Breed's Hill Insurance Agency, Inc. v. Fravel (In re Fravel), 485 B.R. 1

Debtor Gary W. Fravel filed a Chapter 7 petition on April 13, 2010, listing Breed’s Hill as unsecured; Breed’s Hill had a prior collection judgment against Fravel for about $87,133.39 in 2008.
Breed’s Hill alleged Fravel fraudulently collected premiums and diverted them to his own use, seeking nondischargeability under §§ 523(a)(2)(A), (a)(4), and (a)(6).
Breed’s Hill pursued evidence from witnesses including Croteau, Barringer, LeBlanc, and Mahony about premium payments, remittance failures, and the broker/dealer relationship with Fravel.
No written agreement between Breed’s Hill and Fravel was produced; testimony indicated an arm’s-length, intermediary relationship in which premiums were collected by Fravel but not remitted to Breed’s Hill.
The court applied Rule 52(c) to grant judgment on partial findings in favor of Fravel after Breed’s Hill failed to prove its § 523 claims by a preponderance of the evidence.
Key findings included lack of proof of actual fraud, lack of a fiduciary trust under § 523(a)(4), and absence of willful/malicious injury under § 523(a)(6).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does Breed’s Hill prove actual fraud under § 523(a)(2)(A)?	Fravel promised to remit premiums; his actions constitute fraud.	No pretrial evidence of pre-contract discussions or deceit; no misrepresentation proven.	Not proven; no prima facie case of actual fraud.
Does § 523(a)(4) apply based on a fiduciary defalcation?	Mass. Gen. Laws ch. 175, § 176 creates a technical trust; Fravel as agent breached it.	statute creates trust ex malificio but not a fiduciary duty; no express/technical trust proven.	No fiduciary relationship established; § 523(a)(4) not satisfied.
Does § 523(a)(6) apply for willful and malicious injury?	Fravel willfully misused funds; malice shown by intent or lack of justification.	Insufficient evidence of willful/malicious intent; record shows breach/neglect, not willful injury.	Willful/malicious injury not proven; not nondischargeable under § 523(a)(6).

McCrory v. Spigel (In re Spigel), 260 F.3d 27 (1st Cir. 2001) (elements of actual fraud under § 523(a)(2)(A))
Markel Serv. Ins. Agency, Inc. v. Tifco, Inc., 403 Mass. 401, 530 N.E.2d 340 (Mass. 1988) (brokerage/financing structure and ‘payment to broker equals payment to insurer’)
In re Sullivan, 217 B.R. 670 (Bankr. Mass. 1998) (constructs of fiduciary or trust relationships in § 523 context)