UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
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This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
LAWRENCE M. SYLVESTER, No. 99-10073
C.I.M. INDUSTRIES, INC.,
v. A.P. No. 99-1054
LAWRENCE M. SYLVESTER,
Memorandum of Decision
A jury trial was held in state court without a verdict. The state court then dismissed the jury and
entered a judgment in favor of plaintiff C.I.M. Industries against debtor and defendant Lawrence
Sylvester for injunctive relief and attorneys' fees for willful and malicious misappropriation of trade
secrets. C.I.M. now seeks a summary nondischargeable judgment against Sylvester in this adversary
proceeding, arguing collateral estoppel.
Sylvester argues that the state judgment is invalid due to a procedural defect. This position does
not appear to have merit. In any event, the issue should have been raised in the state court. Since the
judgment appears valid on its face and no extrinsic fraud is alleged, the court must presume its validity.
Trade secrets may be misappropriated with or without malicious intent to injure their owner.
Where misappropriation was done under a mistaken belief of entitlement, there is insufficient intent to
support a judgment of nondischargeability. Matter of Miller
, 156 F.3d 598, 603 (5th
the state court in this case specifically found that Sylvester acted willfully and
maliciously. Pursuant to California Code of Civil Procedure § 3426.4, an award of attorneys' fees can
only be made if the misappropriation was willful and malicious. Therefore, also unlike Miller
finding was necessary to the judgment.
Sylvester argues that there can be no nondischargeable debt because there were no damages.
The court disagrees. The award of attorneys' fees is an item of damages, since it was expressly made
due to Sylvester's willful and malicious misappropriation. Statutory attorneys' fees are damages which
may be determined to be nondischargeable. Cohen v. de la Cruz
, 523 U.S. 213, 140 L.Ed.2d 341, 349
For the foregoing reasons, C.I.M.'s motion for summary judgment will be granted. Counsel for
C.I.M. shall submit an appropriate form of order granting its motion and an appropriate form of
Dated: October 25, 1999 ____________________________
United States Bankruptcy