U.S. Department of Labor v. Harris

The bankruptcy court granted summary judgment for the Department of Labor and declared that debtor's debt is nondischargeable under 11 U.S.C. 523(a)(4). Debtor appeals. The Department had obtained a pre-bankruptcy judgment against debtor in district court. The district court found that, under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., that debtor breached his fiduciary duty when the company of which he was CEO failed to remit funds withheld from its employees' paychecks for their health insurance plan. The BAP concluded that a trust res was created in this case because the trust was created when the employer withholds wages for payments to a plan providing benefits to employees; debtor had fiduciary responsibilities with respect to funds that had been withheld from wages for payment to HealthPartners; and debtor committed defalcation when he knowingly failed to remit employee contributions and instead knowingly used those funds to pay for other corporate expenses. Accordingly, the BAP affirmed the judgment. View "U.S. Department of Labor v. Harris" on Justia Law