JACK B. SCHMETTERER, Bankruptcy Judge.

Richard A. Bixter, Holland & Knight LLP, Chicago, IL, for Plaintiff.

Jeffrey S. Harris, Maywood, IL, for Defendant.

MEMORANDUM OPINION ON FNA'S MOTION FOR SUMMARY JUDGMENT

JACK B. SCHMETTERER, Bankruptcy Judge.

This adversary proceeding was brought by FNA Group, Inc. (“FNA”) against Debtor Demetrios Arvanitis (“Arvanitis”). It relates to the Debtor's Chapter 7 case, and seeks to except a debt from discharge under 11 U.S.C. §§ 523(a)(4) and 523(a)(6). After an Answer was filed, FNA Group moved for summary judgment based on asserted issue preclusion arising from a state court order imposing a temporary restraining order (“TRO”) and an order finding civil contempt.

Arvanitis formerly worked at FNA from 1996 through 2012, rising to the title of Director of Operation and Logistics. During his employment at FNA Group, it is alleged that Arvanitis secretly recorded confidential conversations between FNA Group employees and clients, and gathered other proprietary and confidential information. After he left employment at FNA Group, Arvanitis allegedly blackmailed FNA Group by threatening to reveal the confidential information to the public. FNA Group sued in state court, seeking an injunction and damages. Arvanitis then filed his petition for relief under Chapter 7 of the Bankruptcy Code. This adversary proceeding and the motion for summary judgment followed. For the following reasons, summary judgment will be denied.

UNCONTESTED FACTS

The following background facts are drawn from the Plaintiff's Statement of Uncontested Facts, which was filed as required by Local Bankruptcy Rule 7056–1, and the Defendant's response as required by Local Bankruptcy 7056–2. The statements of uncontested facts are nearly all verbatim copies of the allegations contained in the complaint. “The facts are viewed in the light most favorable to the non-moving party and all reasonable inferences are drawn in [his] favor.” Ault v. Speicher, 634 F.3d 942, 945 (7th Cir.2011).

FNA alleges that: FNA is an Illinois corporation which manufactures and sells pressure washers. (Complaint ¶ 5; 7056–1 ¶ 1.) Arvanitis admits this fact. (7056–2 ¶ 1.) Arvanitis was an employee of FNA for 16 years from September, 1996 to August 2012. (Answer ¶ 6; 7056 ¶ 2.) On the date of his departure, Arvanitis held the title of Direct of Operations and Logistics, and his job responsibilities included supervising FNA facilities and the operation and security of FNA's buildings. (Answer ¶ 6; 7056–2 ¶ 3.)

FNA alleges that Arvanitis signed a “Trade Secret/Non–Disclosure Agreement” and received an “Employee Handbook,” which included a “Confidentiality Agreement” and signed an acknowledgement form relating to the Employee Handbook during his employment. (Complaint ¶¶ 7, 10, 12; 7056–1 ¶¶ 5, 8, 9.) Arvanitis denies that he ever executed any of those documents (7056–2 ¶¶ 5, 8, 9.), but does not contest the contents of the documents (7056–2 ¶ 6–7, 10.). Strangely enough, even though Arvanitis denies ever signing those documents, he admits as an uncontested fact that he was “at all times bound by the terms of the Trade–Secret/Non–Disclosure Agreement, the Employee Handbook and the Confidentiality Agreement.” (7056–2 ¶ 1.)

FNA alleges, and Arvanitis denies, that Arvanitis collected proprietary and confidential information from FNA, including using secret audio-visual recording devices. (Complaint ¶¶ 15–18; 7056–1 ¶¶ 12–15.) After his employment ended, Arvanitis allegedly refused to return the confidential materials to FNA, and threatened to reveal the confidential and proprietary information, and even revealed some to third parties. (Complaint ¶ 9;7056–1 ¶¶ 7, 19.) Arvanitis denies these facts.

