Heers v. Parsons (In re Heers)

Summarized by James Webster , Law Office of James Portman Webster, PLLC
10 years 10 months ago

Citation:

Heers v. Parsons (In re Heers) - B.R. - (9th Cir. B.A.P. April 15,2015)

Tag(s):

Ruling:

The Bankruptcy Appellate Panel affirmed the Bankruptcy Court's finding that the Debtor (Appellant) actions rose to the level of denying a discharge as to debts related a mishandling of a probate estate when Debtor had multiple negligent breaches of her fiduciary duties under 11 USC 523(a)(4) when Debtor missed deadlines and failed to pay taxes which resulted in extra costs to the Internal Revenue Service in the amount of $439,621.61. Important to note this is one of the first times the 9th Circuit Bankruptcy Appellate Panel has implemented the new standard set in Bullock v. BankChampaign, N.A., 133 S. Ct 1754 (2013) regarding the requisite mental state for a "defalcation" to occur.

Procedural context:

Debtor filed bankruptcy and Appellee's timely filed Adversary Proceedings under 11 USC 523(a)(4). The Appellee's filed a motion for summary judgment and it was granted by the bankruptcy court. Debtor appealed.

Facts:

Prior to filing bankruptcy, Debtor mishandled a probate estate. This mishandling lead to Internal Revenue penalties in the amount of $439,631.21. The Debtor had a bond and the bond sued the Debtor in the amount it paid to the probate estate. The lawsuit resulted in judgments that Debtor breached her fiduciary duties.

Judge(s):

Dunn, Jury, Kurtz (Dissent)

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