Lefevre v. Fritzson (In re Fritzson)

• Decision Date: 10 August 2018
• Docket Number: ADV. PRO. No. 16-02047 (JJT),CASE No. 16-20291 (JJT)
• Citation: 590 B.R. 178
• Court: U.S. Bankruptcy Court — District of Connecticut
• Parties: IN RE: Diana R. FRITZSON, Defendant. Matthew J. Lefevre, Administrator C.T.A of the Estate of Katherine F. Mesulis, Plaintiff v. Diana R. Fritzson, Defendant.

590 B.R. 178

IN RE: Diana R. FRITZSON, Defendant.Matthew J. Lefevre, Administrator C.T.A of the Estate of Katherine F. Mesulis, Plaintiff

v.Diana R. Fritzson, Defendant.

CASE No. 16-20291 (JJT)

ADV. PRO. No. 16-02047 (JJT)

United States Bankruptcy Court, D. Connecticut, Hartford Division.

Signed August 10, 2018

Ronald Chorches, Esq., Law Offices of Ronald I. Chorches, LLC, 449 Silas Deane Hwy, 2^nd Floor, Wethersfield, CT 06109, Counsel for the Plaintiff

Kara S. Rescia, Esq., Rescia & Shear, LLP, 5104A Bigelow Commons, Enfield, CT 06082, Counsel for the Defendant

MEMORANDUM OF DECISION AFTER TRIAL REGARDING NONDISCHARGEABLE DEBT

James J. Tancredi, United States Bankruptcy Judge

I. INTRODUCTION

This matter comes before the Court on a Complaint (ECF No. 1)¹ filed by Matthew J. Lefevre ("Plaintiff"), Administrator C.T.A. of the probate estate of Katherine F. Mesulis, against the Defendant, Diana R. Fritzson ("Defendant") on June 3, 2016. In the Complaint, the Plaintiff seeks a determination by this Court that an alleged debt owed by the Defendant to the Plaintiff is nondischargeable pursuant to 11 U.S.C. §§ 523(a)(4) and/or (a)(6).² The dispute between these parties originates in a prior proceeding in the Superior Court of the State of Connecticut, Judicial District of Hartford where, on September 6, 2012, the Plaintiff initiated an action known as Lefevre v. Fritzson , HHD-CV12-6034811-S ("State Court Action)" against the Defendant. In that lawsuit, the Plaintiff alleged that the Defendant stole $297,469.38 from her godparents, an aging Katherine and her husband, Anthony Mesulis ("Anthony", collectively with Katherine, "Mesulises") during a time when the Defendant assisted them with their financial and medical care.

Having considered the pleadings, testimony, evidence admitted during trial, the Court's own docket and the arguments of the parties, the Court finds that the Plaintiff met his burden of proof to establish that the alleged debt is nondischargeable under a theory of defalcation pursuant to 11 U.S.C. § 523(a)(4). As to the Plaintiff's claims under the theories of larceny and embezzlement pursuant to 11 U.S.C. § 523(a)(4) and willful and malicious injury pursuant to 11 U.S.C. § 523(a)(6), the Court finds that the Plaintiff failed to meet his burden.

II. JURISDICTION AND VENUE

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b) and derives its authority to hear and determine this matter on reference from the District Court pursuant to 28 U.S.C. §§ 157(a) and (b)(1). This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(I) and (J). Venue in this District is proper pursuant to 28 U.S.C. § 1409.

III. PROCEDURAL HISTORY

On February 26, 2016, the Defendant filed for relief under Chapter 7 of the Bankruptcy Code. On June 3, 2016, the Plaintiff initiated this Adversary Proceeding advancing six causes of action against the Defendant.³ In Counts Three and Four, asserting nondischargeability on the theories of larceny and embezzlement, the Plaintiff alleges that during the time the Defendant was supposed to be assisting the Mesulises with their finances, she instead used their assets for her own personal gain, without authorization to do so. Compl. 5-6, ECF No. 1. The same facts are alleged in support of the Plaintiff's Count Five, asserting nondischargeability on the theory of defalcation while acting in a fiduciary capacity, and Count Six, asserting willful and malicious injury. Compl. 6-7, ECF No. 1. The Defendant answered the complaint by denying most of the allegations. She pleaded an affirmative defense that the Complaint failed to state a claim upon which relief could be granted, and asserted that certain of the amounts she received from the Mesulises were gifts. Answer 20, ECF No. 9.

On October 3 and October 17, 2017, the Court held a two-day trial during which the Plaintiff and Defendant testified and submitted exhibits into evidence. Following the close of the record, both parties submitted post trial briefs (ECF Nos. 50-52). On May 2, 2018, the Court reopened the trial to allow the parties to supplement the evidentiary record.⁴ On June 27, 2018, the trial resumed and both the Plaintiff and Defendant again testified and submitted additional exhibits. The Defendant's expert witness, Sandra Sergeant, RN, also testified on issues related to the nature and cost of home health care of the elderly. At the conclusion of the trial, the Court took this matter under advisement.

IV. FINDINGS OF FACT⁵

In accordance with Fed. R. Civ. P. 52 and Fed. R. Bankr. P. 7052, after consideration of the trial testimony and argument, the documents admitted into evidence, and examination of the official record of the instant Adversary Proceeding, the Court finds the following facts.

Background

1. The Mesulises' home was located at 91 Clearfield Road, Wethersfield, Connecticut 06109 ("Property"). Def. Ex. 1 and 5.

