United States Court of Appeals

For the First Circuit

No. 00-2266

RUSSELL P. STOEHR,

Appellant,

v.

PRINCE MOHAMED BIN BANDER

MOHAMED BIN ABDUL RAHMAN AL SAUD,

Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Rya W. Zobel, U.S. District Judge]

Before

 Boudin, Circuit Judge,

Bownes, Senior Circuit Judge,

and Lipez, Circuit Judge.

Arthur H. Goldsmith for appellant.

Mark S. Foss, with whom MacCarthy Pojani & Hurley, LLP were

on brief for appellee.
April 3, 2001
1At all relevant times, Stoehr was an officer and director

of Fast Forward.

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Per Curiam. Shortly after being found liable for

damages under Mass. Gen. Laws ch. 93A in the Massachusetts

Superior Court, debtor-appellant Russell Stoehr filed for

bankruptcy. The plaintiff in the superior court action,

appellee Prince Mohamed Bin Bander Mohamed Bin Abdul Rahman Al

Saud (“the Prince”), sought a declaration that the chapter 93A

judgment against Stoehr was non-dischargeable under 11 U.S.C. §

523(a)(2). Stoehr now appeals from the district court’s

affirmance of the bankruptcy court’s allowance of the Prince's

motion for summary judgment.

I. Background

In March, 1990, the Prince filed an action in the

Massachusetts Superior Court for conversion, fraud, and unfair

or deceptive acts in violation of Mass. Gen. Laws ch. 93A

against Stoehr and Fast Forward, Inc.1 The Prince alleged that

he entrusted four luxury automobiles to an individual named

Hilton Pereira so that the cars could be “federalized,” i.e.,

brought into conformity with United States safety and emissions

standards. Without the Prince’s knowledge, Pereira transferred

the cars to Stoehr and Fast Forward. Stoehr obtained
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counterfeit certificates of origin for the cars and sold two of

them to third parties. 

The jury returned a verdict on the conversion claim

against Fast Forward and awarded the Prince $430,000 in damages.

The court reserved the chapter 93A claim for decision. On June

17, 1993, the court entered findings and judgment on the chapter

93A claim against Fast Forward and Stoehr, including double

damages in the amount of $860,000 and attorney's fees. In its

findings, the court described Stoehr's conduct as "fraudulent."

Stoehr appealed the chapter 93A judgment to the

Massachusetts Appeals Court, which affirmed the superior court.

Mohamed Bin Bander Mohamed Bin Abdul Rahman Al Saud v. Fast

Forward, Inc., 673 N.E.2d 568, 569 (Mass. App. Ct. 1996). After

additional state-court appeals, the judgment against Stoehr

remained in effect. Id., 682 N.E.2d 1363 (Mass. App. Ct. 1997).

On September 24, 1997, Stoehr filed a Chapter 7

bankruptcy petition in the bankruptcy court. On December 18,

1997, the Prince sought a declaration under 11 U.S.C. §

523(a)(2) that the superior court judgment against Stoehr was

non-dischargeable because it was obtained by "actual fraud."

The bankruptcy court allowed the Prince’s motion for summary

judgment on the ground that it was collaterally estopped from

rehearing the issue of Stoehr’s fraud, because that issue had
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been decided in the superior court's chapter 93A ruling. This

appeal followed.

II. Discussion

In an appeal from district court review of a bankruptcy

court order, this court independently reviews the bankruptcy

court's decision, ordinarily applying the "clearly erroneous"

standard to findings of fact and de novo review to conclusions

of law. Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26, 30

(1st Cir. 1994) (citing In re SPM Mfg. Corp., 984 F.2d 1305,

1310-11 (1st Cir. 1993)). Since the bankruptcy court granted

summary judgment, however, our review here is de novo on all

issues. 

Although bankruptcy proceedings are normally intended

to provide a debtor with a "fresh start" by discharging his or

her debts, 11 U.S.C. § 727, debtors who obtain money or property

fraudulently are not entitled to bankruptcy protection.

