Wednesday, April 26, 2006

Eighth Circuit affirms bankruptcy court judgment that provider of contract labor to physical therapy clinics who overcharged his clients by $376K would not be able to discharge this debt Judith O. Letrud v. Timothy M. Kurmel 053449U.pdf 04/26/06 After a bench trial, the state court found that Kurmel had "violated the trust placed in him by the plaintiffs", that there was "overwhelming" evidence Kurmel used Partners as an "alter ego", and that "it is apparent that Mr. Kurmel violated his fiduciary duties" to the plaintiffs. It entered judgment against Kurmel in the amount of $378,386.30. Subsequent to the ruling, Kurmel filed for bankruptcy protection. Under 11 U.S.C. § 523(a)(4), a debt is nondischargeable if it is for "fraud or defalcation while acting in a fiduciary capacity". After de novo review, see Kasper v. Federated Mut. Ins. Co., 425 F.3d 496, 502 (8th Cir. 2005), we conclude that the debt is nondischargeable under § 523(a)(4) for the reasons explained by the district court.

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