Memorandum of Decision Re: Defalcation of Conservator

IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re JOSEPH D. MICKELSEN,                                                                                                  No. 93-12309      Debtor. ___________________________/ LAWYERS SURETY CORPORATION,      Plaintiff,    v.                                                                                                                                        A.P. No. 93-1269 JOSEPH D. MICKELSEN,      Defendant. _____________________________/
Memorandum of Decision
     Before he filed his Chapter 7 petition, debtor Joseph Mickelsen was the conservator of the person and estate of Carolyn Joan Davey. In state court proceedings after a trial on the merits, the state court found Mickelsen guilty of gross negligence and dereliction of duty in managing the assets of the conservatorship. Mickelsen was removed, and his bond surcharged for $22,366.00. The surety, plaintiff Lawyers Surety Corporation, now seeks to recover from Mickelsen. The issue in this adversary proceeding is whether this debt is nondischargeable pursuant to section 523(a)(4).      Although not cited by either side, the controlling case in this matter is In re Martin, 161 B.R. 672 (9th Cir.BAP 1993), which held that there must be an element of wrongful conduct beyond ordinary negligence before a conservator owes a nondischargeable debt for defalcation. Since the state court made detailed findings which are binding on this court (In re Bugna, 33 F.3d 1054 (9th Cir. 1994)), resolution of this matter by summary judgment is appropriate. Any debts found by the stte court to have resulted from more than ordinary negligence are nondischargeable.      As the court noted in Martin at 161 B.R. 678, a greater degree of culpability than ordinary negligence is established when estate funds are used for the personal benefit of the fiduciary. Thus, the state court's findings that Mickelsen overpaid his wife for care services and      In this case, that element is clear from the state court findings. Mickelsen was more than merely negligent: he overpaid himself and his wife from estate funds and failed to account for several withdrawals. Accordingly, the summary judgment motion will be granted and judgment will be entered in favor of plaintiff declaring that the state court judgment is nondischargeable, along with any costs of suit incurred in this adversary proceeding.      Counsel for plaintiff shall submit an appropriate form of order granting summary judgment and an appropriate form of judgment.
Dated: November 22, 1994                                                                                                   _______________________                                                                                                                                                    Alan Jaroslovsky                                                                                                                                                    U.S. Bankruptcy