PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 18-1372

In re: CHARLES TAYLOR MUHS,

Debtor.

------------------------------

TKC AEROSPACE INC.,

 Plaintiff - Appellee,

v.

CHARLES TAYLOR MUHS,

Defendant - Appellant.

Appeal from the United States District Court for the Eastern District of Virginia, at 

Alexandria. Liam O’Grady, District Judge. (1:17-cv-01304-LO-TCB)

Argued: March 19, 2019 Decided: May 8, 2019

Before MOTZ, KING, and THACKER, Circuit Judges.

Reversed and remanded by published opinion. Judge Thacker wrote the opinion, in 

which Judge Motz and Judge King joined.

ARGUED: Richard George Hall, Annandale, Virginia, for Appellant. Douglas Clark 

Proxmire, VENABLE LLP, Tysons Corner, Virginia, for Appellee. ON BRIEF:
2

Stephen K. Gallagher, Kevin W. Weigand, VENABLE LLP, Tysons Corner, Virginia, for 

Appellee.
3

THACKER, Circuit Judge:

At the root of this appeal is a provision in the United States Bankruptcy Code 

stating that a debt “for willful and malicious injury by the debtor to another entity” is 

nondischargeable in Chapter 7 bankruptcy. 11 U.S.C. § 523(a)(6) (emphasis supplied). 

In 2016, Charles Taylor Muhs (“Appellant”) filed for Chapter 7 bankruptcy and 

attempted to discharge a judgment in excess of $20 million entered by an Alaska district 

court against him and in favor of TKC Aerospace, Inc. (“TKCA”). TKCA, however, 

claims that the judgment is nondischargeable because the damages award was based on 

Appellant’s willful and malicious misappropriation of TKCA’s trade secrets. 

The bankruptcy court, applying collateral estoppel principles, concluded that 

Alaska’s award of damages to TKCA necessarily meant that Appellant willfully and 

maliciously injured TKCA for purposes of § 523(a)(6), granted summary judgment in 

favor of TKCA, and determined that the entire judgment award was nondischargeable. 

The district court affirmed. 

We reverse. The Supreme Court has held that § 523(a)(6) requires “a deliberate or 

intentional injury, not merely a deliberate or intentional act that leads to injury.” 

Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998) (emphases in original). Likewise, this 

court has held that a creditor challenging dischargeability under § 523(a)(6) must prove 

that the debtor had an “inten[t] to injure.” In re Duncan, 448 F.3d 725, 730 (4th Cir. 

2006). Because neither the Alaska district court, nor the bankruptcy court, determined

the precise issue of whether Appellant intended to injure TKCA, collateral estoppel and
4

summary judgment were inappropriate. Therefore, we remand to the district court with 

instructions to remand to the bankruptcy court for further proceedings. 

I.

A.

Background

 In 2007, Appellant became Vice President of Business Development for TKCA, 

an Alaska corporation specializing in aircraft procurement, logistics, and support. In that 

capacity, Appellant had access to TKCA’s proprietary information, and his contract with 

TKCA prohibited him from disclosing confidential information to any third party or 

competing with TKCA for six months after his employment terminated. From 2009 to 

2011, TKCA competed for and won Department of State (“DOS”) contracts for

Bombardier Dash 8 aircrafts, modified to meet DOS needs. As part of this process, 

TKCA would -- with the help of Appellant -- submit proposals to DOS describing how it 

would perform such modifications. 

On March 28, 2011, Appellant left his position with TKCA to accept a position 

with Knowledge International in Alexandria, Virginia, although he continued to work for 

TKCA on a part-time basis. Appellant also began to work closely with Phoenix 

Heliparts, Inc. (“PHP”), an Arizona corporation and (at the time) a competitor of TKCA, 

to secure aircraft and develop bids for possible DOS solicitation. On August 5, 2011, 

DOS issued a solicitation for up to two more Dash 8 aircrafts, and PHP submitted a 

proposal. DOS awarded the contract to PHP.
5

B.

The Alaska and Arizona Actions

1.

Parallel Litigation

On September 26, 2011, TKCA filed a lawsuit in the District of Alaska against 

Appellant, alleging breach of contract, breach of implied covenant of good faith and fair 

dealing, breach of fiduciary duty, unjust enrichment, tortious interference with 

prospective business, fraud, and violation of the Alaska Uniform Trade Secrets Act (the 

“Alaska Action”). See Compl., TKC Aerospace, Inc. v. Muhs, No. 3:11-cv-189 (D. 

Alaska filed Sept. 26, 2011), ECF No. 1, at 12–17. Specifically, the complaint alleged 

that Appellant “stole a corporate business opportunity from TKCA and delivered it to a 

competitor, using TKCA proprietary information.” Id. at 2. 

