11 U.S.C. § 523

Section 523(a)(4) can except a debt arising from the misuse of a corporate opportunity held in a fiduciary capacity, and § 523(a)(6) can except that debt when the conduct maliciously injures the corporation.

Tusco Budget Outlet, Inc. v. Stutsman (In Re Stutsman) · filed 1993-05-28(a)(4), (a)(6)

Nevertheless, a corporate opportunity is a thing of value, sufficiently concrete and ascertainable to be comparable to “money,” to constitute “property,” and to be analogous and tantamount to a trust res, for purposes of exception to discharge under § 523(a)(4). ... The Court infers that Stuts-man’s conduct was indeed “malicious” under § 523(a)(6).

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

Bodie v. Britt (In Re Britt) · filed 1993-06-14(a)(4)

In addition, Virginia real estate law imposed a fiduciary responsibility upon Britt, as Bodie’s agent, and his fraudulent act of removing the funds from escrow constituted a defalcation while acting in a fiduciary capacity as described in § 523(a)(4) of the Bankruptcy Code.

Section 523(a)(4) prevents discharge of debts arising from defalcation in a fiduciary capacity, which detailed state-court findings may establish without a trial transcript.

Sheerin v. Davis · filed 1993-09-14(a)(4)

These findings are sufficient to prevent discharge of both debts under section 523(a)(4). They result from the actual litigation of facts necessary to obtain judgment against Davis, and they describe willful acts by Davis contrary to his fiduciary obligations as an officer of the W.H. Davis Company.

Section 523(a)(4) requires a creditor claiming fraud or defalcation to show that the debtor acted in a fiduciary capacity.

Seiler v. Farley (In Re Farley) · filed 1993-07-22(a)(4)

Plaintiffs have not established that Farley was acting in a fiduciary capacity in any of his dealings with them. To the contrary, all of the above transactions discussed previously were arm’s-length transactions.

Section 523(a)(4) treats partners in a Massachusetts partnership as acting in a fiduciary capacity toward one another.

Bane v. LeRoux (In Re Curran) · filed 1993-07-29(a)(4)

The Court finds that Massachusetts partnerships satisfy the necessary elements of an express trust and and that partners act in a fiduciary capacity toward each other for purposes of § 523(a)(4).

Section 523(a)(4) requires an express trust, a debtor acting in a fiduciary capacity, and a defalcation that breaches the debtor’s fiduciary duties.

Commonwealth of Kentucky, Ex Rel. Chris Gorman, Attorney General v. Kinnard · filed 1993-08-03(a)(4)

To establish non-dischargeability under 11 U.S.C. Sec. 523(a)(4) when a breach of fiduciary duty is alleged, it must be shown that (1) an express trust governed the property at issue; (2) the defendant acted in a fiduciary capacity; and (3) the defendant violated his fiduciary duties by committing a defalcation. ... The other circumstances present in this case do not compel us to conclude that Mr. Kinnard committed a defalcation while acting in a fiduciary capacity.

Section 523(a)(4) requires a corporate officer’s fiduciary duties to arise from an express, technical, or statutory trust for a debt to be excepted from discharge as fiduciary defalcation.

Cono v. Wheatley (In Re Wheatley) · filed 1993-08-20(a)(4)

Debtors who are corporate officers, although they owe a fiduciary duty to the corporation, do not act in “fiduciary capacity” under § 523(a)(4) unless their fiduciary duties arise out of an express, technical or statutory trust.

Section 523(a)(4) excepts from discharge a debt arising from fraud or defalcation in a fiduciary relationship.

In Re Michael T. Murray, Debtor. Shady Oak Investors, a California General Partnership v. Murray · filed 1993-08-16(a)(4)

The Bankruptcy Court held Murray liable for fraud or defalcation in a fiduciary relationship under 11 U.S.C. Sec. 523(a)(4), and found that Murray owed Shady Oak Investors $201,824.00 on a debt that was exempt from discharge. We affirm.

Section 523(a)(4) excepts a debt from discharge for defalcation while acting in a fiduciary capacity; intent to defraud is unnecessary.

Bailey v. Sonnier (In Re Sonnier) · filed 1993-08-27(a)(4)

In this vein, section 523(a)(4) only requires a showing of defalcation.

Section 523(a)(4) does not treat Illinois joint venturers as fiduciaries based solely on the general duties imposed on partners by Illinois law.

Johnson v. Woldman · filed 1993-09-14(a)(4)

For the following reasons, this court concludes, as did the Bankruptcy Judge, that the duties imposed by Illinois law are insufficient to create the type of fiduciary relationship recognized under § 523(a)(4).

Section 523(a)(4) makes an attorney’s debt for a client retainer nondischargeable when professional rules establish a fiduciary duty and the attorney fails to segregate and return the funds.

Ducey v. Doherty (In Re Ducey) · filed 1993-09-29(a)(4)

The Court concludes the following: (1) that in the special relationship between an attorney and client, New Hampshire Rule of Professional Conduct 1.15 and New Hampshire Supreme Court Rule 50 are the kind of explicit notice that the Reeves decision indicated would put a debtor on notice that he or she would become a fiduciary for purposes of § 523(a)(4) of the Bankruptcy Code even though an express trust document was not executed; (2) that in accordance with Bankruptcy Code § 329 and Rule 2017(a), there is no such thing as a non-refundable, earned-upon-receipt retainer for an attorney undertaking representation of a debtor; (3) that the defendant’s failure to segregate into a separate client-trust account the retainer pending approval of his application for retention and final orders approving fees claimed under § 330 was a defalcation; and (4) that the defendant’s failure to account and return the retainer when it was determined that he was not entitled to any fees for his legal services confirms and further establishes the defalcation by the defendant.

Section 523(a)(4) makes a debt for failing to remit entrusted premiums nondischargeable when a statutory fiduciary duty existed before the failure.

Quaif v. Johnson · filed 1993-10-19(a)(4)

In summary, Quaif was under a statutory duty to keep premium funds separate from operating funds, to keep records regarding the premium funds, and to account for those funds to the principal. Therefore, Quaif was acting "in a fiduciary capacity" when he committed a defalcation. The judgment obtained by Johnson against Quaif falls within the exception of Sec. 523(a)(4) and is non-dischargeable.

Section 523(a)(4)’s fraud or defalcation exception requires an express trust held by the debtor for the creditor; a fiduciary relationship alone is insufficient.

First Options of Chicago, Inc. v. Kaplan (In Re Kaplan) · filed 1993-10-26(a)(4)

We have held that, to give rise to § 523(a)(4) liability, it is not sufficient for the plaintiff to prove only that there was a fiduciary relationship between the parties, but also to prove that there is an express trust held by the fiduciary (debtor) on behalf of the beneficiary (creditor), which did not arise out of the action that created the fiduciary relationship.

Section 523(a)(4) excepts from discharge a debt arising from a debtor’s defalcation while acting in a fiduciary capacity.

Highland v. Hix (In Re Hix) · filed 1993-10-28(a)(4)

ORDERED that any indebtedness which the Marion County Probate Court determines is reimbursable to Plaintiff and/or the Highland estates by Defendant be, and is hereby, excepted from Defendant’s discharge pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires an identifiable trust res for fiduciary status and a failure to account for entrusted money or property to establish defalcation.

Evans v. Pollard (In Re Evans) · filed 1993-12-02(a)(4)

Given our conclusion that fiduciary status for purposes of section 523(a)(4) requires an identifiable or defined trust res, it follows that a defalcation requires a failure to account for the trust res of money or property that had been entrusted to the debtor.

Section 523(a)(4) requires a technical or express trust for fiduciary capacity; a corporate director’s relationship with the corporation’s creditors does not alone qualify.

Barber v. Martin (In Re Martin) · filed 1993-11-30(a)(4)

As this Court noted in its prior opinion, it has declined, on prior occasions, to depart from the narrower interpretation of § 523(a)(4), which requires proof of a technical or express trust. ... Therefore, there was no fiduciary relationship between Defendant as corporate director and the creditors of OMI.

