United States Bankruptcy Appellate Panel

FOR THE EIGHTH CIRCUIT

______

Nos. 07-6008EA

 07-6013EA

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In re: *

 *

Michael Porter and Patricia Diane *

Porter, *

 *

Debtors. *

 *

Holly Sells, *

 * Appeals from the United States

Plaintiff – Appellee/ * Bankruptcy Court for the Eastern

 Cross-Appellant, * District of Arkansas

 *

v. *

 *

Michael Porter, *

 *

Defendant – Appellant/ *

 Cross-Appellee. *

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Submitted: August 15, 2007

Filed: September 21, 2007

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Before KRESSEL, Chief Judge, FEDERMAN and MAHONEY, Bankruptcy Judges.

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KRESSEL, Chief Judge.
1

The Honorable Audrey R. Evans, Chief Judge, United States Bankruptcy

Court for the Eastern and Western Districts of Arkansas.

2

Michael Porter appeals the bankruptcy court’s1 order which determined that a

civil judgment debt against him on Holly Sells’ claims for sexual harassment and

retaliation was excepted from discharge. Sells also appeals the judgment entered in

her favor. We affirm the bankruptcy court and dismiss Sells’ appeal. 

Background

Porter and John Huffer were business partners and owners of Mr. Speedy Car

Care Center. Sells was employed by Mr. Speedy. Huffer sexually harassed Sells

while she worked for Mr. Speedy. Sells testified that Huffer repeatedly called her cell

phone and left messages for her, asked her for sex, and grabbed various private areas

of her body. Sells also testified that when she complained about the behavior to

Porter, he told her that she should not flirt with Huffer. 

On March 28, 2003, Sells and Huffer returned a customer’s car from Mr.

Speedy. Sells testified that while returning to Mr. Speedy, Huffer pulled into a

parking lot and kept her in the car with the doors locked for 45 minutes. He returned

to Mr. Speedy only after Porter called him. The next day, Porter gave Sells a memo

addressed to both her and Huffer. It read:

In light of recent rumors alleging some type of inappropriate contact

between the two of you during business hours, I am looking for

assistance in putting this matter to rest. Based on information provided

by both of you in discussions with me, it appears that if anything did

happen, any fault would have to be attributed to you both. It appears that

there was a mutual understanding and agreement between the two of you

that this was on a consensual basis. 
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I strongly suggest that in the future, both of you should be more

cognizant of proper business etiquette, and refrain from any of these

activities while at work. Your failure to adhere to this suggestion will

prompt strong disciplinary action.

Your signatures on the bottom of this memo will serve as your

acknowledgment and submission that anything that happened was of a

consensual nature, and that nothing of this type will ever take place

during normal work hours in the future. With you[sic] signatures, I will

consider this matter closed, once and for all. 

Huffer had already signed the memo. Sells made copies of the memo, but did

not sign it. She testified that when Porter discovered that she had not signed the

memo, he told her that if she did not sign it, she was fired. Sells did not sign the

memo, nor did she return to work.

Sells brought claims for sexual harassment and retaliation under Title VII and

the Arkansas Civil Rights Act against Mr. Speedy Car Care Center, Por John

Enterprises LLC, Porter and Huffer. A jury trial was held September 7-9, 2005 in the

United States District Court for the Western District of Arkansas. 

The jury instructions required Sells to prove the following elements of sexual

harassment in order for the jury to return a verdict in her favor: 1) Sells was subjected

to sexual advances, sexually graphic and lewd comments, and inappropriate physical

touching at the hands of John Huffer; 2) such conduct was unwelcome; 3) such

conduct was based on Sells’ sex and made her working conditions intolerable; 4) the

defendants took adverse action against Sells with the intent of forcing her to quit or

her resignation was a reasonably foreseeable result of the defendants’ actions; and 5)

Sells’ rejection of or failure to submit to such conduct was a motivating factor in the

defendants taking adverse action against her. The jury answered ‘yes’ to the
4

interrogatory that asked whether Sells had been sexually harassed by Huffer. The jury

was not asked whether Sells had been sexually harassed by Porter.

On the claim of retaliation, the jury instructions described the essential elements

as: 1) Sells complained to the defendants that she was being harassed on the basis of

sex; 2) the defendants took adverse action against her; and 3) Sells’ complaint of

sexual harassment was a motivating factor in the defendants’ actions. The jury

answered the corresponding interrogatory with “[o]n plaintiff’s claim that she was

retaliated against because she complained about John Huffer sexually harassing her

. . . we the jury find in favor of [the plaintiff].”

The interrogatory regarding punitive damages asked “do you find that

defendants acted with malice or reckless indifference to plaintiff’s right not to be

sexually harassed and/or retaliated against?” The jury answered in the affirmative and

awarded $150,000 in punitive damages. The jury also awarded $50,000 in

compensatory damages for mental and emotional suffering and $60,000 for lost wages

and benefits. The district court entered judgment for Sells in accordance with the jury

verdict on September 28, 2006. It also awarded Sells attorney’s fees and costs.