On October 20, 2011, TKCA filed a parallel suit against PHP in the Superior 

Court for Maricopa County, Arizona, alleging misappropriation of trade secrets under the 

Arizona Uniform Trade Secrets Act, intentional interference with business expectancy, 

unfair competition, and conversion. See TKC Aerospace, Inc. v. Phoenix Heliparts, Inc., 

No. CV2011-128889 (Ariz. Sup. Ct. filed Oct. 20, 2011) (the “Arizona Action”). 

Although he was a witness in the Arizona Action, Appellant was not named as a party. 

The Alaska Action and the Arizona Action carried on simultaneously. 

On February 21, 2012, Appellant filed a motion to stay the Alaska Action. In 

support of the motion, Appellant’s counsel -- the same counsel representing PHP in the 

Arizona Action -- stated that the Arizona Action “involv[ed] the same plaintiff . . . and 
6

same factual and legal issues as those in the Alaska Action,” and “[t]he underlying 

factual allegations in [both complaints] are virtually verbatim, the gravamen of the claims 

are identical, and the relief requested is virtually identical.” J.A. 193.

1

 The request for 

stay also stated, “this pending action is . . . substantially similar to and significantly 

parallels the Arizona Action,” id. at 199, and “[i]f TKCA prevails in the Arizona Action, 

. . . then [Appellant] would be collaterally estopped from arguing differently in this 

Court,” id. at 214 n.3 (alterations omitted). The Alaska court denied the motion to stay. 

After granting summary judgment on some claims, however, on March 8, 2013, the 

Alaska court deferred further scheduling until the Arizona Action was complete. 

2.

The Arizona Judgment

Meanwhile, from March 2012 to October 2013, the Arizona state court conducted 

a bench trial for over 40 days on the issue of PHP’s liability regarding TKCA’s trade 

secrets and PHP’s misconduct. Ultimately, on January 30, 2015, the Arizona state court 

entered judgment in favor of TKCA and against PHP on the Arizona Uniform Trade 

Secrets Act claim, the tortious interference claim, and the common law unfair 

competition claim, in the total amount of $20,295,782.58. This amount was broken down 

as follows: $2,883,055.86 in lost profits; $3,882,205 in research and development costs; 

and $13,530,521.72 in exemplary damages. As to the latter, the Arizona state court

 1 Citations to the “J.A.” refer to the Joint Appendix filed by the parties in this 

appeal.
7

stated, “PHP [must] pay exemplary damages pursuant to A.R.S. § 44–403(B)[2

] in an 

amount double awarded to TKCA for its lost profit and research and development costs.” 

J.A. 105. The Arizona court found that PHP engaged in “willful and malicious 

misconduct,” id. at 59, and “PHP willfully and maliciously misappropriated TKCA’s 

trade secrets,” id. at 66. It also found that “PHP formed an agency relationship with 

[Appellant],” and “[b]ecause of th[is relationship], this court will attribute [Appellant’s] 

acts to PHP.” Id. at 74, 75. 

But even though the Arizona state court attributed Appellant’s actions to PHP, the 

Arizona Action was not based solely on the actions of Appellant. Indeed, the Arizona 

court also found the following regarding Tina Cannon, president of PHP at the relevant 

time, and her husband Darrin Cannon, who was vice-president:

• “[T]he Cannons wiped their computers after receiving a 

litigation hold letter and after trial started. The court has 

rarely, if ever in a civil matter, witnessed a party engage in 

such flagrant misconduct and act with such disregard for the 

truth and such profound disrespect for the law.” J.A. 60;

• “This court finds that Darrin Cannon installed and ran 

CCleaner with the intent to delete any evidence that PHP had 

misappropriated TKCA’s trade secrets and proprietary and 

confidential information and also to conceal PHP’s efforts to 

delete relevant and material evidence of its misconduct.” J.A. 

60–61;

• “During trial, Tina Cannon and [Appellant] provided 

improbable explanations when confronted with overwhelming 

 2 This statute provides, “If willful and malicious misappropriation exists, the court 

may award exemplary damages in an amount not exceeding twice any award [for actual 

loss from misappropriation and unjust enrichment].” Ariz. Rev. Stat. Ann. § 44-403(B). 
8

evidence of PHP’s efforts to secure the award of the D[O]S 

contract.” J.A. 65; and 

• Tina Cannon “induced [Appellant] to violate his non-compete 

agreement with TKCA and disclose TKCA trade secrets in 

further breach of his employment contract.” J.A. 80. 

Accordingly, when assessing whether exemplary damages were appropriate 

pursuant to A.R.S. § 44–403(B) for willful and malicious misappropriation, the Arizona 

court stated the following, inter alia:

Attempts to conceal wrongful conduct with respect to trade 

secrets provide evidence of willful and malicious 

misappropriation. . . . 

