MEMORANDUM DECISION FINDING THAT DEFENDANT'S DEBT TO PLAINTIFFS IS NON-DISCHARGEABLE UNDER 11 U.S.C. § 523(a)(6)

KEVIN R. ANDERSON, Bankruptcy Judge.

In this adversary proceeding, the Debtor's former employer is seeking to except a pre-bankruptcy judgment from discharge as a "willful and malicious injury" under 11 U.S.C. § 523(a)(6). The complaint alleges that the Debtor caused injury to the Plaintiffs when he formed a competing title company by taking employees and customers from his former employer.

In December 2016 the United States District Court for the District of Utah held a three-week jury trial and on December 30, 2016 entered a judgment against Michael M. Smith in favor of First American for damages. Michael M. Smith filed a voluntary Chapter 7 bankruptcy petition on April 4, 2017.1

First American Title Insurance Company and First American Title Company, LLC (collectively "First American") filed a nondischargeability complaint against Michael M. Smith ("Smith" or "Debtor") alleging breach of fiduciary duty under 11 U.S.C. § 523(a)(4) and willful and malicious injury under § 523(a)(6).2

On April 3, 2019 the Court entered a Stipulated Pretrial Order.3 In the Pretrial Order, First American agreed to voluntarily dismiss its first claim for non-dischargeability under § 523(a)(4). On April 16-19, 2019, the Court held a trial on the cause of action for willful and malicious injury under § 523(a)(6). The Court took the matter under advisement on April 19, 2019. Having carefully considered the parties' oral and written arguments, the evidence and testimony presented at trial, and having conducted its own independent research of the relevant case law, the Court issues the following Memorandum Decision.4

I. JURISDICTION, NOTICE, AND VENUE

The Court's jurisdiction over this adversary proceeding is properly invoked under 28 U.S.C. § 1334(b) and § 157(a) and (b)(2).5 First American's complaint objects to the discharge of particular debts, making this a core proceeding under 28 U.S.C. §§ 157(b)(2)(A) and (I). Venue is appropriately laid in this District under 28 U.S.C. § 1409.

II. FINDINGS OF FACT

A. Summary.

For many years, the Debtor worked as legal counsel for First American and its predecessor, Equity Title. The Debtor became dissatisfied with First American, and took steps to form a new title company — Northwest Title — to directly compete with First American. The Debtor concealed these business formation activities from First American, including leasing new office space in proximity to First American's offices and communicating with First American employees about coming to work with him. Within days of resigning from First American, twenty-six employees left First American and went to work with the Debtor and Northwest Title taking hundreds of customers with them. These actions substantially disrupted First American's business operations and resulted in financial injury.

B. Background.

1. The Debtor is an attorney who practiced real property law from 1987 through 1993. In 1993, he became General Counsel for Realty Title. Courtesy Title acquired Realty Title and the Debtor became General Counsel for Courtesy Title. In 1995, Courtesy Title became Equity Title.6

2. In 2004, the Debtor entered into an employment agreement with Equity Title Insurance Agency, Inc. (the "Equity Employment Agreement").7

3. In the Equity Employment Agreement, the Debtor agreed to be employed to serve as Chief Operating Officer and General Counsel of Equity Title. As COO of Equity Title, the Debtor supervised all operations of Equity Title throughout Utah.8

4. Under the Equity Employment Agreement, the Debtor was entitled to a base salary with yearly cost of living adjustment (COLA) increases for those calendar years in which Equity Title earned a pre-tax net income of 5% or greater.9

5. Under the Equity Employment Agreement, the Debtor was entitled to bonuses based on Equity Title's pre-tax net income.10

6. The Equity Employment Agreement contained a non-compete clause that would apply for one year, but only if the Debtor was terminated for cause.11 The Debtor was aware that if he voluntarily quit, the non-competition clause would not apply.12 However, the Debtor asserts this was not on his mind when he resigned from First American on March 9, 2015.13

7. The Equity Employment Agreement also provides: "Notwithstanding the foregoing, nothing herein shall restrict Smith's right to practice law subsequent to the termination of his employment with Equity; provided, however, that Smith shall not be employed by any person or entity engaged in the title insurance business."14

8. Between 2003 and 2006, Equity Title had approximately 150 employees and between 18 and 20 offices throughout Utah.15

9. In September 2003, First American acquired a 25% ownership interest in Equity Title. First American acquired a further 25% ownership interest in Equity Title in March 2005. In December 2008, First American purchased an additional 45% ownership interest in Equity Title, making it the majority owner. First American acquired the remaining 5% ownership interest in Equity Title in February 2009, making it the sole owner.16

10. After First American acquired a majority interest in Equity Title in 2008, it began managing Equity Title's back office functions such as payroll, accounting, and title plant operations.17

11. After 2011, the Debtor was no longer Equity Title's General Counsel; he became State Underwriting and Legal Counsel.18

12. As State Underwriting and Legal Counsel, the Debtor was to act as a lawyer for First American.19

13. The Debtor recognized that he was a lawyer for First American and that First American was his client.20 The Debtor also recognized that as its attorney, he owed a fiduciary duty and a duty of undivided loyalty to First American relating to the scope of his representation up until the time he resigned.21

14. No one at First American complained to the Debtor about his legal work during the relevant time.22

15. As a lawyer, the Debtor understood the meaning and obligations of the non-compete and non-solicitation agreements in the Equity Employment Agreement.23

16. In June of 2011, the Debtor sent an email to Mark Webber, Ray Whitney and Jeff Williams ("Williams") about a conversation he had with employee Mitch Montgomery, who had received an offer to work for another title company.24 In the email, the Debtor states the following:

17. Mitch Montgomery left First American in December 2011 to work for another title company and took five employees with him, but he was never sued by First American.25

18. The Debtor avers that "[i]n May 2012, Kurt Andrewsen [First American's former Regional Human Resources Manager], told [him] that Equity was gone, that [his] Equity contract no longer existed, and asked [him] to sign an employment agreement with [First American] that contained, among other things, restrictive covenants regarding non-competition, non-solicitation, in favor of [First American]."26

19. Kurt Andrewsen denies having told the Debtor that his Equity Employment Agreement no longer existed.27

20. The Debtor never specifically asked anyone at First American whether he was subject to the non-compete and non-solicitation provisions of the Equity Employment Agreement because he did not believe he needed to.28

21. In May 2012, the Debtor refused to sign a new employment agreement with First American.29

22. On October 12, 2012, Equity Title merged with First American Title Company, LLC.30

23. The Debtor later signed the Utah Legal Counsel Production Bonus Plan, which "supersede[d] and replaced all previous production bonus plans, written or otherwise."31

24. After signing the Utah Legal Counsel Production Bonus Plan, the Debtor received bonuses based on that plan.32

25. By the time the Equity Title offices were rebranded as First American offices at the end of 2011, Equity Title had only seven offices located in Draper, Union Heights, Sugar House, West Jordan, Orem, South Ogden, and St. George.33