Porter filed a bankruptcy petition on December 16, 2005. Sells initiated this

adversary proceeding against him on March 6, 2006, which alleges that her judgment

for sexual harassment and retaliation is nondischargeable under 11 U.S.C. §523(a)(6)

due to Porter’s willful and malicious conduct. Sells filed a motion for summary 
2

Huffer also filed bankruptcy. The bankruptcy court granted Sells summary

judgment determining that Huffer’s debt to her was excepted from discharge. 

Huffer has not appealed.

5

judgment on the basis of collateral estoppel on May 11, 2006, which the bankruptcy

court granted on February 28, 2007. Porter appeals.2

Standard of Review

We review the bankruptcy court’s factual findings for clear error and its

conclusions of law de novo. Debold v. Case, 452 F.3d 756, 761 (8th Cir. 2006); In

Re Vondall, 364 B.R. 668, 670 (B.A.P. 8th Cir. 2007). The application of collateral

estoppel is a question of law that is reviewed de novo. Robinette v. Jones, 476 F.3d

585, 588-589 (8th Cir. 2007). Our review of the bankruptcy court's entry of summary

judgment is also de novo. Groat v. Carlson (In re Groat), 2007 WL 1500050 (B.A.P.

8th Cir. 2007). Summary judgment is appropriate when the evidence, viewed in the

light most favorable to the non-moving party, demonstrates that there is no genuine

issue of material fact in dispute so that the moving party is entitled to judgment as a

matter of law. Id. 

DISCUSSION 

Collateral Estoppel

 Because the prior judgment was in federal court under federal question

jurisdiction, federal principles of collateral estoppel apply. Murdock v. Ute Indian

Tribe, 975 F.2d 683, 687 (10th Cir. 1992). Collateral estoppel, or issue preclusion,

generally refers to the effect a prior judgment has in foreclosing future litigation of an

issue of fact or law that was litigated and resolved in a valid court determination and

that is essential to the prior judgment, regardless of whether the issue arises on the

same or a different claim. New Hampshire v. Maine, 532 U.S. 742, 748-49, 121 S.Ct.
6

1808, 1814 (2001). In the Eighth Circuit, the five elements of federal collateral

estoppel are: 1) the party sought to be precluded in the second suit must have been a

party, or in privity with a party, to the original lawsuit; 2) the issue sought to be

precluded must be the same as that involved in the prior action; 3) the issue must have

been litigated in the prior action; 4) the issue must have been determined by a valid

and final judgment; and 5) the determination must have been essential to the prior

judgment. Robinette v. Jones, 476 F.3d 585, 589 (8th Cir. 2007). Porter really

disputes only the second element, arguing that the issues in the district court case were

not the same as the ones in this dischargeability proceeding.

11 U.S.C. § 523(a)(6) excepts from discharge any debt for a willful and

malicious injury by the debtor. If the jury in Sells’ sexual harassment case effectively

determined that Porter’s conduct was willful and malicious as part of finding him

liable for retaliation, then the jury verdict would preclude the bankruptcy court from

finding that Porter’s actions were not willful and malicious. Although both parties ask

us to review the evidence from the district court when reaching our decision, that is

not part of our inquiry. We are not reviewing the propriety of that judgment. Rather

we, like the bankruptcy court, must determine whether the jury verdict precluded the

bankruptcy court from finding that Porter’s actions were not willful and malicious.

Thus, we turn to the jury’s verdict and its answers to interrogatories. 

Porter’s Actions Were Willful and Malicious. 

While the parties argue extensively about whether the jury’s award of punitive

damages establishes willfulness and maliciousness, we think that the jury

determination regarding the retaliation is sufficient to collaterally estop Porter.
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42 U.S.C. § 2000e-3(a) prohibits employers from discriminating against an

employee because the employee has opposed any practice that is unlawful under this

subchapter, which includes sexual harassment, or because the employee has made a

charge, testified, assisted, or participated in any manner in an investigation,

proceeding, or hearing under this subchapter. The jury determined that Porter violated

this statute when he retaliated against Sells. 11 U.S.C. § 523(a)(6) states that “[a]

discharge under section 727 . . . of this title does not discharge an individual debtor

from any debt–for willful and malicious injury by the debtor to another entity or to the

property of another entity.” 