[T]he following are just a few examples that establish PHP 

willfully and maliciously engaged in misconduct. Despite 

knowing [Appellant’s] contract with TKCA had a noncompete clause, the Cannons induced [Appellant] to 

misappropriate TKCA’s trade secrets in order to compete 

directly with TKCA. [Appellant], on behalf of PHP, withheld 

vital information from TKCA so that PHP could establish a 

material and temporal advantage in preparing a successful 

proposal in response to the D[O]S solicitation. Tina Cannon 

knew that [Appellant] had uploaded TKCA proprietary 

documents to PHP’s servers and PHP knowingly used the 

uploaded documents to prepare its bid. PHP further knew 

that using the uploaded documents would harm TKCA. . . . 

PHP intentionally wip[ed] company servers after learning of a 

subpoena, erasing company laptops in the evening and early 

morning hours before court-ordered forensic imaging started 

. . . .

J.A. 87. After awarding exemplary damages, the Arizona court noted that TKCA also 

satisfied its burden of proof on punitive damages, explaining, “This court finds by clear 

and convincing evidence that PHP engaged in outrageous conduct and acted with an evil 

mind intending to injure TKCA by intentionally interfering with TKCA’s contracts and 
9

opportunities and then using TKCA’s proprietary information to misappropriate those 

opportunities.” Id. at 88–89 (emphases supplied). The court made no specific finding, 

however, that Appellant (who, again, was not a party to the Arizona Action) intended to 

injure TKCA.3

3.

The Alaska Judgment

Based on the Arizona judgment, on June 12, 2015, TKCA filed a motion for 

summary judgment in the Alaska Action. Without holding a hearing, the Alaska court 

granted the motion on October 22, 2015. It reasoned that, even though Appellant was not 

a party to the Arizona Action, the Arizona court’s conclusion and award of damages were

based on “findings that [Appellant] worked with PHP to compete for the D[O]S contract, 

that [Appellant] provided TKCA documents to PHP, and that [Appellant] worked on 

PHP’s D[O]S Dash 8 proposal.” J.A. 30–31. Then the Alaska court applied principles of 

equitable estoppel and quasi-estoppel to reach the conclusion that “[Appellant] agreed to 

be bound by the decision in the Arizona Action and thus he was in privity with PHP. 

Because [Appellant] was in privity with PHP, [he] is collaterally estopped from 

relitigating TKCA’s claims against him.” Id. at 38. 

 3 PHP filed for Chapter 11 bankruptcy on September 18, 2015, staying any 

potential appeal of the Arizona Action. See 11 U.S.C. § 362(a)(1) (bankruptcy petition 

acts as a stay to the “continuation . . . of a judicial . . . proceeding against the debtor” that 

was commenced before bankruptcy).
10

Accordingly, the Alaska court held that TKCA was entitled to judgment against 

Appellant for breach of contract, breach of implied covenant of good faith and fair 

dealing, breach of fiduciary duty, tortious interference with prospective economic benefit, 

and violation of the Alaska Trade Secrets Act. Per the Alaska court, TKCA was entitled 

to the following:

a. Lost Profits: $2,883,055.86

b. Research and Development: $3,882,205.00

c. Exemplary Damages: $13,530,521.72.

J.A. 42. Thus, Appellant was liable for $20,295,782.58, the same amount imposed on 

PHP in the Arizona Action. 

As noted above under “c.,” the Alaska court awarded exemplary damages in the 

amount of $13,530,521.72 to TKCA. In awarding these damages, the Alaska court 

dropped a footnote that stated, “Per AS 45.50.915(b),” with no further analysis. J.A. 42 

n.37. Section 45.50.915(b) is part of the Alaska Uniform Trade Secrets Act and provides:

(a) In addition to or in lieu of injunctive relief, a complainant 

may recover damages for the actual loss caused by 

misappropriation. A complainant also may recover for the 

unjust enrichment caused by misappropriation that is not 

taken into account in computing damages for actual loss.

(b) If wilful and malicious misappropriation exists, the court 

may award exemplary damages in an amount not exceeding 

twice the damages awarded under (a) of this section.
11

AS § 45.50.915 (emphasis supplied). Like the Arizona court, the Alaska court made no 

specific finding that Appellant intended to injure TKCA.4

C.