FNA sued in state court, seeking damages and an injunction for the alleged theft of proprietary and confidential information, under various theories, including breach of contract, breach of fiduciary duty, conversion, and intrusion upon seclusion. (Complaint ¶ 21;7065–1 ¶ 20.) The following history of the litigation in state court is uncontested by Arvanitis. That is, he admits that the events in state court took place, even as he contests the substance of what was alleged in the state court proceeding. (7052–2 ¶¶ 21–49.) FNA moved for a temporary restraining order and preliminary injunction. (Complaint ¶ 31;7056–1 ¶ 28.) After a hearing, the state court judge entered the TRO, which required Arvanitis to return immediately any materials from his employment at FNA including any materials containing confidential or proprietary information. (Complaint ¶ 32;7056–1 ¶ 29.) The state court's order only refers to consideration of the verified complaint and motions by counsel. (Dkt. 25 Exh. D.) FNA contends that the TRO was entered based on a preponderance of the evidence, which is not contested by Arvanitis. (7056–2 ¶ 29.) When Arvanitis failed to comply with the order to FNA's satisfaction, FNA filed an Emergency Motion for Indirect Civil Contempt. (Complaint ¶ 34;7056–1 ¶ 33.) In its motion, FNA alleged that Arvanitis was in possession of documents including a value at risk analysis and inventory accounting, an appraisal of FNA's business net worth, process and shipping diagrams and matrixes, customer pricing charts, customer client codes, prospective client lists, lists of supplies, letters, photographs, emails and voice recordings. (Complaint ¶¶ 34–35;7056–1 ¶¶ 3435.) Following an evidentiary hearing, that motion was granted. (Complaint ¶ 37; 70561 ¶ 37.)

The state court then found that, “Mr. Arvanitis has possession of documents, materials, hardware or software as set forth in the TRO which he has failed to turn over as ordered. Therefore, Mr. Arvanitis is in indirect civil contempt of court.” (Dkt. 25 Exh. F at 7–8.) Accordingly, the court ordered “Arvanitis is adjudicated in indirect civil contempt for not complying with the TRO entered October 2, 2013.” and Arvanitis was ordered to pay a fine of $2500 per day to the court until he complied with the TRO. (Id. at 8.) Arvanitis moved for reconsideration of the contempt order, and the state court judge entered an order halting the accumulation of fines in excess of $32,500 until a further evidentiary hearing. (Complaint ¶¶ 40–41; 7056–1 ¶¶ 40–41.)

After the second evidentiary hearing on Arvanitis's motion for reconsideration was set, but before the hearing itself, Arvanitis filed for relief under Chapter 7 in the above captioned bankruptcy case. (Complaint ¶ 43; 7056–1 ¶ 43.) FNA sought and was granted relief from the automatic stay in order to pursue its contempt proceeding in state court. (Bankruptcy Dkts. 11, 44.) In state court, the contempt order was reinstated, and Arvanitis did not appeal. (Complaint ¶¶ 45–46;7056–1 ¶¶ 45–46.) FNA sought in this court further relief from the automatic stay in order to pursue its case in state court to final judgment and to seek incarceration of the debtor for contempt, and that relief was granted, except that FNA was not authorized to attempt collection of any monetary judgment. (Bankruptcy Dks. 26.) In state court, FNA moved to incarcerate Arvanitis for civil contempt. (7056–1 ¶ 49.) Arvanitis was incarcerated for two weeks, then released, although nothing is said about how Arvanitis secured his release. (Id. ) The state court case has not reached final judgment.

FNA also filed this adversary proceeding to determine the dischargeability of the debt owed by Arvanitis as a result of Arvanitis's acts complained of in the state court case. After an Answer was filed, FNA moved for summary judgment.

