Argued and Submitted, May 14, 2015, San Francisco, California
Appeal from the United States District Court for the Eastern District of California. D.C. No. 2:12-cv-02026-MCE. Morrison C. England, Jr., Chief District Judge, Presiding.
Reversing the district court's judgment affirming the bankruptcy court, the panel held that a debt was not nondischargeable as a debt incurred due to the Chapter 7 debtor's fraud or defalcation while acting in a fiduciary capacity.
Agreeing with the Sixth and Tenth Circuits, the panel held that the debtor was not a " fiduciary" under 11 U.S.C. § 523(a)(4) when he failed to make contractually required contributions to an employee benefits trust governed by the Employee Retirement Income Security Act. The panel declined to recognize an exception to the rule that unpaid contributions by employers to employee benefit plans are not plan assets, even though other courts had recognized an exception when the plan document expressly defines the fund to include future payments.
The panel reversed with instructions to remand to the bankruptcy court with instructions to discharge the debt.
Kristen Ditlevsen Renfro, Desmond, Nolan, Livaich & Cunningham, Sacramento, California, argued the cause and, along with J. Russell Cunningham, J. Luke Hendrix, and Gabriel P. Herrera, filed the briefs for appellant.
Tracy L. Mainguy, Weinberg, Roger & Rosenfeld, Alameda, California, argued the cause, and Christian L. Raisner, Emily P. Rich, Jordan D. Mazur, and Jolene E. Kramer filed the brief for the appellees.
Before: Diarmuid F. O'Scannlain and Sandra S. Ikuta, Circuit Judges and Larry A. Burns,[*] District Judge.
We must decide whether an employer's contractual requirement to contribute to an employee benefits trust fund makes it a fiduciary of unpaid contributions.
Beginning in 2007, Gregory Bos was owner and president of Bos Enterprises, Inc. (" BEI" ). BEI was a member of the Modular Installers Association, an employer association. As president of BEI, Bos agreed that BEI would be bound by the Carpenters' Master Agreement, and several trust agreements. The Carpenters' Master Agreement required each employer--including BEI--to contribute monthly payments based on hours of work to the trust funds (the " Funds" ) for the purpose of providing employee benefits. Each trust agreement defined its respective fund as including " all contributions required by the [Carpenters' Master Agreement] . . . to be made for the establishment and maintenance of the [respective plan], and all interest, income and other returns of any kind." With the exception ...