Court Opinion

ID: 2964663
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:29:06.463491+00
Date Added: 2024-06-11T11:42:59.403909
License: Public Domain

USCA1 Opinion

	

                            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,
            ____________            ___________________      _________________
        & Snyder were on brief for appellant.
        ________
            Mary DeNevi, with  whom Bingham, Dana  & 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 &

            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  & 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  & 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

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                                          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
                                                  ________

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                                          21