11 U.S.C. § 523

Section 523(a)(4) requires an express or technical trust for a claim based on fiduciary defalcation; a constructive trust is insufficient.

Urbana University v. Jones (In re Jones) · filed 1987-07-10(a)(4)

A constructive trust is insufficient to support a cause of action for defalcation of a fiduciary; there must be an express trust.

Section 523(a)(4) excepts from discharge a debt arising from a fiduciary’s defalcation, including the loss of a creditor’s security through imprudent conduct.

Frankel v. Frankel (In Re Frankel) · filed 1987-09-09(a)(4)

The Debtor’s conduct did not comport with the standard of ordinary prudence incumbent upon a fiduciary. By his defalcation he deprived the Plaintiff of valuable security. Accordingly, the Plaintiff’s application to have excepted from discharge so much of his claim as equals the value of the security which he has been deprived of is granted and it is so ordered.

Section 523(a)(4)’s fiduciary capacity exception does not extend to a constructive trust implied from a contract.

Moribondo v. Lane (In Re Lane) · filed 1987-08-24(a)(4)

Furthermore, the term “fiduciary capacity” specifically does not apply to constructive trusts implied by law from contracts, 3 COLLIER ON BANKRUPTCY, supra, at 523-95, which is, at best, the most that can be said of the Plaintiffs position herein.

Section 523(a)(4) excepts a debt from discharge when an express trust existed, fraud or defalcation caused the debt, and the debtor was acting as a fiduciary when the debt arose.

Klingman v. Levinson · filed 1987-09-18(a)(4)

To establish that a debt is nondischargeable under 11 U.S.C. § 523(a)(4), a creditor must establish that: 1) an express trust existed, 2) the debt was caused by fraud or defalcation, and 3) the debtor acted as a fiduciary to the creditor at the time the debt was created.

Section 523(a)(4) requires a true trust that existed before the wrongdoing; a constructive trust does not establish fiduciary capacity.

Rocky Mountain General Agency v. Rustad (In Re Rustad) · filed 1987-09-28(a)(4)

Since the Debtor became a trustee by operation of law, a constructive trust and not a true trust was established. ... As such 11 U.S.C. § 523(a)(4) provides no basis for relief to the plaintiff.

Section 523(a)(4) requires a fiduciary relationship based on an express or technical trust that existed before the act creating the debt.

Kwiat v. Doucette · filed 1987-11-23(a)(4)

Federal bankruptcy law controls who is a fiduciary for purposes of § 523(a)(4). To be a fiduciary for dis-chargeability purposes, the debtor must be a trustee either under an express or “technical” trust.

Section 523(a)(4) requires a fiduciary relationship to establish fraud or defalcation.

Rumchaks v. Pavelka (In Re Pavelka) · filed 1987-10-22(a)(4)

The threshold issue for proving § 523(a)(4) fraud or defalcation is identifying the existence of a fiduciary relationship.

Section 523(a)(4) excepts a debt from discharge when a fiduciary uses entrusted money without authority, constituting defalcation.

Celone v. Dino (Dino) · filed 1988-01-25(a)(4)

Dino’s unauthorized use of Celone’s money, entrusted to him while he was a fiduciary, constitutes defalcation within the meaning of the statute.

Section 523(a)(4)’s fiduciary capacity exception applies to express or technical trusts, not fiduciary duties that may give rise only to a constructive trust.

Barker v. Clemens (In Re Clemens) · filed 1988-01-28(a)(4)

“Fiduciary” as used in § 523(a)(4), “applies only to express or technical trusts and does not extend to implied trusts which are imposed on transactions by operation of law as matter of equity.” ... Because the court finds that Debtor lacked the requisite intent to deceive, that Debtor was not acting in a fiduciary capacity, and that Debtor adequately accounted to plaintiffs, count II of plaintiffs’ complaint should be dismissed.

Section 523(a)(4) requires more than a debtor-creditor relationship to establish the fiduciary capacity needed for a fraud claim.

International Leasing Corp. v. Guinn (In re Guinn) · filed 1988-01-28(a)(4)

Since a debtor/creditor relationship, without more will not establish a fiduciary/beneficiary relationship under § 523(a)(4), Plaintiffs first cause of action does not state a claim upon which relief can be granted.

Section 523(a)(4) requires an express or technical trust for a debt to be nondischargeable based on fraud or defalcation in a fiduciary capacity; a New Jersey partnership alone does not create one.

Reiter v. Napoli (In Re Napoli) · filed 1988-02-10(a)(4)

I thus cannot conclude that New Jersey common law creates a general fiduciary relationship for partners for all purposes simply by virtue of the partnership relationship. Napoli did not owe Reiter any fiduciary duty by virtue of an express or technical trust. Consequently, Reiter can have no claim that Napoli’s debt to him is nondischargeable based on fraud or defalcation pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts a debt for defalcation from discharge only when the debtor acted under an express, technical, or statutorily imposed trust, rather than a merely implied fiduciary relationship.

Orem Postal Credit Union v. Twitchell (In Re Twitchell) · filed 1988-02-22(a)(4)

This court finds that the bankruptcy court’s opinion that Mr. Twitchell was acting in a fiduciary capacity for the purposes of 11 U.S.C. § 523(a)(4) is incorrect based on existing case law and policy considerations which favor dischargeability. Under the circumstances of this case, no express agreement or statute placed Mr. Twitchell as a trustee over funds belonging to the Credit Union. Because the Credit Union made no showing that Mr. Twitchell was in a “fiduciary capacity” as construed under federal law, Mr. Twitchell’s obligation of $20,958.37 is dischargeable in bankruptcy.

A statute criminalizing misappropriation without requiring funds to be segregated at the outset does not create a trust for Section 523(a)(4)'s fiduciary defalcation exception.

NesSmith Electric Co. v. Kelley (In Re Kelley) · filed 1988-02-23(a)(4)

However, it is this Court’s belief that a statute which makes the act of misappropriating funds a crime, without requiring those funds to be segregated at the outset, is insufficient to create a trust for purposes of Section 523(a)(4).

Section 523(a)(4) makes a debt nondischargeable when an attorney defrauds clients while acting as their fiduciary.

Moore v. Pagano (In Re Pagano) · filed 1988-03-25(a)(4)

Defendant was in a fiduciary capacity in representing his client, obtaining funds for her and converting those funds to his own use. From the facts stated and irrespective of the judgment of the Miami County Common Pleas Court, this Court finds that the evidence is clear and convincing that defendant committed fraud against the plaintiffs while acting as their attorney, and committed conversion as a matter of law. The motion for Summary Judgment of Plaintiff should be granted pursuant to 11 U.S.C. § 523(a)(4) on the issue of liability.

Section 523(a)(4) excepts from discharge a debt arising from an insurance agent’s failure to remit premiums held in a fiduciary capacity.

Federal Insurance v. Feldman (In Re Feldman) · filed 1988-04-08(a)(4)

The court finds that the debtor’s failure to remit to Federal and Great Northern insurance premiums which he had collected and which were owed to Federal and Great Northern constitutes a defalcation under 11 U.S.C. § 523(a)(4) of the Bankruptcy Code.

Section 523(a)(4) treats an Indiana limited partnership’s general partner as a fiduciary from the start of the partnership.

Leeb v. Guy (In Re Guy) · filed 1988-04-28(a)(4)

This Court agrees with the conclusion reached by the courts in In re Kraus, 37 B.R. 126, supra, and In re Owens, 54 B.R. 162, supra, that Indiana Code 23-4-1-21(1) establishes a fiduciary relationship at the outset of the agreement that falls within the federal definition of a fiduciary under § 523(a)(4).

Section 523(a)(4) requires proof of an express or technical trust to establish a fiduciary relationship.

Davis v. Ducharme (In Re Ducharme) · filed 1988-05-02(a)(4)

A bankruptcy court will not find that a fiduciary relationship exists under 11 U.S.C. § 523 unless there is proof of an express or technical trust.

Section 523(a)(4) requires an express or statutory trust to establish a fiduciary relationship; breaches of contract alone do not suffice.

Pioneer General Insurance Co. v. Midkiff (In Re Midkiff) · filed 1988-05-03(a)(4)

The failure to reimburse Pioneer for forfeitures, the failure to maintain an adequate reserve account and the failure to follow Pioneer’s underwriting policies were breaches of their contractual relationship. Pioneer failed to establish that an express or statutory trust existed between Midkiff and Pioneer adequate to find a fiduciary relationship between the parties.

