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, All
____________
___________________
______________
& Snyder were on brief for appellant.
________
Mary DeNevi, with
___________
for appellee.

whom Bingham, Dana & Gould LLP were on

___________________________

br

____________________

April 10, 1997

____________________

BOWNES,
BOWNES,

Senior Circuit
Senior Circuit

Judge.
Judge.

The

overarching

_____________________

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.

affirmed an

opinion of

the bankruptcy

The district court

court holding, on

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

for

the appeal is

summary judgment, our review

from the grant

of a motion

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

strictures

start

with

of Fed. R.

the

facts, keeping

Civ. P. 56(c).1

Printy

in

mind

and his two

____________________

1.

The rule states in pertinent part:

The

judgment

forthwith if
answers
admissions

sought

shall be

rendered

the pleadings, depositions,

to
on

interrogatories,
file,

together with

the

and
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

-22

sons

were

the co-trustees

Trust, (the Trust)

the

death

of The

Andrea L.

Printy Family

which had been established in

of Printy's

an

experienced

investor and knowledgeable in the finance field.

At the time

of discovery in this

wife.

Printy was

1986 after

case he was a business

consultant with

eighteen

been

years' experience

issued

broker's

in financial

license and

services.

had

held

He had

management

positions in several financial services companies.

On August 26, 1992, Printy transferred

account

to

Minnesota.

decisions

case.

the

office

of

The

record

shows

about the

Dean

Trust; the

Witter

that

in

Printy

sons play

the Trust's

Minneapolis,

made

all

no part

the

in this

Dean Witter is a national broker-dealer in securities.

It is registered with

and is

Dealers.

a member of

the Securities and Exchange Commission

the National

Association of

Securities

The account was opened in the name of the Trust and

funded with a deposit of $50,000.00.

The account

the

executive at Dean Witter

Trust account was Michael Krmpotich.

in charge of

He and Printy were

acquainted.

broker-dealer

Printy

had

Printy had tried to persuade Krmpotich to join a

company

been

in

New Ulm,

affiliated.

It

solicited the Trust account.

____________________

judgment as a matter of law.

-33

Minnesota,

was

with

Krmpotich

which

who had

Printy

with

executed an Active Assets Account Agreement

Dean Witter, effective

terms

account

of the

were

agreement, any

subject to

September 30, 1992.

Under the

controversies relative

arbitration.

The Active

to the

Assets

Account permitted the holder to buy and sell securities.

account holder

transfers from,

could also write

the Account.

checks on, or

Additionally,

The

receive wire

the securities

held in the account could be used as collateral for borrowing

funds

from Dean

Witter "on

additional securities or

margin"

in order

for other reasons.

to purchase

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.

money to Dean

Dean Witter

Under

the agreement, if

Witter for margin borrowing

was

entitled

to

the Trust

owed

or other reasons,

a security

interest

in

any

securities or property held in the Trust's account.

In early

the

September of 1992,

following assets from the

and stock

holdings in:

Merrill Dow,

Trust:

Dean Witter

U.S. Treasury Note

Baxter International,

Inc., Vital Heart Systems,

received

Inc., Marion

Inc., Eastman Kodak

Co., Weyerhaeuser Co., Bank America Corp., and J. P. Morgan &

Co.

In

addition

150,000 shares

MCI

Medical

to

these

assets, Dean

of Health Concepts,

Seed

Limited

president, secretary, and

Witter

Inc. and an

Partnership.

a shareholder of

received

interest in

Printy

was

the

Health Concepts.

-44

He knew

that the stock

was not

traded on

over-the-counter market

and had

very little value,

The bankruptcy

judge points out in

any exchange

or

if any.

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

analysis section

the stock

at

all in

the liquidation

of his Disclosure Statement

submitted with

his Plan of Reorganization.

As part

monthly

assets.

showed

of its

services, Dean Witter

statements detailing

and

summarizing

sent Printy

the

Trust's

As of September 30, 1992, the Dean Witter statement

the

$191,533.33,

market

with a

value

of

the

borrowing

statement did not reflect the

Trust's

limit of

assets

to

be

$141,104.50.

