Case Summary:
Debtor sought summary judgment in a nondischargeability adversary proceeding that alleged a violation of Wisconsin’s theft by contractor statute, Wis. Stat. § 779.02(5). The debtor contended that the plaintiffs’ previous state court settlement with the other principal in their limited liability company constituted a release of any claim against him as well. The Wisconsin trust fund statute makes a contractor the trustee of the funds received from a property owner until various claims are paid. Under Wisconsin law, there are certain instances in which the release of one tortfeasor may lead to the release of a non-settling tortfeasor’s liability as well because the non-settling party’s right to contribution or indemnification is imputed against the plaintiff. However, only a negligent tortfeasor is entitled to contribution or indemnification from an intentional tortfeasor. In this case there was a dispute as to which of the contractors was the “intentional” tortfeasor. This dispute precluded the granting of summary judgment as there was a genuine issue of material fact as to a main component of the debtor’s defense.
Statute/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud in Fiduciary Capacity
Wis. Stat. § 779.02(5) -- Theft by Contractor
Key Terms:
Fraud - Fiduciary Capacity
Theft by Contractor