Section 523(a)(4) requires a fiduciary relationship that existed before the alleged misconduct; the term covers express or technical trusts, not implied trusts.

Feldman v. Kaufman (In Re Kaufman) · filed 1988-05-04(a)(4)

Moreover, the term “fiduciary” applies only to express or technical trusts and does not extend to implied trusts, which are imposed on transactions by operation of law as a matter of equity.

Section 523(a)(4) does not treat a general partner as acting in a fiduciary capacity solely because of the partnership relationship.

Human v. Braudis (In Re Braudis) · filed 1988-05-31(a)(4)

The Court, therefore, finds there was no fiduciary duty for purposes of § 523(a)(4) to plaintiffs by defendant in this action.

Section 523(a)(4)'s fiduciary exception requires an express or technical trust.

Wittman v. Potter (In Re Potter) · filed 1988-06-28(a)(4)

No express or technical trust exists here. Therefore 11 U.S. C. § 523(a)(4) does not apply.

Section 523(a)(4) requires an express trust and a fiduciary duty owed to the creditor for a debt based on fraud or defalcation to be excepted from discharge.

Fisher v. Steliga (In re Steliga) · filed 1988-07-13(a)(4)

The court, therefore, concludes that the plaintiffs have failed to show that Steliga was their “special” fiduciary or to prove the existence of an express trust necessary to sustain a complaint under § 523(a)(4).

Section 523(a)(4) requires an express or technical trust for a debt to be excepted from discharge as fraud or defalcation while acting in a fiduciary capacity.

United American Insurance Co. v. Koelfgen (In Re Koelfgen) · filed 1988-07-18(a)(4)

The circumstances of this case simply do not support a finding that Robert Koelfgen acted in a fiduciary capacity under 11 U.S. C. § 523(a)(4). ... There was no express or technical trust imposed on the funds in debtor’s possession. Where there is no fiduciary relationship between the creditor and debtor, there can be no action for fraud or defalcation.

Section 523(a)(4) requires proof of an express or technical trust to establish a fiduciary relationship; a contract alone does not establish one.

Stewart-Michaud v. Mullin (In Re Mullin) · filed 1988-08-04(a)(4)

A bankruptcy court will not find a fiduciary relationship exists under 11 U.S.C. § 523 unless there is proof of an express or technical trust. ... The creditor failed to establish the existence of an express or technical trust to this Court. A fiduciary relationship will not be implied based upon a contractual relationship alone.

Section 523(a)(4) excepts debts arising from abuse of a fiduciary position or criminal deprivation of another’s property.

Harris v. Ward (In Re Ward) · filed 1988-08-08(a)(4)

The exception to discharge of debts incurred through fraud or defalcation while acting in a fiduciary capacity, embezzlement or larceny, § 523(a)(4), is intended to reach those debts incurred through abuses of fiduciary positions and through active misconduct whereby debtor has deprived others of their property by criminal acts.

Section 523(a)(4) requires defalcation to occur while the debtor acts in a fiduciary capacity; a general partner’s obligations alone do not establish that capacity without a technical trust.

Dreyfoos v. Ryan (In Re Ryan) · filed 1988-08-15(a)(4)

Though it makes a partner accountable to the partnership, it does not create a technical or express trust and does not, therefore, make a partner a fiduciary for the purposes of § 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when the debtor commits fraud or defalcation while acting in a fiduciary capacity.

Stone v. Stone (In Re Stone) · filed 1988-08-29(a)(4)

Accordingly, this court finds that the plaintiff’s debt is nondischargeable pursuant to 11 U.S.C. § 523(a)(4) because the debtor committed fraud and defalcation while acting in a fiduciary capacity.

Section 523(a)(4) excepts a debt from discharge when the debtor commits defalcation while acting in a fiduciary capacity created by an express or technical trust.

Berry v. Mullin (In Re Mullin) · filed 1988-09-13(a)(4)

This provision created the express or technical trust, to which the debtor was bound. Therefore, the Court finds that a fiduciary relationship existed between the parties as required under 11 U.S.C. § 523(a)(4). ... Based upon the foregoing, this Court finds that the state court judgment is excepted from discharge under 11 U.S.C. § 523(a)(4) because of the debtor’s defalcation while acting in fiduciary capacity.

Section 523(a)(4) makes a debt for defalcation while acting in a fiduciary capacity nondischargeable when the debtor is responsible for mishandled trust funds.

Graves v. James (In Re James) · filed 1988-09-21(a)(4)

In short, I conclude that the defendant bears responsibility for failure to procure policies for the plaintiffs. ... He has not carried his burden to shift responsibility to his brother alone. Accordingly, the defendant has defalcated and the damages proximately caused by that defalcation are non-dischargeable.

Section 523(a)(4) does not make a corporate officer’s misappropriation of corporate assets nondischargeable as to an individual corporate creditor when the fiduciary duty runs to the corporation.

Miller v. Krause (In Re Krause) · filed 1988-09-09(a)(4)

The essence of the foregoing cases, with which this Court is in accord, is that a mere corporate creditor is precluded from obtaining a judgment of nondischargeability versus a corporate director, officer or controlling stockholder for the misappropriation of corporate assets under § 523(a)(4).

Section 523(a)(4) requires an express, technical, or statutorily imposed trust for fiduciary capacity; an ordinary commercial relationship between a general partner and limited partners does not suffice.

Joseph v. Stone (In Re Stone) · filed 1988-09-27(a)(4)

However, this relationship arose from ordinary commercial transactions with the appellants and not to any technical, express, or statutorily imposed trust. As discussed above, this type of principal/ agent relationship does not amount to a fiduciary duty that would subject the debtor’s actions to liability under § 523(a)(4). Therfore, appellee was not a fiduciary to the appellants as contemplated by § 523(a)(4).

Section 523(a)(4) does not except a debt arising from an employer’s failure to obtain workers’ compensation insurance when no fiduciary relationship existed before the employee’s injury.

Kraemer v. Crook · filed 1988-10-04(a)(4)

Plaintiff’s arguments that an express trust is created by the operation of O.C. G.A. § 34-9-120 are unpersuasive. Because a cause of action does not arise until the employee is injured, there is nothing for the employer to hold in trust, as an accident or injury is only a potentiality. ... The bankruptcy court was correct in finding that no fiduciary relationship existed between the Defendant-Debtor and plaintiff.

A creditor may establish a fiduciary defalcation exception under § 523(a)(4) by a preponderance of the evidence and use collateral estoppel for facts decided in prior state litigation.

Stone v. Becker (In re Becker) · filed 1988-12-06(a)(4)

Accordingly, in this dischargeability proceeding this Court applies the preponderance of the evidence standard which effectively neutralizes the debtor’s opposition to the application of issue preclusion (collateral estoppel) to facts established in the state court litigation. It was established in the plaintiffs state court case against the debtor that debtor was in a trust relationship to the plaintiff and that the judgment debt arose because of the debtor’s defalcation or misappropriation of trust funds. Applying collateral estoppel to these facts renders the judgment debt excepted from discharge under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) treats misappropriation by a fiduciary as defalcation.

Stone v. Stone (In Re Stone) · filed 1988-12-23(a)(4)

At minimum, “defalcation,” as that term is used in section 523(a)(4), embraces misappropriation by a fiduciary.

Section 523(a)(4) requires a preexisting express trust and property entrusted to the fiduciary for another’s benefit.

Griffiths v. Peterson (In Re Peterson) · filed 1988-10-28(a)(4)

For a debt to be nondis-chargeable under section 523(a)(4) there must have been an express trust in existence prior to or independent from the alleged act or wrongdoing and there must be a res or particular property entrusted to the fiduciary for the benefit of another.

Section 523(a)(4) generally does not treat ordinary partners as fiduciaries for its defalcation exception.

Sager v. Lewis (In Re Lewis) · filed 1988-12-07(a)(4)

This Court is convinced that the term “fiduciary” as used in 11 U.S.C. § 523(a)(4) is limited to the class of fiduciaries including trustees of specific written declarations of trust, guardians, administrators, executors, or public officers and, absent special considerations, does not extend to the more general class of fiduciaries such as agents, bailees, brokers, factors, and partners. As such the alleged indebtedness at issue in this case is not a debt for defalcation while acting in a fiduciary capacity.

Section 523(a)(4) bars discharge of a debt arising from a debtor’s defalcation while acting as trustee of an express trust.