The

receipt of the Health Concepts

stock or the interest in the MCI Medical Seed Partnership.

Next comes

The Dean

showed

Witter

the event

statement for

receipt by the Trust

that led

the

to this law

month of

on October 28,

October

suit.

1992

1992 of 150,000

shares

of

Coastal

$3,637,500.00.

In his

HealthCare

Coastal HealthCare

deposition testimony

authorize the

purchase of

stock

with

Printy stated

that he

the Coastal HealthCare

obviously mistaken increase

half million

dollars in the asset

-55

of

stock is publicly traded.

never received stock-purchase confirmation slips.

for this

value

did not

stock and

The reason

of over three

value of the Trust

and one

was a

computer

error

by

Dean

Witter.

worthless Health Concepts shares

code for

The

Trust's

virtually

had been given the computer

Coastal HealthCare shares, thus

attributing to the

Trust ownership of Coastal HealthCare stock, which it did not

own.

On

November 16,

Trust's account

1992,

broker, Krmpotich,

Printy sent

and his

a fax

to the

assistant, Lynn

Jorgenson, asking that 15,000 shares of Coastal HealthCare be

delivered

to

him

but

left

Jorgenson informed Printy that

anything

authorized

but the entire

in

the

name

of

the

Trust.

Dean Witter could not deliver

holding of 150,000

shares.

the delivery of the 150,000 shares.

Printy

In due time,

he

received

certificate

for 150,000

shares

of

Health

Concepts, not the Coastal HealthCare shares he had requested.

The

computer mix-up

Coastal HealthCare

between

Health Concepts

continued through November of

and

1992.

The

November 1992 statement showed that 150,000 shares of Coastal

HealthCare valued at $3,712,500.00

account.

shrunk

As

to

a result,

$100,475.00

had been debited from the

the total asset

from

the

value of the

October

Trust

value

of

$3,775,925.00.

Printy returned the

Health

Concepts to

150,000 shares certificate

Dean Witter

on December

computer

continued on its merry way

The Dean

Witter December

1, 1992.

of

The

in the wrong direction.

1992 statement showed

the Trust's

-66

receipt

on

December

HealthCare, with an increase

of

150,000

shares

of

Coastal

in asset value from $100,475.00

to $4,984,275.00.

The December statement,

the

return of

the

however, showed more

Coastal HealthCare

stock

to the

than

Trust

account.

It showed

that Printy purchased a total

of 22,409

shares of stock in twelve companies and withdrew through wire

transfers

January

stock in

account.

used to

and these

or

checks,

$262,501.11

of 1993, Printy bought

eight companies

In both

from the

a total of

account.

In

16,763 shares of

and withdrew $373,670.14

from the

months, the Coastal

HealthCare stock was

calculate the authorized limit

for margin borrowing

purchases and withdrawals were

made against these

erroneously inflated margin limits.

It is

other brokers

purchases

none

true, as Printy asserts,

from Dean

Witter urged

that Krmpotich and

Printy to make

on the basis of the Trust's borrowing limits.

of the brokers

at Dean Witter

knew of the

stock

But

error that

inflated

the value of the Trust's assets.

They assumed that

Dean Witter's monthly statements were accurate.

who knew

the monthly statements were

Printy.

In his

deposition

questions

about how his account

The only one

grossly inaccurate was

Printy testified

that

was being handled.

he had

But he

never told Krmpotich that he did not own any stock in Coastal

-77

HealthCare

and

that the

authorized

borrowing

limits were

wrong.

February

Dean

Witter finally

1993

statement.

HealthCare, with a value

The

corrected

the error

in

the

150,000

shares of

Coastal

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.

margin

call.

