Trenwick America Reinsurance Corp. v. Swasey (In re Swasey), 488 B.R. 22

Debtor Malcolm Swasey filed a voluntary Chapter 7 petition on November 11, 2011; schedules list Trenwick America Reinsurance and Unum Life as unsecured creditors with claims of $12,842,772.42 each and disclose retirement income and high monthly expenses.
Plaintiffs Trenwick and Unum filed an adversary complaint on February 10, 2012 seeking nondischargeability under 11 U.S.C. § 523(a)(6) based on a Massachusetts District Court judgment.
District Court Trenwick v. IRC, Inc. (D. Mass. 2011) held that IRC Re and Swasey disavowed a reinsurance contract in bad faith, with 19% risk assumed by IRC Re, and that Swasey lied during testimony; it awarded damages under Mass. Gen. Laws ch. 93A, §11, including double damages and attorneys’ fees.
District Court declined to pierce the corporate veil and found no fraud or negligent misrepresentation, but found egregious 93A misconduct; it concluded Swasey personally liable for bad-faith disavowal and awarded double damages and fees under 93A; collateral-estoppel issues were discussed.
District Court did not expressly adjudicate whether Swasey intended to injure the plaintiffs in § 523(a)(6) terms, leaving unresolved whether collateral estoppel bars relitigation of nondischargeability issues.
This bankruptcy court must decide whether collateral estoppel applies to § 523(a)(6) nondischargeability and how the willful-malicous standard should be applied, considering potential distinctions between 93A findings and § 523(a)(6) liability.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does collateral estoppel bar § 523(a)(6) nondischargeability here?	Swasey, via the District Court's willful and knowing conduct findings and 93A double-damages, satisfies estoppel elements.	District Court did not expressly decide § 523(a)(6) intent; findings were under 93A, not a § 523(a)(6) dispositive ruling.	Collateral estoppel does not apply to § 523(a)(6) nondischargeability.
What is the proper willful injury standard under § 523(a)(6)?	District Court’s willful misconduct shows intentional injury; injury was tortious and intentional.	Intent to injure is not shown; analysis requires either subjective intent or substantial certainty.	Court adopts a subjective or substantial-certainty approach consistent with case law, but because the prior judgment did not establish intent, collateral estoppel fails here.
Is collateral estoppel warranted given the District Court's lack of explicit intent findings for § 523(a)(6)?	District Court's willful and knowing conduct or the contract-disavowal findings align with § 523(a)(6) nondischargeability.	Absent explicit intent findings for § 523(a)(6), relitigation is not barred.	Collateral estoppel not warranted for § 523(a)(6) nondischargeability based on the record.

Kawaauhau v. Geiger, 523 U.S. 57 (U.S. 1998) (willful injury requires intended or substantially certain harm; not mere recklessness)
Jendusa-Nicolai v. Larsen (In re Jendusa-Nicolai), 677 F.3d 320 (7th Cir. 2012) (Geiger distinguishes willful injury; subjective standard discussed)
In re Miller, 156 F.3d 598 (5th Cir. 1998) (recognizes objective substantial certainty and subjective motive approaches)
In re Su, 290 F.3d 1140 (9th Cir. 2002) (recognizes subjective framework for willful injury; discusses Restatement approach)
Slosberg (In re Slosberg), 225 B.R. 9 (Bankr. D. Me. 1998) (First Circuit's approach to willfulness evolved; later Geiger influence)
Kane (In re Kane), 470 B.R. 902 (Bankr. S.D. Fla. 2012) (discusses subjective vs objective substantial certainty in 523(a)(6))
Shcolnik v. Rapid Settlements Ltd (In re Shcolnik), 670 F.3d 624 (5th Cir. 2012) (illustrates willful injury and sanctions-based collateral estoppel discussion)
Liddell v. Peckham (In re Peckham), 442 B.R. 62 (Bankr. D. Mass. 2010) (collateral estoppel in discovery/contempt contexts; 93A considerations)
Desmond v. Varrasso (In re Varrasso), 37 F.3d 760 (1st Cir. 1994) (summary judgment standard reference)