
USCA1 Opinion

	




        November 6, 1995        [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                                            ____________________        No. 95-1406                                  RICHARD P. TRITTER,                                      Appellant,                                          v.                        DIANE KINCH CORRY AND MELISSA TRITTER,                                      Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                     [Hon. Joseph L. Tauro, U.S. District Judge]                                            ___________________                                 ____________________                                        Before                                Selya, Cyr and Boudin,                                   Circuit Judges.                                   ______________                                 ____________________            Richard P. Tritter on brief pro se.            __________________            Diane Kinch Corry on brief for appellees.            _________________                                 ____________________                                 ____________________                      Per   Curiam.     Appellant   Richard   P.  Tritter                      ____________            ("Tritter')  appeals pro  se  from the  district court  order                                 ___  __            affirming the decision of the  bankruptcy court that his debt            to   his   daughter,    Melissa   Tritter   ("Melissa")    is            nondischargeable under 11 U.S.C.    523(a)(4).  "In an appeal            from district  court review of  a bankruptcy court  order, we            independently   review   the  bankruptcy   court's  decision,            applying the 'clearly erroneous' standard to findings of fact            and  de novo review to  conclusions of law."  Grella v. Salem                                                          ______    _____            Five Cent Sav. Bank, 42 F.3d 26, 30 (1st Cir. 1994).             ___________________                      I. Donative Intent                         _______________                      Tritter raises an argument  on appeal to this court            which he did  not raise  before the bankruptcy  court or  the            district court: that evidence  of donative intent should have            been  admitted to  show that  "there was  never a  valid gift            under the Uniform  Gifts to  Minors Act."   This argument  is            waived  because it was not raised below. See United States v.                                                     ___ _____________            Palmer,  956  F.2d  3, 6  (1st  Cir.  1992).   Moreover,  the            ______            bankruptcy court  found that, by Tritter's  own admission, an            account had been established under the Uniform Gift to Minors            Act  ("UGMA")  for  Melissa's  benefit,  over  which  he  was            custodian.   There is nothing  in the record  to suggest that            the  bankruptcy court's  finding in  that regard  was clearly            erroneous.                                         -2-                      II.   Breach   of  Fiduciary   Duty   Amounting  to                            _____________________________________________            Defalcation            ___________                      In   addition   to    donative   intent,    Tritter            "incorporated by reference" the issues raised in his district            court  brief.    Chief  among those  issues  is  whether  the            bankruptcy court  erred in  ruling that Tritter  breached his            fiduciary  duty  under  the relevant  statute  and,  thereby,            engaged in "defalcation" pursuant to    523(a)(4).1  We  need            not decide whether the propriety of the expenditures at issue            should  be  judged under  the UGMA,  Mass.  Gen. L.  ch. 201A            (1957),  in effect when the account was established, or under            the UTMA, ch. 201A (1986), which replaced the UGMA, effective            January  30, 1987.  The  expenditures at issue  here were not            "for the minor's benefit" under either Act.                      Tritter  argues  that the  UGMA grants  a custodian            broader discretion  than the  UTMA and  should apply to  this            case.  The UGMA provides, in relevant part, as follows:                      The custodian shall pay  over to the minor for                 expenditure  by  him,  or  expend for  the  minor's                                            ________________________                 benefit, so  much of or all  the custodial property                 _______                 as  the custodian deems  advisable for the support,                 maintenance, education and benefit  of the minor in                 the  manner, at the time or times and to the extent                 that the custodian in his discretion deems suitable                 and proper . . . .                                             ____________________            1.  With  respect to  the  remaining  issues incorporated  by            reference, we  agree with the  district court's determination            that they lack factual support.                                         -3-            Ch.  201A,    4(b)  (1957) (emphasis  added).   Payment  of a            parent's  legal fees,  even for  custody  matters, is  not an            expenditure "for  the minor's benefit" within  the meaning of            the UGMA.  See Perlberger v. Perlberger, 626  A.2d 1186, 1202                       ___ __________    __________            (Pa. Super.,  1993)  (interpreting Pennsylvania  UGMA,  which            contains language  identical to    4(b) of  the Massachusetts            UGMA).  Tritter has  failed to cite  any cases in support  of            his argument that his use of the funds for legal fees was for            his  daughter's  benefit  under  the  Massachusetts UGMA.  We            conclude that the bankruptcy court did not err in ruling that            payment of a parent's legal fees, even to litigate custody or            visitation  issues, is  not an  expenditure "for  the minor's            benefit."    Assuming  there  may exist  exceptions  to  this            general   rule   in    extraordinary   circumstances,    such            circumstances are not present here.                      The  bankruptcy court also  found that  Tritter, in            his capacity  as custodian of his  daughter's account, failed            to keep  proper records and  commingled funds.   Tritter does            not contest those  findings.  Under  the UGMA, the  custodian            was  required  to  keep   custodial  property  "separate  and            distinct  from his own   property in a  manner to identify it            clearly as custodial property," Ch. 201A,   4(g) (1957).  The            UGMA also required the custodian to "keep accounts of all his            transactions  with respect  to  the property  held by  him as                                         -4-            custodian .  . . ." Id.,    4(h).  Tritter  clearly failed to                                ___            comply with those duties as custodian under the UGMA.                        Pursuant to 11 U.S.C.    523(a)(4), a debt incurred            by  "fraud  or  defalcation   while  acting  in  a  fiduciary            capacity" is non-dischargeable.   "In order for  [plaintiffs]            to  prevail  under     523(a)(4),  [they]  must  prove  by  a            preponderance of the evidence that the Debtor committed fraud            or defalcation while acting in  a fiduciary capacity." In  re                                                                   ______            Christian, 172 B.R. 490,  495 (Bankr.D.Mass., 1994).  Tritter            _________            became  a  fiduciary  for  purposes of   523(a)(4)  when  the            account  was  established  under  the  UGMA,  naming  him  as            custodian.  See In re Johns, 181 B.R. 965, 973 (Bankr.D.Ariz.                        ___ ___________            1995)(holding that custodian of UGMA or UTMA accounts acts in            a fiduciary capacity for purposes of  523(a)(4)).                      Tritter  breached his  fiduciary duties  under both            the UGMA  and the UTMA by  1) expending the funds  to pay his            own  legal fees, not "for the minor's benefit;" 2) failing to            keep  the custodial funds separate from his own funds; and 3)            failing  to  keep  proper  records.    The  bankruptcy  court            correctly ruled that Tritter's breach of his fiduciary duties            constituted "defalcation"  within the meaning of  11 U.S.C.              523(a)(4),  notwithstanding  the  absence  of  any  proof  of            intentional wrongdoing. See In re Christian, 172 B.R. at 495.                                    ___ _______________                      The decision of the bankruptcy court is affirmed.                                                              ________                                         -5-