Under§ 523(a)(6), malice and willfulness are two different elements and the

plaintiff must establish both in order to prevail. Johnson v. Miera (In re Miera), 926

F.2d 741, 743 (8th Cir. 1991). “The word ‘willful’ in [§ 523(a)(6)] modifies the word

‘injury,’ indicating that nondischargeability takes a deliberate or intentional injury, not

merely a deliberate or intentional act that ‘leads to injury.’” Kawaauhua v. Geiger,

523 U.S. 57, 61 (1998). The willful injury standard is met if the injury was

substantially certain to result from the debtor's conduct. Geiger v. Kawaauhua (In re

Geiger), 113 F.3d 848, 852-53 (8th Cir. 1997)(quoting Restatement(Second) of Torts

§ 8A, cmt. b, (1965)); Jafarpour v. Shahrokhi (In re Shahrokhi), 266 B.R. 702, 708

(B.A.P. 8th Cir. 2001)(mentioning the 8th Circuit's reliance on the Restatement's

substantially certain language and applying that standard). Malice must apply to a

heightened level of culpability which goes beyond recklessness if it is to have a

meaning independent of willful. Johnson, 926 F.2d at 743. “In the Eighth Circuit, an

injury is malicious when the debtor intended to harm the creditor at least in the sense

that the debtor’s tortious conduct was certain or almost certain to case harm.” Osborne

v. Stage (In re Stage), 321 B.R. 486, 493 (B.A.P. 8th Cir. 2005). 

 As we said in Stage, supra., it is the intent to cause both injury and harm (as

those words are defined in the Restatement) that results in a willful and malicious
8

injury. Thus, “if the debtor was aware of the plaintiff-creditor’s right under law to be

free of the invasive conduct of others (conduct of the sort redressed by the law on the

underlying tort) and nonetheless proceeded to act to effect the invasion with particular

reference to the plaintiff, wilfulness is established. If in so doing the debtor intended

to bring about a loss in fact that would be detrimental to the plaintiff, whether specific

sort of loss the plaintiff actually suffered or not, malice is established. Upon those

showings, the debt that arises under law to compensate the plaintiff for that loss is

nondischargeable.” KYMN, Inc. v. Langeslag (In re Langeslag), 366 B.R. 51, 59

(Bankr. D. Minn. 2007). 

Porter’s retaliatory actions against Sells were willful. The jury found that Sells

reported that she was being sexually harassed by Huffer, and that he retaliated against

her in response. When Porter retaliated against Sells, he invaded her legally protected

right to be free from discrimination after her report of sexual harassment. Porter’s

discriminatory actions were willful because Porter took action against Sells because

of her report of sexual harassment by Huffer. His intent was to force Sells to give up

her right to work in an environment free of harassment or give up her job. These

actions go beyond mere recklessness and become willful because Porter took

purposeful action against Sells in order to force her to surrender her rights.

Porter’s actions were also malicious because he intended to harm Sells when

he retaliated against her. One of the essential elements of retaliation requires that

Porter take adverse action against Sells. An ‘adverse action’ is an action that is certain

or nearly certain to cause harm. He intended that she suffer the harm of continuing

to suffer the real emotional damage of continuing to work with Huffer or the harm of

losing her income. Sells did in fact suffer harm as a result of Porter’s actions. She

suffered pecuniary damages in the form of lost wages and benefits, and also suffered

mentally and emotionally.
9

Because Porter’s actions were willful and malicious, Sells’ judgment debt is

excepted from Porter’s discharge under 11 U.S.C. §523(a)(6). 

Sells May Not Appeal a Judgment in Her Favor

“A party may not appeal from a judgment or decree in his favor, for the purpose

of obtaining a review of findings he deems erroneous which are not necessary to

support the decree.” Electrical Fittings Corp. v. Thomas & Betts Co. 307 U.S. 241,

242 (1939). Sells’ cross-appeal alleges that the bankruptcy court erred in finding that

Huffer’s actions were not imputed to Porter by virtue of their partnership relationship.

That the bankruptcy court ruled in favor of Sells on grounds other than she desired

does not allow us to review the bankruptcy court’s findings on the request of the

prevailing party. See California v. Rooney, 483 U.S. 307, 311 (1987); Elkin v. Metro

Prop. & Cas. Ins. Co. (In re Shkolnikov), 470 F.3d 22, 24 (1st Cir. 2006). On appeal,

Sells may assert alternative grounds for affirmance, and we may affirm the bankruptcy

court’s decision on any basis supported by the record. See Power Equip. Co., LLC v.

Case Credit Corp. (In re Power Equip. Co., LLC), 309 B.R. 552, 559 (B.A.P. 8th Cir.

2004). However, we are under no obligation to revisit conclusions of law that are

unnecessary to support our decision. Since we are affirming the bankruptcy court on

the grounds that plaintiff’s debt is nondischargeable because Porter’s conduct was

willful and malicious, it is unnecessary for us to consider whether Huffer’s conduct

should be attributed to Porter. 

CONCLUSION

For the foregoing reasons, the judgment of the bankruptcy court is affirmed and

Holly Sells’ cross-appeal is dismissed.