Court Opinion

ID: 2963688
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:13:57.499248+00
Date Added: 2024-06-11T15:01:19.872190
License: Public Domain

USCA1 Opinion

	

        November 6, 1995        [NOT FOR PUBLICATION]

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                           

                                 ____________________

        No. 95-1406 

                                 RICHARD P. TRITTER,

                                      Appellant,

                                          v.

                        DIANE KINCH CORRY AND MELISSA TRITTER,

                                      Appellees.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                     [Hon. Joseph L. Tauro, U.S. District Judge]
                                            ___________________

                                 ____________________

                                        Before

                                Selya, Cyr and Boudin,
                                   Circuit Judges.
                                   ______________

                                 ____________________

            Richard P. Tritter on brief pro se.
            __________________
            Diane Kinch Corry on brief for appellees.
            _________________

                                 ____________________

                                 ____________________

                      Per   Curiam.     Appellant   Richard   P.  Tritter
                      ____________

            ("Tritter')  appeals pro  se  from the  district court  order
                                 ___  __

            affirming the decision of the  bankruptcy court that his debt

            to   his   daughter,    Melissa   Tritter   ("Melissa")    is

            nondischargeable under 11 U.S.C.    523(a)(4).  "In an appeal

            from district  court review of  a bankruptcy court  order, we

            independently   review   the  bankruptcy   court's  decision,

            applying the 'clearly erroneous' standard to findings of fact

            and  de novo review to  conclusions of law."  Grella v. Salem
                                                          ______    _____

            Five Cent Sav. Bank, 42 F.3d 26, 30 (1st Cir. 1994). 
            ___________________

                      I. Donative Intent
                         _______________

                      Tritter raises an argument  on appeal to this court

            which he did  not raise  before the bankruptcy  court or  the

            district court: that evidence  of donative intent should have

            been  admitted to  show that  "there was  never a  valid gift

            under the Uniform  Gifts to  Minors Act."   This argument  is

            waived  because it was not raised below. See United States v.
                                                     ___ _____________

            Palmer,  956  F.2d  3, 6  (1st  Cir.  1992).   Moreover,  the
            ______

            bankruptcy court  found that, by Tritter's  own admission, an

            account had been established under the Uniform Gift to Minors

            Act  ("UGMA")  for  Melissa's  benefit,  over  which  he  was

            custodian.   There is nothing  in the record  to suggest that

            the  bankruptcy court's  finding in  that regard  was clearly

            erroneous.

                                         -2-

                      II.   Breach   of  Fiduciary   Duty   Amounting  to
                            _____________________________________________

            Defalcation
            ___________

                      In   addition   to    donative   intent,    Tritter

            "incorporated by reference" the issues raised in his district

            court  brief.    Chief  among those  issues  is  whether  the

            bankruptcy court  erred in  ruling that Tritter  breached his

            fiduciary  duty  under  the relevant  statute  and,  thereby,

            engaged in "defalcation" pursuant to    523(a)(4).1  We  need

            not decide whether the propriety of the expenditures at issue

            should  be  judged under  the UGMA,  Mass.  Gen. L.  ch. 201A

            (1957),  in effect when the account was established, or under

            the UTMA, ch. 201A (1986), which replaced the UGMA, effective

            January  30, 1987.  The  expenditures at issue  here were not

            "for the minor's benefit" under either Act.

                      Tritter  argues  that the  UGMA grants  a custodian

            broader discretion  than the  UTMA and  should apply to  this

            case.  The UGMA provides, in relevant part, as follows:

                      The custodian shall pay  over to the minor for
                 expenditure  by  him,  or  expend for  the  minor's
                                            ________________________
                 benefit, so  much of or all  the custodial property
                 _______
                 as  the custodian deems  advisable for the support,
                 maintenance, education and benefit  of the minor in
                 the  manner, at the time or times and to the extent
                 that the custodian in his discretion deems suitable
                 and proper . . . . 

                                
            ____________________

            1.  With  respect to  the  remaining  issues incorporated  by
            reference, we  agree with the  district court's determination
            that they lack factual support.

                                         -3-

            Ch.  201A,    4(b)  (1957) (emphasis  added).   Payment  of a

            parent's  legal fees,  even for  custody  matters, is  not an

            expenditure "for  the minor's benefit" within  the meaning of

            the UGMA.  See Perlberger v. Perlberger, 626  A.2d 1186, 1202
                       ___ __________    __________

            (Pa. Super.,  1993)  (interpreting Pennsylvania  UGMA,  which

            contains language  identical to    4(b) of  the Massachusetts

            UGMA).  Tritter has  failed to cite  any cases in support  of

            his argument that his use of the funds for legal fees was for

            his  daughter's  benefit  under  the  Massachusetts UGMA.  We

            conclude that the bankruptcy court did not err in ruling that

            payment of a parent's legal fees, even to litigate custody or

            visitation  issues, is  not an  expenditure "for  the minor's

            benefit."    Assuming  there  may exist  exceptions  to  this

            general   rule   in    extraordinary   circumstances,    such

            circumstances are not present here.

                      The  bankruptcy court also  found that  Tritter, in

            his capacity  as custodian of his  daughter's account, failed

            to keep  proper records and  commingled funds.   Tritter does

            not contest those  findings.  Under  the UGMA, the  custodian

            was  required  to  keep   custodial  property  "separate  and

            distinct  from his own   property in a  manner to identify it

            clearly as custodial property," Ch. 201A,   4(g) (1957).  The

            UGMA also required the custodian to "keep accounts of all his

            transactions  with respect  to  the property  held by  him as

                                         -4-

            custodian .  . . ." Id.,    4(h).  Tritter  clearly failed to
                                ___

            comply with those duties as custodian under the UGMA.  

                      Pursuant to 11 U.S.C.    523(a)(4), a debt incurred

            by  "fraud  or  defalcation   while  acting  in  a  fiduciary

            capacity" is non-dischargeable.   "In order for  [plaintiffs]

            to  prevail  under     523(a)(4),  [they]  must  prove  by  a

            preponderance of the evidence that the Debtor committed fraud

            or defalcation while acting in  a fiduciary capacity." In  re
                                                                   ______

            Christian, 172 B.R. 490,  495 (Bankr.D.Mass., 1994).  Tritter
            _________

            became  a  fiduciary  for  purposes of   523(a)(4)  when  the

            account  was  established  under  the  UGMA,  naming  him  as

            custodian.  See In re Johns, 181 B.R. 965, 973 (Bankr.D.Ariz.
                        ___ ___________

            1995)(holding that custodian of UGMA or UTMA accounts acts in

            a fiduciary capacity for purposes of  523(a)(4)).

                      Tritter  breached his  fiduciary duties  under both

            the UGMA  and the UTMA by  1) expending the funds  to pay his

            own  legal fees, not "for the minor's benefit;" 2) failing to

            keep  the custodial funds separate from his own funds; and 3)

            failing  to  keep  proper  records.    The  bankruptcy  court

            correctly ruled that Tritter's breach of his fiduciary duties

            constituted "defalcation"  within the meaning of  11 U.S.C.  

            523(a)(4),  notwithstanding  the  absence  of  any  proof  of

            intentional wrongdoing. See In re Christian, 172 B.R. at 495.
                                    ___ _______________

                      The decision of the bankruptcy court is affirmed.
                                                              ________

                                         -5-