O’Rorke v. Porcaro (In re Porcaro)

Citation:
O’Rorke v. Porcaro (In re Porcaro), BAP No. MW15-026, --- B.R. --- (1st Cir. BAP Feb. 3, 2016)
Tag(s):
Ruling:
The BAP affirmed the Bankruptcy Court’s orders granting summary judgment on the judgment creditors’ 11 U.S.C. § 523(a)(6) nondischargeability claim and denying the debtor’s motion for summary judgment. Prior to the bankruptcy, the judgment creditors obtained a state court judgment under the Massachusetts consumer protection law (Chapter 93A) where, after arbitration and a bench trial, the trial court ruled in favor of the judgment creditor, awarded $20,000 in damages, which was trebled under Chapter 93A to $60,000 plus attorneys’ fees and costs. The BAP analyzed and evaluated the state court record to determine whether the state court judgment under Chapter 93A for unfair and deceptive acts could be given preclusive effect in a proceeding under 11 U.S.C. § 523(a)(6), which excepts discharge of any debt for “willful and malicious injury by the debtor to another entity or to the property of another entity.” Though the elements of Chapter 93A and Section 523(a)(6) were different and the “willfulness” element of § 523(a)(6) was not actually litigated in the state court, the BAP concluded that the granting of summary judgment in favor of the judgment creditors was supposed based on the ample state court records, harm to the judgment creditors was substantially likely to occur based on the actions of the debtor and the fact that the debtor still went ahead. The debtor’s motion for summary judgment was thus properly denied.
Procedural context:
The debtor appealed the Bankruptcy Court’s decision denying his motion for summary judgment and granting the motion of his judgment creditors on a claim under 11 U.S.C. § 523(a)(6). Following arbitration, a state court bench trial and numerous appeals through the state courts, the judgment creditors filed an adversary proceeding in the debtor’s bankruptcy case objecting to the discharge of the debtor’s judgment debt under 11 U.S.C. § 523(a)(6). The debtor and the judgment creditors each moved for summary judgment. The issue before the Bankruptcy Court was whether the state court trial judge’s findings under Chapter 93A satisfied the elements of § 523(a)(6). The debtor sought dismissal of the adversary proceeding on the basis that his conduct did not cause intentional, willful or malicious injury to the plaintiffs within the meaning of § 523(a)(6). The judgment creditors argued that the state court findings on the Chapter 93A claim were binding on the bankruptcy court based on collateral estoppel. The bankruptcy court granted the judgment creditor’s motion stating that the principles of collateral estoppel, comity of courts, and Rooker-Feldman mandate a finding that the debtor was willful and malicious under § 523(a)(6). The bankruptcy court further stated that it was bound by the final decision of the state court, and the same issues could not be relitigated in the § 523(a)(6) proceeding. The debtor appealed.
Facts:
In 2004, the judgment creditors (O’Rorkes) hired the debtor to install replacement windows in their home for a contract price of $19,100.00. The debtor retained a subcontractor, but did not obtain a permit. The subcontractor informed the debtor that he noticed that the windows were ¾ inch too small for the window openings, and the debtor told him to install the windows anyway and threatened to withhold payment if he told the O’Rorkes. When the debtor refused to pay the subcontractor at the end of the job, the subcontractor informed the O’Rorkes about the problem with the windows. The parties submitted to arbitration, where the arbitrator found that the debtor installed windows that were too small and awarded the O’Rorkes $11,300 in damages. The debtor appealed to the state district court where the O’Rorkes counterclaimed under Chapter 93A. The trial judge conducted a two-day bench trial, which included expert testimony, and issued a decision in favor of the O’Rorkes awarding them $20,000 in damages, trebled to $60,000 for violations under Chapter 93A, plus interest, attorneys’ fees and costs. The trial judge found that the debtor willfully failed to obtain a necessary permit and willfully had the windows installed in the home, which he knew to be too small for the openings. The debtor moved for a new trial, which was denied, and appealed to the Massachusetts Appellate Division, Appeals Court and eventually the Supreme Judicial Court. The debtor filed for bankruptcy in 2010 and listed the O’Rorkes as the holders of a $100,000 disputed judicial lien on his real estate in Massachusetts. The O’Rorkes commenced the adversary proceeding with a single-count complaint under 11 U.S.C. § 523(a)(6) objecting to his discharge.
Judge(s):
Deasy, Harwood, Cary

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