IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
JOSEPH D. MICKELSEN, No. 93-12309
LAWYERS SURETY CORPORATION,
v. A.P. No. 93-1269
JOSEPH D. MICKELSEN,
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 _______________________