Federal Bankruptcy Proceedings

On July 1, 2016, Appellant filed a petition for Chapter 7 bankruptcy in the 

Bankruptcy Court for the Eastern District of Virginia and sought to discharge the Alaska 

judgment. See Petition, In re Muhs, No. 16-12288 (Bankr. E.D. Va. filed July 1, 2016), 

ECF No. 1. TKCA then filed an adversary complaint in the bankruptcy court, alleging 

that the Alaska judgment was nondischargeable pursuant to 11 U.S.C. § 523(a)(2) (any 

debt for “money . . . to the extent obtained by . . . false pretenses [or] actual fraud” is 

nondischargeable in Chapter 11 proceedings); § 523(a)(4) (same for any debt “for fraud 

or defalcation while acting in a fiduciary capacity, embezzlement, or larceny”); and 

§ 523(a)(6) (same for any debt “for willful and malicious injury by the debtor to another 

entity or to the property of another entity”). See Compl., In re Muhs, No. 16-01192 

(Bankr. E.D. Va. filed Oct. 11, 2016).

1.

TKCA’s First Motion

On December 19, 2016, TKCA filed a motion for judgment on the pleadings based 

on the Alaska judgment. It contended:

 4 The Alaska judgment has been appealed to the Court of Appeals for the Ninth 

Circuit, but the appeal was administratively closed in May 2017 pending bankruptcy 

proceedings. 
12

This court should estop [Appellant] from re-litigating the 

same facts and issues that two other courts have already 

addressed. To do so, the Court should apply collateral 

estoppel to the findings of the Arizona and Alaska Courts and 

hold that [Appellant’s] debt from the Alaska Judgment is not 

dischargeable under 11 U.S.C. §§ 523(a)(2) [false pretenses 

or fraud], (a)(4) [fraud or defalcation in a fiduciary capacity, 

embezzlement, or larceny], and (a)(6) [willful and malicious 

injury].

Mot. J. Pleadings, In re Muhs, No. 16-01192 (Bankr. E.D. Va. filed Dec. 19, 2016), ECF 

No. 7, at 9. The bankruptcy court held a hearing on this motion. There, TKCA 

contended, “[The] Alaska and Arizona [courts] awarded exemplary damages, which 

under their statutes . . . exemplary damages can only be awarded if there is willful and 

malicious misappropriation.” Trans., In re Muhs, No. 16-01192 (Bankr. E.D. Va. March 

9, 2017), ECF No. 22, at 10–11. The bankruptcy court denied the motion, explaining in 

open court:

[T]his is a Court of equity, so I am going to use my power to 

apply equitable estoppel in this case in order for a trial to go 

on. I’m not saying that [Appellant] has a prayer of winning. 

What I am saying is that it is clear by the judgment in the 

Arizona Court that [Appellant’s] attorney was not working in 

the best interests from time to time of either of its clients, 

PHP or [Appellant]. . . . I think that there definitely are some 

disputed facts, and I want to know what they are. I want to 

hear both sides. 

Id. at 37–38.

TKCA then moved for leave to appeal the bankruptcy court’s interlocutory order 

to the district court. See Mot. Leave to Appeal, TKC Aerospace, Inc., No. 1:17-cv-372 

(E.D. Va. Mar. 29, 2017), ECF No. 1. The district court granted the motion for leave to 

appeal and reversed the bankruptcy court, explaining that it erred in “finding that 
13

collateral estoppel did not apply to [the Alaska court’s] grant of summary judgment.” 

J.A. 222. The district court explained that the issues in the Alaska Action and bankruptcy 

proceeding were “identical,” but it did not determine whether the Alaska court found that 

Appellant had an intent to injure TKCA. Id. at 227. Instead, the district court made the 

general proclamation that a judgment “resulting from . . . willful and malicious injury 

against another [is] barred from discharge in a bankruptcy proceeding.” Id. (citing 11 

U.S.C. § 523). Thus, it concluded “[t]he doctrine of collateral estoppel bars re-litigation 

of the facts in the Alaska case.” Id. at 229. The district court remanded for further 

proceedings.

2.

TKCA’s Second Motion

On November 2, 2017, in the bankruptcy court once again, TKCA filed a renewed 

motion for judgment on the pleadings. The very next day, the bankruptcy court entered 

an order granting summary judgment to TKCA, concluding that the Alaska judgment was 

nondischargeable pursuant to § 523(a)(6) only. It explained, “With the district court’s 

guidance in mind, applying principles of collateral estoppel, this Court finds that the 

Alaska court’s findings satisfy the standard for nondischargeability under 11 U.S.C. 

§ 523(a)(6).” J.A. 236. It did not address § 523(a)(2) or (a)(4). 

Appellant appealed to the district court. See Notice of Appeal, Muhs v. TKC 

Aerospace Inc., 1:17-cv-1304 (E.D. Va. filed Nov. 16, 2017), ECF No. 1. The district 

court affirmed the bankruptcy court as to nondischargeability under § 523(a)(6). It held 

that because the Alaska judgment “awarded exemplary damages to [TKCA] for 
14

Appellant’s violation of Alaska’s Uniform Trade Secrets Act,” which are “only for 

willful and malicious conduct,” then the Alaska judgment is nondischargeable under 

§ 523(a)(6). J.A. 310. Appellant timely noted this appeal. We possess jurisdiction 

pursuant to 28 U.S.C. § 1291 and § 158(d).