Dahlin v. Dahlin (In Re Dahlin) · filed 1988-12-09(a)(4)

Since a debt arising from “defalcation while acting in a fiduciary capacity” is not dischargeable under 11 U.S.C. § 523(a)(4), he cannot discharge Mrs. Dahlin’s claim in a Chapter 7 proceeding.

Section 523(a)(4) excepts a debt for defalcation from discharge when a union officer acts under the express or technical trust created by 29 U.S.C. § 501.

Council 49 v. Boshell (In Re Boshell) · filed 1989-01-19(a)(4)

All requirements of an express trust having been met, this Court is satisfied that Section 501 of the LMRDA embodies the requisite elements of an express or technical trust under Section 523(a)(4) of the Bankruptcy Code. The defendant is properly classified as a fiduciary under Section 523(a)(4). ... Clearly, the definition of defalcation would include the debtor’s failure to account for funds entrusted to her and her failure to withhold necessary payroll taxes. This Court relies on the findings of the District Court as to the debtor’s misfeasance and malfeasance and hereby concludes that the debtor is guilty of defalcation.

Section 523(a)(4) excepts a debt from discharge when the debtor commits defalcation while acting in a fiduciary capacity.

Moreno v. Ashworth · filed 1989-01-31(a)(4)

In this case all the evidence presented to the Bankruptcy Judge shows that Moreno is chargeable with at least defalcation. ... Accordingly, this Court concludes that the Bankruptcy Judges Findings of Fact with respect to the dischargeability issue are not clearly erroneous and that the Judge’s rulings based on those findings were appropriate.

Section 523(a)(4) makes a debt arising from defalcation while acting in a fiduciary capacity nondischargeable.

Federal Savings & Loan Insurance Corp. v. Mmahat · filed 1989-02-08(a)(4)

In light of the concurrent findings of the jury and this Court that an attorney-client and fiduciary relationship existed, Mmahat's wrongful conduct falls within 11 U.S.C. § 523(a)(4). Where a defalcation occurs in the context of a fiduciary relationship, a debt resulting from the defalcation is not dischargeable in bankruptcy.

Section 523(a)(4) excepts a fiduciary debt from discharge when the fiduciary cannot account for entrusted funds.

Ohio Casualty Insurance v. Kern (In Re Kern) · filed 1989-04-04(a)(4)

By her own admission, Debtor is unable to account for funds she held in a fiduciary capacity. Thus, Debtor is guilty of defalcation and her obligation to OCIC is nondischargeable under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires a technical or express trust that arose before the act creating the debt for a fiduciary relationship to bar discharge.

Louisiana Builders Services, Inc. v. Levine (In re Levine) · filed 1989-02-16(a)(4)

The bankruptcy judge did find as a matter of law that no fiduciary relationship existed between Levine and Louisiana Builders within the meaning of Sec. 523(a)(4). On this issue, the bankruptcy judge was clearly correct. ... Under federal law, a fiduciary relationship exists only when there is a technical or an express trust. ... The trust must arise prior to and without reference to the act creating the debt.

Section 523(a)(4) requires a fiduciary relationship that existed before the alleged fraud or defalcation; a later imposed constructive trust does not establish one.

Kidder v. Freeman (In Re Freeman) · filed 1989-02-28(a)(4)

As stated above, constructive trusts under the law are deemed inapplicable for establishing the strict fiduciary relationship required by § 523(a)(4).

Section 523(a)(4) does not except a debt from discharge for fiduciary misconduct when the parties intended property to serve as collateral rather than to be held in trust.

Hull v. Stefanoff (In Re Stefanoff) · filed 1989-03-17(a)(4)

Therefore, the Court finds that Stefanoff was not acting in a fiduciary capacity with regard to the Certificate of Deposit because the parties did not have the requisite intent to create a trust. Instead, the parties intended for the Certificate of Deposit to serve as collateral for repayment of the note and nothing more.

Section 523(a)(4) requires a qualifying trust for a debt to be excepted from discharge on the basis of fiduciary wrongdoing; a contract directing how funds must be used does not itself create that trust.

Coleman v. Choisnard (In Re Choisnard) · filed 1989-03-17(a)(4)

Under § 523(a)(4), the Court finds that Rehoboth was not acting in a fiduciary capacity with respect to Kelley and Coleman since the requisite trust relationship did not arise between the parties either by agreement or by statute.

Section 523(a)(4) does not treat the duties created by these Georgia partnership statutes as a fiduciary relationship between individual partners.

Betz v. Gay (In Re Gay) · filed 1989-03-27(a)(4)

In the Court’s view, these sections of the Georgia Code do not create the fiduciary relationship between Plaintiff and Defendant that is required by section 523(a)(4).

Section 523(a)(4) does not bar discharge for a breach of fiduciary duty unless the debtor personally owed the creditor that duty.

United Diesel, Inc. v. Rodrigue · filed 1989-03-27(a)(4)

Because there was no fiduciary duty here owed by Rodrigue personally to United Diesel, appellant’s objection to discharge based on Section 523(a)(4) is without merit and was rightfully dismissed.

Section 523(a)(4)'s fiduciary capacity requirement can be satisfied by a state common law technical trust that exists before the debt arises, including the trust Colorado law imposes on directors of an insolvent corporation for its creditors.

Bay 511 Corp. v. Thorsen (In Re Thorsen & Co.) · filed 1989-03-28(a)(4)

This is a technical trust, not imposed by statute with express legislative intent to create a trust relationship, but rather it is imposed by common law. This relationship involves the duty to deal with the assets of the insolvent corporation for the advantage of the creditors and the corporation, not for the director’s own benefit. ... Those attributes create a trust within the meaning of Section 523(a)(4).

Section 523(a)(4) requires an independent fiduciary relationship for a debt to be excepted from discharge as fraud or defalcation in a fiduciary capacity.

Krug, Inc. v. Nayee (In Re Nayee) · filed 1989-04-04(a)(4)

While it is true that an officer of a corporation has an obligation to act in a responsible manner towards the creditors, this responsibility does not rise to the level of an independent fiduciary relationship contemplated by § 523(a)(4).

Section 523(a)(4) requires an express trust and a debtor acting in a fiduciary capacity when the debt arose; § 523(a)(2)(B) excepts a loan debt obtained through a materially false written financial statement on which the creditor reasonably relied.

Harasymiw v. Selfreliance Federal Credit Union · filed 1989-03-02(a)(4), (a)(2)(B)

The contractual relationship arising out of a loan transaction is insufficient to create the required express trust. ... Consequently, she was not acting in a fiduciary capacity with respect to the debt for the purposes of § 523(a)(4). ... This court will affirm the bankruptcy court’s finding that Selfreliance has met its burden of showing that Harasymiw’s loan is non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(4) excepts a debt from discharge when a fiduciary fails to account for funds entrusted to them.

Crooksville Exempted Village School District v. Curth (In Re Curth) · filed 1989-04-05(a)(4)

There are no genuine issues of material fact and it is clear as a matter of law that Debtor is guilty of defalcation. Accordingly, Debtor’s obligation to the School District is nondis-chargeable under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts a debt for fiduciary defalcation from discharge when estate assets were intentionally diverted without authorization; criminal intent and personal benefit are not required.

Winter v. Hirsch (In Re Hirsch) · filed 1989-05-05(a)(4)

The plaintiffs need prove only that the diversion of estate assets was unauthorized and intentional.

Section 523(a)(4) excepts a debt from discharge when a person controlling a debtor in possession willfully breaches fiduciary duties and injures a creditor.

American Savings & Loan Ass'n v. Weber (In Re Weber) · filed 1989-04-07(a)(4)

Jack Weber willfully disregarded his fiduciary responsibilities under the Bankruptcy Code. ... It is justification for the denial of his discharge as set forth in 11 U.S.C. § 727(a)(7) and (2) as well as an exception to discharge under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) does not treat an agent’s obligation to remit proceeds to a principal as a fiduciary relationship without an express or technical trust.

Auto Owners Insurance v. Littell (In Re Littell) · filed 1989-04-14(a)(4)

The mere obligation of an agent to remit proceeds to a principal does not create a fiduciary relationship for the purposes of § 523(a)(4).

Section 523(a)(4) does not except a debt for fiduciary defalcation from discharge when the creditor establishes only a constructive trust and no preexisting fiduciary duty.

University Orthopaedic Associates of Rochester, P.C. v. Catalano (In Re Catalano) · filed 1989-04-21(a)(4)

In the absence of an express trust, the Catalanos had no fiduciary duty to the Associates, only a debtor’s duty to a creditor. Accordingly, their defalcation does not come under § 523(a)(4) so as to except their debt to the Associates from discharge.