Palmacci v. Umpierrez, 121 F.3d 781, 786 (1st Cir. 1997). 11

U.S.C. § 523, "Exceptions to discharge," provides, in relevant

part:

(a) A discharge under section 727, 1141,

1228(a), 1228(b), or 1328(b) of this title

does not discharge an individual debtor from

any debt--

(2) for money, property, [or] services . . .

to the extent obtained by--

(A) false pretenses, a false representation,

or actual fraud . . .
2Stoehr appears to contest the existence of the first,

second and fourth factors.

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Here, the bankruptcy court held that because the superior court

had determined that Stoehr committed fraud, the issue could not

be relitigated and the Prince was entitled to summary judgment.

When there is an identity of the parties in subsequent

actions, the doctrine of collateral estoppel is properly applied

when: (1) the issue sought to be precluded is the same as that

involved in the prior action; (2) the issue was actually

litigated; (3) the issue was determined by a valid and binding

final judgment; and (4) the determination of the issue was

essential to the judgment.2 Grella, 42 F.3d at 30. "An issue

may be 'actually' decided even if it is not explicitly decided,

for it may have constituted, logically or practically, a

necessary component of the decision reached in the prior

litigation." Id. at 30-31 (citing Dennis v. Rhode Island Hosp.

Trust, 744 F.2d 893, 899 (1st Cir. 1984)).

Here, the bankruptcy court correctly determined that

these factors were satisfied. There is ample record support for

the conclusion that the superior court based its chapter 93A

judgment on Stoehr's fraudulent conduct. The superior court

included in its findings and conclusions the following

statements: 
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(1) that Fast Forward and Stoehr's conduct

included “fraudulent, knowing, intentional,

and unfair, if not criminal, deceptive acts

and practices”; 

(2) that Fast Forward and Stoehr "used

counterfeit certificates [to accomplish] a

fraud on the purchasers of the vehicles and

on the plaintiff"; 

(3) that "defendant Stoehr knew that the

certificates of origin were counterfeit and

nonetheless used the certificates to

transfer title, intending to deprive the

true owner of his title and deceive the

purchasers who he understood would rely [on]

the forged documents; and 

(4) that "defendant Stoehr, individually and

as president of [Fast Forward,] participated

in the fraudulent conduct that result[ed] in

the damages found by the jury . . . ."

These findings make clear that the issue of fraud was actually

litigated in the superior court, was a necessary component of

the court's judgment, and was the same as the issue adjudicated

in the section 523(a)(2) proceeding. See Grella, 42 F.3d at 30.

Stoehr contends that he did not actually litigate, nor

have the opportunity to litigate, the issue of fraud in the

superior court because it was not tried to the jury. Although

no common-law fraud claim was tried to the jury, the chapter 93A

judgment was premised on fraud. See Nickerson v. Matco Tools

Corp., 813 F.2d 529, 531 (1st Cir. 1987) (recognizing close

relationship between common-law fraud and unfair or deceptive
3In addition to challenging the district court's ruling on

collateral estoppel grounds, Stoehr attacks the superior court

judgment based on the due process clause, the Seventh Amendment,

and overall procedural fairness. The district court correctly

held, however, that the proper venue for these arguments was the

Massachusetts courts of appeal, not the federal courts.

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practices under chapter 93A).3 Here, the superior court's

findings and conclusions under chapter 93A were based solely on

the evidence presented to the jury. 

Stoehr also argues that fraud was not essential to the

chapter 93A judgment. He correctly points out that chapter 93A

violations and fraud are not synonymous, and that chapter 93A

liability may be premised on conduct other than fraud. The

superior court's findings, however, make clear that fraud was in

fact the basis for chapter 93A liability in this case, and do

not suggest any different theory of chapter 93A liability. 

In sum, the Prince satisfied each of the elements of

collateral estoppel, and we affirm the district court's order of

summary judgment.