Section 523(a)(4) requires an express or technical trust that existed before the wrongdoing to establish fiduciary capacity.

Tway v. Tway (In Re Tway) · filed 1993-12-02(a)(4)

Due to jurisprudence extant since 1844 a § 523(a)(4) complaint must establish that there is an express or technical trust which existed prior to the wrongdoing. One does not exist on the facts presented here.

Section 523(a)(4) excepts a debt from discharge when an attorney commits defalcation while owing a preexisting fiduciary duty over client funds.

Ball v. McDowell (In Re McDowell) · filed 1993-12-08(a)(4)

Further, the Debtor committed a defalcation in his fiduciary duties which renders the debt owed to Brisboy nondischargeable under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires some element of bad faith or reprehensible conduct for a fiduciary's failure to account for an asset to be a nondischargeable defalcation.

Martin v. Fidelity & Deposit Co. of Maryland (In Re Martin) · filed 1993-12-14(a)(4)

We decline to expand the definition further and hold that the mere failure to use ordinary care in accounting for an asset does not per se constitute "defalcation" within the context of § 523(a)(4). There simply must be a showing of some element of bad faith or reprehensible conduct for nondischargeability under § 523(a)(4).

Section 523(a)(4) requires a fiduciary duty that exists before the debtor’s wrongdoing; a nominal statutory trust securing lottery receipts does not qualify.

In the Matter of Nancy S. Marchiando, Debtor-Appellee. Appeal of State of Illinois, Department of the Lottery · filed 1994-01-10(a)(4)

All the cases except Quaif and Carey that have held debts nondischargeable by virtue of section 523(a)(4) have involved either express trusts of a conventional variety or fiduciary relations of the kind just described — relations of inequality that justify the imposition on the fiduciary of a special duty, basically to treat his principal’s affairs with all the solicitude that he would accord to his own affairs. Nothing of the sort is involved here.

Fiduciary status under § 523(a)(4) is determined by looking to state law.

Gore v. Kressner (In Re Kressner) · filed 1994-02-18(a)(4)

The issue of fiduciary status pursuant to Section 523(a)(4) is determined by looking to state law.

Under § 523(a)(4), once a creditor establishes that the debtor received funds in a fiduciary capacity, the debtor bears the burden of accounting for them and proving that no defalcation occurred.

Cappella v. Little (In Re Little) · filed 1994-02-03(a)(4)

Thus even if state law is not controlling on the issue, the Debtor should still bear the burden of proving that he did not commit a defalcation. His motion for involuntary dismissal will therefore be denied.

Section 523(a)(4) makes a debt arising from a trustee’s unauthorized use of trust funds nondischargeable as a fiduciary defalcation.

Central Bank of Denver v. Olinger (In Re Olinger) · filed 1994-04-04(a)(4)

The Court concludes that Ms. Olinger’s actions constitute a defalcation by a fiduciary pursuant to Section 523(a)(4).

Section 523(a)(4) can except a corporate officer’s debt from discharge when the officer defalcates while owing the corporation a fiduciary duty over its assets.

Hays v. Cummins (In Re Cummins) · filed 1994-03-15(a)(4)

Thus, fiduciary capacity under section 523(a)(4) of the Bankruptcy Code can be established where there is a clear fiduciary duty on the part of corporate officers to a corporation with regard to the proper treatment of corporate assets over which the corporate officer has control.

Section 523(a)(4) excepts a fiduciary’s defalcation from discharge, and § 523(a)(6) also excepts a loss caused by an intentional, unjustified use of another’s property.

Gordon v. Stephenson (In Re Stephenson) · filed 1994-04-15(a)(4), (a)(6)

The unauthorized investment clearly constitutes a “defalcation” and, therefore, the loss suffered by the plaintiff by virtue of the unauthorized investment by the debtor constitutes a nondischargeable debt under section 523(a)(4). ... Thus, the debtor’s unauthorized use of the plaintiffs $115,000 was á willful and malicious injury within the meaning of § 523(a)(6) and the loss suffered by the plaintiff is also nondischargeable for this additional reason.

Section 523(a)(4) excepts a debt arising from a fiduciary’s failure to account for trust funds from discharge as defalcation.

Hodnett v. Loevner (In Re Loevner) · filed 1994-05-02(a)(4)

The court concludes that transfer of the trust funds to MLJ without notice to plaintiff and the failure to properly account for the location of funds constitute defalcation by debtor while acting in a fiduciary capacity. ... Thus the judgment debt is also excepted from discharge under § 523(a)(4).

A partnership relationship alone does not establish the fiduciary capacity required to except a debt from discharge under § 523(a)(4).

Faw v. Wiles (In Re Wiles) · filed 1994-05-03(a)(4)

Plaintiffs rely upon the partnership relationship to establish the fiduciary relationship as to Wiles. This relationship is insufficient to create the narrow fiduciary relationship required by § 523(a)(4) to except a debt from discharge.

Section 523(a)(4) requires the fiduciary relationship to predate and exist independently of the alleged defalcation.

Jacobs v. Pierce (In Re Pierce) · filed 1994-06-20(a)(4)

In the context of bankruptcy, “fiduciary” has a narrower meaning than in other contexts. It includes only those relationships that existed before, and without reference to, the act asserted to be a defalcation.

Section 523(a)(4) limits fiduciary capacity to technical or express trusts, excluding trusts imposed by operation of law.

Lucero v. Montes (In Re Montes) · filed 1994-07-07(a)(4)

It is a well settled rule of law in the Ninth Circuit that the term “fiduciary capacity” under § 523(a)(4) has been limited to technical or express trusts and not to trusts which are imposed by operation of law.

Section 523(a)(4) makes a corporate officer’s debt for breaching a fiduciary duty to creditors nondischargeable when the duty arose upon the corporation’s insolvency or dissolution, before the breach.

Energy Products Engineering, Inc. v. Reuscher (In Re Reuscher) · filed 1994-07-08(a)(4)

When viewed in this context, it is clear that the officer/director’s wrongful conduct does not create the fiduciary duty. Rather, the duty arose upon the corporation’s insolvency or dissolution and the officer/director’s subsequent breach of that duty creates an obligation or debt. Accordingly, the Court finds that such a debt is subject to nondis-chargeability under § 523(a)(4).

Section 523(a)(4) does not require a fiduciary to gain personally for a debt arising from defalcation to be excepted from discharge.

Medus v. Perry · filed 1994-08-04(a)(4)

First, the Court does not read those decisions as requiring personal gain for there to be a finding of defalcation.

Section 523(a)(4) makes unpaid insurance premiums nondischargeable when an agent fails to remit them while acting in a fiduciary capacity.

Commissioner of Insurance of Puerto Rico v. Del Valle Otero (In Re Del Valle Otero) · filed 1994-09-19(a)(4)

Accordingly, the amount of unpaid insurance premiums, to be determined by an audit at a later date, owed to Corporación Insular de Seguros by its agents Jorge del Valle and Diana Ferrer Marrero constitutes a nondis-chargeable debt under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts a landlord’s security deposit debt from discharge when state law imposes fiduciary duties before the landlord’s defalcation; related punitive damages are also nondischargeable.

Brixius v. Christian (In Re Christian) · filed 1994-09-30(a)(4)

In view of the foregoing, the Court finds that Chapter 186, § 15B of the Massachusetts General Laws imposes fiduciary duties on the residential landlord for the benefit of the tenant for nondischargeability purposes under § 523(a)(4). Therefore, Plaintiffs’ undisputed claim, arising from Defendant’s violation of ch. 186, § 15B(2)(a)-(c), (3)(a), (3)(b) and (4), and arising from the Debtor’s defalcation is deemed nondischargeable under § 523(a)(4). ... Accordingly, this Court concludes that the punitive damages, which may be imposed under ch. 186, § 15B and ch. 93A, § 9 and the regulations promulgated thereunder, are nondisehargeable under § 523(a)(4).