26. In Utah, at the end of 2011, First American had at least 23 offices, located in Union Heights, Orem, South Ogden, Downtown Salt Lake City, Foothill Drive in Salt Lake City, American Fork, Bountiful, two in Union Park, Delta, Ephraim, Fillmore, Heber City, Layton, two in Park City, Richfield, South Jordan, St. George, and Cedar City.34

27. Assuming that each First American office had four or five employees—First American had at least 100 employees in Utah.35

C. First American's Employee Handbook & Code of Ethics.

28. First American employees are frequently required to look at online e-training, consisting of presentations and documents that employees are required to acknowledge online.36

29. Among the documents which First American employees must open and acknowledge are the First American Employee Handbook (Employee Handbook), and the First American Code of Ethics and Conduct (Code of Ethics).37

30. The Employee Handbook sets forth employee privileges and obligations, provides complaint protocol, and outlines consequences for failure to comply with the handbook, specifically discipline and termination.38

31. When accessing the Employee Handbook employees receive a prompt that, at the end of a description of the privileges and obligations associated with the handbook, states, "By clicking `I Acknowledge,' I confirm that I have read and agree to the terms noted above."39

32. First American reserves the right to change any of the terms of the Employee Handbook at any time, without notice. When the Employee Handbook is revised employees are asked to review and agree to its terms again.40

33. The acknowledgement of the Code of Ethics states that the employee has "read and understood the Code's contents" and that employees "are expected to know and abide by the [its] rules of ethical conduct."41

34. The Debtor does not deny acknowledging the Employee Handbook and Code of Ethics.42

D. Setting up Northwest Title.

35. Discussions about forming Northwest Title began in 2014. Casey Willoughby ("Willoughby") was working as the Branch Manager of First American's Orem office. He contemplated leaving First American, and talked to Doug Smith about it at family events. Doug Smith—an attorney whose wife is a first cousin of Willoughby's wife—suggested that Willoughby start his own title business.43

36. Doug Smith is not related to the Debtor.44

37. Doug Smith and Clark Olsen ("Olsen") had no experience in the title and escrow industry. Nor did Willoughby have the knowledge and experience necessary to manage the operations of a title company. To move forward, they knew they would need to involve someone with experience running a title business.45

38. Willoughby arranged a meeting to introduce Doug Smith and Olsen to the Debtor, who was his colleague at First American. The first meeting occurred in early spring of 2014. Prior to that meeting, the Debtor had never met Doug Smith or Olsen.46

39. At the meeting, the four men discussed the possibility of opening a title business. The idea was that Olsen would contribute capital and the Debtor would run the company. The Debtor expressed his interest in the proposed venture and agreed to consider it further.47

40. Several months later, Willoughby called Doug Smith to inform him that the Debtor was interested in rekindling the discussions. At that point, having made the necessary introductions and expressed his desire to move forward, Willoughby left the details to the others.48

41. A second meeting between the Debtor, Doug Smith, and Olsen took place in November or December of 2014 to discuss the possibility of opening a title business. Specifically, Doug Smith testified:

42. They also discussed that the owners of the business would include Doug Smith, Olsen, the Debtor, Willoughby, and Williams. At this time, the latter three individuals were employees of First American.50

43. They agreed upon the ownership of Northwest Title as follows: Olsen, 51%; the Debtor, 29%; Doug Smith, 10%; Williams, 5%; and Willoughby, 5%.51

44. In October or November of 2014, the Debtor began communicating with Mike Koloski (Koloski) of Westcor Land Title Insurance Company (Westcor), who was a long-time acquaintance.52

45. Westcor is a national title insurance underwriter that competes with First American.53

46. The Debtor informed Koloski that he was interested in starting his own title company under the name of Northwest Title. The two began working to formalize a relationship so that Northwest Title could become a title insurance issuing agent for Westcor.54

47. The Debtor, Doug Smith, and Olsen met again in January 2015. At that meeting, they discussed the terms of an operating agreement and the ownership percentages that each owner of Northwest Title would have.55

48. Forming a new title company required the creation of an underwriting relationship between Northwest Title and First American's competitor, Westcor. Part of that process involved the submission of personal information forms by any owner or employee who would have signature authority on escrow accounts.56

49. On January 8, 2015, Willoughby submitted his personal information form to Koloski at Westcor. Willoughby sent the form using his personal email account, stating: "Mike Smith asked me to fill this out and return to you."57

50. In January 2015, the Debtor arranged a meeting to introduce Williams and Casey Buhler, his long-time administrative assistant at First American, to Doug Smith.58

51. During that meeting, Doug Smith presented Williams with a draft operating agreement and they discussed Williams' ownership percentage in Northwest Title. The participants also discussed things they were working on and tasks they had been assigned to move forward with creating Northwest Title.59

52. On January 17, 2015, and while still employed as legal counsel for First American, the Debtor signed a Westcor "Regional Agency Application" for Northwest Title and submitted it to Westcor.60 The Debtor signed the application as "President/Manager" of Northwest Title and the "Primary Application Contact."61 It listed the owners of Northwest Title and their respective ownership percentages as follows: Olsen with a 51% ownership share; the Debtor with a 29% ownership share; Doug Smith with a 10% ownership share; and Williams and Willoughby each with a 5% ownership share. The application also listed the Debtor, Williams, Willoughby, and Casey Buhler as employees of Northwest Title.62 The Regional Agency Application is dated January 17, 2015, which was almost two months before any of these individuals left First American.63

53. On January 19, 2015, Doug Smith emailed the Westcor personal information forms for himself and Olsen to Koloski, writing: "This is Doug Smith — working with Mike Smith to set up Northwest Title in Salt Lake City, UT."64 Koloski forwarded those forms to his administrative assistant with the following note: "two more for the Mike Smith group."65

54. Starting around January 27, 2015, Koloski used the email account of Ruth Smith, the Debtor's wife. Sometimes Koloski intended the email for Ruth Smith to pass on information to the Debtor and sometimes to directly communicate with the Debtor about setting up Northwest Title.66

55. This was done to avoid using the Debtor's First American email account, and to avoid First American learning of the Debtor's activities in setting up Northwest Title.67

56. The Debtor knew that First American would be upset if it became aware that he was setting up a competitor title company.68

57. Around the same time, Doug Smith filed a Certificate of Organization on behalf of Northwest Title with the Utah Department of Commerce.69

58. On January 26, 2015, the registration was approved, and Northwest Title was certified to do business.70

59. On January 28, 2015, Koloski prepared a "Write Up for Mike Smith Northwest Title" as part of Westcor's agency application process.71 The document details the prospective relationship between Northwest Title and Westcor. In response to a question about Northwest's customer base, Koloski wrote: "This [sic] agecny [sic] has a very strong relationship [sic] with the major producers of Coldwell Banker Real Estate Agents."72