Section 523(a)(4) generally limits fiduciary capacity to technical or express trusts.

Moore v. McQueen (In Re McQueen) · filed 1989-05-15(a)(4)

The scope of the concept of a fiduciary for purposes of § 523(a)(4) generally is limited to technical or express trusts.

Section 523(a)(4) makes a debt nondischargeable when a debtor acting as trustee uses trust funds for his own purposes.

Schneider v. Davis (In Re Schneider) · filed 1989-06-06(a)(4)

By allowing the $69,000 to be used for his own purposes, the debtor breached his duty as a trustee. Therefore, the debtor’s debt in the amount of $69,000 is nondischargeable under § 523(a)(4).

Section 523(a)(4) treats a trustee’s failure to segregate entrusted funds and follow the beneficiary’s investment directions as defalcation.

Hayton v. Eichelberger (In Re Eichelberger) · filed 1989-06-08(a)(4)

As a matter of law, I hold that debtor’s failure to segregate plaintiff’s funds and invest those funds according to plaintiff’s instructions as well as debtor’s termination of the plan and subsequent conversion to an integrated profit-sharing plan constitutes defalcation under Section 523(a)(4).

Section 523(a)(4) excepts a corporate officer’s debt from discharge when the officer personally participates in a fraud or defalcation, even if the corporation is the fiduciary.

San Saba Pecan, Inc. v. Failing (In Re Failing) · filed 1989-06-02(a)(4)

This conclusion is supported by a number of decisions holding that the exception to discharge set forth in 11 U.S.C. § 523(a)(4) applies to corporate officers who directly participate in a fraud or defalcation of a creditor even if such officers are acting in the scope of their employment and even if the corporation rather than the individual officer is actually the fiduciary under the contract or statute that establishes the trust relationship.

Section 523(a)(4) makes a corporate director’s debt for misappropriating corporate property nondischargeable when the director’s fiduciary duty predates the debt.

Bakis v. Snyder (In Re Snyder) · filed 1989-06-08(a)(4)

Thus, to summarize, the Court finds that the fiduciary duties of corporate directors under Massachusetts law satisfy the requirements of section 523(a)(4) of the Bankruptcy Code.

Section 523(a)(4) requires a fiduciary relationship that existed before the wrongdoing; a divorce property settlement alone does not establish one.

Lanker v. Wheeler (In Re Wheeler) · filed 1989-06-16(a)(4)

Therefore, the court finds that the plaintiff has failed to establish that the requisite fiduciary relationship existed on February 19, 1988 when the Decree was entered to support a finding of nondischargeability of a debt pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) limits fiduciary relationships to those arising from express or statutory trusts.

Alexander & Alexander of Washington, Inc. v. Hultquist (In Re Hultquist) · filed 1989-06-27(a)(4)

It is now well recognized that under § 523(a)(4), the term “fiduciary” is given a very narrow definition and that only “express” or “statutory” trusts fall within the scope of this section.

Section 523(a)(4) excepts from discharge attorney’s fees awarded as a primary debt when they proximately result from a debtor’s fiduciary fraud.

Pacific Bancorporation v. Sears (In re Sears) · filed 1989-06-29(a)(4)

The attorney’s fees incurred by plaintiffs in rescinding the fraudulent management agreements is a primary debt which is non-dischargeable in the pending bankruptcy proceeding. There is both statutory and contractual authority to support such an award which proximately resulted from defendant’s fraud.

Section 523(a)(4) does not make a debt for breach of fiduciary duty nondischargeable without fraud or defalcation.

Tindale v. Blatnik (In Re Blatnik) · filed 1989-07-06(a)(4)

However, this finding is a far cry from also determining that the Defendant perpetrated a fraud or defalcation in the furtherance of his partnership duties; thus, the judgment debt rendered herein is deemed dischargea-ble.

Section 523(a)(4)'s fiduciary capacity requirement can be met by an agent who controls a principal's assets for the principal's benefit, even without an express trust.

Rech v. Burgess (In Re Burgess) · filed 1989-07-27(a)(4)

Although the facts of this case do not create a technical express trust relationship under Nebraska Law, I conclude that Curtis Burgess had the fiduciary capacity required under § 523(a)(4).

Section 523(a)(4) excepts a debt from discharge for defalcation by a debtor acting in a fiduciary capacity when the trust exists independently of the wrongful act.

Norfolk and Western Railroad v. Bergman (In Re Bergman) · filed 1989-08-28(a)(4)

Therefore, the obligations of the Debtors to the Plaintiffs are non-dischargeable as defalcations pursuant to § 523(a)(4), largely on the basis of collateral estoppel.

Section 523(a)(4) excepts an escrow agent’s debt from discharge when the agent commits defalcation while acting as a fiduciary.

Kartchner v. Kudla (In Re Kudla) · filed 1989-10-13(a)(4)

This Court finds that Defendant’s conduct constituted defalcation, he did not meet the obligations of a fiduciary under Section 523(a)(4), and the Plaintiff’s claim is not discharged in bankruptcy.

Section 523(a)(4) makes a debt for defalcation nondischargeable when the debtor incurred it by breaching a fiduciary duty arising from an express trust.

Federal Deposit Insurance v. Sax (In Re Sax) · filed 1989-10-20(a)(4)

Sweeney’s debt is nondischargeable under 11 U.S.C. § 523(a)(4) because the following elements have been established by clear and convincing evidence: 1) the existence of an express trust; 2) a debt incurred by fraud or defalcation; and 3) a debt incurred by a breach of the debtor’s fiduciary duty; i.e. a debt incurred by the debtor in his capacity as a fiduciary.

Section 523(a)(4) excepts a debt from discharge when it arises from a fiduciary’s willful neglect of duty, even without fraud or embezzlement.

In the Matter of Samuel A. Moreno, Debtor. Samuel A. Moreno v. Ashworth · filed 1990-01-22(a)(4)

A defalcation is a willful neglect of duty, even if not accompanied by fraud or embezzlement.

Section 523(a)(4) makes a debt arising from a fiduciary’s defalcation nondischargeable when the fiduciary uses entrusted contract proceeds to repay himself.

Gillespi v. Jenkins (In Re Jenkins) · filed 1990-01-24(a)(4)

Debtor’s acts of having Sunset Oil pay his loans and advances from proceeds under the contracts which were the subject matter of the General Indemnity Agreement and taking inordinate salary during March through May, 1986 constitute defalcation. Therefore, Plaintiff is entitled to a judgment holding the debt due from Debtor to Plaintiff as Conservator as nondischargeable under 11 U.S.C. § 523(a)(4) to the extent Debtor repaid himself loans, and advances to the corporation, or took an inordinate salary during the final months of operation of Sunset Oil.

Section 523(a)(4) makes a debt nondischargeable when a fiduciary misapplies entrusted money without permission and cannot return it on demand.

Braun v. McKay (In Re McKay) · filed 1990-02-21(a)(4)

In addition, Ronald McKay admitted at trial he had received $30,000.00 from the Ber-mans and was unable to return it to them on demand because he had misapplied the money by using it without their permission. This constitutes defalcation under § 523(a)(4) of the Bankruptcy Code.

Section 523(a)(4) excepts from discharge debts arising from defalcation by a debtor acting in a fiduciary capacity.

McLaughlin v. Jones (In Re Jones) · filed 1990-03-14(a)(4)

This conduct constitutes defalcation under 11 U.S.C. Sec. 523(a)(4).

Section 523(a)(4) makes a debt for defalcation by an express trustee nondischargeable; proof that trust funds went directly to the trustee establishes a prima facie case, shifting the burden to the trustee to explain the transfer.

Eckell v. Borbidge · filed 1990-04-17(a)(4)

Where, as in this case, such a fiduciary relationship exits, a prima facie case of defalcation is established against the trustee when it is proved that there was a direct transfer of funds from the trust to the trustee. The burden then shifts to the trustee to establish that the transferred assets were a gift, were used for the benefit of the trust beneficiary, or were obtained as repayment for services rendered to the trust beneficiary.

Section 523(a)(4) makes a debt arising from a corporate director’s defalcation while acting as a fiduciary nondischargeable.

Committee of Unsecured Creditors of Specialty Plastics, Inc. v. Doemling (In Re Specialty Plastics, Inc.) · filed 1990-05-03(a)(4)

Eugene Doemling, by virtue of his status as a director of Specialty, at all times relevant, was a fiduciary of Specialty for purposes of § 523(a)(4). ... The purchasing by Eugene Doeml-ing of the B75, B100 and Uniloy 300 blow molders constituted defalcation.