Section 523(a)(4) does not excuse a fiduciary’s defalcation because the fiduciary negligently misunderstood the law governing trust funds.

Old Republic Surety Co. v. Richardson (In Re Richardson) · filed 1995-02-16(a)(4)

The court concludes that negligent ignorance of the law is not a defense to defalcation.

Section 523(a)(4) does not except a debt from discharge when the creditor proves neither a fiduciary relationship nor embezzlement.

Smallwood v. Howell (In Re Howell) · filed 1995-02-14(a)(4)

Because the defendant/debtor was not a fiduciary for § 523(a)(4) purposes, and because the plaintiff has failed to prove that the debtor committed embezzlement, the court finds and concludes that this particular debt to the plaintiff shall not be excluded from discharge under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) makes a managing partner’s debt for breach of fiduciary duty nondischargeable even when the same damages also rest on breach of the partnership agreement.

Fallas v. Schwager (In Re Schwager) · filed 1995-02-15(a)(4)

A plain reading of the jury findings reveals that the jury found both that debtor breached his fiduciary duty to plaintiffs and that he breached the partnership agreement. Further, the damage award clearly provides that each basis fully supports an award of the entire amount of compensatory damages. The Court concludes, therefore, that the jury findings are sufficiently specific and that the debt is non-dischargeable under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires fiduciary capacity and fraud or defalcation; signing a guaranty under a power of attorney did not meet those requirements here.

Van De Water v. Van De Water (In Re Van De Water) · filed 1995-03-15(a)(4)

To prevail under this section, plaintiff must prove that the debtor was acting in a “fiduciary capacity” when he executed the guaranty in her name and that any liability she may have as a result is due to fraud or defalcation. The Court finds that the debtor was not acting in a fiduciary capacity pursuant to 523(a)(4) when he signed plaintiffs name to the guaranty, and that in any event he did not commit fraud or defalcation in doing so.

Section 523(a)(4) does not treat a contractual relationship alone as a fiduciary relationship for the discharge exception.

Fuller v. Johannessen · filed 1995-03-27(a)(4)

The relationship between the parties in the case at bar was strictly a contractual relationship, not a “technical” trust and thus, did not at any time rise to the level of a fiduciary.

Section 523(a)(4) excepts from discharge a debt arising from a debtor’s defalcation while acting in a fiduciary capacity.

Johns v. Johns (In Re Johns) · filed 1995-04-11(a)(4)

Having engaged in bad faith or misconduct in dissipating all of the Plaintiffs funds, except for perhaps the sum of $2,000 which was used to purchase a car for the Plaintiff, the Debtor became liable to the Plaintiff for a defalcation while acting in a fiduciary capacity. As a result, the Debtor is liable to the Plaintiff pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when a fiduciary’s willful neglect of duty constitutes defalcation.

Teekell v. Sheffield (In Re Sheffield) · filed 1995-04-21(a)(4)

Regarding the second prong of § 523(a)(4), Sheffield’s own testimony acknowledged his ethical dilemma. Rather than withdrawing from further representation, or obtaining the client’s consent, it is clear that he threatened (according to both his and Teekell’s testimony) to blow the whistle on the usurious transactions. This extortion threat is insurmountable evidence of his willful neglect of duty.

Section 523(a)(4) makes a debt nondischargeable when a fiduciary’s wrongful use of trust funds and failure to account for them constitute defalcation.

Raymond v. Pickering (In Re Pickering) · filed 1995-05-15(a)(4)

I conclude the Plaintiff has shown by a preponderance of the evidence that the Debtor/Defendant dealt with the Guardianship funds “as if they were her own”, thus causing a defalcation by a fiduciary within the meaning and interpretation of § 523(a)(4).

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

Charles Edward Lee Rogers v. Walter M. Rogers, Jr. Ronald A. Rogers Rogers Brothers, Incorporated · filed 1995-04-19(a)(4)

Charles E. Rogers, Jr., appeals from the district court's order affirming the bankruptcy court's orders (1) denying his motion for a continuance of the scheduled trial date; and (2) finding that he committed a defalcation while acting in a fiduciary capacity, within the meaning of 11 U.S.C. Sec. 523(a)(4) (1988), rendering his $145,000 debt to the Appellees nondischargeable in bankruptcy. Our review of the record, including the transcripts of the hearings before the bankruptcy court on both issues, reveals that this appeal is without merit. Accordingly, we affirm the district court's order.

Section 523(a)(4) permits an exception from discharge for liened proceeds defalcated, dissipated, or disposed of for the debtor’s personal benefit when the debtor effectively concedes the claim.

St. John Medical Center, Inc. v. Innis (In Re Innis) · filed 1995-05-16(a)(4)

The Court further concludes that, in the posture of this adversary proceeding, St. John is entitled to an exception from discharge under 11 U.S.C. § 523(a)(4) as to any portions of such proceeds which have been “defalcated, dissipated or disposed of by ... for his personal benefit, in derogation of St. John’s statutory lien rights,” including in particular those proceeds which have been distributed to Innis from DuPriest’s trust account.

Section 523(a)(4) limits fiduciary capacity to express or technical trusts or trusts created by statute; informal trust in someone to manage finances is insufficient.

Schaffer v. Dempster (In Re Dempster) · filed 1995-06-05(a)(4)

It is well established that the term “fiduciary” in the dischargeability context is limited to express or “technical” trusts or trusts created by statute, and does not extend to implied trusts imposed as a matter of equity.

Section 523(a)(4) treats a PACA trustee as acting in a fiduciary capacity because the trust arises before any wrongdoing.

N.P. Deoudes, Inc. v. Snyder (In Re Snyder) · filed 1995-06-07(a)(4)

Thus, the PACA trust exists separate from any act of wrongdoing, and a PACA trustee serves in a fiduciary capacity under Section 523(a)(4).

Section 523(a)(4) requires an express or technical trust with an identifiable trust res for a debt arising from fraud or defalcation in a fiduciary capacity to be nondischargeable.

Windsor v. Librandi (In Re Librandi) · filed 1995-06-22(a)(4)

Thus, it is clear that the Court intended “fiduciary capacity”, as that term is used in section 523(a)(4), to apply only in those situations that involve a trust, either express or technical.

Section 523(a)(4) does not except a debt from discharge based solely on a general fiduciary duty of loyalty, good faith, and fair dealing.

Kayes v. Klippel (In Re Klippel) · filed 1995-06-23(a)(4)

The only duty is the general fiduciary duty of loyalty, good faith, and fair dealing, which accompanies practically every contract and which is not sufficient to bar the discharge of a debt under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires an express or technical trust to establish a fiduciary relationship for a debt based on fraud or defalcation.

Bollinger v. Polk (In re Polk) · filed 1995-06-28(a)(4)

Therefore, upon consideration of the record as a whole, the Court finds that there was no fiduciary relationship between the Debtor and the Plaintiff pursuant to the State Circuit Court order of December 3, 1991. There being no other basis upon which a fiduciary relationship can be established here, the Court cannot find that the debt in question is nondischargeable under section 523(a)(4).

Section 523(a)(2) and (a)(4) except debts arising from fraudulent representations and fiduciary defalcation from discharge when the creditor proves the required elements.

Ferraro v. Phillips (In Re Phillips) · filed 1995-08-11(a)(2), (a)(4)

Based upon the foregoing, this Court finds that the Plaintiff has sustained his burden of proving the elements set forth in Section 523(a)(2) and (a)(4) of the Code.

Section 523(a)(4) makes a debt nondischargeable when an attorney commits defalcation while acting in a fiduciary capacity, including by failing to account for or improperly retaining client property.

Tonwe v. Harris-Miles (In Re Harris-Miles) · filed 1995-09-12(a)(4)

This Court finds that Ms. Miles actions elearly breached her fiduciary duty as an attorney, and thus committed defalcation while acting in a fiduciary capacity, in at least three ways. First, Ms. Miles failed to keep an accurate accounting of the Tonwes’ property. Second, Ms. Miles improperly retained and used client property. Third, Ms. Miles failed to accurately account for the time she spent working on the Tonwes’ behalf, further aggravating the other aforementioned breaches. For these reasons this Court can only find that the indebtedness of Ms. Miles to the Tonwes, as discussed in the factual findings above, is non-dis chargeable.