Dean Witter

also made a

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

arbitration

March

30,

1993,

proceeding against

Trust before the National

The

Statement

of Claim

included counts

common-law fraud,

common-law

for

Dean

Witter

Printy,

his

commenced

sons, and

an

the

Association of Securities Dealers.

consisted

theft and

violations

of

eight counts,

receiving

of Minnesota

stolen

which

property,

securities

conversion, and common-law replevin.

law,

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

raised

a number

consisted

responded

of

to the

Statement

affirmative allegations.

of denial of wrongdoing and

of

The

Claim and

defense

shifting the blame to

Dean Witter.

-88

The

1994.

Trust

It

arbitration

found Printy,

liable

for

award was

his sons

compensatory

issued on

January 20,

as co-trustees,

damages in

the

and 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

of

the

Bankruptcy

arbitration award

Code

confirmed.

from the automatic stay

30, 1995, the

Judicial

award.

Dean

Dean

Witter

of

imposed under the Code.

Minnesota confirmed

Witter filed

having the

Witter obtained

Hennepin County District Court for

District

Dean

prior to

petition under Chapter 11

an adversary

the

relief

On January

the Fourth

arbitration

proceeding against

Printy in bankruptcy court on August 24, 1994.

III.
III.

ANALYSIS
ANALYSIS
________

The

first issue

is

whether the

bankruptcy

debt

falls under

Code.

523(a)(2)(A)

or

523(a)(6) of the

Bankruptcy

Section 523 of the Code provides in pertinent part:

523.
523.

Exceptions to discharge
Exceptions to discharge

(a) A discharge
(a)
1141,

1228(a),

this

title

under section

1228(b),
does

not

727,

or 1328(b)

of

discharge

an

individual debtor from any debt--

(2)
(2)

for money,

property, services,

or an extension, renewal,

or refinancing

of credit, to the extent obtained by--

-99

(A)
(A)

false

pretenses,

false representation, or actual

fraud,

other than

respecting

a statement

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

exclusive and

argues

that

the district

the

sections

court erred in

are

mutually

proceeding under

(a)(6).

This is an ingenious argument but it is convincingly

rebutted by the words of the statute and the case law.

is

no indication in

sections to

523 that Congress

be mutually exclusive, nor

There

intended these two

does the legislative

history of the statute so suggest.

Printy candidly admits

have

that, "[a] number of

either applied both provisions

cases

to fraud claims or have

-1010

indicated an

Printy says.

inclination to do

so."2

The cases

do hold as

Both parties have referred

us to Grogan v. Garner,
________________

498 U.S. 279, 282 n.2 (1991), which states:

We

therefore

question

do

whether

not consider

the

523(a)(2)(A) excepts

from discharge that part of a judgment in

excess of

the actual value

property received by
of fraud.

of money

a debtor by

or

virtue

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

services

from

judgments

money,

property,

the plaintiffs

that include

or

and those

punitive damages

awards are more appropriately governed by

523(a)(6).
(excepting
willful
debtor
property

See 11 U.S.C.
from

and
to

discharge

malicious
another

of

523(a)(6)

another

debts

injury

entity

or

entity");

Rubin, 875 F.2d, at 758, n. 1.

_____

"for

by

the

to

the

In re
______

____________________

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.
150

1995); In re Dorsey,
_____________

(Bankr.

Berman,
______

N.D.

154 B.R.

Ill.

162 B.R.

1993);

991 (Bankr.

In re
______
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

Fla.),

aff'd, 108
_____

1989),

aff'd sub nom., Powell v. Bear,

_______________ ________________

Stearns & Co., 914

______________

B.R.

(Bankr. S.D.

343 (S.D.

F.2d 268

Fla.

(11th Cir.

1990).

Appellant's Br. at 11.

-1111

We

realize that this is

surely

does not

523(a)(6)

undercut the

as the

Printy's conduct.

not a precedential

holding, but it

bankruptcy court's

relevant section

under which

choice of

to assess

The bankruptcy

indeed

converting Dean

Trust,

to

finance

expenditures."

tort of

court found that Printy "was using,

Witter's assets,

his

trades

We agree.

523(a)(6).