Section 523(a)(4) can make a judgment debt for breach of fiduciary duty nondischargeable without requiring the debtor to have received money, property, services, or credit from the creditor.

Nelson v. Tsamasfyros (In Re Tsamasfyros) · filed 1990-05-31(a)(4)

I affirm the bankruptcy court’s ruling on collateral estoppel, but apply it to Nelson’s § 523(a)(4) claim for breach of fiduciary duty, and not the § 523(a)(2)(A) claim for property obtained by misrepresentation. The state court’s decision was decided under the correct evidentiary standard, since the court expressly found evidence of breach of fiduciary duty beyond a reasonable doubt. Likewise, the fact that monetary damages were awarded on the breach of fiduciary duty counterclaim, and not the misrepresentation counterclaim, makes § 523(a)(4) the more logical Code section under which to hold Tsamasfyros’ debt to Nelson nondischargeable. It also eliminates the problem of whether Tsamasfyros received money, property, services or credit from Nelson as a result of misrepresentations, since § 523(a)(4) contains no similar requirement.

Section 523(a)(4) requires a preexisting technical trust for a debt to be nondischargeable as defalcation in a fiduciary capacity; an officer’s personal liability for diverting trust funds alone does not establish that capacity.

Stanley Silverblatt Electrical Contractor, Inc. v. Marino (In Re Marino) · filed 1990-06-26(a)(4)

Therefore, an objection to discharge of an individual officer of a corporate contractor on the ground of defalcation while acting in a fiduciary capacity is not viable based solely on the Trust Relationships subtitle.

Section 523(a)(4) excepts from discharge a debt arising from defalcation while acting in a fiduciary capacity, including a lawyer’s self-enriching breach of fiduciary duty.

Federal Deposit Insurance Corp. v. Mmahat · filed 1990-08-03(a)(4)

The bankruptcy code excepts from discharge acts committed by “fraud or defalcation while acting in a fiduciary capacity.” 11 U.S.C. § 523(a)(4). ... FDIC argues that there was defalcation: Mmahat urged Gulf Federal to make improper loans so that he could earn fees. Mmahat thereby enriched himself at the cost of Gulf Federal’s assets. ... We agree. Mmahat cannot discharge this judgment in bankruptcy.

Section 523(a)(4)’s fiduciary capacity exception requires the debtor to have acted under an express or technical trust.

Dignam v. McMahon (In Re McMahon) · filed 1990-07-19(a)(4)

This Court has consistently ruled that, in order to meet the requirements of § 523(a)(4), the Debtor must be acting under an express or technical trust.

Section 523(a)(4) requires an express or technical trust for a debt arising from breach of fiduciary duty to be nondischargeable; the Maryland Construction Trust Statute does not create one.

CRL of Maryland, Inc. v. Holmes (In Re Holmes) · filed 1990-08-30(a)(4)

In order for a debt to be non-dischargeable under Section 523(a)(4) arising from a breach of fiduciary duty, the debtor must, have been acting as a trustee of an express or technical trust. ... The Maryland Construction Trust Statute does not create an express or technical trust on the part of a contractor as trustee on behalf of a subcontractor.

Section 523(a)(4) does not except a debt for security deposits from discharge when the debtor never received the deposits and committed no fraud or defalcation.

Alaska Teamster-Employer Pension Trust v. Wise (In Re Wise) · filed 1990-10-16(a)(4)

Even if the Alaska URLTA creates a statutory trust, the Teamster Trust has not shown how Wise’s actions could be characterized as “fraud or defalcation.” No money was “entrusted” to Wise by Wespac or its tenants, nor did he defraud anyone of money since he did not receive it. ... Wise, on the other hand, has established that he is entitled to summary judgment that any claim arising from the Wespac deposits is dischargeable under § 523(a)(4).

A loan debt is dischargeable under § 523(a)(4) when the creditor fails to prove fiduciary defalcation or larceny.

Griffith v. Griffith III (In re First Georgia Financial Corp.) · filed 1990-10-23(a)(4)

Plaintiff also contends that the debt of Debtor is nondischargeable under section 523(a)(4) of the Bankruptcy Code.5 ... The transaction between Plaintiff and Debtor was in the form of a loan to help Debtor open a new business. Unfortunately, this business failed. The Court is persuaded that Plaintiff has not carried her burden of showing that this debt is nondis-chargeable.

Section 523(a)(4) requires a creditor alleging fraud or defalcation in a fiduciary capacity to prove both a fiduciary relationship with the debtor and fraud or defalcation while the debtor acted in that capacity.

Fresh Western Marketing, Inc. v. Pieper (In Re Pieper) · filed 1990-09-24(a)(4)

To establish a claim of nondischargeability based on fraud or defalcation pursuant to 11 U.S.C. § 523(a)(4), a creditor must prove by clear and convincing evidence first that a fiduciary relationship existed between the parties and second that the Debtor is guilty of defalcation or fraud while acting in his fiduciary capacity.

Section 523(a)(4) makes a debtor’s trust obligation to pay a former spouse her share of military retirement benefits nondischargeable.

Sommerville v. Pyle (In Re Sommerville) · filed 1990-10-24(a)(4)

Debtor is obliged to pay any moneys received representing the 40 percent. The trust obligation is nondischargeable under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) makes a Colorado partner’s debt nondischargeable when the partner fails to account for partnership receipts and uses them personally without authorization.

Schaefer v. Winden (In Re Winden) · filed 1990-10-26(a)(4)

Clearly, Winden’s failure to account to Schaefer for business-generated receivables (as determined in the State Court proceeding), together with his unauthorized and unannounced personal use of such funds, constitutes a defalcation under § 523(a)(4).

Section 523(a)(4) requires a fraud or defalcation to occur while the debtor is acting in a fiduciary capacity; a director acting as an ordinary borrower does not meet that requirement.

First National Bank of Northwest Florida v. Thurman (In Re Thurman) · filed 1990-10-31(a)(4)

The allegations in this case even if true do not show that Thurman was acting in his fiduciary capacity when he asked the president of the bank for a release; he was acting as any other debtor. Since he was acting as an ordinary debtor, he did not breach any fiduciary duty to FNB when he obtained the partial release. Thus, Thurman did not violate the provisions of § 523(a)(4) and his debt to the bank is dis-chargeable.

Section 523(a)(4)’s fiduciary fraud or defalcation exception requires an express or technical trust that existed before the default; an ordinary credit sale does not create that relationship.

Wallingford's Inc. v. Waning (In Re Waning) · filed 1990-11-19(a)(4)

In the absence of an express trust relationship, a fiduciary relationship under § 523(a)(4) cannot be found.

Section 523(a)(4) excepts a debt from discharge when a debtor fails to pay produce sale proceeds held in a PACA trust, because that trust establishes fiduciary capacity and the failure to pay is a defalcation.

Tom Lange Co. v. Stout (In Re Stout) · filed 1990-11-21(a)(4)

It is this court’s opinion that the trust created by PACA § 499e(c)(2) satisfies the fiduciary capacity requirement as defined by § 523(a)(4) and defendant’s failure to pay plaintiff the proceeds from the sale of produce is a defalcation.

Section 523(a)(4) does not treat a debtor as a fiduciary merely because the debtor is a partner; the debtor must have undertaken trust duties at the outset.

Bamco 18 v. Reeves (In Re Reeves) · filed 1990-11-21(a)(4)

The federal law is aimed only at the express trust situation in which the debtor either expressly signified his intention at the outset of the transaction, or was clearly put on notice by some document in existence at the outset, that he was undertaking the special responsibilities of a trustee to account for his actions over and above the normal obligations that contracting parties have to each other in a commercial transaction. ... The Defendant is not a fiduciary to the plaintiff for purposes of Section 523(a)(4).

Section 523(a)(4) does not treat an ordinary Georgia general partner as acting in a fiduciary capacity toward limited partners solely because of the partnership relationship.

Blashke v. Standard (In Re Standard) · filed 1991-01-04(a)(4)

After reviewing judicial interpretations of the word “fiduciary” in § 523(a)(4) and predecessor bankruptcy statutes and relevant Georgia law, the Court concludes that debtor here did not have a fiduciary relationship with the plaintiffs in the strict and narrow sense as that the term is used in § 523(a)(4).

Section 523(a)(4) makes an insurance broker’s debt nondischargeable when the broker diverts funds held in trust, even without personal benefit.