Section 523(a)(4) excepts from discharge a debt caused by defalcation while acting as trustee of an express trust, including a trust created by a divorce settlement.

Houston v. Capps (In Re Capps) · filed 1995-09-29(a)(4)

Having determined that Ms. Capps was a fiduciary for purposes of section 523(a)(4), the remaining issue is whether she committed a defalcation in that capacity. ... Those acts, therefore, constituted defalcations of Ms. Capps’ duties under the trust in the residence formed for the benefit of Mr. Houston.

Section 523(a)(4) excepts from discharge statutory penalties arising from fiduciary defalcation and related attorney fees.

Harsch v. Eisenberg (In Re Eisenberg) · filed 1995-11-13(a)(4)

The judgment amount arose in connection with the breach, and the breach was a defalcation. ... Similarly, the attorney fees arose on account of the defalcation and are also excepted from discharge.

Section 523(a)(4) treats an ERISA fiduciary as a fiduciary whose debt for fraud or defalcation may be excepted from discharge.

Morgan v. Musgrove (In Re Musgrove) · filed 1995-10-18(a)(4)

As a matter of law, the Court concludes that the Debtor in fact does owe a “debt” in bankruptcy to the Morgans and that an ERISA “fiduciary” will qualify as a “fiduciary” for the purposes of 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when a lottery agent who holds ticket proceeds in trust fails to remit them.

State v. Kaczynski (In Re Kaczynski) · filed 1995-11-22(a)(4)

Accordingly, it must be concluded that the failure to remit the ticket proceeds to the Commission constituted a defalcation within the meaning of section 523(a)(4).

Section 523(a)(4) makes a debt for defalcation of funds held under a New York Lien Law statutory trust nondischargeable.

Semilof v. Waskew (In Re Waskew) · filed 1995-12-29(a)(4)

A trust created by the New York Lien Law creates an express statutory trust within the meaning of section 523(a)(4). ... Waskew’s debt of $34,579.56 to Semilof is therefore nondischargeable.

Section 523(a)(4) does not except a lottery ticket agent’s debt to the state from discharge when their relationship lacks the control required for fiduciary capacity.

Texas Lottery Commission v. Tran (In Re Tran) · filed 1995-12-14(a)(4)

Further, the relationship between a lottery ticket agent and the state is not in the nature of a fiduciary relationship sufficient to invoke 11 U.S.C. § 523(a)(4).

Section 523(a)(4) allows a surety subrogated to trust beneficiaries’ rights to assert the nondischargeability of a debt for defalcation in a fiduciary capacity.

Old Republic Surety Co. v. Richardson (In Re Richardson) · filed 1995-12-29(a)(4)

As such, Old Republic may exercise the trust beneficiaries’ right of non-dischargeability under Section 523(a)(4) of the Bankruptcy Code.

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

American Surety & Casualty Co. v. Hutchinson (In Re Hutchinson) · filed 1996-02-06(a)(4)

This Court has held that § 523(a)(4) applies only when the plaintiff can prove the existence of an express or technical trust. ... The Court finds that the threshold requirement of § 523(a)(4) has not been met.

Section 523(a)(4) excepts a co-guardian’s debt for violating clear restrictions on estate property from discharge as a fiduciary defalcation.

Office of Public Guardian v. Messineo (In Re Messineo) · filed 1996-02-13(a)(4)

Accordingly, the removal of the property was in violation of his duty under the Probate Court Decree. The debt of $1,775.00 was for defalcation while acting in a fiduciary capacity, and the debt is excepted from discharge pursuant to section 523(a)(4).

Section 523(a)(4) makes a debt for fraud committed while acting in a fiduciary capacity nondischargeable.

In Re John W. Evans and Patricia R. Evans, Debtors. Alexander Weir Iii, Bruce R. Weir, Carol J. Ashman and Alexander Wei · filed 1996-03-27(a)(4)

Thus, Evans was "act[ing] in a fiduciary capacity" (11 U.S.C. § 523(a)(4)) when he fraudulently failed to disclose the commissions he earned from the Genie transactions.

Section 523(a)(4) requires a creditor alleging fiduciary defalcation to prove by a preponderance of the evidence that the debtor’s failure to pay involved more than mere negligence.

Chase Lumber & Fuel Co. v. Koch (In Re Koch) · filed 1996-05-23(a)(4)

It is the plaintiffs burden to show by a preponderance of the evidence that more than mere negligence led to the debtor’s failure to pay.

Under § 523(a)(4), a Wisconsin probate estate’s personal representative acts in a fiduciary capacity, and failing to distribute beneficiaries’ shares is defalcation.

Dutton v. Kondora (In Re Kondora) · filed 1996-04-10(a)(4)

The Court concludes that Debtor’s failure to give Plaintiffs their share of the distribution in Norman Many’s probate estate constitutes defalcation while acting in a fiduciary capacity under § 523(a)(4).

Section 523(a)(4) requires an express or technical trust for a debt arising from fiduciary defalcation to be excepted from discharge.

Riden v. Sigler (In Re Sigler) · filed 1996-05-17(a)(4)

Consequently, finding that no trust exists under the facts of this case, this Court must conclude that the Plaintiffs have failed to meet their burden of proof under § 523(a)(4), as that Section of the Bankruptcy Code requires the presence of an express trust in order for a debt to be held, nondischargeable on the grounds that the Debtor engaged in a defalcation while acting in a fiduciary capacity.

Section 523(a)(4) makes emotional distress damages arising from a real estate broker’s fiduciary misconduct nondischargeable when the broker’s licensed activities involve an identifiable trust res.

Thompson v. Rodriguez (In Re Rodriguez) · filed 1996-05-15(a)(4)

The bankruptcy court properly found that appellant was acting within the scope of his real estate license when he made the instant misrepresentations. Under the above cases, this made appellant appellees’ fiduciary in the underlying transactions. Moreover, the bankruptcy court properly found that the loan principal given by appellees to appellant constituted a trust res under In re Evans. It follows that an express trust existed between appellants and appellees. The bankruptcy court did not err in concluding that appellees’ claims for emotional distress damages against appellant were nondischargeable under § 523(a)(4), and its decision is AFFIRMED.

Section 523(a)(4) does not treat unauthorized withdrawals from a joint account as fiduciary defalcation merely because the debtor had signature authority over the account.

Stentz v. Stentz (In Re Stentz) · filed 1996-05-30(a)(4)

Norman also did not act with the requisite fiduciary capacity under section 523(a)(4), when he disbursed funds from the joint account. Having signature authority over the joint account does not constitute an express trust and it does not involve a level of fiduciary capacity comparable to that of an executor, administrator, g-uardian or trustee.

Section 523(a)(4) requires a technical trust for a debt to be excepted from discharge on the basis of fraud or defalcation in a fiduciary capacity; a physician-patient relationship alone does not qualify.

Caccamo v. Pouliot (In Re Pouliot) · filed 1996-05-30(a)(4)

Consistent with the holdings in Davis and Quaif, this Court finds that the relationship between a physician and his patient does not create a “technical trust” which establishes a “fiduciary capacity” under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires an express or technical trust for fiduciary nondischargeability; a stock exchange’s know-your-customer rule does not create one in favor of a brokerage firm.

Shearson Lehman Hutton, Inc. v. Schulman (In Re Schulman) · filed 1996-06-04(a)(4)

In any event, the rule is not a statute which imposes an express trust in favor of the brokerage firm. Therefore, Shearson must allege at least some other factor from which I could conclude that Sehulman held assets in a technical trust capacity for Shearson within the meaning of section 523(a)(4).