60. As to why Westcor should approve Northwest as its agent, Koloski's wrote:

61. On February 3, 2015, Northwest Title obtained the domain name "NWTitleUtah.com."74

62. By February 4, 2015, Northwest Title had signed a lease for its corporate Sugar House office. The Debtor negotiated the lease, and Doug Smith signed it.75

63. Northwest Title's Sugar House office was in the building next door to First American's Sugar House office.76

64. In an email to Westcor on February 5, 2015, Koloski reported:

65. Northwest Title applied with the state of Utah for its title escrow and title search licenses on February 7, 2015.78

66. On February 18, 2015, the following events occurred:

67. On February 23, 2015, Koloski wrote to the Debtor: "Since you are giving your notice on Wednesday at 5:00 pm ... we will go ahead and `Appoint: you with the State that afternoon ... no one should know unless they actually search for Northwest Title on the site."86 The Debtor responded:

68. The Debtor wanted to limit the time between when he resigned and when other First American employees could start at Northwest so as to maximize the chance that First American employees would come to work for Northwest and to minimize the opportunity for First American to try and keep the employees at First American.88

69. On February 28, 2015, the Debtor wrote to Koloski:

70. On March 3, 2015, Williams prepared the Schedule of Minimum Charges for Escrow Services that Northwest Title needed to file with the Utah Department of Insurance. He used his First American computer to complete the form, then e-mailed it to his wife's personal account so another employee of Northwest Title could file it.90

71. On March 4, 2015, Koloski sent the following email to Westcor: "Northwest Title, Mike Smith ... mass exodus from First Am ... next week."91

E. The Debtor's Beliefs Regarding His Employment Relationship with First American.

72. In preparing to leave First American, and in forming Northwest Title as a competitor to First American, the Debtor engaged in the following analysis and alleges that he formed the following beliefs regarding his employment relationship with First American.

73. The Debtor believed that with the transition from Equity Title to First American, coupled with the changes to his job responsibilities and his compensation, that: (1) the Equity Employment Agreement was no longer binding; and (2) that he did not have an employment agreement with First American.

74. The Debtor drew these conclusions based on the following:

75. Nonetheless, the Debtor knew that First American would not be happy with him leaving to start Northwest and that a lawsuit was coming.96

76. The Debtor was aware that if he resigned from First American, the non-compete provision in the Equity Employment Agreement would not apply.97

F. The Debtor Resigns from First American.

77. On Friday, March 6, 2015, Koloski sent the Debtor the following email: "Mike Good Luck today .... we did get Brandon all set up on ewestcor [sic] ......... I will talk with you on Monday ........ Great Job .... on getting all you [sic] employees to join you."98

78. Mark Webber ("Webber") and the Debtor have known each other twenty years and worked together for many years at Equity Title and First American.99

79. On Monday, March 9, 2015, Webber was in a weekly management meeting at First American's Sugarhouse office. The Debtor intentionally missed the meeting,100 but Williams was there. During the meeting, Webber learned of Northwest Title, and he asked those at the meeting whether they knew anything about Northwest Title. Williams said nothing, left the meeting, and texted the Debtor that Webber knew about Northwest.101

80. After this meeting, the Debtor arrived at the First American office and informed Webber that he was resigning. Webber did not initially connect the Debtor's resignation with the news about Northwest. When Webber asked where he was going, the Debtor only said he was considering his options, and that he didn't want to talk about it.102

81. Webber told the Debtor that if he was going to work for a competitor, it would be a problem.103

82. Later that day, Webber learned that the Debtor was the president of Northwest. When Webber confronted him about this, the Debtor again said that he did not want to talk about it, and he left the First American offices. The Debtor testified that he was trying to avoid a confrontation with Webber.104

83. The Debtor testified that he did not definitively decide to resign from First American "until he walked out the door."105

84. Mark Webber testified that if he had known of the Debtor's involvement with Northwest, that he would have immediately fired him.106

85. The afternoon of his resignation, the Debtor sent emails to various First American employees informing them of his departure.107

86. Upon resigning, the Debtor took First American documents.108

87. The Debtor's assistant, Buhler, helped him gather those documents.109

88. When the Debtor resigned from First American, he left no project undone which had an imminent deadline, and First American had other lawyers who were also handling, or were capable of handling, regulatory matters.110

89. On March 10, 2015, Northwest opened its offices in Bountiful and Sugar House.111

90. Williams and Carrell resigned on March 10, 2015, just one day after the Debtor. Williams and Carrell immediately began working for Northwest Title.112

91. On the same day that Williams and Carrell resigned, ten other employees left First American, including the following individuals:113

92. Then, between March 11 and March 23, 2015, fourteen more employees left First American, including the following individuals:114

93. In summary, twenty-eight First American employees left in March of 2015 to join the Debtor at Northwest Title.115

94. Mark Webber estimated that the departing employees represented 300 years of title experience.116

95. Immediately after joining Northwest Title, the former First American employees began contacting First American's customers exclaiming, for example, that the "whole office switched companies"; "[t]he whole office went;—)"; or "we've all switched title companies" and "are located in the bldg. next to where we were with First American."117

96. Geraldine Jensen promised: "New name same great customer service."118

97. Others, like Elizabeth Cole, added that "[w]e are transferring everything over here" and "I still plan to close your deal (we have all of the info)." When one customer asked Cole what happened, she responded that "Mike Smith left FATCO and started his own company" and "[m]ost people followed."119

98. As a result, less than three weeks after opening its doors, Northwest already had "600 orders" with Westcor. Koloski characterized getting that many customers in such a short period of time as "getting slammed."120

99. Northwest Title profited from at least 150 transactions that were opened at First American but later closed at Northwest.121

100. Nearly every Northwest Title employee deposed testified that a majority of his or her customers at Northwest Title were his or her customers from First American.122

101. One Northwest Title Sales Manager, Diane Mouser, bragged on Facebook that 95% of First American's former Sugar House customers left for Northwest Title.123

G. First American Sues the Debtor, and the Debtor's Email Comments Regarding First American and the Lawsuit.

102. On April 3, 2015, First American filed an action in the United States District Court, District of Utah, Civil No. 2:15-cv-00229 (the "District Court Litigation") against the Debtor and others for, among other things, breach of contract, tortious interference with contract, breach of fiduciary duty, misappropriation of trade secrets, and unfair competition.124

103. After First American filed the law suit, the Debtor made the following statements in emails:

H. First American Prevails Against the Debtor in the District Court Litigation.

104. In the District Court Litigation, Judge Nuffer made the following conclusions of law in connection with First American's motion for summary judgment.