Nassau Suffolk Limousine Ass'n v. Jardula (In Re Jardula) · filed 1990-12-24(a)(4)

As long as the trust funds were used for any purpose other than that laid down in the statute there has been a defalcation. That Jardula may not have personally ben-efitted from the defalcation is of no legal consequence. ... His plea establishes his defalcation and makes his debt to the plaintiff nondischargeable.

Section 523(a)(4) excepts a debt for defalcation from discharge when a general partner acts in a fiduciary capacity under applicable state partnership law.

Getaz v. Stewart (In Re Stewart) · filed 1991-02-08(a)(4)

This Court concludes that the language of § 523(a)(4) is expressed clearly and that the position of Mr. Stewart as a general partner is “a fiduciary capacity” included within the scope of that statute.

Section 523(a)(4) and (a)(6) except debts for defalcation, embezzlement, and willful and malicious injury from discharge.

Hall v. Johann (In Re Johann) · filed 1991-04-03(a)(4), (a)(6)

Pursuant to 11 U.S.C. § 523(a)(4) and (a)(6), the debt of $16,000.00 based on the purchase order and the debt of $9,526.66 based on the unauthorized salary are excepted from defendant’s discharge.

Section 523(a)(4) does not treat Missouri partners as fiduciaries for the fraud-or-defalcation exception to discharge, even when one acts as managing partner.

Hardesty v. Johnson · filed 1991-04-10(a)(4)

In sum, the Court does not find any managing partner exception to be established in the law, and would defer to and follow the decision of the district’s Bankruptcy Court to the effect that Missouri partners are not fiduciaries under § 523(a)(4). Plaintiff’s request for nondis-chargeability under § 523(a)(4) can be denied as a matter of law.

Section 523(a)(4) excepts a debt for defalcation from discharge when the debtor acted in a fiduciary capacity under a technical trust that existed before the debt arose.

Beebe v. Schwenn (In Re Schwenn) · filed 1991-04-22(a)(4)

I conclude that Colorado common law imposes on partners a technical trust relationship and that a partner holds in trust profits acquired in the course of the partnership. Thus, Schwenn’s misappropriation of joint venture profits was a defalcation while acting in a fiduciary capacity under section 523(a)(4).

Section 523(a)(4) does not treat a family, personal, or romantic relationship alone as fiduciary capacity for a fraud or defalcation exception.

Farina v. Balzano (In Re Balzano) · filed 1991-05-21(a)(4)

Not surprisingly, she cites no authority for the simplistic supposition that her familial, personal and/or romantic relationship with Defendant, without much more, transformed Defendant into a fiduciary within the circumscribed ambit of § 523(a)(4).

A § 523(a)(4) fiduciary defalcation claim cannot be resolved on summary judgment when material facts remain about the trustee’s duties and handling of plan funds.

Dickey v. Weinsten (In re Weinsten) · filed 1991-06-11(a)(4)

Although neither party denies that Messrs. Weinsten and Weinsten were trustees of the plan, there remains the unresolved issues of their responsibility in the collection, use and disbursement of funds which may have been earmarked for the plan. That the plan was funded and Messrs. Weinsten and Weinsten were its trustees and its fiduciaries leaves open these questions of fact. Accordingly, the Court must reserve any decision on the merits until these questions of fact are resolved.

Section 523(a)(4) requires a fiduciary relationship based on an express or technical trust that existed before the wrongdoing that created the debt.

RAI Credit Corp. v. Patton (In Re Patton) · filed 1991-06-28(a)(4)

Further, the fiduciary duties must be based on an express or technical trust which existed prior to the act creating the debt and without reference to a wrongful act.

Section 523(a)(4) excepts a partner’s debt from discharge when the partner breaches a preexisting fiduciary duty by failing to account for partnership assets.

In Re Chris J. Roy, a Law Corp. · filed 1991-07-01(a)(4)

Applying those tests to the stipulated facts and considering the foregoing analysis of the contracts by the state courts, the conclusion is inescapable that Roy was charged with a duty to the plaintiffs under 11 U.S.C. 523(a)(4) and as a fiduciary under Louisiana law, and that the duty was breached.

Section 523(a)(4) permits a nondischargeable claim against a New York partner for defalcation involving partnership property because partners act in a fiduciary capacity toward one another.

43 East 74th St. Associates v. Marceca (In Re Marceca) · filed 1991-07-29(a)(4)

Thus, partners in a New York Partnership are deemed to act in a fiduciary relationship to each other within the meaning of 11 U.S.C. § 523(a)(4), with the result that a nondischargeable claim may be asserted by a partner against a debtor partner who is guilty of a defalcation with respect to partnership property.

Section 523(a)(4) excepts from discharge debts arising when a debtor appropriates entrusted corporate assets for personal expenses while acting in a fiduciary capacity.

LaPointe Ex Rel. Brown & LaPointe Development, Inc. v. Brown (In Re Brown) · filed 1991-09-19(a)(4)

Brown is liable to the corporation for the debts he incurred when he appropriated corporate assets to pay personal expenses. The obligations result from defalcations while acting in a fiduciary capacity and are therefore excepted from discharge under § 523(a)(4).

Section 523(a)(4) requires a fiduciary relationship that arose before the fraud or defalcation for a debt to be nondischargeable.

Park v. Moorad (In Re Moorad) · filed 1991-09-26(a)(4)

To find nondischargeability under this section, a fiduciary relationship must arise before the commitment of the fraudulent acts. ... In this case, the fiduciary relationship arose between the parties when they entered into the subscription agreement pursuant to the terms presented in the Memo. The Debtor breached his fiduciary duty to the Plaintiff when the trust duties as presented in the Memo were not kept.

Section 523(a)(4) requires an express or technical trust with a segregated trust res, an identifiable beneficiary, and affirmative trust duties for a debtor to act in a fiduciary capacity.

Cladakis & Road King, Inc. v. Triggiano (In Re Triggiano) · filed 1991-10-09(a)(4)

This Court has consistently ruled that in order to meet the requirements of a fiduciary relationship under § 523(a)(4) of the Bankruptcy Code, the Debtor must have acted under an express or technical trust, wherein there is a segregated trust res, an identifiable beneficiary, and affirmative trust duties established by contract or by statute.

Section 523(a)(4) excepts a debt for embezzlement from discharge even if the debtor did not act in a fiduciary capacity.

Cavalear Ins. Agency, Inc. v. Rico (In Re Rico) · filed 1991-10-15(a)(4)

This defense is without merit, as the element of fiduciary capacity modifies fraud or defalcation, and is not applicable to embezzlément.

Section 523(a)(4) requires a preexisting express or technical trust to establish fiduciary capacity.

In re Kelley · filed 1991-11-27(a)(4)

The necessary relationship must arise from a preexisting express or technical trust.

Section 523(a)(4) requires an express trust relationship for a fraud or defalcation claim; under Pennsylvania law, partners do not acquire that fiduciary capacity merely by being partners.

Rolley v. Spector (In Re Spector) · filed 1991-11-29(a)(4)

Therefore, this court finds that, under Pennsylvania law, partners do not stand in an express trust relationship capacity to one another sufficient to meet the standards for a “fiduciary” as set-forth in 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts a contractor’s debt from discharge when the contractor breaches a statutory duty to hold construction funds for a supplier, constituting defalcation while acting in a fiduciary capacity.

Discount Home Center, Inc. v. Turner (In Re Turner) · filed 1991-12-04(a)(4)

The Court concludes that Turner’s debt to Discount for $6,604.47 is excepted from discharge under 11 U.S.C. § 523(a)(4), “for ... defalcation while acting in a fiduciary capacity.”

Section 523(a)(4) makes a fiduciary’s debt for defalcation nondischargeable when the fiduciary misuses pension funds for personal benefit.

Moss v. Miller (In Re Miller) · filed 1991-12-19(a)(4)

The court grants summary judgment for plaintiffs against defendant, Gary L. Miller, for $41,168.44 and orders that said judgment is nondischargeable pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts from discharge a fiduciary’s debt arising from failure to return entrusted funds after a judgment requiring their return.

Boudakian v. Boudakian (In Re Boudakian) · filed 1992-02-07(a)(4)

After that unappealled judgment however, and before the filing of his bankruptcy petition, the Debtor’s failure to return the $5,000 to Khajadourian constitutes a “defalcation while acting in a fiduciary capacity.”