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

Golfingly Yours, Inc. v. Roberts (In re Roberts) · filed 1996-06-11(a)(4)

Section 523(a)(4) provides that a debt owed by a debtor is excepted from discharge if there was fraud or defalcation while acting in a fiduciary capacity. Thus, the plaintiff must prove two elements: that the debtor was a fiduciary, and that, while a fiduciary, the debtor committed a fraud against the plaintiff.

Section 523(a)(4) is inapplicable without an express trust and a recognizable corpus.

In the Matter of William Patrick Cantrell Carol Ann Cantrell, Debtors. Jim Perdue John Turner v. Cantrell · filed 1996-07-18(a)(4)

The court also correctly opined that, in the absence of an express trust and a recognizable corpus, 11 U.S.C. § 523(a)(4) is inapplicable.

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

In Re Robert J. Young and Donna M. Young, Debtors. Fowler Brothers v. Robert J. Young and Donna M. Young · filed 1996-07-26(a)(4)

Thus, an express or technical trust must be present for a fiduciary relationship to exist under § 523(a)(4).

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

Peoples Bank & Trust Co. v. Penick (In Re Penick) · filed 1996-07-31(a)(4)

This Court must therefore discover the existence of a technical trust in order for the defendant to be considered a fiduciary, looMng to state law to determine if a trust relationship exists. ... This provision does not create a trust, notwithstanding any inferences that might be drawn from it concerning a corporate director’s “fiduciary” duty to the corporation’s shareholders. ... The debt owed to the plaintiff by the defendant is not excepted from discharge pursuant to that statute.

Section 523(a)(4) requires a technical, express, or statutory trust for fraud or defalcation to occur in a fiduciary capacity.

Shappy v. Scott (In Re Scott) · filed 1996-08-27(a)(4)

Section 523(a)(4) requires instead a technical or express trust, or a trust created by statute.

Section 523(a)(4) excepts debts arising from fraud or defalcation in a fiduciary capacity or embezzlement from discharge.

Brown v. Kastner (In Re Kastner) · filed 1996-08-12(a)(4)

The conversion by Mr. Kastner, as an officer of American Lloyds, of the moneys to G & K that were actually due and owing to American Lloyds is an act of fraud or defalcation while acting in a fiduciary capacity, and/or embezzlement that is excepted from discharge under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) does not except a debt from discharge for defalcation under a fee-sharing agreement between joint venturers who lack the fiduciary relationship the section requires.

In the Matter of Barry Woldman, Debtor-Appellee. Appeal of Geraldine Johnson · filed 1996-09-19(a)(4)

The statute treats fraud and defalcation the same. The only thing that matters is that Woldman was not Nye’s fiduciary within the special meaning that section 523(a)(4) assigns to the term.

Section 523(a)(4) treats Arizona partners as fiduciaries because Arizona law imposes fiduciary duties on them.

In Re Byron C. Lewis Irene Lewis, Debtors. Byron C. Lewis Irene Lewis v. Scott · filed 1996-10-02(a)(4)

In light of this language, we hold that Arizona law imposes upon partners a fiduciary duty within the meaning of section 523(a)(4).

Section 523(a)(4) permits denial of discharge for a debt arising from defalcation while acting as a fiduciary of a PACA trust.

Strube Celery & Vegetable Co. v. Zois (In Re Zois) · filed 1996-10-21(a)(4)

Therefore, defalcation while acting as a fiduciary of a PACA Trust is a sufficient ground to warrant denial of discharge under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) makes a debt nondischargeable for fiduciary defalcation only when the debt arises from that defalcation.

Tucker v. Nestor (In Re Nestor) · filed 1996-10-16(a)(4)

Under this provision, a debt must arise from a debtor’s defalcation for the defalcation to render the debt nondis-chargeable.

Section 523(a)(4) requires an express trust and a fiduciary duty when the debt is incurred; an ordinary creditor-debtor relationship is insufficient.

Butler v. Clark (In Re Clark) · filed 1996-11-07(a)(4)

We find that at the time the 1987 Agreements were made the funds were not the subject of an express trust, and further that Mr. Clark owed no fiduciary duty to Ms. Williams under the 1987 Agreements.

Section 523(a)(4) does not treat a parent as a fiduciary solely because of the parent-child relationship.

Bachman v. Bachman-Collins (In re Bachman) · filed 1996-11-22(a)(4)

It is the conclusion of this court that for purposes of § 523(a)(4), a parent/child relationship without more is not sufficient to constitute the parent a fiduciary with respect to the child.

Section 523(a)(4) requires a fiduciary relationship for fraud or defalcation claims, but not for embezzlement or larceny claims.

Utica Mutual Insurance v. Johnson (In Re Johnson) · filed 1997-01-03(a)(4)

Under a plain reading of § 523, the “fiduciary relationship” requirement applies only to debts alleged to be nondischargeable for fraud or defalcation, not to debts alleged nondischargeable for embezzlement or larceny under § 523(a)(4), nor to willful or malicious injuries under § 523(a)(6).

Section 523(a)(4) shifts the burden to a fiduciary debtor to account for entrusted funds once the creditor establishes the fiduciary relationship and entrustment.

In Re Jeannie Niles, Debtor. Rita G. Otto v. Niles · filed 1997-02-12(a)(4)

We conclude that Otto satisfied her burden of proof by establishing that Niles was a fiduciary to whom funds had been entrusted. The burden then shifted to Niles to account fully for all funds received by her for Otto's benefit, by persuading the trier of fact that she complied with her fiduciary duties with respect to all questioned transactions.

Section 523(a)(4) requires an express or technical trust created by contract or statute to establish fiduciary capacity.

Clark v. Allen (In Re Allen) · filed 1997-02-10(a)(4)

The Court declines to read Young as broadly as Plaintiff does, and concludes that “an express or technical trust” by their own terms cannot be implied, but must be created by contract or statute.

Section 523(a)(4) requires a fiduciary relationship that existed before the debt arose; a contractual duty to repay does not create one.

Continental Casualty Co. v. York (In Re York) · filed 1997-03-05(a)(4)

Without some evidence indicating that the parties contemplated a trust relationship prior to York incurring the debt at issue, the court is reluctant to convert what appears to be a simple debtor-creditor relationship into a trust relationship which imposes fiduciary duties simply because appellants choose to categorize the relationship between the parties as such. Therefore, appellants are unable to satisfy the narrow legal definition of a “fiduciary” as that term is employed in § 523(a), and the Bankruptcy Court was correct in awarding summary judgment to York as to this claim.

Section 523(a)(4) requires control of entrusted funds before and during a defalcation to establish a fiduciary relationship under the trustee theory.

Freeman v. Frick (In Re Frick) · filed 1997-03-11(a)(4)

Without the control of monies of a beneficiary prior to and concurrent with the defalcation, there is no fiduciary relationship which is actionable under the fiduciary theory of Section 523(a)(4).

Section 523(a)(4) preserves the nondischargeability of a debt arising from fiduciary defalcation after the debt is subrogated to another party.

Richardson v. Old Republic Surety Co. · filed 1997-03-19(a)(4)

Richardson argues that a debt arising out of a defalcation on the part of a fiduciary remains non-dischargeable under § 523(a)(4) of the bankruptcy code, 11 U.S.C. § 523(a)(4), only for so long as it is owed to the party with whom the debtor stood in a fiduciary relationship. Richardson accordingly urges that the non-dischargeability of a debt that he owed to a court-created trust did not survive subrogation. We find no support for Richardson's argument either in the logic of the bankruptcy laws or in the caselaw.

Section 523(a)(4) excepts a debt from discharge when a broker acting as a fiduciary misappropriates funds entrusted for a specific investment or fails to account for them.

Smith v. Young (In Re Young) · filed 1997-04-04(a)(4)

From the circumstances of Young’s acts as a broker, together with the Malenbaum Plaintiffs entrustment to him of funds for specific investment purposes, arose an express trust relationship between the parties within the meaning of § 523(a)(4). Finally, not only has the Court has already elaborated the fraud committed by Young against the Malenbaum Plaintiffs, Young’s “misappropriation of trust funds or money” held in his fiduciary capacity, and his failure “to account fully” for the misappropriated funds constituted acts of defalcation.

