In re Barnes (Ch. 7 Case No. 03-31752, Adv. No. 03-03071)

A surety provided a guardian bond to the debtors who were the guardians of their minor daughter. The debtors were removed as guardians and the successor guardian called upon the surety to honor its bond. The surety obtained a confession of judgment from the debtors. The debtors filed for Chapter 7 relief and the surety contended the debtors obligation was a nondischargeable defalcation while acting in a fiduciary capacity.

The court held that the surety was entitled to summary judgment on the issue that the debtors were acting in a fiduciary capacity and that the surety was a proper party to bring the nondischargeable action. The court held that there remain material questions of fact as to whether the debtors committed a defalcation.

Monday, November 8, 2004