In its adversary complaint for nondischargeability, FNA alleges that Arvanitis recorded private conversations between FNA officers and employees with customers, (¶ 17.), and also took copies of customer lists (¶ 19.), and other proprietary information. Further, the complaint seeks relief for threatening to disclose and actually disclosing confidential information to third parties. (¶ 22.) While the conduct FNA complains of includes taking proprietary information that Arvanitis no the right to access after leaving his employment with FNA, the Complaint reaches much farther than what was covered in the contempt orders. For example the complaint in this proceeding alleges that “Debtor's breaches of his fiduciary duty caused loss and damages to FNA in excess of $800,000, in that Debtor caused freight carriers, brokers and forwarders to charge excessive, above-market fees and costs to FNA.” (¶ 26) Further, the complaint alleges that “Debtor has threatened and continues to threaten to disclose and release such unauthorized recordings to third parties in violation of the rights of FNA and its employees.” (¶ 30.)

In his response to the motion for summary judgment, Arvanitis attached an “affidavit” that had a space for a notary's signature, but was never notarized, and was undated. (Dkt. 31–3.) In the affidavit, Arvanitis declared that he did not sign any Trade Secret/Non–Disclosure Agreement, an Employee Handbook Acknowledgement, or a Confidentiality Agreement. (¶¶ 2–4.) He further stated that never installed any recording devices in FNA offices, but rather that Mr. Alexander (FNA's CEO) directed them to be installed. (¶ 6.) Arvanitis also stated that he never collected any recording from the devices. (¶ 7.) He also stated that he did not refuse to return any recordings or materials, and that he has not threatened to disclose any proprietary and confidential information. He also stated that any such material was deleted, and that he has none in his possession.

Upon FNA's motion for summary judgment, a briefing schedule was established. To its reply brief, FNA attached, as Exhibit A, a three or four-inch stack of transcripts from the state court proceeding. Exhibit A was not accompanied by an affidavit regarding its authenticity and completeness, and FNA did not supply an abstract of that long transcript or state in its reply brief what parts of the transcript it wished to rely upon and what pertinence each part might have. Moreover, it was filed with the reply brief and thereby sought to expand the factual basis for relief originally sought. This had the effect of surprising the defendant with new issues after he had responded to the motion. Exhibit A was therefore stricken by motion of court sua sponte . See United States v. Dunkel, 927 F.2d 955, 956 (7th Cir.1991) (“Judges are not like pigs, hunting for truffles buried in briefs.”); Gross v. Town of Cicero, Ill., 619 F.3d 697, 702 (7th Cir.2010) (“As we have repeated time and again, ‘Judges are not like pigs, hunting for truffles buried in [the record].’ ”) Apart from other reasons, the failure to designate portions of the transcript relied on would alone have required the Court's order.

DISCUSSION

Jurisdiction

Subject matter jurisdiction lies under 28 U.S.C. § 1334. Under 28 U.S.C. § 157 and District Court Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois, this proceeding is referred here. Venue lies under 28 U.S.C. § 1409. This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(I). It seeks to determine the discharge-ability of a debt, therefore, it “stems from the bankruptcy itself,” and may constitutionally be decided by a bankruptcy judge. Stern v. Marshall, ––– U.S. ––––, 131 S.Ct. 2594, 2618, 180 L.Ed.2d 475 (2011).

Summary Judgment

Summary judgment should only be granted “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” F.R.C.P. 56(a) (made applicable in bankruptcy by Fed. R. Bankr.P. 7056 ). “The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact.” Roger v. Yellow Freight Sys., Inc., 21 F.3d 146, 148 (7th Cir.1994) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). If the initial burden is met, the nonmoving party that bears the burden of proof on a dispositive issue at trial must affirmatively demonstrate a genuine issue for trial on that issue. See Id.

§ 523(a)(4)Embezzlement & Larceny (COUNT 1)

In Count I, FNA Group seeks a declaration that its claim against Arvanitis is not dischargeable on grounds of embezzlement. Section 523(a)(4) provides that certain debts incurred by embezzlement or larceny are not dischargeable. In its complaint, FNA Group only seeks nondischargeability on grounds of embezzlement. In its motion for summary judgment, however, it also argues that larceny may apply.