105. In a subsequent motion for summary judgment, Judge Nuffer made the following additional conclusions of law.

106. Following the December 2016 trial, the jury found that the Debtor received and had knowledge of the relevant terms of the Employee Handbook and the Code of Ethics.137

107. The jury found that the Debtor breached the three contracts — (1) the non-solicitation provision of the employment agreement he entered into with First American's predecessor in interest, Equity Title; (2) the Employee Handbook; and (3) the Code of Ethics. For the Debtor's breaches of contract, the jury awarded $500,000 in compensatory damages.138

108. The District Court found that the Debtor had a fiduciary duty to First American while employed by First American, the jury found that he breached that fiduciary duty, and that there was clear and convincing evidence that his breach of fiduciary duty was willful and malicious, or in knowing and reckless indifference toward, and disregard of, the rights of First American. The jury awarded $600,000 in compensatory damages for this breach.139

109. The jury found that the Debtor tortiously interfered with First American's contracts, other than his own contracts, and that there was clear and convincing evidence that such tortious interference was willful and malicious, or in knowing and reckless indifference toward, and disregard of, the rights of First American. The jury awarded $525,000 in compensatory damages for this breach.140

110. The jury found that the Debtor was acting as an agent of Northwest Title when he breached his fiduciary duty to First American. The jury found that Northwest Title tortiously interfered with First American's contracts and that such tortious interference was willful and malicious, or in knowing and reckless indifference toward, and disregard of, the rights of First American. The jury awarded $1,000,000 in compensatory damages for such breach.141

111. In addition to the $1,625,000 in compensatory damages against the Debtor, and the $1,000,000 in compensatory damages against Northwest Title, the jury awarded an additional $100,000 in compensatory damages against the other defendants, Williams and Carrell. The jury also awarded $500,000 in punitive damages against Northwest Title. The Court entered judgment on such amounts on December 30, 2016.142

112. The Court granted an award of attorneys' fees and costs to First American and against the Debtor and others in the amount of $3,097,816.36.143

113. Williams paid $99,500 to First American towards his compensatory damages obligation, which amount First American accepted as satisfaction of the judgment against him. Carrell satisfied the judgment against her by paying approximately $100,000 to First American. To date, the Debtor has involuntarily paid $2,662.06 toward his obligations to First American, which First American obtained from him by garnishment.144

114. On appeal, the Tenth Circuit Court of Appeals affirmed the District Court's finding that the Debtor's Equity Employment Agreement was still in effect when he resigned from First American on March 9, 2015.145 The Tenth Circuit also affirmed all other aspects of the District Court's findings and judgment against the Debtor.146

115. On or about April 4, 2017, Debtor filed a voluntary petition for relief in this Court under Chapter 7 of the Bankruptcy Code.147

III. DISCUSSION

A. The Preclusive Effect of the District Court Litigation.

Before proceeding it is necessary to address the preclusive effect of the District Court Litigation on this nondischargeability action. "The preclusive effect of a judgment is defined by claim preclusion and issue preclusion, which are collectively referred to as `res judicata.'"148 Issue and claim preclusion "protect against `the expense and vexation attending multiple lawsuits, conserv[e] judicial resources, and foste[r] reliance on judicial action by minimizing the possibility of inconsistent decisions.'"149 "Federal common law governs the preclusive effect of a judgment of a federal court sitting in diversity."150 "The `federally prescribed rule of decision' to determine the preclusive effect of a diversity court's judgment is `the law that would be applied by state courts in the State in which the federal diversity court sits.'"151 In this case, the findings of fact arose from the United States District Court for the District of Utah sitting in diversity. Therefore, the Court will apply Utah law on claim and issue preclusion.152

Under Utah law, "[c]laim preclusion bars a party from prosecuting in a subsequent action a claim that has been fully litigated previously."153 However, in Brown v. Felsen the Supreme Court held that claim preclusion does not prevent the creditor or the debtor from presenting additional evidence in a bankruptcy adversary proceeding under § 523.154

On the other hand, issue preclusion "corresponds to the facts and issues underlying causes of action."155 Issue preclusion "prevents parties or their privies from relitigating facts and issues in the second suit that were fully litigated in the first suit."156 For issue preclusion to apply under Utah law, the following four elements are required: "(i) the party against whom issue preclusion is asserted must have been a party to or in privity with a party to the prior adjudication; (ii) the issue decided in the prior adjudication must be identical to the one presented in the instant action; (iii) the issue in the first action must have been completely, fully, and fairly litigated; and (iv) the first suit must have resulted in a final judgment on the merits."157

Because this adversary proceeding involves the same parties and arises from the same set of operative facts as the District Court Litigation, the requirements of issue preclusion are met. Thus, this Court is bound by the findings of fact and law made in the District Court Litigation, and as affirmed by the Tenth Circuit Court of Appeals.158 Further, while the causes of action in the District Court Litigation (breach of contract, breach of fiduciary duty, and tortious interference with contracts) are different than First American's nondischargeability claim, the prior findings are nonetheless relevant to the elements of First American's cause of action under § 523(a)(6).159

1. The Preclusive Effect of the District Court Litigation on the Existence of First American's Injuries and the Amount of the Debt.

In its Trial Brief, First American argues that the Debtor is estopped from re-litigating the validity or amount of his debt owing to First American. The Court agrees. This nondischargeability action arises from the same conduct at issue in the District Court Litigation; namely, the Debtor's formation of Northwest Title and his "poaching" of employees and customers from First American.

The existence of an injury to First American and the amount of the Debtor's liability to First American was established by a final judgment in the District Court Litigation in the following amounts and for the following causes of action: (1) $500,000 in compensatory damages for the Debtor's breach of the Equity Employment Agreement and the First American Employee Handbook and Code of Ethics;160 (2) $525,000 in compensatory damages for the Debtor's tortious interference with First American's contracts (other than those involving the Debtor);161 and (3) $600,000 in compensatory damages for the Debtor's breach of fiduciary duty.162

In addition, the District Court awarded First American the following in attorney fees and costs: (1) $88,006.44 for Defendant's breach of fiduciary duty; (2) $2,802,344.52 for Defendant's breach of contract; and (3) $250,771.27 in costs.163 Thus, the District Court awarded First American $1,625,000 in total compensatory damages and $3,141,122.23 in total attorney's fees and costs, for a grand total of $4,766,122.23.

Based on the preclusive effect of the District Court Litigation,164 the Court finds that for purposes of § 523(a)(6), the Debtor's actions caused a quantifiable injury to First American in the total amount of $4,766,122.23.165

2. The Preclusive Effect of the Jury's Findings on the Legal Elements of This Adversary Proceeding.

The jury found that the Debtor breached his fiduciary duty as First American's legal counsel. However, this does not give rise to a cause of action under § 523(a)(4) for breach of fiduciary duty. This is because § 523(a)(4) requires an express or technical trust rather than the more general duty that exists in an attorney-client relationship.166 Indeed, First American ultimately dropped its cause of action under § 523(a)(4).