2. In 1971 when the Defendant was a child, her parents moved to a home across the street from the Mesulises. Tr. 1, 3:19.

3. Over the years, the Defendant maintained a longstanding, nearly familial relationship with the Mesulises. At the age of 16, the Defendant became Katherine's goddaughter. Compl. ¶ 9; Answer ¶ 9; Tr. 1, 3:23.

4. The Mesulises often gave monetary gifts to the Defendant during her childhood, and later to her family and children for graduations, holidays, weddings, and other special occasions. Tr. 1, 3:31-32, 3:23-27.

5. The Mesulises had no natural born children. Compl. ¶ 7; Answer ¶ 7.

6. Katherine was diagnosed with Parkinson's disease

in the late 1980s to early 1990s, when she was in her sixties. Tr. 1, 3:07-3:08, 3:22.

7. In 2003, the Mesulises hired a woman named Patricia Borchetta ("Ms. Borchetta") to periodically clean their home. They also hired her son, Kevin Yade ("Mr. Yade"), to assist with yardwork, snow removal and other household maintenance. Tr. 1, 3:41-43. Anthony and Mr. Yade developed a close relationship. Tr. 1, 3:59. At some point, Anthony gifted Mr. Yade his antique Mercedes automobile. Tr. 1, 2:22; Tr. 2, 3:46.

8. The Plaintiff is an attorney, in good standing, licensed to practice in the State of Connecticut. Tr. 1, 0:18. On June 4, 2008, the Plaintiff prepared the wills of Anthony and Katherine for execution. Tr. 1, 1:44; Def. Ex. 2 and 3. The Defendant was named a one-half beneficiary in Katherine's will. Tr. 1, 0:30. Mr. Yade was named beneficiary of the other half. Id . ; Def. Ex. 2.

9. Anthony's will left all of his assets to Katherine, but if she predeceased him, his estate would be left in equal shares to the Defendant and Mr. Yade. Def. Ex. 3.

10. At the same time the Mesulises executed their wills, they also signed Connecticut Short Form Power of Attorney documents appointing their tax preparer, Robert Fochi ("Mr. Fochi"), as their attorney-in-fact. Compl. ¶¶ 11, 18; Answer ¶¶ 11,18.

11. On June 24, 2008, a few weeks after the wills were executed, Ms. Borchetta filed a report with the Wethersfield Police Department alleging that the Defendant was taking advantage of the Mesulises, and that her son, Mr. Yade, noticed that the Defendant was receiving large amounts of money from them, and was spending too much on groceries. Def. Ex. 1. After speaking with the Mesulises, the Plaintiff, the Defendant and the live-in caregiver, the police determined that there was no ostensible wrongdoing on the part of the Defendant. Id.

12. The execution of the wills and subsequent events strained the relationship between the Defendant and Mr. Yade.⁶

13. Anthony died on January 27, 2009 at the age of 87. Tr. 1, 0:21. Anthony was "sharp" until his death. Tr. 2, 0:25. His assets were bequeathed to Katherine by operation of his will. Tr. 1, 0:32.

14. Katherine died on November 23, 2011 at the age of 89. Compl. ¶ 6; Answer ¶ 6; Tr. 1, 0:19, 1:03-1:04. At the time of her death, Katherine was in declining physical and mental health. Tr. 1, 0:19-21.

15. The Mesulises' home was free and clear of all liens prior to Anthony's death. Tr. 1, 0:56; Def. Ex. 5.

The Defendant's Relevant Background

16. At all relevant times, the Defendant lived at 4 Emily Road in Marlborough, Connecticut 06447 with her husband and two children.

17. The Defendant maintained employment as a senior administrative assistant at an insurance company called The Hartford, and worked roughly thirty to forty hours per week. Tr. 2, 2:37, Tr. 3, 1:34-35. She declined two promotions so she could maintain the flexible hours her job afforded her in order to continue caring for the Mesulises when they needed her. Tr. 1, 3:55; Tr. 3, 1:35.

18. The Defendant maintained a joint checking account at People's United Bank (the "People's Account") with her husband. Tr. 2, 0:26-27, 1:47-1:48; Def. Ex. 7 and 8. Only the Defendant's income was deposited into the People's Account.

19. The Defendant's net monthly income from the Hartford was $3,800.00 and was direct deposited into the People's Account. Tr. 2, 2:37-2:38; Def. Ex. 8.

20. The Defendant's monthly mortgage payment was $2,071.00, and was paid out of the People's Account. Tr. 2, 2:38-2:39; Def. Ex. 8. The Defendant's monthly car payment was roughly $742.13, and was also paid out of the People's Account. Id.

The Mesulises' Financial Accounts

21. At all relevant times, Katherine maintained a Buell Individual Retirement Account ("IRA"). Pl. Ex. A.

22. At all relevant times, the Mesulises maintained a Buell Joint Securities Account. Pl. Ex. B. After Anthony died, the funds were transferred to Katherine's Buell Securities Account, and the Joint Account was closed. Tr. 1, 0:35-36, 1:29; Pl. Ex. B.

23. At all relevant times, Katherine also maintained a Buell Securities Account (collectively, with the IRA and the Joint Securities Account, the "Buell Accounts"). Pl. Ex. C.

24. At all relevant times, the Mesulises' financial advisor at Buell Securities was William Cusack ("Mr. Cusack"). After Mr. Cusack's death in June 2008, Chris Berris ("Mr. Berris") succeeded him. Tr. 1, 0:40-43; Pl. Ex. A-C.

25. At all...