Brian K. Failon v. Compass Chemical International, LLC

Section 523(a)(6) of the Bankruptcy Code excludes from discharge any debt “for willful and malicious injury by the debtor to another entity or the property of another entity.” 11 U.S.C. § 523(a)(6). In Kawaauhau v. Geiger, 523 U.S. 57 (1998), this Court held that debts attributable to negligent or reckless acts do not fall within the statutory exception. In doing so, the Court ruled that the language of § 523(a)(6) encompassed only acts done with the actual intent to cause injury and not merely intentional acts that happen to cause injury. The question presented here is: Whether a debt arising from a spoliation sanction issued to the debtor because he intentionally wiped the hard drive of his employer-owned laptop computer clean prior to leaving his then-employer -- conduct which was judicially described as “at least negligent and may have been deliberate” – but did not cause the company any competitive harm and did not have any substantive monetary relief awarded against him for any of the eleven counts brought against him in a subsequent civil suit that the former employer ultimately voluntarily dismissed without prejudice was a “malicious injury by the debtor to another” under § 523(a)(6) of the Bankruptcy Code that could not be discharged in bankruptcy.