II.

This court “review[s] the judgment of a district court sitting in review of a 

bankruptcy court de novo, applying the same standards of review that were applied in the 

district court.” In Re Biondo, 180 F.3d 126, 130 (4th Cir. 1999). Specifically, we review 

the factual findings of the bankruptcy court for clear error, while we review questions of 

law de novo. See id. “Although collateral estoppel may well preclude a bankruptcy court 

from relitigating previously-decided issues, the ultimate issue of dischargeability is a 

legal issue, and exceptions to discharge are narrowly construed.” In re McNallen, 62 

F.3d 619, 625 (4th Cir. 1995) (citations omitted).

III.

In this appeal, we are asked to decide whether Appellant is collaterally estopped 

from arguing in bankruptcy court that the Alaska judgment is dischargeable under 

§ 523(a)(6), because the Alaska court awarded exemplary damages to TKCA based on 

willful and malicious misappropriation under Alaska law. As the party challenging the 

dischargeability of a debt, TKCA bears the burden of proving the debt nondischargeable 

by a preponderance of the evidence. See Grogan v. Garner, 498 U.S. 279, 287, 291 

(1991).
15

TKCA contends that the “Alaska court’s findings satisfy all the requisite elements 

for ‘willful and malicious’ injury to TKCA under 11 U.S.C. § 523(a)(6),” and “[t]here is 

no meaningful difference in the definition of ‘willful and malicious’ under Alaska law 

and [§ 523(a)(6)].” Appellee’s Br. 9–10. Appellant, however, maintains that “in a 

proceeding involving 11 U.S.C. § 523(a)(6), ‘willful and malicious’ conduct requires a 

finding of a specific intent to injure,” and there was no such finding made in the Alaska 

Action. Appellant’s Br. 9. We agree with Appellant.

A.

Collateral Estoppel 

In Grogan v. Garner, the Supreme Court concluded that principles of collateral 

estoppel apply in dischargeability proceedings in bankruptcy. 498 U.S. at 284 & n.11. 

But we must first address which jurisdiction’s estoppel rules apply. As a general matter, 

“[t]he preclusive effect of a federal-court judgment is determined by federal common 

law.” Taylor v. Sturgell, 553 U.S. 880, 891 (2008). When a federal court exercises 

diversity jurisdiction over a state law claim, as in the Alaska Action, the federal rule “is 

to apply ‘the law that would be applied by state courts in the State in which the federal 

diversity court sits’ as long as the state rule is not ‘incompatible with federal interests.’” 

Hately v. Watts, 917 F.3d 770, 777 (4th Cir. 2019) (quoting Semtek Int’l, Inc. v. Lockheed 

Martin Corp., 531 U.S. 497, 509 (2001)). Finding no reason why Alaska collateral 

estoppel law would be incompatible with federal interests, we apply the following test: 

Collateral estoppel prohibits relitigation of issues actually 

decided in earlier proceedings where: (1) the party against 

whom the preclusion is employed was a party to or in privity 
16

with a party to the first action; (2) the issue precluded from 

relitigation is identical to the issue decided in the first action; 

(3) the issue was resolved in the first action by a final 

judgment on the merits; and (4) the determination of the issue 

was essential to the final judgment.

Strong v. Williams, 435 P.3d 872, 875 (Alaska 2018) (emphases supplied). Accordingly, 

first, we will assess the issue Appellant wants to litigate in the bankruptcy court (i.e., 

whether the debt is for a willful and malicious injury for purposes of § 523(a)(6)). Next,

we will evaluate whether collateral estoppel precludes litigation of that issue in 

bankruptcy court.

B.

Bankruptcy Requirement: Intent to Injure

The statue at issue here -- § 523(a)(6) -- provides that a debt is not dischargeable 

in a Chapter 7 proceeding if it is a debt “for willful and malicious injury by the debtor to 

another entity or to the property of another entity.” 11 U.S.C. § 523(a)(6). The Supreme 

Court and this court have decided that a debt arising from an injury attributable to mere 

negligent or reckless conduct does not satisfy the “willful and malicious” requirement of 

(a)(6); in addition, it is not enough that the conduct underlying the injury was intentional. 

Rather, the debtor must have engaged in such conduct with the actual intent to cause 

injury. See Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998); In re Duncan, 448 F.3d 725, 

729 (4th Cir. 2006). 
17

1.