Section 523(a)(4)'s fiduciary exception requires proof of a trust relationship between the debtor and creditor.

Atcavage v. Shaffer (In Re Shaffer) · filed 1997-03-17(a)(4)

Having examined the transcript and ail exhibits, we see no evidence that would support a finding of the existence of any trust relationship between the Debtor/Defendant and the Plaintiffs.

Section 523(a)(4) makes a debt for fraud or defalcation nondischargeable when a licensed real estate broker acts as a fiduciary to a client.

In Re Gustavo Rodriguez, Debtor. Gustavo Rodriguez v. Harry G. Thompson Amira Thompson Horacio Gutierrez Ofelia Gutierre · filed 1997-03-26(a)(4)

Under California law, if a debtor acts within the scope of his real estate broker's license, a fiduciary relationship arises between the debtor and his clients, and any judgment for fraud or defalcation is nondischargeable under section 523(a)(4).

Section 523(a)(4) excepts from discharge a debt arising from defalcation committed while the debtor acts in a fiduciary capacity.

Jacobs v. Pierce (In Re Pierce) · filed 1997-04-29(a)(4)

On these two independent grounds, this court decides, as matters of law are decided, that the conduct of Robert Pierce was a “defalcation in a fiduciary capacity” and the debt of $400,000 to claimants Lewis D. Jacobs and Stuart Jacobs is nondisehargeable under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires a creditor alleging fraud in a fiduciary capacity to prove that the fiduciary relationship existed when the misconduct occurred.

Weisberger v. Guth (In Re Guth) · filed 1997-05-02(a)(4)

In order to succeed in a nondischargeability action under § 523(a)(4) based upon fraudulent conduct, it is incumbent upon the complaining party to show the existence of a fiduciary relationship with the defending party at the time of the alleged misconduct.

Section 523(a)(4) treats partners as fiduciaries for purposes of the exception to discharge for fraud or defalcation in a fiduciary capacity.

BCCI Holdings (Luxembourg), S.A. v. Clifford · filed 1997-05-05(a)(4)

Partners are fiduciaries within the meaning of Section 523(a)(4).

Section 523(a)(4) requires an express or technical trust for fiduciary defalcation; serving as a corporate director alone does not establish one.

Miramar Resources, Inc. v. Schultz (In Re Schultz) · filed 1997-05-09(a)(4)

In this Proceeding, although Defendant was a director of the Plaintiff corporation, this fact alone does not establish an express or technical trust as required for an exception from discharge under Section 523(a)(4). The Defendant’s position as a director does not per se make him a trustee to the corporation.

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

Ansari v. Pahlavi · filed 1997-05-08(a)(4)

In order to prove a debt is non-dischargeable under§ 523(a)(4) of the Bankruptcy Code, a creditor must prove the debtor committed "[1] fraud or defalcation [2] while acting in a fiduciary capacity." 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts debts for fraud or defalcation while acting in a fiduciary capacity from discharge; defalcation includes misappropriating or failing to account for funds held in that capacity.

Bankr. L. Rep. P 77,362 in Re Ahmad Ali Massoud Ansari, Debtor. Reza Pahlavi Medina Development Company v. Ahmad Ali Mas · filed 1997-05-08(a)(4)

A defalcation under 523(a)(4) is “misappropriation of trust funds or money held in any fiduciary capacity; [or the] failure to properly account for such funds.”

Section 523(a)(4) requires an express or technical trust for a debt to be nondischargeable as defalcation; an attorney-client relationship alone is insufficient.

In Re Theodore M. Garver, Debtor. R.E. America, Inc. v. Garver · filed 1997-06-19(a)(4)

The attorney-client relationship, without more, is insufficient to establish the necessary fiduciary relationship for defalcation under § 523(a)(4). Instead, the debtor must hold funds in trust for a third party to satisfy the fiduciary relationship element of the defalcation provision of § 523(a)(4).

Section 523(a)(4) makes a debt for defalcation nondischargeable when the debtor acted as a fiduciary at the time the debt arose.

In Re: Will K. Ellwanger Helen Ellwanger, AKA Helen Immelt, Debtors. Estate of Betty Joyce McBroom v. Will K. Ellwanger · filed 1997-06-12(a)(4)

For a debt to be nondischargeable under the defalcation prong of section 523(a)(4), the debtor must have "acted as a fiduciary ... at the time the debt was created." In re Niles, 106 F.3d 1456, 1459 (9th Cir.1997); see also In re Lewis, 97 F.3d 1182, 1185 (9th Cir.1996). ... Immelt incurred the surcharge debt while acting in her capacity as administrator.

Section 523(a)(4) does not except a debt for defalcation in a fiduciary capacity when the debtor's reimbursement obligation is contractual and no express or technical trust exists.

Matter of Eldridge · filed 1997-06-26(a)(4)

The Court is not persuaded, however, that these documents created a trust relationship sufficient to create fiduciary duties on the part of Eldridge as required by § 523(a)(4).

Section 523(a)(4) makes a guardian’s debt from misappropriating guardianship funds nondischargeable as defalcation while acting in a fiduciary capacity.

Ohio Casualty Ins. v. Hryhorchuk (In Re Hryhorchuk) · filed 1997-08-04(a)(4)

Ohio Casualty has thus established the validity of its claim and that the claim resulted from the defalcation of Hryhorehuk while acting in a fiduciary capacity.

Section 523(a)(4) treats a Texas limited partnership’s general partner as a fiduciary to the limited partners when a receiver is appointed only to sell property and the general partner continues to manage the partnership.

In the Matter Of: Bruce Barton Schwager, Debtor. Bruce Barton Schwager v. Meyer Fallas Fred Fallas William Cramer Malcol · filed 1997-08-22(a)(4)

Thus, the mere fact that a receiver was appointed does not indicate that Schwager did not control the partnership. We conclude that the bankruptcy and district court did not err in determining, as a matter of law, that Schwager was in a fiduciary relationship with the limited partners under the rule in Bennett.

Section 523(a)(4) treats willful neglect of fiduciary duty, essentially recklessness, as defalcation.

Schwager v. Fallas · filed 1997-09-10(a)(4)

It is clear in the Fifth Circuit that a “willful neglect” of fiduciary duty constitutes a defalcation -- essentially a recklessness standard.

Section 523(a)(4) requires more than a mere breach of fiduciary duty to except a debt from discharge as defalcation.

Caldwell v. Hanes (In Re Hanes) · filed 1997-09-17(a)(4)

Thus, a mere breach of a fiduciary duty without more does not amount to defalcation under § 523(a)(4).

Section 523(a)(4) does not except a debt from discharge for fraud or defalcation based on a constructive trust alone.

Martel v. Zeitler (In Re Zeitler) · filed 1997-09-22(a)(4)

Constructive trusts do not give rise to the fiduciary duty required in 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires sufficient mental culpability for a fiduciary’s defalcation to make a debt nondischargeable.

Airtron, Inc. v. Faulkner (In Re Faulkner) · filed 1997-10-03(a)(4)

The court has determined that Airtron’s cause of action for nondischargeability under section 523(a)(4) has not been established, because the requisite level of “mental culpability” for purposes of a defalcation finding has not been established.

Section 523(a)(4) excepts a debt from discharge when an attorney diverts client funds entrusted to him, even if he never establishes the planned trust.

Koenig v. Grotrian (In Re Grotrian) · filed 1997-11-25(a)(4)

Had Defendant, in accordance with the advice he gave his client, established a trust for the sale proceeds and then used those funds for his own purposes, there would be no question concerning the nondischargeability of the resulting debt. Despite the fact that, in his rush to obtain the funds, this Defendant may have omitted the intermediate step of creating the trust before diverting the money, the court has no trouble concluding that his conduct also constitutes defalcation.

Section 523(a)(4) excepts a debt for defalcation from discharge only if the debtor was acting in a fiduciary capacity when the defalcation occurred.

