In Re: Anthony Hall
A landlord holding a security deposit pursuant to C.G.S. §47a-21 does so in a fiduciary capacity under 11 U.S.C. §523(a)(4). Albertha Dennis, a residential tenant, filed a complaint seeking a determination that a security deposit debt owed from her landlord, Anthony Hall, was not discharged under 11 U.S.C. §523(a)(4) or §523(a)(6) in his chapter 7 bankruptcy case. Pursuant to the lease agreement, Dennis had paid Hall a security deposit of $1,800. After vacating the premises, she requested the return of the sum in writing. More than 30 days later, Hall sent her an accounting claiming damages to the premises resulted in repairs of $2,090.01 leaving a balance owed to Hall. Hall testified that he initially deposited the security deposit in an escrow account but closed the account due to nonpayment of rents by other tenants and used the security deposit to cover expenses. The court found that Hall's response more than 30 days after the request for the return of the security deposit violated C.G.S. §47a-21(d)(2). Accordingly, under that statute, Hall was liable to Dennis for double the deposit's value or $3,600 plus interest. Except for repairs to a garbage disposal for $106, Hall failed to present receipts for repairs or other evidence to sustain his burden for several claimed items of damages. The deductions were found improper and not allowed. After deducting $106, the court determined that the debt, $3494 plus interest, was not dischargeable under §523(a)(4). A landlord holding a security deposit pursuant to C.G.S. §47a-21 was found to do so in a "fiduciary capacity" within the purview of §523(a)(4). The debtor admitted withdrawing the security deposit prior to the termination of the tenancy in violation of the Connecticut statute and using those funds for his personal purposes. His act was consciously undertaken and violated his fiduciary obligations. The debtor had about 25 years experience as a landlord and was aware of his responsibilities under the law. Consequently, his conduct constituted a "defalcation" within the meaning of §523(a)(4) and the debt was deemed nondischargeable pursuant to that section.