MEMORANDUM OF DECISION
I. Introduction
Debtor-Appellant Robert Spagnuolo, Jr. (“Spagnuolo”) now appeals the order of the Bankruptcy Court allowing the motion for summary judgment of Plaintiff-Appellee Edwina Brooke-Petit (“Brooke-Petit”). For the reasons set forth below, this Court AFFIRMS IN PART and VACATES IN PART the order and REMANDS the case for further findings on a limited issue.
II. Factual Background
A. Brooke-Petit Obtains a State Court Judgment Against Spagnuo-lo
In 2005, Brooke-Petit engaged Spagnuolo to perform and supervise renovations at her home in Mashpee, Massachusetts. Petit v. Spagnuolo (In re Spagnuolo),
In instructing the jury on fraud, the court identified five elements that must be established by a preponderance of the evidence: 1) “that [the defendant] made a false statement or statements to the plaintiff, and that statement ... or those statements concerned some fact that a reasonable person would consider important to the decision that the plaintiff was about to make;” 2) that “when [the defendant] made the statement, the defendant either knew that the statement was false or recklessly made the statement by willfully disregarding its truth or falsity;” 3) the defendant “made the false statement with the intention that the plaintiff would rely on that statement in making her decision;” 4) “in making her decision, [the plaintiff] did in fact rely upon the defendant’s statement as true and that ... her reliance was reasonable under the circumstances;” and 5) “that the plaintiff suffered some financial loss as a result of relying on the defendant’s false statement.” D. 15-1 at 69-71.
The state court then proceeded to define each of these elements in more detail, including the second element:
Mr. Spagnuolo is liable if he made a false statement of fact knowing it to be false. Likewise, if he made an unqualified statement about facts, the truth or falsity of which he could’ve determined with certainty and gave [the plaintiff] the reasonable impression that he was speaking of his knowledge, [then the defendant] is not excused from liability if he didn’t in fact know whether the statement was true or false. The law regards such willful disregard of the facts as equivalent to an intentional misrepresentation. Actual intent to deceive need not be proven.
Id. at 73. As to damages, the court instructed that “if you reach the issue of damages, award [the plaintiff] a sufficient amount of money to put her in the position that she would’ve been in if the situation had been as represented by ... the defendant.” Id. at 75.
On August 24, 2010, the jury found Spagnuolo liable on each of Brooke-Petit’s claims and on a special verdict form indicated its findings that 1) a contract existed between the parties; 2) the defendant breached the contract; 3) the defendant committed fraud, deceit, and/or misrepresentation by any means, in connection with the services provided; and 4) the defendant violated Mass. Gen. L. c. 142A. D. 15-2 at 22-26. The verdict form instructed that a finding of liability on c. 142A automatically led to a finding of liability on Brooke-Petit’s c. 93A claim. Id. at 24.
III. Procedural Background
Spagnuolo filed a voluntary Chapter 7 bankruptcy petition on February 1, 2011. No. ll-br-10844, D. 1. Brooke-Petit opened an adversary proceeding on September 28, 2011. No. ll-ap-01290, D. 1. Brooke-Petit moved for summary judgment on November 15, 2012. Id. at D. 42.
IV. Standard of Review
On appeal, the “district court ... may affirm, modify, or reverse a bankruptcy judge’s judgment, order or decree or remand with instructions for further proceeding.” Fed. R. Bankr.P. 8013. In its review, the district court reviews the Bankruptcy Court’s conclusions of law de novo, but must accept its findings of fact unless they were clearly erroneous. TI Fed. Credit Union v. DelBonis,
V. Discussion
A. The Bankruptcy Court Correctly Held that Issue Preclusion Barred Re-Litigation of Whether His Conduct, Found to Constitute Fraud by a State Court Verdict, is Nondischargeable Under 11 U.S.C. § 523(a)
Spagnuolo challenges the Bankruptcy Court’s finding that issue preclusion barred relitigation of whether Spagnuolo’s debt to Brooke-Petit is dischargeable under 11 U.S.C. § 523(a)(2)(A). This statute provides that “[a] discharge under [the bankruptcy code] does not discharge an individual debtor from any debt ... for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by ... false pretenses, a false representation, or actual fraud.” Id. The Bankruptcy Court found that Spag-nuolo was “collaterally estopped from contesting his liability under § 523(a)(2)(A) based upon a state trial court jury verdict for fraud.” In re Spagnuolo,
“Under federal law, a state court judgment receives the same preclusive effect as it would receive under the law of the state in which it was rendered.” Dillon v. Select Portfolio Servicing,
To establish nondischargeability of a debt obtained by fraud, a plaintiff must demonstrate that the debtor “(1) [made] a false representation, (2)[did] so with fraudulent intent, i.e., with ‘scienter,’ (3) [intended] to induce the plaintiff to rely on the misrepresentation, and (4) the misrepresentation [did] induce reliance, (5) which is justifiable, and (6) which cause[d] damage (pecuniary loss).” Palmacci v. Umpierrez,
The Bankruptcy Court compared the standard of nondischargeability in § 523(a)(2)(A) with the state court judge’s instructions to the jury on Brooke-Petit’s fraud count, finding that the jury instructions and verdict “eomport[ed] with the requirements for an exception to discharge under § 523(a)(2)(A).” Spagnuolo,