P.F.C. Management Corp. v. Chomat (In Re Chomat) · filed 1997-12-15(a)(4)

For the foregoing reasons, the Court finds that the Defendant was not acting in a fiduciary capacity for purposes of 11 U.S.C. § 523(a)(4) when the defalcation occurred. Therefore, Defendant’s debt to the Plaintiff is determined to be dischargeable.

Section 523(a)(4) requires more than the general fiduciary duty that Oklahoma common law imposes on joint venturers.

Holaday v. Seay (In Re Seay) · filed 1997-12-16(a)(4)

Even though the Oklahoma state courts may approve of a general policy that creates a fiduciary duty between joint venturers, this policy is not sufficient to fulfill the Tenth Circuit’s requirements of a common law trust for purposes of § 523(a)(4). Accordingly, Holaday has not met his burden of showing the existence of a fiduciary relationship required under § 523(a)(4).

Section 523(a)(4) requires a fiduciary relationship and acts of defalcation for a debt to be excepted from discharge on that basis.

Federal Deposit Insurance v. Jackson · filed 1998-01-05(a)(4)

Nondischargeability of the Duponts’ liability under Section 523(a)(4) thus requires a determination of (1) the existence of a fiduciary relationship; and (2) acts of defalcation. ... Both elements are alleged here.

Section 523(a)(4) covers a debt arising when a trustee under New York’s construction trust fund law diverts trust funds to nonbeneficiaries.

IRR Supply Centers, Inc. v. Phipps (In Re Phipps) · filed 1998-02-17(a)(4)

In accordance with Kawczynski, I find that the statutory trust created by Article 3A of the Lien Law does create the type of fiduciary duty that is within the contemplation of 11 U.S.C. § 523(a)(4). I am further bound by Kawczynski to deny discharge of the debt owed to Irr if the Debtor here caused PSD to expend trust funds other than to Lien Law beneficiaries.

Section 523(a)(4) treats corporate officers and directors whose duties are fiduciary under Arizona law as acting in a fiduciary capacity.

M-R Sullivan Manufacturing Co. v. Sullivan (In Re Sullivan) · filed 1998-02-05(a)(4)

Based on the weight of authority, this Court finds that the fiduciary duties of corporate officers and directors under Arizona law satisfy the element of fiduciary relationship required to be proven under § 523(a)(4) of the Bankruptcy Code. Therefore, Mr. Sullivan as president of the Company was its fiduciary for the purposes of the Plaintiffs claim under § 523(a)(4).

Section 523(a)(4) does not treat a fiduciary’s mere negligence as defalcation that prevents discharge of a debt.

Samuels v. Ellenbogen (In Re Ellenbogen) · filed 1998-03-13(a)(4)

This Court holds that the term “defalcation” as used in section 523(a)(4) does not include mere negligent conduct on the part of a fiduciary. Therefore, Ellenbogen’s debt is dischargeable in bankruptcy.

Section 523(a)(4) does not except a debt from discharge based on a Vermont landlord’s holding of a tenant’s security deposit, because that arrangement creates a debtor-creditor relationship rather than a fiduciary one.

Tanneberger v. Paeplow (In Re Paeplow) · filed 1998-02-20(a)(4)

While we are unwilling to conclude that a security deposit falls within the scope of the statute governing secured transactions because the issue was not raised by the parties, we do hold that a security deposit under Vermont law does not create a fiduciary relationship. Rather it creates a debtor-creditor relationship, to which § 523(a)(4) does not apply.

Section 523(a)(4) requires a fiduciary relationship to exist before the alleged defalcation; a corporate officer’s duty to creditors can arise when the corporation becomes insolvent.

Mercedes-Benz Credit Corp. v. Carretta (In Re Carretta) · filed 1998-03-17(a)(4)

The time at which the debt came into existence is significant under § 523(a)(4) in respect to whether a fiduciary relationship existed before the debtor’s alleged defalcation and not as a result of the defalcation.

Section 523(a)(4) does not bar discharge for defalcation when the debtor held no funds in trust and owed no accounting to the creditor.

In Re Nicholas A. Peters, Debtor. Nicholas A. Peters v. Rettig · filed 1998-03-25(a)(4)

Even assuming Peters was in a fiduciary relationship with Rettig, he did not hold funds in trust and was not obligated to provide Rettig an accounting. Thus, Peters could not have committed defalcation and section 523(a)(4) does not bar discharge of Peters's personal loans from Rettig.

Section 523(a)(4) requires at least some wrongdoing for defalcation; innocent or merely negligent conduct does not qualify.

Zohlman v. Zoldan (In Re Zoldan) · filed 1998-04-06(a)(4)

Based upon the analysis set forth in Ellenbogen, this Court concludes that, for purposes of Section 523(a)(4), the term “defalcation” requires at least some element of wrongdoing on the part of the debtor/fiduciary, and that “innocent” or merely negligent conduct, even if held actionable in a state court, is not within the scope of the statutory exception to dischargeability under the Bankruptcy Code.

Section 523(a)(4) makes a debt nondischargeable when a co-trustee’s inactivity amounts to defalcation while acting in a fiduciary capacity.

Klenda v. Hogue (In Re Hogue) · filed 1998-05-22(a)(4)

The Debtor clearly committed a defalcation. A co-trustee is liable for inactivity in the administration of a trust. ... The Court finds that the Debtor committed a defalcation while acting in a fiduciary capacity and therefore, pursuant to § 523(a)(4), finds that the debt is nondisehargeable.

Section 523(a)(4) excludes a fiduciary’s merely negligent conduct from defalcation.

Rutanen v. Baylis (In Re Baylis) · filed 1998-06-12(a)(4)

Moreover, excluding negligent conduct from the coverage of section 523(a)(4) harmonizes that subsection with section 523(a)(6).

Section 523(a)(4) excepts a debt from discharge when a debtor breaches a preexisting fiduciary duty by failing to return or account for entrusted funds.

Bennett v. Hollingsworth (In Re Hollingsworth) · filed 1998-06-17(a)(4)

The evidence is clear that based on their attorney-client relationship, the Debtor owed a fiduciary duty to Kilroe. It is equally clear that the Debtor breached that fiduciary duty and committed defalcation as a fiduciary.

Section 523(a)(4) does not treat duties arising solely under Oklahoma partnership law as the fiduciary relationship required to except a defalcation debt from discharge.

Smolen v. Hatley (In Re Hatley) · filed 1998-06-16(a)(4)

However, as stated above, the law in this circuit based upon Young and its progeny is that neither Oklahoma common law nor Oklahoma statutory law, i.e., the OUPA, imposes the fiduciary duty required under § 523(a)(4).

Section 523(a)(4) treats an attorney-client relationship as a fiduciary relationship for the discharge exception.

Lynch v. Brunero (In Re Brunero) · filed 1998-07-06(a)(4)

The attorney-client relationship is a fiduciary relationship within the meaning of Section 523(a)(4).

Section 523(a)(4) excepts a trustee’s debt from discharge when the trustee fails to distribute trust proceeds and takes unauthorized personal loans from the trust.

Reilly v. Beeman (In Re Beeman) · filed 1998-09-01(a)(4)

I find the Plaintiff has established by a preponderance of the evidence that the Defendant, a fiduciary, committed a defalcation in fading to remit the Trust proceeds to the Plaintiff and by unilaterally taking Trust monies as personal loans.

Section 523(a)(4) excepts from discharge a debt arising from defalcation while the debtor acts under a preexisting technical trust.

Georgia Lottery Corp. v. Daniel (In Re Daniel) · filed 1998-09-22(a)(4)

O.C.G.A. § 50-27-21 sets forth all the elements of a technical trust. ... Therefore, the evidence presented by Plaintiff supports a conclusion that Debtor’s actions constitute defalcation.

Section 523(a)(4) does not except a debt from discharge for fraud or defalcation unless the debtor acted in a fiduciary capacity; the relationship among these shareholders and directors did not establish that capacity.