Kawaauhau v. Geiger

In Geiger, Margaret Kawaauhau sought treatment from Dr. Paul Geiger for a foot 

injury. See 523 U.S. at 59. Dr. Geiger knew intravenous penicillin would be most 

effective to decrease the risk of infection, but he prescribed oral penicillin because 

Kawaauhau wished to keep the cost down. Then, he left town and placed her in the care 

of other physicians, who decided she should be transferred to a specialist. But when Dr. 

Geiger returned, he disagreed and cancelled her transfer because he thought the infection 

had subsided; however, Kawaauhau’s condition worsened, resulting in the amputation of 

her right leg below the knee. See id. 

Kawaauhau and her husband sued Dr. Geiger for malpractice, and a jury awarded 

them $355,000 in damages. Dr. Geiger did not carry malpractice insurance and ended up 

filing for bankruptcy and seeking to discharge the judgment against him under 

§ 523(a)(6). See Geiger, 523 U.S. at 59–60. The bankruptcy court decided the debt was 

nondischargeable because the doctor’s “treatment fell far below the appropriate standard 

of care and therefore ranked as ‘willful and malicious.’” Id. at 60. 

The Eighth Circuit, sitting en banc, reversed the bankruptcy court and held that the 

debt was dischargeable, and the Supreme Court affirmed. The Supreme Court explained: 

We confront this pivotal question concerning the scope of the 

“willful and malicious injury” exception: Does § 523(a)(6)’s 

compass cover acts, done intentionally, that cause injury (as 

[the Kawaauhaus] urge), or only acts done with the actual 

intent to cause injury (as the Eighth Circuit ruled)? The 

words of the statute strongly support the Eighth Circuit’s 

reading.
18

Geiger, 523 U.S. at 61 (emphasis supplied). The Court reasoned, “The word ‘willful’ in 

(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.” Id. 

(emphases supplied). Moreover, “the (a)(6) formulation triggers in the lawyer’s mind the 

category ‘intentional torts,’ as distinguished from negligent or reckless torts. Intentional 

torts generally require that the actor intend ‘the consequences of an act,’ not simply ‘the 

act itself.’” Id. at 61–62 (quoting Restatement (Second) of Torts § 8A) (emphasis in 

Geiger). The Court rejected the notion that a willful and malicious injury should 

encompass “a wide range of situations in which an act is intentional, but injury is 

unintended, i.e., neither desired nor in fact anticipated by the debtor,” such as a “knowing 

breach of contract.” Id. at 62. In the end, “to be nondischargeable, the judgment debt 

must be for willful and malicious injury,” and “[n]egligent or reckless acts . . . do not 

suffice to establish that a resulting injury is willful and malicious.” Id. at 63–64 

(emphasis in original). 

2.

In re Duncan

This court has applied the Geiger principle in only one published decision, In re 

Duncan, 448 F.3d 725 (4th Cir. 2006). There, a mother (“Jacqueline”) was found liable 

for the wrongful death of her adopted child, after her child drowned in the bathtub while 

in Jacqueline’s care. Because the child had subdural hemorrhaging and cerebral edema, 

the wrongful death lawsuit filed by the child’s father alleged that Jacqueline either abused 
19

and assaulted the child and then left her in the bathtub unattended to drown, or 

intentionally drowned her to obscure evidence of the abuse. See id. at 727. The jury in 

the wrongful death suit awarded the child’s estate (the “Estate”) $15,000 in compensatory 

damages, and $500,000 in punitive damages, which was later reduced. See id. Because 

the jury awarded punitive damages, it necessarily decided that Jacqueline engaged in 

“willful and wanton” conduct, which was defined as: 

acting consciously in disregard of [the child] or acting with a 

reckless indifference to the consequences to [the child] when 

the Defendant is aware of her conduct and is also aware, from 

her knowledge of existing circumstances and conditions, that 

her conduct would probably result in injury to [the child].

Id. at 729 (emphasis supplied).

Jacqueline thereafter filed a Chapter 7 bankruptcy petition and listed the wrongful 

death award as a dischargeable debt. See Duncan, 448 F.3d at 727. The Estate argued 

that it was not dischargeable under § 523(a)(6), and, based on the wrongful death 

judgment and punitive damages award, Jaqueline was collaterally estopped from arguing 

that the injury was not willful or malicious. See id. 

Applying Virginia law (because the wrongful death judgment originated in 

Virginia state court), we held that collateral estoppel did not apply to the willful and 

malicious issue because whether Jacqueline “intended to injure” her daughter was neither 

identical to, nor necessary to, the issue litigated in the wrongful death proceedings. 

