Plaintiff Hellenbrand Glass, LLC filed an adversary complaint seeking a determination that a debt evidenced by a state court judgment was nondischargeable under 11 U.S.C. § 523(a)(4). The parties filed a stipulation agreeing inter alia that $15,457.03 was nondischargeable. They also stipulated that the state court trebled this amount pursuant to Wis. Stats. §§ 895.446 and 943.20. The only issue before the Court was whether the treble damage portion of the debt was dischargeable. The parties agreed there were no material issues of fact and the court ordered briefs. To resolve the state court action, the Plaintiff and Debtor Scott G. Pulvermacher entered into a settlement agreement intending to resolve the Plaintiff’s claim for theft by contractor Plaintiff. The Court concluded that the trust created by Wis. Stat. § 779.02(5) establishes the type of express statutory trust contemplated by 11 U.S.C. § 523(a)(4). Accordingly, the Court found the entire debt nondischargeable reasoning a party’s breach of a settlement agreement disposing of the underlying action does not erase the history of the debt’s origin.
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud or Defalcation in Fiduciary Capacity
Wis. Stat. § 779.02(5) -- Theft by Contractor
Wis. Stat. § 895.446 -- Action for Property Damage or Loss
Wis. Stat. § 943.20 -- Theft
Theft by Contractor