK-98-22987)

Argued: January 25, 2001

Decided: March 15, 2001

Before MICHAEL and MOTZ, Circuit Judges, and

Robert E. PAYNE, United States District Judge for the

Eastern District of Virginia, sitting by designation.

Affirmed by unpublished per curiam opinion.

COUNSEL

ARGUED: David Casler Slade, Bowie, Maryland, for Appellant. Steven Neal Leitess, LEITESS, LEITESS & FRIEDBERG, P.C., Balti-
more, Maryland, for Appellee. ON BRIEF: Aryeh E. Stein,

LEITESS, LEITESS & FRIEDBERG, P.C., Baltimore, Maryland, for

Appellee. 

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

PER CURIAM: 

In this case a debtor appeals from the district court’s affirmance of

a bankruptcy court order precluding him from relitigating whether he

willfully and maliciously injured secured property, thus preventing

him from discharging the debt secured by that property. We affirm.

I.

On October 8, 1997, Associates Commercial Corporation filed a

complaint in federal district court alleging that Fernando Nestorio

(and various corporate entities) wrongfully converted, concealed, and

destroyed construction equipment in which Associates had a security

interest. Nestorio failed to file a responsive pleading or otherwise

appear in the action. The court subsequently entered a default judgment for Associates, thus prompting Nestorio to file a motion to set

aside the default judgment. The court granted Nestorio’s motion on

the condition that he post a $100,000 bond. Nestorio failed to do so.

Accordingly, the default judgment was re-entered and the case

referred to a magistrate judge for a determination of damages. 

Nestorio was present and represented by counsel on the first day

of the damages hearing, which was continued to allow supplemental

briefing. On October 2, 1998, before the hearing resumed, Nestorio

filed a voluntary petition for relief under Chapter 7 of the Bankruptcy

Code, 11 U.S.C. §§ 701-766 (1994). This petition operated as an auto2 IN RE: NESTORIO
matic stay preventing Associates from continuing the damages phase

of the litigation. See 11 U.S.C. § 361(a) (1994). 

On December 2, Associates filed a motion for relief from the automatic stay to determine the damages and complete the litigation.

Associates subsequently requested Nestorio’s consent to lift the stay

and proposed a consent order. Nestorio filed a response to Associates’s motion, stating that he "d[id] not oppose the granting of the

relief requested," but adding that the language of the proposed consent order needed revision. 

After further negotiation by counsel for both sides, the language of

the consent order was revised. On January 7, 1999, Nestorio’s bankruptcy counsel sent Associates a signed facsimile of the consent order

and a letter authorizing Associates to file the order with the court and

explaining Nestorio’s "understanding" of the scope of the consent

order: 

It is our understanding that this Order will lift the automatic

stay solely for the purpose of allowing Associates to proceed . . . so that the amount of damages, if any, can be determined and a final judgment may be entered and that the stay

will remain in effect as to the enforcement of any such judgments and that no attempt to collect on such judgment may

be made by Associates outside the Bankruptcy Court, without further relief from that stay. 

It is also our understanding that is [sic] has already been

determined by the court . . . that the measure of damages is

the difference in value, if any, between the value of the

equipment at the time that the equipment was determined to

have been wrongfully retained by Mr. Nestorio and the

value of the equipment at the time that it was recovered by

Associates. 

If our understanding on any of these matters is not the same

as your understanding please contact us before filing the

consent order as our consent may be misplaced. 

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On January 14, 1999, after receipt of this letter, the consent order

was entered in the bankruptcy court. The consent order provided that

the parties consented to terminating the automatic stay, allowing

Associates "to proceed against Debtor in the litigation now pending

. . . for the purpose of determining the amount of Debtor’s liability

to Associates and the entry of final judgment in that amount," but that

Associates "must receive additional relief from this court prior to any

execution or enforcement of said final judgment." 

Following entry of the consent order, on January 15, 1999, Associates filed a complaint in bankruptcy court, claiming that because

Nestorio willfully and maliciously injured Associates’s secured property, the amount of the judgment determined by the district court

should be exempt from discharge in bankruptcy. See 11 U.S.C.

