Chapter 13 debtor’s ex‑wife brought adversary proceeding to except debt from discharge and moved for summary judgment on “fiduciary fraud or defalcation” claim. Debtor‑husband cross‑moved for summary judgment in his favor. The Bankruptcy Court held: (1) debtor stood in “fiduciary capacity” to his spouse, as that term was used in dischargeability exception, when he unilaterally liquidated and spent funds from community account other than for support of community, and (2) debtor’s unilateral liquidation and spending of funds from community account other than for support of community around the time that he and his wife separated was breach of marital trust relationship and of his fiduciary duty to community, and rose to level of “defalcation.”
Laura Morgan is a Family Law Consultant. Laura is available for consultation, brief writing and research on family law issues throughout the country. She can be reached through her website. www.famlawconsult.com
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