Next, the jury found that there was clear and convincing evidence that the Debtor's breach of fiduciary duty was willful and malicious, or in knowing and reckless indifference toward, and in disregard of, the right of First American.167 "The phrases "willful and malicious" and "knowing and reckless indifference" appear to be in reference to Utah's punitive damages statute at U.C.A. § 78B-8-201168 rather than an attempt to have the jury make findings that would exclude this debt from discharge under § 523(a)(6). Indeed, the disjunctive "or" in the finding thwarts a collateral estoppel finding of willful and malicious injury under § 523(a)(6) because if the jury based its finding on reckless indifference, this is insufficient for purposes of a § 523(a)(6) action.169

Nonetheless, because First American's claims against the Debtor in this bankruptcy case arise from the same conduct that was tried in the District Court, this Court can consider the factual underpinnings for each damage award in determining if First American has met its burden of proof under § 523(a)(6).170

Plaintiff further argues that the Court should not limit its analysis to the specifics of the District Court causes of action because all of the damage awards arose from the same conduct that gives rise to this nondischargeability action. This is consistent with Brown v. Felsen,171 and the Court agrees that if the individual damage awards arose from the same conduct that is found to be willful and malicious under § 523(a)(6), then the constituent parts of the entire damage award are nondischargeable.172

B. The Tenth Circuit Standard for Willful and Malicious Injury.

Section 523(a)(6) excepts from discharge a debt arising from the "willful and malicious injury by the debtor to another entity or to the property of another entity." The purpose of this section is to preclude the discharge of claims arising from a debtor's tortious conduct that resulted in harm to persons or property.173 For First American to prevail, it must establish by a preponderance of the evidence that the Debtor's actions constituted both a willful act and a malicious injury.174 As explained above, the Court has already found that First American was injured as a result of the Debtor's actions. Thus, the dispositive issue is whether those injuries were willful and malicious under § 523(a)(6).

1. The Meaning of Willful.

The purpose of requiring proof of a willful act is to preserve the distinction between willful conduct and injurious conduct that is only reckless or negligent.175 The concept of willful under § 523(a)(6) is "akin to the standard of deliberate injury necessary for an intentional tort."176 The Tenth Circuit has held that "to constitute a willful act under § 523(a)(6), the debtor must `desire . . . [to cause] the consequences of his act or . . . believe [that] the consequences are substantially certain to result from it.'"177 The Eight Circuit has explained that willful conduct is "headstrong and knowing,"178 and that a willful injury is "a deliberate or intentional invasion of the legal rights of another."179

In this case, the evidence establishes that the Debtor's actions were headstrong, knowing, and done with the intent to create a title company that would directly compete with First American by poaching First American's employees and customers and by opening offices in the same location as First American's offices. But this finding of willfulness does not ipso facto lead to a conclusion that the Debtor acted maliciously.

2. The Meaning of Malicious.

Determining a debtor's malicious intent is sometimes implicit in the nature of the actions, such as when a debtor assaults an individual during an altercation. But in cases involving tortious business activity, a malicious intent is seldom conceded. More often, debtors assert a pure profit motive, and that any injury was merely incidental to the conduct of aggressive but legitimate business activities. So to extract a finding of malicious intent from an inherent profit motive, the Court may indirectly infer intent from all of the facts and circumstances of the case.180 Further, the Supreme Court181 and the Tenth Circuit182 have adopted the definition of intent found in Restatement (Second) of Torts § 8A (1979), which is that "the actor desires to cause consequences of his act, or that he believes that the consequences are substantially certain to result from it." This definition is augmented by the comment to the Restatement:

In the context of a § 523(a)(6) action, the Eight Circuit explains that malicious conduct is "targeted at the creditor (`malicious') at least in the sense that the conduct is certain or almost certain to cause financial harm."184

While some courts apply an objective standard185 in determining whether the debtor had the requisite knowledge or belief to satisfy the substantial-certainty-of-harm test, the Tenth Circuit, in an unpublished decision,186 has held that the focus should be on the debtor's subjective knowledge or belief:

Lastly, a "[w]illful injury may be established by direct evidence of specific intent to harm a creditor or the creditor's property. . . . or indirectly by evidence of both the debtor's knowledge of the creditor's . . . rights and the debtor's knowledge that the conduct will cause particularized injury."188

Thus, for First American to prevail on its § 523(a)(6) action, the Court must find by a preponderance of the evidence that (1) the Debtor subjectively wished to have caused the particularized injury to First American (i.e., the damages resulting from the formation of Northwest Title and the poaching of First American's employees and customers); or (2) the Debtor subjectively believed that such injury was substantially certain to occur, with the understanding that the subjective, substantial certainty test "extends the scope of intent well beyond the compass of evil motive, without extending it to so far as to include consequences entirely outside the actor's ken. . . ."189

C. Application of the Findings of Fact to the Tenth Circuit Standard for Willful and Malicious Injury.

Applying the standards articulated above to the findings of fact made by the District Court and adduced during the bankruptcy court trial, the Court finds as follows: (1) the Debtor acted with a willful intent to form Northwest Title to directly compete with First American and to conceal these actions from First American; (2) the Debtor acted with a willful intent to hire a significant number of First American employees, with their expertise and customer contacts, to work for Northwest Title; (3) the Debtor did these acts with the subjective knowledge that these actions, which resulted in the immediate loss of a significant number of First American employees and customers, were substantially certain to result in the particularized harm actually suffered by First American; and (4) thus, the Debtor willfully and maliciously injured First American. The Court bases its finding of willful and malicious injury on the following factors.

1. The Jury's Finding of Tortious Interference Included a Finding that the Debtor Desired to Bring About Harmful Consequences to First American.

The jury found that the Debtor "tortiously interfered with First American's contracts."190 To prevail on this cause of action, First American had to establish "(1) that the defendant intentionally interfered with the plaintiff's existing or potential economic relations, (2) . . . by improper means, (3) causing injury to the plaintiff."191 The "intent" requirement for tortious interference is satisfied by a showing of the defendant's desire to bring about the resulting consequences:

Based on the preclusive effect of the jury's finding on tortious interference with contracts, the Court finds that the Debtor intended to bring about harmful financial consequences to First American.

2. The Debtor Intentionally Concealed from First American the Formation of Northwest Title and His Intent to Hire Away First American Employees and Customers.

During the bankruptcy court trial, First American established that the Debtor took steps to conceal his involvement in the formation of Northwest Title. The Debtor admitted using his wife's email account to communicate with Koloski to avoid detection by First American. So that his involvement would be less visible, the Debtor coordinated with Doug Smith, Williams, and Willoughby, who took the laboring oar to obtain lease space, office equipment, and make other arrangements for the opening of the Northwest offices. The Debtor also had surreptitious discussions with First American employees about job opportunities with Northwest but directed them to Doug Smith to handle the employment offers.