Section 523(a)(4) does not except a debt for fiduciary defalcation when a statute labels proceeds a trust fund but creates no express trust or fiduciary relationship.

Illinois, Department of Lottery v. Marchiando (In Re Marchiando) · filed 1992-02-24(a)(4)

Here, neither an express trust nor a fiduciary relationship flows from the Illinois Lottery Law.

Section 523(a)(4) requires an express or technical trust for a fiduciary relationship that supports a defalcation exception to discharge.

Page v. Racila (In Re Racila) · filed 1992-03-31(a)(4)

The transaction was for consideration and no express or technical trust was created. Therefore, no fiduciary relationship was created for purposes of § 523 and no defalcation could have occurred.

Section 523(a)(4) requires the fiduciary relationship to exist when the debtor engages in the conduct giving rise to the debt.

Applebee v. Brawn (In Re Brawn) · filed 1992-03-16(a)(4)

To sustain a § 523(a)(4) claim, a creditor must establish that the required fiduciary relationship existed at the time the debtor engaged in the conduct giving rise to the debt at issue.

Section 523(a)(4) excepts from discharge debts arising from defalcation while acting in a fiduciary capacity.

In Re Chavez · filed 1992-03-31(a)(4)

In light of the foregoing, the court finds that Raymond Chavez’s conduct amounted to a breach of his fiduciary duties to SCSB and accordingly constituted defalcation while acting as a fiduciary. The court, therefore, orders that pursuant to 11 U.S.C. section 523(a)(4), the obligations owed to SCSB by the debtor Raymond D. Chavez shall not be discharged.

Section 523(a)(4) requires actual fraud rather than fraud presumed by state law; defalcation requires facts showing affirmative misconduct beyond failure to pay a trust beneficiary.

Stanley H. Silverblatt Electrical Contractor, Inc. v. Marino (In Re Marino) · filed 1992-04-21(a)(4)

Fraud under § 523(a)(4) must be actual and fraud in fact involving moral turpitude or intentional wrongdoing. Plaintiff is not entitled to judgment as a matter of law under § 523(a)(4) because the state law presumption of fraud does not satisfy to the Bankruptcy Code. Defalcation under § 523(a)(4) is broader than misappropriation, yet still requires a prima facie showing of facts which would evidence affirmative misconduct.

Section 523(a)(4) excepts a debt from discharge when a fiduciary fails to account for money held in an escrow agreement.

Hoff v. Carroll (In Re Carroll) · filed 1992-05-14(a)(4)

Essentially, defalcation involves the failure to account for money or property held in a fiduciary capacity. ... Carroll failed to account for money that he held in a fiduciary capacity. The Court finds that Carroll is liable for his defalcation while acting in a fiduciary capacity. ... Accordingly, the Court concludes that the debt of Hoff should be excepted from Carroll’s discharge under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) covers debts arising from misuse of Texas construction trust funds only to the extent Texas law makes that conduct wrongful.

In the Matter of Wilson J. NICHOLAS, Jr., Debtor. COBURN COMPANY OF BEAUMONT, Appellant, v. Wilson J. NICHOLAS, Jr., App · filed 1992-04-23(a)(4)

We are bound by Boyle’s conclusion that the Texas Construction Trust Fund Statute creates fiduciary duties encompassed by 11 U.S.C. § 523(a)(4) only to the extent that it defines wrongful conduct under the statute.

Section 523(a)(4) excepts a debt from discharge when it arises from defalcation while the debtor acted in a fiduciary capacity.

Bankers Life & Casualty Co. v. Gilmore (In re Gilmore) · filed 1992-05-28(a)(4)

The defendant’s admission to the charge of theft establishes the elements of defalcation necessary for 11 U.S.C. § 523(a)(4) and of willful and malicious injury to the property of the plaintiff necessary for 11 U.S.C. § 523(a)(6).

Section 523(a)(4) does not bar discharge for fiduciary defalcation when the debtor owed no fiduciary duty to the creditor seeking to except the debt from discharge.

Sun Bank/South Florida, N.A. v. Lugo (In re Lugo) · filed 1992-06-02(a)(4)

Accordingly, we hold that Debtor neither owed nor breached a fiduciary obligation to Sun Bank, and that any debt he might owe to Sun Bank is dischargeable.

Section 523(a)(4) does not treat an independent contractor as acting in a fiduciary capacity toward the hiring company merely because of that relationship.

Nova Home Health Services, Inc. v. Casagrande (In Re Casagrande) · filed 1992-06-19(a)(4)

The same would certainly hold true as to an independent contractor. The relationship between the debtor and Nova in this case reveals that the debtor did not act in a fiduciary capacity with respect to Nova. Therefore, a cause of action under section 523(a)(4) of the Bankruptcy Code was not proven.

Section 523(a)(4) does not make a lottery agent’s debt nondischargeable merely because state law calls the proceeds a trust fund when the underlying relationship is commercial rather than fiduciary.

Illinois, Department of the Lottery v. Marchiando (In Re Marchiando) · filed 1992-06-22(a)(4)

The state, through creative legislation cannot transform a normal principal-agent/commercial relationship into a “trust.”

Section 523(a)(4) excepts from discharge a surety’s judgment debt arising from guardians’ fiduciary defalcation, including attorney’s fees.

Cincinnati Insurance Co. v. Butts (In Re Butts) · filed 1992-07-21(a)(4)

As a result of the defendants’ defalcation, plaintiff was ordered to pay on the surety bond and incurred attorney’s fees. ... The liability of defendants to plaintiff as a result of the defalcation is non-discharge-able under § 523(a)(4), and the judgment debt in amount of $1,070,843.70 shall be excepted from defendants’ discharge.

Section 523(a)(4) does not make an attorney’s negligence debt nondischargeable merely because the attorney owes fiduciary duties to a client; the attorney must be a trustee of an express or statutory trust.

Braud v. Stokes (In Re Stokes) · filed 1992-07-23(a)(4)

However, to the extent that those cases hold that Section 523(a)(4) makes nondis-chargeable debts arising from mere negligence by an attorney who does not hold the position of a trustee with regard to his client’s, property, I disagree.

Section 523(a)(4) excepts a debt for fiduciary defalcation from discharge when the fiduciary relationship arises from an express trust that predates the debt.

Kuck v. Shane (In Re Shane) · filed 1992-07-29(a)(4)

As to the fraud or defalcation exceptions to discharge found in Section 523(a)(4), proof must be presented that the fiduciary relationship be based upon the creation of an express trust. ... The Court finds that Shane, while acting in a fiduciary capacity, committed defalcation due to his failure to account for the missing proceeds, cattle, and equipment that was entrusted to him.

Section 523(a)(4)'s fiduciary capacity requirement is not met when a majority shareholder receives payments as an individual employee and California law does not make that person a trustee of corporate assets in that capacity.

In Re Donald Ross Bangerter, Debtor. Peter C. Roots, Individually and as Trustee for the Peter C. Roots Trust v. Donald · filed 1992-07-21(a)(4)

California has not held that a majority shareholder is a trustee of corporate assets when acting in his individual capacity as an employee of the company. We do not decide whether Roots has another cause of action against Bangerter. We hold only that the bankruptcy court and the Appellate Panel did not err in finding an absence of a fiduciary relationship under § 523(a)(4).

Section 523(a)(4) recognizes a director’s duty to an insolvent corporation’s creditors as fiduciary capacity when that duty arises before the defalcation.

Berres v. Bruning (In Re Bruning) · filed 1992-07-22(a)(4)

For the reasons discussed below, I determine that a common law fiduciary relationship arises between a director and an insolvent corporation’s creditors at the moment of insolvency. Such a relationship creates a technical trust within the meaning of 11 U.S.C. § 523(a)(4). As such, fiduciary capacity under 11 U.S.C. § 523(a)(4) exists even in the absence of an express trust so long as the fiduciary relationship arises before the defalcation upon which the claim is based. I accordingly reverse the bankruptcy court’s decision.

Section 523(a)(4) excepts a debt for fiduciary defalcation from discharge when the breach of duty is reckless; a merely negligent breach is insufficient.

Federal Deposit Insurance v. Gaubert (In Re Gaubert) · filed 1992-08-31(a)(4)

Yet this court finds no support in the language from Fifth Circuit precedent that the standard is so low that a mere breach of the duty makes the debt non-dischargeable. The breach must be reckless.

Section 523(a)(4) requires a clearly established trust duty before a debtor’s defalcation can be treated as occurring in a fiduciary capacity; Texas law did not clearly establish that duty between the managing partner of a managing partner and the limited partners.