Duncan, 448 F.3d at 730. Indeed, Virginia law allowed for an award of punitive 

damages for conscious disregard or reckless indifference, neither of which rose to the 

level of intent to injure under Geiger. And because the Estate was not required “to prove 
20

that Jacqueline Duncan intended to injure [the child] . . . , the wrongful death judgment 

did not involve an identical issue to the controlling issue here.” Id. at 730. We 

concluded, “At bottom, neither the wrongful death nor the punitive damages award in the 

state court involved the issue of whether Jacqueline Duncan intended to injure [the child] 

that controls resolution of this adversary proceeding.” Id. Thus, we held that collateral 

estoppel did not apply in the bankruptcy proceedings. 

Therefore, based on this case law, the controlling issue in the adversary 

bankruptcy proceeding has to be whether Appellant intended to injure TKCA. With this 

in mind, we turn to an analysis of the Alaska court’s decision.

C.

Alaska Judgment

We now determine whether, based on the Alaska judgment, Appellant is 

collaterally estopped in the adversary proceeding from arguing that the debt to TKCA is 

not for a willful and malicious injury for purposes of § 523(a)(6). Under Alaska law, 

collateral estoppel prohibits relitigation of an issue “actually decided in earlier 

proceedings” if TKCA can demonstrate that (1) Appellant was a party to the Alaska 

Action; (2) the issue precluded from relitigation is identical to the issue decided in the 

Alaska Action; (3) the issue was resolved by a final judgment on the merits; and (4) the 

determination of the issue was essential to the final judgment. Strong, 435 P.3d at 875. 

Because Appellant was a party in Alaska, and the Alaska judgment was final, we turn to 

an analysis of whether the issues are identical, were actually decided in Alaska, and were 

essential to the Alaska judgment. 
21

1.

Identical Issues

First, Alaska law requires that the issue to be precluded from relitigation “is 

identical to the issue decided in the first action.” Strong, 435 P.3d at 875. However, 

TKCA has not demonstrated -- and we cannot conclude -- that the meaning of “willful 

and malicious” under Alaska law is identical to the meaning of “willful and malicious” 

under the Bankruptcy Code. 

As explained above, § 523(a)(6) requires intent to injure, and does not encompass 

mere negligent or reckless conduct. Alaska has adopted the Uniform Trade Secrets Act 

(“UTSA”), and neither Alaska’s version of the UTSA, nor the UTSA itself, defines the 

terms willful and malicious. We cannot conclude that just because the words are the 

same, the meaning is also the same. In fact, many states adopting the UTSA have 

developed definitions of willful and malicious that fall below the Geiger standard. See, 

e.g., Mattern & Assocs., L.L.C. v. Seidel, 678 F. Supp. 2d 256, 271 (D. Del. 2010) 

(analyzing award of exemplary damages under the Delaware UTSA, explaining, 

“Delaware courts have defined willfulness as an awareness, either actual or constructive, 

of one’s conduct and a realization of its probable consequences, and malice as ill-will, 

hatred or intent to cause injury.” (citation and internal quotation marks omitted) 

(emphases supplied)); Mangren Research & Dev. Corp. v. Nat’l Chem. Co., 87 F.3d 937, 

946 (7th Cir. 1996) (analyzing award of exemplary damages under the Illinois UTSA, 

reasoning that the definition of willful and malicious “surely must include an intentional 

misappropriation as well as a misappropriation resulting from the conscious disregard of 
22

the rights of another” (emphasis supplied)); 12 Pa. C.S.A. § 5302 (Pennsylvania UTSA 

defining “willful and malicious” as “[s]uch intentional acts or gross neglect of duty as to 

evince a reckless indifference to the rights of others on the part of the wrongdoer, and an 

entire want of care so as to raise the presumption that the person at fault is conscious of 

the consequences of his carelessness” (emphasis supplied)); see also HTS, Inc. v. Boley, 

954 F. Supp. 2d 927, 959 (D. Ariz. 2013) (noting that the Arizona UTSA does not define 

“willful and malicious” but adopting Pennsylvania’s definition, explaining “the Court 

considers as instructive decisions from other jurisdictions that have adopted substantially 

the same provision of the UTSA”).

Indeed, TKCA’s attempts to define “willful and malicious” in Alaska’s version of 

the UTSA as identical to § 523(a)(6) fall short of its burden. It refers to an Alaska 

Supreme Court decision stating, “[a]n act is willful if it is done intentionally and 

purposefully, rather than accidentally or inadvertently.” Walt’s Sheet Metal v. Debler, 

826 P.2d 333, 336 (Alaska 1992). It then contends that the Alaska court necessarily 

determined that Appellant “intentionally and purposefully misappropriated TKCA’s trade 

secrets, which is sufficient to meet the Fourth Circuit standard for willfulness.” 