The Debtor emailed Koloski and asked him to wait a few days to be appointed with Northwest "if there is a chance someone will see it."193 Koloski responded: "Just let me know when you [w]ant us to `Appoint' you."194 Later, Koloski said he would appoint the Debtor because "no one should know unless they actually search for Northwest Title on the [web] site."195 When the Debtor resigned, he declined to disclose to Mark Webber where he was going. Even after Mark Webber learned that the Debtor was president of Northwest, the Debtor refused to talk to him about his plans with Northwest. Mark Webber testified that if he had known of the Debtor's actions to form Northwest, he would have immediately fired him.

The Debtor's concealment of his business activities supports a finding of malicious intent. In Global Control Sys., Inc. v. Luebbert (In re Luebbert),196 the debtor secretly set up a company to compete with his employer and used his inside information to outbid his employer on jobs. The employer found out, and the parties entered into a settlement agreement that the debtor later breached. As a result of the breach, a jury awarded damages against the debtor. The debtor filed for bankruptcy, and the employer brought a § 523(a)(6) action. The debtor defended that a breach of contract could not be a basis for a § 523(a)(6) action, and that he never subjectively intended to harm his employer. The court noted that it was not limited to the findings on the breach of contract action, especially when the debtor knew that his breach would certainly deprive his employer of income.197 The court also declined to accept the debtor's testimony on this point given that the debtor secretly set up a company to compete with his employer, that he was not "straightforward in his resignation letter," and that he hid his actions and intentions: "[The debtor] did not offer any credible reason for these secretive and evasive actions, all of which seem designed to hide the fact he was intending to go forward and take away [his employer's] customer."198 Based on this and similar findings regarding the debtor's concealment of his outside business activities while working for his employer, the court found that the debtor had committed a willful and malicious injury.

The Court finds Debtor's secretive actions and lack of credible explanation in this case similar to the actions of the Debtor in In re Luebbert. Therefore, the Court finds that the Debtor intentionally concealed his Northwest business formation activities for the following reasons: (1) the Debtor knew his actions were inconsistent with his legal and ethical duties to First American as its counsel; (2) the Debtor knew that First American would view his actions to set up Northwest as a threat because of the impact on First American's business and reputation; and (3) the Debtor knew he had to keep his plans secret from First American so he could take twenty-seven employees before First American could respond in a meaningful way to retain such employees.

3. The Debtor's Business Plan for Northwest Title Contemplated Hiring Away a Number of First American Employees with Considerable Expertise and Customer Contacts.

The evidence establishes that it was the Debtor's intent to have First American's employees transition with him to Northwest to staff the new offices and to provide an immediate influx of clients and title work. Consistent with this intent, twenty-seven First American employees followed the Debtor to Northwest Title after his resignation from First American. As found by the District Court, these actions constituted a breach of the non-solicitation provision199 in the Equity Employment Agreement because the Debtor "directed numerous [First American] employees to Doug Smith, who later hired them on behalf of Northwest."200

As expressed in an email to Koloski, the Debtor talked about a "landing space" for the Northwest Bountiful and Union Park offices, and that he would delay his departure from First American because "we want to limit the time when I exit and when the others could come."201 In another email to Koloski, the Debtor talked about completing the lease for the Union Heights office because "I am not yet ready to leave that group behind without getting them in the barn."202 Finally, three days before his resignation, Koloski congratulated the Debtor "on getting all you[r] employees to join you."203 Two days after his resignation, the Debtor reported to Koloski regarding his success at getting employees to follow him: "25 in the barn as of tonight. 4 more anticipated by the first of next week. A good day. I can feel the lawsuit coming."204 This last sentence establishes that the Debtor knew of the potential legal consequences of poaching First American's employees.

Mark Webber estimated that the departing employees represented 300 years of title experience. Koloski reported that within the first few weeks of opening, "Northwest Title has 600 orders that they are working, and they are just getting slammed."205 Because essentially all of the Northwest employees came from First American, the Court finds that these 600 orders represent work that would otherwise have been done by First American. As previously noted, all of the Debtor's efforts to attract and hire First American's employees was done in a way to keep it hidden from First American. This evidence strongly supports the Court's finding of malicious intent.

4. The Debtor Located the Northwest Title Business Offices in Proximity to Existing First American Business Offices.

The Court also finds indicia of a malicious intent from the curious fact that the Debtor set up the main Northwest office in Sugar House right next door to First American's office. The Debtor and Northwest also set up offices in Draper, Bountiful, Union Heights, and Orem, which is where First American likewise had offices. Further, the First American employees who went to work for Northwest remained in their same business locations working for Northwest. This establishes the Debtor's intent to simply transfer the employees and business from these First American office locations to the corresponding Northwest office locations.

5. The Debtor Subjectively Knew that His Actions Were Substantially Certain to Cause Harm to First American.

Most significant is that a preponderance of the evidence establishes that the Debtor subjectively knew there was a substantial certainty that his actions would harm First American. In June 2011, an employee approached the Debtor about a job offer he had received from another title company. The Debtor told the employee that "we would take him to the mat on the non-compete if he left for another title company."206 The employee raised an issue similar to the Debtor's defense that the employment contract with Equity Title was not enforceable because of the merger with First American. The Debtor responded that he "absolutely believe[d] the non-compete would be enforceable and that [First American] would seek to enforce it if he leaves."207 This statement belies the Debtor's assertion that he believed his Equity Employment Agreement was no longer binding on him, and establishes that he understood the ramifications of title company employees leaving to work for competitors — and even more so when leaving to set up a new title company to directly compete with one's former employer.208

As an experienced title attorney, the Debtor was also well aware of the damage to the reputation and operation of a title company if its ability to close transactions was disrupted. In a declaration filed in the District Court Litigation, the Debtor articulated the damages if the District Court enjoined Northwest Title from doing business.209 The Debtor stated that shutting its doors, even temporarily, would not only would have a negative effect on Northwest's cash flow, but it would result in irreparable harm to its reputation. The Debtor said this would effectively be a death sentence in that Northwest would not be able to open its doors again because customers would not "want to risk doing business with a company that can't keep its doors opened (or had them shut), regardless of the reason."210

When questioned about his declaration, the Debtor was evasive as to whether he knew taking twenty-seven employees, including six branch managers, and their customer contacts would result in a similar harm to First American. But the Debtor ultimately conceded that unless First American was able to quickly replace the twenty-seven employees, it would result in an injury. The Debtor suggested that the harm to First American from the loss of employees would be a sliding scale, such that the loss of a few employees would not result in harm.211 But the evidence establishes that the Debtor intended to bring at least twenty-seven First American employees to Northwest Title,212 so his rationalization about a sliding scale of harm is not relevant. Thus, the Debtor subjectively knew that taking a large number of First American's employees was substantially certain to disrupt and impair First American's ability to conduct business at its various locations. Further, the Debtor subjectively knew that the loss of hundreds of customers was substantially certain to result in an economic harm to First American — and this is exactly what happened.

