Hobson Mould Works v. Douglas C. Madsen, (8th Cir. 1999)

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United States Court of Appeals FOR THE EIGHTH CIRCUIT

No. 99-2197NI

In re: Douglas C. Madsen, Debtor, Hobson Mould Works, Inc, Plaintiff-Appellee, v. Douglas C. Madsen, Defendant-Appellant, Michael C. Dunbar, Trustee, In re: Aaron Herbert Lease, Debtor, Hobson Mould Works, Inc. Plaintiff-Appellee, v. Aaron Herbert Lease, Defendant-Appellant, Michael C. Dunbar, Trustee.

Submitted: October 5, 1999 Filed: November 2, 1999

Before McMILLIAN, RICHARD S. ARNOLD, and HANSEN, Circuit Judges.

PER CURIAM.

Hobson Mould Works, Inc., filed with the Bankruptcy Court1 an adversary complaint seeking a determination that a state-court judgment against Aaron Lease and Douglas Madsen for misappropriation of Hobson§§ 523(a)(4) and 523(a)(6). The Bankruptcy Court granted summary judgment to Hobson after a hearing, the District Court2 affirmed, and Lease and Madsen now appeal.

Collateral estoppel applies in bankruptcy dischargeability proceedings brought under section 523(a). See Grogan v. Garner, 498 U.S. 279, 284-85 n.11 (1991). When

On Appeal from the United

States District Court for the

for the Northern District

of Iowa.

[To Be Published]

the parties have previously litigated an issue in a state court, the Bankruptcy Court will apply the law of collateral estoppel of the state. See Haberer v. Woodbury County, No. 98-2551, 1999 WL 652467, at estoppel applies if (1) there is an identity of issues in the current and prior actions, (2) the issue was raised and actually litigated in the prior action, (3) the issue was material and relevant to the disposition of the prior action, and (4) the determination was necessary and essential to the prior judgment. See Dolan v. State Farm Fire & Cas. Co., 573 N.W.2d 254, 256 (Iowa 1998).

Under section 523(a)(6), a debtor is not discharged from any debt for "willful and malicious injury" to another. For purposes of this section, the term willful means deliberate or intentional. See Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998) (§ 523(a)(6) requires deliberate or intentional injury); In re Long, 774 F.2d 875, 881 (8th Cir. 1985) (to meet willfulness component of § 523(a)(6), debtor§ 523(a)(6)). Therefore, the debt for misappropriation of trade secrets is nondischargeable under section 523(a)(6). We need not decide whether the debt is also nondischargeable under section 523(a)(4).

Accordingly, we affirm.

3 (8th Cir. Aug. 27, 1999). Under Iowa law, collateral

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

[1] The Honorable Paul J. Kilburg, United States Bankruptcy Judge for the Northern District of Iowa.

[2] The Honorable Edward J. McManus, United States District Judge for the Northern District of Iowa.

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