Appellee’s Br. 11. But Geiger and Duncan specifically instruct that it is not enough to 

have “a deliberate or intentional act that leads to injury.” Geiger, 523 U.S. at 61. Rather, 

a bankruptcy court must specifically find a deliberate and intentional injury. Therefore, 

even if TKCA is correct that the Alaska court decided Appellant intentionally and 

purposefully misappropriated TKCA’s trade secrets, that is still not enough. It must have 
23

taken the additional step of finding that Appellant, in so doing, intended for TKCA to be 

injured by that misappropriation. 

Therefore, we simply cannot affirm the district court and bankruptcy court’s 

conclusion that the issue Appellant seeks to argue in bankruptcy court is identical to the 

issue presented in the Alaska Action. 

2.

Actually Decided and Essential

Moreover, the issue of whether Appellant intended to injure TKCA was neither

“actually decided in,” nor “essential to” the Alaska Action. Strong, 435 P.3d at 875. The 

Alaska court never decided whether Appellant intended to injure TKCA, as required by 

Geiger and Duncan. Indeed, the only critical determination the Alaska court made was 

that Appellant was in privity with PHP based on equitable and quasi-estoppel, and 

therefore, he was collaterally estopped from “relitigating TKCA’s claims against him” in 

Alaska. J.A. 38. TKCA maintains that the Alaska court necessarily made a 

determination of willfulness and maliciousness in its award of exemplary damages, 

indicated in a footnote with no analysis. But as mentioned above, the Alaska court made 

no decision whatsoever that it based those damages on a finding that Appellant intended 

to injure TKCA. Indeed, the district court’s decision on appeal here recognizes this fact. 

It states that the Alaska judgment awarded exemplary damages for violation of Alaska’s 

UTSA, which can “only [be awarded] for willful and malicious conduct.” J.A. 310 

(emphasis supplied). As explained above, Appellant’s conduct is not the issue; rather, it 

is his intent to injure that matters. 
24

TKCA also points to a portion of the Arizona court’s decision regarding the award 

of punitive damages, which states, “This court finds by clear and convincing evidence 

that PHP engaged in outrageous conduct and acted with an evil mind intending to injure

TKCA by intentionally interfering with TKCA’s contracts and opportunities and then 

using TKCA’s proprietary information to misappropriate those opportunities.” J.A. 88–

89 (emphasis supplied). Then, TKCA contends that although Appellant was not a party 

to the Arizona Action, this “evil mind” is attributable solely to Appellant because in the 

Alaska Action, Appellant’s counsel acknowledged “TKCA’s claims of wrongdoing by 

PHP are entirely based on the alleged wrongdoing of [Appellant].” Appellee’s Br. 16 n.2 

(quoting J.A. 200 (motion to stay Alaska Action)). 

But crucially, the Alaska court did not take the additional step of finding that 

Appellant had the requisite intent to injure (or was estopped from arguing to the contrary) 

in the Alaska Action. Nor would such a finding have been essential to the Alaska court’s 

decision that Appellant was in privity with PHP and thus, he was collaterally estopped 

from relitigating the issues determined in the Arizona Action. 

Therefore, whether Appellant specifically had the requisite intent to injure TKCA 

was neither actually decided in, nor essential to, the Alaska Action.
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3.

For these reasons, collateral estoppel was inappropriate in this case. We reverse 

the district court and bankruptcy court’s reliance on collateral estoppel to determine the 

nondischargeability of the Alaska judgment, and remand for further proceedings.5

IV.

For the foregoing reasons, we reverse the judgment of the district court, with 

instructions to remand to the bankruptcy court for proceedings consistent with this 

opinion.

REVERSED AND REMANDED

 5 TKCA argues in its response brief that we could affirm based on other 

nondischargeability provisions in the Bankruptcy Code, specifically, § 523(a)(2) and 

(a)(4). These arguments were raised to the bankruptcy court; however, the bankruptcy 

and district courts relied only on (a)(6) in the immediate judgments on appeal. These are 

determinations best left to the bankruptcy court in the first instance. See In re FirstPay, 

Inc., 391 F. App’x 259, 269 n.7 (4th Cir. 2010) (“Whether FirstPay converted and 

misappropriated some of its clients’ funds in order to make payments to the IRS on 

behalf of other clients, among other issues, will have to be determined by the bankruptcy 

court in the first instance.”); In re Biondo, 180 F.3d 126, 134 (4th Cir. 1999) (“The 

Biondos’ state of mind is a question of fact to be determined in the first instance by the 

bankruptcy court . . . .”); In re Pucci Shoes, Inc., 120 F.3d 38, 42 (4th Cir. 1997) 

(remanding to bankruptcy court for determination of the value of a line of credit because 

“neither this court nor the district court is authorized to make . . . factual determinations 

in the first instance”). On remand, the bankruptcy court is free to entertain these 

possibilities.