668 (4th Cir. 1995);

(Bankr. D. Mass. 1985);

personal

Viewing Printy's

conversion, there are cases

falls within the ambit of

F.3d 664,

and

not assets

and

of the

family

actions as the

holding that conversion

See In re Stanley, 66
___ _____________

In re Lindberg, 49
______________

In re Cardillo, 39 B.R.
______________

B.R. 228

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

claim

willful and

for

an aggrieved

sounds

in fraud.

relief

under

aggrieved

party whose

malicious injury

The critical focus for

section

creditor

523(a)(6) for
is

the

an

conduct

committed by the debtor, if found willful

and malicious under the facts, whether or
not

such conduct

one or

more of

might also
the other

fit within

exceptions to

discharge under section 523(a).

162 B.R. at 155-56.

Printy cites to

N.D.

Ill. 1991),

argument.

as

In re Price,
___________

precedent for

123 B.R. 42

its mutually

(Bankr.

exclusive

Price, however, is the only case so holding and we

_____

-1212

decline to follow it.

(a)(6) are

not

bankruptcy

court did

We hold that sections 523(a)(2)(A) and

mutually exclusive.

not err

It follows

in using

that

523(a)(6)

the

as the

section applicable to Printy's conduct.

The

uncontroverted

violated

to

facts

to

523(a)(6).

determine

malicious."

next issue

the

The

is whether

establish

there

that

were sufficient

Printy's

conduct

We start our analysis with an attempt

meaning

of

House Judiciary

the

words

Committee's

"willful

and

Report

that

accompanied the

"willful"

as

passage of the 1978

"deliberate or

"recklessness" was

H.R.

Rep. No.

Bankruptcy Code defined

intentional"

and stated

that

no longer the standard for "willfulness."

95-595,

at

365

U.S.C.C.A.N. 5787, 5963, 6320-21.

(1977), reprinted in
_____________

1978

This, however, is only the

beginning of our task.

As

disagreement

requires

the

bankruptcy

among the

court

circuits as

pointed

out, there

to whether

is

the statute

an intentional act that results in an injury or one

done with the intention of causing an injury, with variations

on

this theme.

(1st Cir.

issue."

In Piccicuto v. Dwyer, 39 F.3d

___________________

1994), we noted "this

37, 41 n.3

difficult and controversial

We declined to enter the fray, however, because the

parties

the case:

had agreed on a

"for

an act

523(a)(6), it must

definition which we

to be willful

used to decide

and malicious

be 'deliberate,' 'wrongful,'

under

and 'done

-1313

without

regard to

its consequences'. .

That option is not available in this case.

. ."

Id.
___

at 41.

We start with

the Eleventh

Circuit is that "willful"

or deliberate act,

the rights of

(11th

another.

just

cause

or

personal hatred, spite or

quotation

marks

necessary.

1163

ill-will."

in

the

Id. at 1164
___

omitted).

absence of

(internal

Malice could

the specific intent to harm

be

is not

Id.
___

The

(3d

F.3d 1161,

was defined as "wrongful and

excessive even

and citation

implied or constructive;

reckless disregard of

In re Walker, 48
_____________

"Malicious"

The rule in

means an intentional

not done merely in

Cir. 1995).

without

a survey of the cases.

Third Circuit in In re Conte, 33 F.3d 303, 305

___________

Cir. 1994), held:

"An injury is

willful and malicious

under

the Code only if the

injury or acted with

actor purposefully inflicted the

substantial certainty that injury would

result."

The rule of the Tenth Circuit is that "'willful and

malicious

injury'

justification

or

occurs

excuse, and

specific consequences

knowing full well that

injury."

when

with

of his conduct,

the

debtor,

without

full

knowledge of

the

acts notwithstanding,

his conduct will cause particularized

In re Pasek, 983 F.2d 1524, 1527

___________

-1414

(10th Cir. 1993).

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

act

held

that

wrongful

done

intentionally, which necessarily produces

harm and is without just cause or excuse,
may

constitute

injury.

We

a willful

and malicious

rejected

the

standard

that "willful"

requires

an act

with

stricter

and "malicious"
intent

to

cause

injury.

(Citation omitted).