Embezzlement under § 523(a)(4) has been defined as the “fraudulent appropriation of property by a person to whom such property was entrusted or into whose hands it has lawfully come.” Matter of Weber, 892 F.2d 534, 538 (7th Cir.1989). “To prove embezzlement, the creditor must show by clear and convincing evidence that (1) the debtor appropriated funds for his or her own benefit; and (2) the debtor did so with fraudulent intent or deceit.” Id. For embezzlement, fraudulent intent “is knowledge that the use is devoid of authorization, scienter for short.” In re Sherman, 603 F.3d 11 (1st Cir.2010) (Souter, J.)

“Larceny is proven for § 523(a)(4) purposes if the debtor has wrongfully and with fraudulent intent taken property from its owner.” Matter of Rose, 934 F.2d 901, 903 (7th Cir.1991).

§ 523(a)(6)Willful & Malicious Injury (COUNT 2)

In Count II, nondischargeability is sought under § 523(a)(6). A debt is nondischargeable under § 523(a)(6) for willful and malicious injury when there is “(1) an injury caused by the debtor (2) willfully and (3) maliciously.” First Weber Group, Inc. v. Horsfall, 738 F.3d 767, 774 (7th Cir.2013). Injury is a violation of another's legal right, for which the law provides a remedy. Id. Willfulness requires “a deliberate or intentional injury, not merely a deliberate intentional act that leads to injury.” Id. (quoting Kawaauhau v. Geiger, 523 U.S. 57, 61, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998) ) (emphasis in original). Maliciousness requires proof of conscious disregard of a duty without just cause or excuse. Id.

Availability of Issue Preclusion

A state court judgment is entitled to the same preclusive effect in federal court as that judgment would have in state court. Allen v. McCurry, 449 U.S. 90, 96, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980) ; see 28 U.S.C. § 1738. This rule applies with equal force in bankruptcy cases. First Weber Group, Inc. v. Horsfall, 738 F.3d 767, 772 (7th Cir.2013). Even in the dischargeability context, “[w]here a state court determines factual questions using the same standards as the bankruptcy court would use, collateral estoppel should be applied ...” Id.

Under Illinois state law, collateral estoppel, also known as issue preclusion, applies when:

(1) the issue decided in the prior adjudication is identical with the one presented in the suit in question,

there was a final judgment on the merits in the prior adjudication, and

the party against whom estoppel is asserted was a party or in privity with a party to the prior adjudication.

In re Owens, 125 Ill.2d 390, 399–400, 126 Ill.Dec. 563, 532 N.E.2d 248 (1988).

Trial courts have broad discretion to make sure that application of offensive collateral estoppel is not fundamentally unfair to the defendant, even though the threshold requirements for collateral estoppel are otherwise satisfied. Id. at 399, 126 Ill.Dec. 563, 532 N.E.2d 248.

In a recent case, another bankruptcy judge in this district granted summary judgment based on collateral estoppel for defalcation by one in a fiduciary capacity under § 523(a)(4), demonstrating that offensive summary judgment based on collateral estoppel may succeed in the nondischargeability context. Wain v. Wain, 13–bk–38147, 14–ap–177 (Bankr.N.D.Ill. Dec. 17, 2014). But in Wain, the state court case had reached final judgment and the state court judge had made specific factual findings that satisfied the legal requirements for nondischargeability. As will be seen below, however the factual findings of the state court contempt order applicable here do not satisfy legal requirements for nondischargeability in this proceeding.