Putting aside, for a moment, the state court’s admonition that “[a]ctual intent to deceive need not be proven,” the state court’s instruction on fraudulent intent closely tracks the First Circuit’s application of § 523(a)(2)(A) in Palmacci The state court instructed the jury that: “Mr. Spagnuolo is liable if he made a false statement of fact knowing it to be false[;] or ... if he made an unqualified statement of facts, the truth or falsity of which he could’ve determined with certainty and gave Ms. Brooke-Petit ... the reasonable impression that he was speaking from his knowledge ... if he didn’t in fact know whether the statement was true or false. The law regards such willful disregard of the facts as equivalent to an intentional misrepresentation.” D. 15-1 at 73. The state court then added: “[a]ctual intent to deceive need not be proven.” Id. Thus, the state court instructed the jury to find Spagnuolo liable if they determined that he knew his statements were false or if he willfully disregarded the truth. This is squarely consistent with the First Circuit’s
Spagnuolo argues that the state court’s statement that “[a]ctual intent to deceive need not be proven” is seemingly irreconcilable with the court’s instructions immediately preceding it. The Bankruptcy Court resolved this inconsistency by determining that “the state court’s use of the phrase ‘intent to deceive’ clearly was a reference to direct evidence of intent to deceive, as generally intent is determined from all the facts and circumstances.” Spagnuolo,
This Court agrees. The state court clearly instructed the jury that it could consider both direct and circumstantial evidence. D. 15-1 at 51. In addition, one could read the jury instructions to mean that proof of reckless disregard for the truth (sufficient for nondischargeability under § 523(a)(2)(A)) is sufficient to give rise to a finding of liability for fraud. In either case, to read the jury instructions as Spagnuolo asks this Court to do — that the state court instructed the jury that they could find Spagnuolo liable applying a standard of intent lesser than what is required for § 523(a)(2)(A) — would be inconsistent with the totality of the instructions for the reasons discussed above.
Spagnuolo cites Petrucelli v. D’Abrosca (In re D’Abrosca), No. 09-11638,
B. The Issue of What Portion of the Verdict Is Attributable to Fraudulent Conduct and, Therefore, Non-dischargeable, Remains
Spagnuolo has argued both to the Bankruptcy Court and to this court that the jury verdict “is not dispositive on the issue of what damages may be attributable to what conduct.” D. 14 at 15; Spagnuolo,
Other decisions support the proposition that a jury’s failure to allocate damages between a cause of action that is consistent with the federal standard of nondischarge-ability and a cause of action that does not rise to that standard cannot be the basis of a judgment that has a preclusive effect without further findings regarding same on remand. See In re Raccuglia,
Finding no First Circuit case discussing the consequence of a prior jury’s failure to allocate damages for the purposes of deciding nondischargeability under § 523(a)(2)(A) (and the parties having not directed the Court to any such authority), the Court, nevertheless, agrees with the reasoning of those decisions discussed above. That is, where a jury finds liability on multiple claims, but only some claims meet the standard of nondischargeability provided in § 523(a)(2)(A), but where the jury does not allocate damages between counts, the entirety of the judgment is not nondischargeable without some finding regarding same.
Here, the state court jury found Spagnuolo liable for fraud, but also found him liable for breach of contract, violation of Mass. Gen. L. c. 142A and violation of Mass. Gen. L. c. 93A. Spagnuolo,
Preserved in the record is the colloquy between the state court judge and Spagnuolo in which the Court explained that “we want this judgment satisfied. We don’t want people, you know, walking away from them and thinking that because, you know, because they can declare bankruptcy as some people think that they could, they’re going to get away from it. But, this is a fraudulent finding by the jury ...
In the absence of any such finding by the Bankruptcy Court, the Court determines that remand on this limited issue (of the portion of jury verdict for damages is attributable to fraud) is appropriate. See Groman v. Watman (In re Watman),
VI. Conclusion
For the foregoing reasons, the Court AFFIRMS IN PART and VACATES IN PART the Bankruptcy Court’s entry of summary judgment and REMANDS this matter to the Bankruptcy Court for further findings consistent with this decision.
So ordered.
Notes
. Mass. Gen. L. c. 142A, § 17 provides that: "[vjiolations of any of the provisions of this chapter shall constitute an unfair or deceptive act under the provisions of chapter ninety-three A.”
. Pursuant to Fed. R. Bankr.P. 8012, this Court determines that, after examination of the briefs and record, oral argument is not needed.
. Given the ruling above regarding the jury instructions regarding fraud being in accordance with the standard for nondischargeability under § 523(a)(2)(A), Spagnuolo’s further argument that the Bankruptcy Court also erred by failing to consider the entirety of the state trial transcript as to this issue, D. 14 at 22, is moot. The same, however, cannot be said as to determining how much of the jury verdict of damages is attributable to fraud and, therefore, is nondischargeable. Nothing bars the Bankruptcy Court from reviewing the entirety of the transcript upon remand in attempting to determine the remaining issue. See Stanley-Snow,