In re Littleton, 942 F.2d 551, 554 (9th Cir. 1991),

_______________

states the

the

Ninth Circuit standard:

concept

without his

without

that

'the

knowledge

"Our court

conversion

or consent,

justification and

excuse,

of

has adopted

another's

done

to the

property

intentionally

and

other's injury,'

constitutes a willful and malicious injury within the meaning

of the

523(a)(6)."

The

(Citations omitted).

Fifth Circuit,

in

Chrysler Credit Corp. v.

__________________________

Perry Chrysler Plymouth, 783 F.2d 480, 486

________________________

defined the words tersely:

'malicious'

(5th Cir. 1986),

"'Willful' means intentional and

means without just

cause or

excuse." (Footnote

omitted).

In St. Paul Fire & Marine Ins. Co. v. Vaughn, 779

___________________________________________

F.2d 1003

rule

as

required

(4th Cir. 1985), the Fourth Circuit enunciated its

follows. "[S]pecific

on

the

part of

or

the

debtor:

conversion is done deliberately and

-1515

'special'

'if

malice is

the

act

not

of

intentionally in knowing

disregard

of

the rights

of

another, it

falls

within the

statutory exclusion [from discharge in bankruptcy].'"

Id. at
___

1008 (citation omitted).

We

our

have chosen not to go back further than 1985 in

review of

circuit

court cases.

therefore, In re Long, 774 F.2d 875,

__________

which

of

the Eighth Circuit stated:

security

agreements

nondischargeability

headstrong and

creditor

conduct

certain or

at

in

issue,

whether

the

least

almost

is,

881 (8th Cir. 1985), in

knowing ('willful') and, (2)

('malicious'),

is

on

case

"When transfers in breach

are

turns

Our final

in the

certain

we

believe

conduct is

(1)

targeted at the

sense

to cause

that

the

financial

harm."

The majority rule followed by the bankruptcy courts

for the District of Massachusetts can be stated as follows:

"[M]alicious"

means

an

conscious disregard of
special malice toward

act

done

in

one's duties.
the creditor

No
need

be shown.

. . .

[T]he

term

523(a)(6)

"willful
means

and malicious"

an act

intentionally

committed, without just cause

in conscious disregard

in

or excuse,

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

courts and

the

the rule of the

further

treatise on bankruptcy:

refinement

Massachusetts bankruptcy

of

it

in

Collier's

-1616

To
section

fall

within

523(a)(6),

the
the

exception
injury

to

of
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 illwill.

The

word

"willfull"

[sic]

means

"deliberate or intentional," referring to

a

deliberate

and

intentional act

necessarily leads to injury.

a wrongful act done
necessarily

that

Therefore,

intentionally, which

produces harm or which has a

substantial certainty of causing harm and

is without just cause or excuse, may be a
willful

and

malicious

something more than

is

necessary

requirement
specific

to
of

injury.

While

a mere voluntary act

satisfy

the

section

intent

to

malice

element

scienter
523(a)(6),

injure

is

not

necessary.

The

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
An

injury

malice

of proof.

inflicted willfully

under

section

and with

523(a)(6) is

one

inflicted intentionally and deliberately,

and either

with the intent to

harm complained of,

in which the

or in

cause the

circumstances

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

standard is

the

the bankruptcy court that,

applied here, summary judgment

uncontroverted facts.

Printy willfully

There can

whatever

was warranted on

be no

question that

and maliciously injured Dean

Witter by not

-1717

informing it that a mistake had been made by crediting to the

Trust account

he

did

the Coastal HealthCare stock

not own.

computer error

from the

shares

conduct

Printy

by borrowing

false margin

of

stock that

by

took

Printy

advantage of

against

account that

Printy

Dean Witter's

and withdrawing

derived its

knew he

translates

that Printy knew

easily

did not

into

funds

value from

own.

an

intent

Such

to

willfully and maliciously cause harm.

Printy attempts

arguing

was

to blunt or obscure what he did by

that Dean Witter did not prove that "its own conduct

not an intervening cause

Appellant's

Br.

at

21.

in the creation

Printy

of the debt."

mischaracterizes

what

happened.