LSP Investment Partnership v. Bennett (In Re Bennett) · filed 1992-08-28(a)(4)

And this Court has previously indicated that section 523(a)(4) should be applied to deny a discharge only in cases where either the common law or a statute clearly and expressly imposes trustee-like obligations on the debtor. ... The Court finds that Texas law does not clearly and expressly impose a trust relationship between the managing partner of the managing partner of a limited partnership and the limited partners.

Section 523(a)(4) does not deny discharge based on fiduciary defalcation unless state law clearly imposes a preexisting trust duty on the debtor; Texas law does not clearly impose that duty on the managing partner of a limited partnership’s general partner.

Bennett v. Bennett · filed 1992-09-02(a)(4)

The holding in Crenshaw is therefore too ambiguous for this Court to apply it to deny Bennett a discharge under section 523(a)(4) in this case.

Section 523(a)(4) makes debts to subcontractors nondischargeable when construction loan proceeds held in trust for their payment are used for other costs.

Heidenreich v. Builders Steel Co., Inc., Commercial Ceilings and Drywall, Inc., and Gaines Plumbing and Pi · filed 1992-10-15(a)(4)

We agree with the district court that the Oklahoma statute does apply. Accordingly, the indebtedness owed the three subcontractors involved here is not dischargeable under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires more than a duty of care to establish fiduciary capacity.

Hartwood Aviation, Inc. v. Hamilton (In Re Hamilton) · filed 1992-11-27(a)(4)

A duty of care without more, however, is insufficient to create a fiduciary relationship sufficient to satisfy 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires a fiduciary relationship that existed before the default; a constructive trust arising from the default does not qualify.

Zrubek v. Zrubek (In Re Zrubek) · filed 1993-01-14(a)(4)

Accordingly, the argument that Montana’s Constructive Trust Statute, § 72-33-219, made the Debtor a “fiduciary” within the meaning of § 523(a)(4) is without merit.

Section 523(a)(4) covers a restitution claim based on alleged breaches of ERISA fiduciary duties as a claim for fraud or defalcation while acting in a fiduciary capacity.

Pension Benefit Guaranty Corp. v. Eckert · filed 1993-01-20(a)(4)

Accordingly, pursuant to Fed.R.Civ.P. 56(d), and in light of the authorities cited by plaintiff, the Court finds that it is without substantial controversy that plaintiff's claim falls within the ambit of section 523(a)(4). The Court does not reach the issue of whether defendants, in fact, breached their fiduciary duties under ERISA, but merely finds that plaintiff’s restitution claim, which is based on such alleged breaches, is one for “fraud or defalcation while acting in a fiduciary capacity.”

Section 523(a)(4) requires a debt arising from the real estate broker’s own licensed acts or omissions to establish a fiduciary relationship.

In Re Grabau · filed 1993-01-29(a)(4)

Thus, the existence of a fiduciary relationship for purposes of § 523(a)(4) requires that the debt arise from defendant’s personal acts or omissions relating to his real estate license.

Section 523(a)(4) makes compensatory and punitive damages for intentional conversion nondischargeable when the debtor acts in a fiduciary capacity.

Tricentrol Overseas, Ltd. v. Touchstone (In Re Touchstone) · filed 1993-01-29(a)(4)

Here, Touchstone’s intentional conversion of the Seats establishes the level of misconduct required to prove defalcation. Therefore, the jury verdict and judgment of the trial court, as clarified by the Texas Supreme Court’s opinion and the opinion on remand by the Texas Appellate Court conclusively established the facts necessary to prove that the compensatory and punitive damages judgment for breach of fiduciary duty are not dischargeable pursuant to § 523(a)(4).

Section 523(a)(4) treats a contractor’s diversion of Michigan building trust funds to pay others instead of trust beneficiaries as fiduciary defalcation.

Michigan Steel Erectors, Inc. v. Crane (In Re Crane) · filed 1993-03-16(a)(4)

It is quite clear that the “defalcation” required under § 523(a)(4) exists when the complained of act consists of misappropriating funds under the Michigan Builders Trust Fund Act by payment of persons other than those who are designed to be the beneficiaries of that trust fund.

Section 523(a)(4) excepts from discharge a guardian’s debt arising from misappropriation of a ward’s funds while acting in a fiduciary capacity.

Western Surety Co. v. Dauterman (In Re Dauterman) · filed 1993-04-06(a)(4)

Based upon this evidence, this Court finds that Defendants’ breach of duty rises at least to the level of defalcation. Debts arising out of defalcation while acting in a fiduciary capacity are exceptions to discharge under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) does not categorically exclude a corporate officer’s preexisting duty to the corporation from fiduciary capacity.

Langenkamp v. McKinney (In Re McKinney) · filed 1993-03-16(a)(4)

Insofar as In re Hutton holds that a corporate officer is never in a “fiduciary capacity” with respect to his corporation, that case goes too far, and this Court declines to follow it so far.

Section 523(a)(4) excepts from discharge a fiduciary’s debt arising from failure to turn over and account for estate funds.

Hash v. Reed (In Re Reed) · filed 1993-05-18(a)(4)

The facts in this case clearly establish that the debtor, as administrator of the estate of Brenda L. Brunty, was acting in a fiduciary capacity. Equally clear is the conclusion that the debtor’s failure to turn over property of the Brunty estate to the estate was a failure to perform his duties as an estate administrator and a failure to properly account for estate funds. Unless otherwise excused, the debtor’s conduct constituted a defalcation.

Section 523(a)(4) makes debts from defalcation nondischargeable when a managing partner owes fiduciary duties to limited partners through control of the partnership’s general partner.

LSP Investment Partnership v. Bennett · filed 1993-04-19(a)(4)

By making these improper charges Bennett willfully neglected his duties to the limited partners and we find that these charges constitute defalcations by Bennett while acting in a fiduciary capacity, and as such are not dischargeable pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires a fiduciary relationship for a debt to be excepted from discharge on the basis of fraud or defalcation in a fiduciary capacity.

Dan Porter Motors, Inc. v. Decker (In Re Decker) · filed 1993-04-27(a)(4)

There is no agreement between DPM and Decker which could be characterized as a trust agreement and the court concludes that their relationship is less than what is required to establish the existence of a fiduciary relationship. Where no fiduciary relationship exists, no fraud or defalcation can arise from the nonexisting fiduciary relationship as mandated under section 523(a)(4).

Section 523(a)(4) makes a debt for breach of fiduciary duty nondischargeable when the debtor’s duties arose from a technical trust before the wrongdoing.

Tricentrol Overseas, Ltd. v. Touchstone (In Re Touchstone) · filed 1993-05-10(a)(4)

The Court concludes that the combination of Debtor’s fiduciary duties as an officer of TOTI and as resulting trustee for the Seats, together with the findings set forth in the jury verdict and appellate court decisions in the Texas Action and discussed herein and in the Prior Opinion, establish that both prongs of the Bennett test were met and compels the conclusion that the punitive damage award against debtor for $146,000 in the Texas Action is nondis-chargeable under section 523(a)(4).

Section 523(a)(4) can cover a fiduciary relationship between partners, but the debt is dischargeable when fraud or defalcation is not proved.

Waitman v. Steed (In Re Steed) · filed 1993-05-21(a)(4)

This Court finds that Defendant and Plaintiff were acting in fiduciary relationships with each other which is governed by 11 U.S.C. § 523(a)(4). ... Although the evidence does not give the picture of an ideal business arrangement, it does not convince the Court by a preponderance of the evidence that the Defendant has been fraudulent in his business dealings or that the Defendant participated in fraud or defalcation.

Section 523(a)(4) treats the fiduciary duty that Texas law imposes on a managing partner of a limited partnership’s managing partner as sufficient to make debts from defalcation nondischargeable.

Bennett v. Bennett · filed 1993-05-21(a)(4)

Therefore, based on the holding in Crenshaw and the cases cited therein, we find that Bennett, as the managing partner of the managing partner, owed to the MG limited partners "the highest fiduciary duty recognized in the law." We find further that this fiduciary obligation is sufficient to meet the requirements of Section 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when a prior judgment establishes defalcation by a debtor acting in a fiduciary capacity.

Laughter v. Speight · filed 1993-05-28(a)(4)

Therefore, the issue of defalcation by Speight, who owed a fiduciary duty to Laughter was squarely before and was decided by the Chancellor. Such a breach of fiduciary duty has been found sufficient to constitute “defalcation” under the bankruptcy code.