Applicability of Collateral Estoppel Here

FNA Group argues that both the TRO order and the contempt order give rise to collateral estoppel. The TRO order cannot not give rise to collateral estoppel because by its own terms, it only found a likeliness of success on the merits and was thus not a judgment on the merits. See Wilson v. Hinsdale Elementary School District 181, 349 Ill.App.3d 243, 248, 284 Ill.Dec. 847, 810 N.E.2d 637 (2d Dist.2004). However, as discussed below, a contempt order might give rise to collateral estoppel.

Under Illinois state law, a judgment for contempt is a final judgment. “The imposition of a sanction for contempt is final and appealable because, although occurring within the context of another proceeding and thus having the appearance of being interlocutory, it is an original special proceeding, collateral to and independent of, the case in which the contempt arises.”People ex rel. Scott v. Silverstein, 87 Ill.2d 167, 172, 57 Ill.Dec. 585, 429 N.E.2d 483 (1981).

In the state court contempt order, it was found that “Mr. Arvanitis has possession of documents, materials, hardware or software as set forth in the TRO which he has failed to turn over as ordered. Therefore, Mr. Arvanitis is in indirect civil contempt of court.” (Dkt. 25 Exh. F at 7–8.) The items “set forth in the TRO” were “any and all documents and materials of any nature pertaining to any work performed for or elated to FNA Group, Inc., ...” and “any computer hardware and software containing any of the information contained in Paragraph 1 ...” (Dkt. 25 Exh. D at 2.) However, the state court contempt order did not have findings relating to how Arvanitis acquired the property (lawfully? fraudulently? by force? some other way?). Nor does it contain any indication of Defendant's state of mind. Therefore, the issue decided by the state court in the contempt order was not identical to either issue of nondischargeability to be decided here. The factual findings in the order—possession and a failure to return the items as ordered—do not by themselves give rise to an inference that the events after Arvanitis left employment with FNA Group occurred in the way described in FNA Group's complaint.

The opinion in First Weber Group v. Horsfall is instructive. 738 F.3d 767 (7th Cir.2013). There, the plaintiff commenced an adversary complaint against the debtor for nondischargeability under § 523(a)(6) for the underlying acts of tortious interference with contract and conversion. The creditor moved for summary judgment, arguing that it was entitled to judgment as a matter of law because of issue preclusion based on the state-court judgment for conversion. The Seventh Circuit panel concluded that although the state court judgment had collateral estoppel effect for two elements necessary for nondischargeability—injury and maliciousness—it did not give rise to collateral estoppel effect for the third required element—willfulness—because willfulness was not necessarily established by the state court judgment for interference with contract and conversion.

Likewise here, willfulness required under § 523(a)(6) to prove a willful and malicious injury has not been established by the state court's contempt order. What has been established is only that at some point, Arvanitis gained possession of some of plaintiff's property, and at some point that possession was determined by court order to have become wrongful. The language in the contempt order did not find that Arvanitis acted with the intent to injure FNA, nor did the contempt order find that Arvanitis took or kept FNA's property knowing that he did not have authorization at any time prior to entry of the TRO. Nor has intent to deceive been established as required under § 523(a)(4) for embezzlement or larceny. Accordingly, there remain genuine issues of material fact, and so summary judgment will be denied.

It may be that all of these questions could have been answered had a transcript of any evidentiary hearing on which the state court judge relied had been properly presented here. “While collateral estoppel applies only to issues that have been necessarily and unambiguously decided, express factual findings are not required because an issue may be decided from findings implicit in the judgment.” Leventhal v. Schenberg (In re Leventhal), 481 B.R. 409, 420 (N.D.Ill.2012). “In order to determine whether the elements of collateral estoppel have been satisfied in a dischargeability proceeding, the bankruptcy court should look at the entire record of the state proceeding, not just the judgment.”In re Tapper, 123 B.R. 594, 600 (Bankr.N.D.Ill.1991). But the present record is very sparse as to the factual basis for the state court ruling and the nature of that ruling. CONCLUSION

For the foregoing reasons, FNA Group's motion for summary judgment will be denied by separate order.