There is no question that Dean Witter's error gave

Printy the

opportunity to use

own gain.

Printy

saw

HealthCare shares as

Dean Witter's assets

the mistaken

a way to make

transfer

of

for his

Coastal

some money quickly.

To

put it bluntly, Printy saw a chance to make a killing at Dean

Witter's

cause.

expense and he took

it.

There

was no intervening

The sole proximate cause was Printy's greed.

The

final

issue

bankruptcy court erred in

we

discuss

is

whether

the

ruling that Printy's counterclaims

were barred by res judicata because they were decided against

___ ________

Printy in the arbitration proceedings.

Count

contract by

of

the

Dean Witter.

counterclaim

The

asserts

essence of the claim

breach of

is that

-1818

Dean Witter

Trust

agreed that

account and

failed

it would accurately

to do

so.

It

administer the

is

specifically

alleged that Dean Witter refused to correct the statements in

the

Trust

attention."

account

And it

when

"its

is alleged

errors

were

that Dean

called

to its

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

Dean

specific allegation

Witter refused to

in the

counterclaim that

correct the statements

in the Trust

account "when its errors were called to its attention" has no

support in

the record.

the contrary.

time did

At

fact, the record

is directly to

his deposition Printy admitted that

he tell Krmpotich or his

own any stock in

Trust

In

assistant that he did not

Coastal HealthCare, and that the

held was Health

at no

Concepts, whose value

stock the

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)

Operations

Failure by

Dean

Witter to

Center;

(10)

failure

to

Krmpotich; (11) breach of the implied

and

fair

dealing; and

(12) that

damaged."

-1919

supervise its

as

supervise

Midwest
broker

covenant of good faith

a result,

Printy was

Count II of the counterclaim

It alleges

that because

incurred damages.

claim

of

Printy.

sounds in negligence.

of Dean Witter's

negligence Printy

We have already disposed of the negligence

It

has

no

merit

either

legally

or

factually.

Count III

alleges a breach

duty of good faith and fair dealing.

by Dean Witter

This claim

is based on

the following assertions:

16.

As

Printy,

part
Dean

of

the

Witter

arbitration
sought

with

punitive

damages.

17.

Dean

Witter has taken

of its

the position

throughout

the

country

arbitrations

pursuant

to

in
its

other
customer

agreements that punitive damages

are not

available under New York law or any other

law.

18.

Dean Witter has stated

view

that

punitive

publicly its

damages

are

not

available in arbitrations pursuant to its

customer agreements.

19.

Having

taken

matter of its
Witter is
punitive
attempt

this

consistent practice,

acting in
damages
to

position

bad

against

recover

such

as

Dean

faith to

seek

Printy.

Its

damages

is

fundamentally unfair and discriminatory.

20.

As

result

of

Dean

Witter's

actions, Printy has been damaged.

Printy

claim.

has

cited no

cases supporting

We have not looked for any.

the record

this novel

We have found nothing in

that would factually support

the statements made

-2020

in

paragraphs 17 and 18.

We

find that this claim, like the

others asserted in the counterclaim, has no merit.

We also

doctrine

of

res
___

agree with

judicata
________

the bankruptcy court

that the

bars

of

consideration

the

counterclaim because

the issues asserted in the counterclaim

were

as

also

raised

arbitration proceedings.

829 F.2d 1201,

1208 (1st

party

"full

had the

arbitration

See also
___ ____

as a

allegations

in

the

In Pujol v. Shearson/American Exp.,

_______________________________

Cir. 1987), we

power"

proceeding,

therefore, stands

affirmative

to

"[t]he

press

held that where

its

claim

arbitration

res judicata bar

___ ________

the

decision,

to these

Aunyx Corp. v. Canon U.S.A., 978 F.2d

____________________________

in

claims."

3, 6-7 (1st

Cir. 1992).

The summary judgment issued by the bankruptcy court

and affirmed by the district court is Affirmed.

Affirmed
________

-2121