O'Shea v. Frain (In Re Frain) · filed 1998-07-28(a)(4)

Plaintiffs have failed to prove that Frain acted in a fiduciary capacity. As a result, the Frain’s asserted debt to Plaintiffs, if it be owing, cannot be held nondischargeable under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires a statutory trust to identify trust property and impose trust-like duties before it makes a debtor a fiduciary for the discharge exception.

Texas Lottery Commission v. Tran · filed 1998-09-03(a)(4)

Rather, to meet the requirements of § 523(a)(4), a statutory trust must (1) include a definable res and (2) impose “trust-like” duties.

Section 523(a)(4) does not except a debt from discharge when the debtor was an agent whose duties did not create a fiduciary relationship.

Texas Lottery Commission v. Tran · filed 1998-09-15(a)(4)

In spite of the "descriptive epithets" contained in the Act, Tran remained nothing more than an agent. Her debt was not incurred "while acting in a fiduciary capacity," and therefore is dischargeable.

Section 523(a)(4) makes a debt for fraud or defalcation committed in a fiduciary capacity nondischargeable.

Swimmer v. Manzonelli · filed 1998-08-13(a)(4)

Swimmer's actions of altering the contract and placing a lien on all of the undisputed insurance proceeds payable to Manzonelli and her children was sufficient to establish fraud or defalcation under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) permits a surety subrogated to a beneficiary’s rights to seek nondischargeability for a fiduciary’s breaches committed before the surety acquired those rights.

Minnesota Trust Co. of Austin v. Yanke (In Re Yanke) · filed 1998-08-14(a)(4)

As suecessor-by-operation-of-law to Laganiere, the Plaintiff had the right to call the Defendant to account on any breach of those duties, and regardless of when he committed it. The timing of the Defendant’s breaches in relation to the Plaintiff’s assumption of standing is not relevant to the application of § 523(a)(4).

Section 523(a)(4) excepts a fiduciary’s debt from discharge when misconduct beyond mere negligence constitutes defalcation.

Kress v. Kusmierek (In Re Kusmierek) · filed 1998-09-23(a)(4)

James argues here that, because he was merely negligent, he cannot have committed defalcation under § 523(a)(4). However, his behavior was more than merely negligent; it constituted defalcation which went beyond merely making excess distributions to himself through weakness.

Section 523(a)(4) makes a debt from fraudulent conversion of entrusted funds nondischargeable when the debtor acted in a fiduciary capacity, even without a formal trust.

Johnson v. Thompson (In re Thompson) · filed 1998-10-19(a)(4)

Moreover, it is clear that he was acting in a fiduciary capacity. Although there is no showing of a formal trust, he understood that the money was for Mary, and that he had been named as a co-signer on the joint account for the sole purpose of providing funds to the nursing home and to Mary, because Julia was living away from Coffee County where the nursing home was located. He breached this trust when he fraudulently converted the CDs and the joint account money to his own use. See Section 523(a)(4).

Section 523(a)(4) requires an express or technical trust for a debt arising from fraud or defalcation in a fiduciary capacity; an employment relationship alone is insufficient.

PaineWebber Inc. v. Magisano (In Re Magisano) · filed 1998-10-23(a)(4)

PaineWebber has neither alleged nor proven the existence of the type of fiduciary relationship required to invoke 11 U.S.C. § 523(a)(4), and merely referring to the employee-employer relationship is insufficient.

Section 523(a)(4) limits fiduciary capacity to relationships involving an express or technical trust; a contractual duty to pay does not suffice.

Collenge v. Runge (In Re Runge) · filed 1998-10-26(a)(4)

Further, the definition of “fiduciary” is limited to a relationship involving either an express or a technical trust, and “not trusts that are imposed by law as a remedy.” ... Therefore, the Court holds that the Defendants were not fiduciaries under the narrow definition of the term in section 523(a)(4) of the Bankruptcy Code.

Section 523(a)(4) requires a fiduciary relationship that exists before the misconduct; a trust arising only after a partner takes profits without consent is insufficient.

In Re Hatley · filed 1998-11-19(a)(4)

Although Oklahoma's UPA speaks in terms of deriving profits without the consent of the other partners, we have already noted that the provision only creates a trust after the partners derive profits without the consent of the partnership, and the trust created is therefore the sort of trust ex maleficio that is not sufficient for § 523(a)(4).

A real estate broker acting within her licensed activities who receives a client’s trust deed to record has a fiduciary relationship under § 523(a)(4).

Stevens v. Briles (In Re Briles) · filed 1998-12-14(a)(4)

Therefore, because Debtor was acting within the scope of her licensed activities and received property on behalf of Stevens, the existence of a fiduciary relationship for purposes of § 523(a)(4) has been established.

Section 523(a)(4) does not except a debt for breach of contract from discharge when the debtor committed no defalcation while subject to a fiduciary duty.

McLean, Koehler, Sparks & Hammond v. Hildebrand (In Re Hildebrand) · filed 1999-01-21(a)(4)

Although the evidence supports a breach by the Defendant of a duty created by an expressed provision in the Partnership Agreement, that duty was one of a contract purchase, the violation of which gave rise to a simple debt for breach of contract, as opposed to defalcation by a fiduciary. Thus, the uncontradicted evidence does not demonstrate any breach by the Defendant of a statutory fiduciary duty imposed by law or imposed by private agreement.

Section 523(a)(4) excepts a guardian’s debt from discharge when the guardian fails to account for ward funds while acting in a fiduciary capacity.

Peerless Insurance v. Swanson (In Re Swanson) · filed 1999-03-04(a)(4)

Because this debt was incurred as the result of the Defendant’s defalcation while acting in a fiduciary capacity, the $65,000 owed by the Defendant to the Plaintiff is excepted from discharge under section 523(a)(4).

Section 523(a)(4) requires entrustment of the creditor’s money or property to the debtor for defalcation; a breach of fiduciary duty alone is insufficient.

SunTrust Bank v. Roberson (In Re Roberson) · filed 1999-02-01(a)(4)

SunTrust’s claim fails because it never entrusted Debtor with the $150,000.00. ... But a mere breach of a fiduciary obligation does not in itself constitute defalcation.

Section 523(a)(4) does not except a contractor’s debt from discharge when the claimants are not beneficiaries of the construction trust and no diversion of trust funds is shown.

Lampman v. Lee (In re Lee) · filed 1999-03-01(a)(4)

For two reasons, the Lampmans’ claim against Mr. Lee must be denied. First, the Lampmans are not beneficiaries under the trust fund statute under which they claim recovery. Second, from the testimony and evidence before it, the court cannot find that trust funds were diverted at all, much less intentionally or knowingly. Therefore, the court finds that any debt of Mr. Lee to the Lampmans is dischargeable.

Section 523(a)(4) can except a debt for joint fraud from discharge when the debtor’s partner, rather than the debtor, owed the fiduciary duty.

Cooper v. Zois (In Re Zois) · filed 1999-03-05(a)(4)

Section 523(a)(4) merely requires that such debt arise out of fraud committed by a fiduciary. The plain language of section 523(a)(4) does not require that the debtor be in such fiduciary capacity and allows another in privity with the debtor to have the required fiduciary relationship.

Section 523(a)(4) excepts from discharge a debtor’s liability for breaching an ERISA fiduciary duty by withholding employee contributions and failing to remit them to the plan.

Cochran v. Coleman (In Re Coleman) · filed 1999-03-31(a)(4)

I find that Debtor acted as a fiduciary with respect to employee contributions to the Funds which were withheld from their paychecks after Debtor took control of the business in May 1995. To the extent that Debtor withheld money from employee paychecks and did not remit those contributions to the Funds, I find that he breached his fiduciary duty under ERISA. I grant partial summary judgment to the Plaintiffs on that question and hold that Debtor’s liability for that breach, if any, will be excepted from his discharge in bankruptcy.

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

Harrell v. Merchant's Express · filed 1999-03-19(a)(4)

Under this section, a fiduciary is limited to instances involving express or technical trusts.