IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF KANSAS
MICHAEL JOSEPH DEAN,
GREATER KANSAS CITY LABORERS VACATION PLAN, et al.,
MICHAEL JOSEPH DEAN,
ADV. NO. 92-7144
ORDER DENYING SUMMARY JUDGMENT
This dischargeability proceeding is before the Court on the plaintiffs' motion for summary judgment and the debtor's response. The plaintiffs appear by counsel Michael G. Newbold and Robert A. West. The debtor appears by counsel Stephen G. Bolton. The Court has reviewed the relevant pleadings and is now ready to rule.
The plaintiffs' motion sets forth the nature of the case, a procedural analysis, thirty-one undisputed
facts, and a legal argument. The debtor conceded the plaintiffs accurately stated the nature of the
case, the procedural analysis, and the undisputed facts. He did assert some additional facts to
which the plaintiffs have responded.
The debtor was the president, director, and chief operating and executive officer of Calidad Masonry Company, Inc. (Calidad), a construction company. Under a collective bargaining agreement with the plaintiffs, Calidad was obligated to withhold certain amounts from its employees' wages and remit them to the plaintiffs. The debtor was responsible for ensuring that Calidad performed this function. According to company records which he certified, Calidad properly withheld the required amounts and supposedly remitted them to the plaintiffs. However, contrary to his certifications, the plaintiffs were not paid $4,748.88 in vacation fund contributions and $1,758.70 in supplemental dues. The vacation fund contributions are governed by the Employee Retirement Income Security Act (ERISA).
In attachments to his response, the debtor stated that D.M. Ward Construction Company, Inc.
(Ward), the general contractor on the construction jobs involved, had agreed to make the
payments for Calidad. According to the agreement, which appears to have been in force during
the time period pertinent to the plaintiffs' claims, Ward was to deduct all taxes and union benefits
from amounts due Calidad for the jobs and then pay the taxing authorities and the plaintiffs on
Calidad's behalf. These deductions appear to include the funds which the plaintiffs have not
DISCUSSION AND CONCLUSIONS
The plaintiffs claim that by withholding money from their members' pay and failing to remit it to them, the debtor committed fraud or defalcation while acting in a fiduciary capacity, embezzlement, larceny, or conversion. The debtor admits the money was withheld but contends that he gained no personal benefit from the withholding, and furthermore, that Ward was the responsible party due to its agreement with Calidad.
By virtue of its agreements with the plaintiffs, Calidad was obligated to remit to the plaintiffs money it withheld from its employees' pay for the vacation fund and for supplemental dues. On the other hand, Calidad appears to have agreed with its general contractor, Ward, on the jobs which appear to have generated the obligations for the money that was not paid to the plaintiffs, to have Ward fulfill these and payroll tax obligations, and pay Calidad only the net funds due it on a weekly basis.
The cases cited by the plaintiffs speak at most of a de facto fiduciary relationship being created for vacation fund misappropriations. See United States v. Grizzle, 933 F.2d 943, 947-48 (11th Cir. 1991). A fiduciary relationship established only de facto or ex maleficio is not the express or statutory type covered by §523(a)(4). E.g., In re Hutton, 117 B.R. 1009, 1010-13 (Bankr.N.D. Okla. 1990); see 3 Collier on Bankruptcy, ¶523.14[c] at 523-106 to -109 (15th ed. 1994). The Court therefore concludes the debtor did not breach a fiduciary relationship under §523(a)(4) and denies summary judgment on that claim.
Although there is no dispute about any other fact, the debtor's assertion of a contract with Ward does raise a genuine issue of material fact that must be resolved before the remaining allegations under §523(a)(2), (4) and (6) can be determined. The debtor signed documents on behalf of Calidad certifying that money had been withheld from pay and remitted to the plaintiffs. However, the debtor also asserts that Ward was to deduct these same funds from the money it owed Calidad and remit them to the plaintiffs. Either the statements are inconsistent and therefore raise the issue of which is correct, or they are not inconsistent and the debtor signed the certifications based on the mistaken assumption that Ward carried out its agreement with Calidad. Until this question is resolved, the plaintiffs' motion for summary judgment must be denied.
IT IS SO ORDERED.
Dated at Topeka, Kansas, this _____ day of September, 1994.
JAMES A. PUSATERI
CHIEF BANKRUPTCY JUDGE