In addition, when Koloski was explaining to Westcor why it should approve Northwest as an agent, he revealed that its start up would involve "major employees of First American . . . for over 20 years," and that "IT WILL BE A MAJOR PROBLEM FOR FIRST AMERICAN . . . when they open their doors." Koloski further said that Northwest would secure "at least 40% of the Coldwell Bank business from First American within the first year" and that "Coldwell Banker has been a major customer of First American for many years."213 Koloski testified that he did not know if the Debtor knew this would be the consequence of starting Northwest Title.214 However, the Debtor had to be Koloski's main source of information about First American's market share, employees, and customers, and the Court finds it extremely unlikely that the Debtor and Koloski did not discuss the impact on First American of starting a competing title company. Therefore, the Court finds this to be indirect evidence of the Debtor's subjective knowledge that the opening of Northwest Title by taking First American employees and customers was substantially certain to harm First American.215

Finally, the Debtor's responses to First American's difficulties and the subsequent lawsuit against the Debtor and other Northwest employees also establishes that the Debtor knew of the substantial certainty of harm to First American and the potential for a lawsuit as a result of such harm. They also evidence the Debtor's attitude of retribution against First American. A few days after his resignation, the Debtor reported his success at soliciting so many First American employees to follow him and said, "I can feel the lawsuit coming."216 A few weeks later, First American indeed sued the Debtor. When asked about the lawsuit, the Debtor responded that he was not paying attention to Mark Webber and that "[i]f he were very smart, and those of us who know him well know he is not, he would just rally around what is left at FA and make the most of it."217 In other emails, he said First American "are idiots" and that they should just "make the best of what they have left here in Utah and move on."218 To his accountant, he reported his departure from First American and said they were not happy with him, but that "they had their chances to do something different over the years, and they chose not to do that."219 To an attorney friend, he reported the lawsuit and said, "I fully expected that going in, so we were ready. They don't have much if any ground to stand on. They were just pissed because their company is dumb . . . ."220 A few weeks later, the Debtor said he never liked First American221 and that First American "suck[ed] as a company."222 Lastly, the Debtor reported First American to a state regulatory agency for conducting too many presentations at a customer's location. After reporting First American, the Debtor commented, "I am somewhat embarrassed as to the level of enjoyment I took out of drafting and sending the email below. . . . May [First American] burn in regulatory hell! Sorry, but I am feeling it good people!"223

Many of these statements were made after First American sued the Debtor, so he was understandably angry. But they nonetheless establish the Debtor's feelings of animosity to First American, and that he was neither surprised nor sorry about the injury to First American from his formation of Northwest Title.

In the similar case of Patriot Fire Prot., Inc. v. Fuller (In re Fuller),224 the debtor had worked for ten years in the fire safety industry. He initially did side jobs for customers without his employer's knowledge. Later, after he was fired, he solicited business away from his former employer. In a resulting lawsuit, the state court found that the debtor had breached a non-compete clause and awarded damages. The debtor filed for bankruptcy and the employer filed a § 523(a)(6) action. The bankruptcy court noted that while the state court made no finding of willful and malicious injury, sufficient facts were presented at trial to establish that the debt was excepted from discharge:

In the present case, the Debtor's experience and sophisticated understanding of the title industry and the business operations of First American likewise establish that he would have known the harmful impact of taking employees and clients from his employer.

In Diamond v. Vickery (In re Vickery),226 the debtor transferred investment funds from a partnership to himself and others in a manner inconsistent with the partnership's anticipated share of such funds. In affirming the bankruptcy court's finding of willful and malicious injury under § 523(a)(6), the district court held that debtor "acted with knowledge that the transfers were `certain to injure [the partnership] by depriving [it] of funds to which it was entitled.'"227 The court also found that the debtor's failure to disclose to investors that the partnership would be left with insufficient funds supported an inference that the debtor knew his actions were not in the best interests of the partnership. Finally, the court found that the debtor knew that his actions "would result in the partnership being deprived of $3.6 million that rightfully belonged to it."228 This is analogous to the Debtor's concealment of the formation of Northwest Title and his knowledge that taking employees and customers would result in a financial loss to First American.

For these reasons, the Court finds that the Debtor subjectively knew of the substantial certainty of injury to First American as a result of opening Northwest Title offices in First American's business locations and taking First American's employees and their customer contacts.

D. The Debtor's Actions Were Without Justification or Excuse.

The Debtor's defense to the § 523(a)(6) action is that he acted with justification or excuse.229 Specifically, the Debtor asserts: (1) he formed Northwest Title for the purpose of creating a better employment opportunity for himself; (2) he did not intend to harm First American; and (3) at all relevant times, he believed he was not subject to the provisions of his Equity Employment Agreement, and this belief was supported by the advice of counsel.

For the following reasons, the Court rejects this defense. The Debtor argued both in the District Court Litigation and this adversary proceeding that he reasonably believed that the Equity Employment Agreement was no longer binding once Equity Title merged into First American. The Debtor also argued that at the time he resigned, he did not think he was subject to a non-compete or a non-solicitation clause in the Employee Handbook or the Code of Ethics. However, this Court is bound by the findings of the District Court Litigation. These include the following: (1) the Debtor's Equity Employment Agreement remained in force; (2) the Debtor received and had knowledge of the Employee Handbook and the Code of Ethics; and (3) the Debtor does not deny acknowledging the Employee Handbook and Code of Ethics. Based on these rulings, the Court will not consider the Debtor's assertion that he believed he was not bound by the Equity Employment Agreement or the terms of the Employee Handbook and the Code of Ethics.

The jury in the District Court Litigation also found that the Debtor "tortiously interfered with First American's contracts other than his own contracts." To prevail on this cause of action in the District Court Litigation, First American had to establish that the defendant intentionally interfered with the plaintiff's contracts, through an improper means, and thereby causing injury to the plaintiff.230 A defendant employs an improper means when the actions "are contrary to law, such as violations of statutes, regulations, or recognized common-law rules."231 The finding of an improper means is the functional equivalent of unexcused or unjustified interference.232 Thus, under the preclusive effect of the District Court judgment, the Court finds that the Debtor was without justification or excuse for his actions that injured First American.

In summary, the Debtor argued that he did not intend to harm First American. But based on the totality of the facts regarding the Debtor's experience in the title industry; his understanding of the consequences to a title company's reputation and cash flow from the disruption of its business; his understanding of the issues of employees going to work for a competitor title company; his feelings of animosity towards First American; and his testimony at trial as to his knowledge of the substantial certainty of harm from taking employees and business from First American; the Court finds that the Debtor subjectively knew that his actions were substantially certain to cause harm, and thus that he acted with the requisite malicious intent under § 523(a)(6).

E. The Debtor's Advice of Counsel Defense Does Not Negate His Malicious Intent.

The Debtor asserts that he lacked a malicious intent because his actions were based on a reasonable belief that he was not bound by the Equity Employment Agreement. The Debtor further asserts his belief was in good faith because it was supported by the opinion of an attorney. Specifically, the Debtor spoke with Doug Smith about this issue, who consulted with the Wood Balmforth law firm. Allegedly, Wood Balmforth opined to Doug Smith that the Equity Employment Agreement ceased to be of legal effect after the merger with First American. Doug Smith then communicated this opinion to the Debtor.

