## Facts

- Holly Sells worked at Mr. Speedy Car Care Center, a business co-owned by Michael Allen Porter and John Huffer.
- Sells alleged Huffer repeatedly sexually harassed and assaulted her at work, including persistent sexual propositions, unwanted touching, and an incident in a supply closet.
- Sells complained to Porter about Huffer’s conduct.
- Porter responded by preparing a memorandum asserting Sells had admitted the conduct was consensual and pressured her to sign it; she refused and later resigned.
- Sells sued Mr. Speedy, Huffer, Porter, and related entities under Title VII and the Arkansas Civil Rights Act for sexual harassment, retaliation, and constructive discharge.
- A jury found Huffer subjected Sells to unwelcome sexual harassment and found Mr. Speedy, Huffer, and Porter retaliated against Sells after she complained, awarding $360,000 in damages.
- Porter filed Chapter 7 bankruptcy, and Sells brought an adversary proceeding seeking a determination that the judgment debt was nondischargeable under 11 U.S.C. § 523(a)(6).

## Issues

1. Whether the bankruptcy court properly applied collateral estoppel to the employment-case jury verdict in determining dischargeability.
2. Whether the retaliation findings necessarily established a “willful and malicious injury” by Porter under 11 U.S.C. § 523(a)(6), rendering the $360,000 judgment nondischargeable.

## Decision

- The Eighth Circuit affirmed summary judgment for Sells.
- The court held collateral estoppel applied because the retaliation issues were actually litigated, necessarily decided, and essential to the final judgment.
- The court held the jury’s retaliation finding established that Porter’s conduct was willful and malicious under § 523(a)(6).
- The $360,000 judgment debt was excepted from discharge in Porter’s Chapter 7 case.

## Legal Principles

- Under 11 U.S.C. § 523(a)(6), a debt is nondischargeable if it is “for willful and malicious injury by the debtor to another entity.”
- In the Eighth Circuit, “willful” and “malicious” are distinct elements: willfulness requires intent to cause injury or substantial certainty injury will result; maliciousness requires conduct targeted at the creditor that is certain or almost certain to cause harm.
- Federal collateral estoppel principles apply in dischargeability litigation; preclusion requires (1) the same issue, (2) actually litigated, (3) determined by a valid and final judgment, and (4) essential to that judgment.
- A civil jury’s finding of intentional retaliation—adverse action taken because of an employee’s protected complaint—can satisfy § 523(a)(6) by establishing deliberate, creditor-directed harm rather than negligence or purely vicarious liability.

## Conclusion

The Eighth Circuit held that the retaliation verdict against Porter conclusively established a willful and malicious injury to Sells, so collateral estoppel barred relitigation and the resulting $360,000 judgment was nondischargeable under § 523(a)(6).


In re Porter, 539 F.3d 889 (8th Cir. 2008)