Monaco v. TAG Investments, Ltd.

Monaco appealed the district court's opinion holding that Monaco individually owes TAG $171,942.03, a nondischargeable debt under bankruptcy law, 11 U.S.C. 523(a)(4), arising from the Texas Construction Trust Fund Act (CTFA), Tex. Prop. Code Ann. 162.001. Section 162.031(b) of the CTFA holds that “[i]t is an affirmative defense to prosecution or other action . . . that the trust funds not paid to the beneficiaries of the trust were used by the trustee to pay the trustee's actual expenses directly related to the construction or repair of the improvement.” Monaco explains that $124,053.00 went to salaries and overhead and an additional $50,400.00 went to supervision of the project. The court concluded that Monaco could assert the affirmative defense for overhead costs of the project. Therefore, Monaco should not have been held liable for misapplication of construction trust funds under the CTFA and the debt claimed by TAG should have been discharged. Accordingly, the court reversed and remanded with directions to discharge. View "Monaco v. TAG Investments, Ltd." on Justia Law