§ 523(a)(6). The complaint alleged that, "the only issue remaining to

be addressed [by the magistrate judge] is the amount of damages to

be awarded Associates" and explained that "a final hearing" with

respect to the amount of damages to be awarded Associates "due to

Debtor’s willful and malicious conversion and destruction of Associates’ property (the "Debt") will be scheduled [before the magistrate

judge] shortly after the filing of this complaint." Nestorio, represented

by bankruptcy counsel, filed an answer to this complaint in bankruptcy court, in which he stated "it is our understanding that another

issue not resolved in that litigation is whether [Nestorio] committed

fraud, and thus whether punitive damages should be awarded." 

In February 1999, Nestorio’s district court counsel filed a motion

to withdraw, which the magistrate judge granted. On March 10, 1999,

the magistrate judge resumed the damages hearing, which lasted for

three days. Although Nestorio was given notice of the hearing, he

failed to attend. After taking evidence, hearing testimony, and questioning witnesses, the magistrate judge filed a detailed, sixteen-page

report, recommending that Associates be awarded both compensatory

and punitive damages. The magistrate judge explicitly found that

Nestorio acted with "malice and a deliberate intent to deprive [Associates] of possession of the Equipment." Nestorio did not object to

this recommendation and the district judge adopted the magistrate’s

report and entered final judgment for Associates. 

With judgment in hand, Associates moved for partial summary

judgment in its dischargeability action in the bankruptcy court. Over

4 IN RE: NESTORIO
the protest of Nestorio’s original bankruptcy counsel, the bankruptcy

court precluded Nestorio from relitigating whether he willfully and

maliciously injured the property, reasoning that this issue had been

previously litigated and decided in the district court proceeding. As

a result, the bankruptcy court granted Associates’s motion for summary judgment and excepted its judgment from discharge. Nestorio,

represented by new bankruptcy counsel, appealed to the district court,

which affirmed. This appeal followed. 

II.

We have reviewed the record, briefs, and applicable law, and considered the oral arguments of the parties, and we are persuaded that

the district court properly affirmed the bankruptcy court.* We affirm

*Before us, Nestorio contends that it was always his and his counsel’s

"understanding" that the only issue to be litigated before the magistrate

judge was the amount of Associates’s compensatory damages. But the

record — including the January 7, 1999 letter of Nestorio’s counsel and

the answer that counsel filed in the bankruptcy court — simply do not

bear this out. Counsel’s January 7 letter appears entirely directed to two

points: (1) cataloging how the amount of compensatory damages would

be determined and (2) limiting proceedings before the magistrate judge

to determination of damages and entry of a final judgment with the

understanding that "no attempt to collect on such judgment may be made

outside the Bankruptcy Court." The consent order accurately incorporated both of those points. Moreover, after entry of the consent order,

Associates filed its complaint in the bankruptcy court, which alleged that

"liability has been established [by the magistrate judge] and the only

issue to be addressed [by him] is the amount of damages." Nestorio

answered that it was his understanding "that an additional issue not

resolved in that litigation is whether or not [Nestorio] committed fraud,

and thus whether punitive damages, should be awarded." Because this

responds to Associates’s allegation that (1) liability "had been" established and (2) the "only issue to be addressed" was damages, Nestorio’s

answer that punitive damages was "another issue not addressed" by the

magistrate is most reasonably read as his acknowledgment that this issue

had not yet been "addressed" but is "another issue" that will "be

addressed" by the magistrate judge. In any event, neither in the answer

nor in any other pleadings or paper did Nestorio ever state that it was his

position that this issue could not or would not be "addressed" and "resolved" by the magistrate judge. 

IN RE: NESTORIO 5
the district court’s holding that the plain language of the consent order

"did not preclude the [magistrate judge] from considering all issues

relevant to a determination of damages," and that Nestorio is, therefore, barred from relitigating the issue of willful and malicious injury.

See Nestorio v. Associates Commercial Corp., 250 B.R. 50 (D. Md.

2000).

AFFIRMED

6 IN RE: NESTORIO