In the context of a nondischargeability action, the "advice of counsel" defense is explained as follows:

The Debtor does not qualify for this defense. First, at the relevant times, Wood Balmforth was not the Debtor's attorney.234 Instead, Wood Balmforth was retained by Doug Smith to represent Northwest Title. Second, the ostensible legal opinion of Wood Balmforth was communicated to Doug Smith, and the Debtor only heard it second-hand from him. Third, it was not established that Wood Balmforth had all of the relevant facts necessary to render an informed opinion on the enforceability of the Equity Employment Agreement. Fourth, because the Debtor is an attorney with more than twenty years of experience in the title industry, it was not reasonable for him to accept what he heard second-hand from Doug Smith as the definitive word on the enforceability of the Equity Employment Agreement. Finally, the testimony established that the Debtor fully understood the risks of proceeding with his plans to form a directly competing title business while still employed at First American.

In the case of United Orient Bank v. Green, that likewise involved a § 523(a)(6) action, the court rejected the debtor's attempt to defend a very aggressive business strategy based on the advice of counsel: "[the debtor] knew that there was, at a minimum, a substantial risk that his actions were improper and elected to run that risk . . . [and the debtor] knew that his actions were `contrary to commonly accepted duties in the ordinary relationships among people, and injurious to' plaintiffs."235

For these reasons, the Court rejects the Debtor's argument that he lacked a malicious intent based on his reliance on the alleged legal opinion of Wood Balmforth that the Equity Employment Agreement was no longer binding upon him when he formed Northwest Title.

F. The Amount of the Nondischargeable Debt.

1. The District Court Judgment.

In the Adversary Complaint, First American seeks a judgment from the Bankruptcy Court determining that the entire District Court Judgment owed by Debtor to Plaintiff is nondischargeable based on Defendant's willful and malicious injury to First American. The Complaint does not set forth a dollar amount, but attached to the Complaint is the Special Verdict-Phase I from the District Court Litigation showing awarded damages in the total amount of $1,625,000 against the Defendant.236 Further, in the Stipulated Pretrial Order, the parties agreed that the jury awarded the following damages in favor of First American and against the Debtor — $1,625,000 in total compensatory damages consisting of $500,000 on the breach of contract claim; $600,000 on the breach of fiduciary duty claim; and $525,000 on the tortious interference with contracts claim.237

As noted above, the District Court's final judgment established First American's claim against the Debtor. Issue preclusion thus prevents this Court from reconsidering the existence or the amount of First American's damage claim. Therefore, this Court will find that the damage award of $1,625,000 in favor of First American is nondischargeable under § 523(a)(6).

2. Attorney Fees and Costs Awarded by the District Court.

First American also seeks a judgment from the Bankruptcy Court determining that the attorney fees and costs awarded to the Plaintiff by the District Court are likewise nondischargeable. As an initial matter, however, the Bankruptcy Court is unclear as to the amount of attorney fees and costs awarded by the District Court. The pleadings filed in this Adversary Proceeding contain conflicting amounts. In the Adversary Complaint, First American asks that "Plaintiff be awarded additionally [sic] fees, costs and interest in an amount to be determined by the Court."238 In its Trial Brief, First American asserts that the District Court awarded First American attorney fees and costs in the total amount of $3,141,122.23: (1) $88,006.44 in attorney fees based on the Defendant's breach of fiduciary duty; (2) $2,802,344.52 predicated on the Defendant's breach of contract; and (3) $250,771.27 in costs.239 However, the stipulated Pretrial Order240 states that "[t]he [District] Court granted an award of attorneys' fees and costs to First American and against Mr. Smith and others in the amount of $3,097,816.36."241

The Bankruptcy Court does not have in evidence and has not taken judicial notice of a copy of the District Court judgment(s) and/or orders awarding attorney fees and costs. First American did not include any of the pleadings in the District Court Litigation as proposed exhibits in the original Pretrial Order.242 Rather than attempt to reverse engineer First American's attorney fees and costs, this Court will hold a supplemental hearing on the issue.

3. Request for Post-Petition Post-Judgment Interest.

First American further asserts that it is entitled to post-petition post-judgment interest on the amount of the nondischargeable debt.243 First American's Trial Brief does not provide a calculation of post-judgment interest. Therefore, the Court determines that a supplemental hearing is necessary to determine whether First American is entitled to post-petition post-judgment interest and if so, in what amount.

4. Plaintiffs' Attorney Fees and Costs Incurred in this Adversary Proceeding.

It appears that in addition to the attorney fees and costs awarded in the District Court Litigation, First American is seeking attorney fees and costs incurred in connection with the Adversary Proceeding before the Bankruptcy Court. The Court comes to this conclusion based on a sentence in First American's trial brief stating "[t]he Court should conclude that attorneys' fees incurred in connection with the same willful and malicious conduct is also non-dischargeable, including those fees First American has had to expend in these proceedings."244 Again, the Court finds that a supplemental hearing is necessary on the issue of attorney fees and costs incurred in this Adversary Proceeding.

IV. CONCLUSION

This has been a difficult case for the Court as it is fully cognizant of the serious financial consequences that will flow to the Debtor as a result of this decision. The Court understands that the Debtor was frustrated with his situation at First American, and that the Debtor had the respect, confidence, and loyalty of many First American employees. Something that First American ostensibly failed to appreciate.

There is nothing per se malicious about the Debtor wanting to create a better career opportunity for himself and others. However, the Debtor's otherwise appropriate motivations crossed the line into malicious conduct when his business plan evolved into what was essentially a surprise attack on the operations of First American that involved intentionally concealing the formation of Norwest Title, poaching First American's essential employees and significant customers, and setting up offices in locations that were in direct competition with First American. The Debtor's actions are particularly problematic, and support the Court's finding of an intent to injure, given that the Debtor's formation of Northwest Title occurred when he was concurrently acting as First American's legal counsel. As such, the Debtor knew he had a fiduciary duty to avoid self-dealing and to act in the best interests of First American. As described above, the Debtor's conduct in this regard was wholly contrary to this duty, and the Debtor knew that his actions would injure First American.

Based on the foregoing, the Court finds that First American has carried its burden of proof by a preponderance of the evidence that the Debtor willfully and maliciously injured First American under § 523(a)(6). The Court will hold a supplemental hearing on whether and in what amounts the following should be included in the nondischargeable judgment: (1) attorney fees and costs awarded in the District Court Litigation; (2) post-petition post-judgment interest; and (3) attorney fees and costs incurred by the Plaintiff in this Adversary Proceeding. The Court will issue an order simultaneously with this Memorandum Decision.