11 U.S.C. § 523

Section 523(a)(4) excepts a debt from discharge when a debtor’s misapplication of trust funds constitutes defalcation while acting in a fiduciary capacity.

LVR Carpet Center, Inc. v. Coley (In Re Coley) · filed 2006-11-28(a)(4)

Regardless, the Court is convinced that the misapplication here constituted a defalcation for purposes of 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when a debtor acting as a fiduciary misappropriates trust funds or fails to account for them.

Oregon State Bar Assoc. v. Kelley (In Re Kelley) · filed 2006-11-28(a)(4)

Resultantly, it can only be concluded that the Defendant satisfies the fiduciary requirement of § 523(a)(4), and thus the Court turns to the final issue: whether the Defendant committed the act of defalcation. ... With respect to this testimony, no other logical explanation can be made— entirely consistent with the act of defalcation under § 523(a)(4), the Defendant misappropriated funds held in trust and failed to properly account for those funds.

Section 523(a)(4) does not except a debt from discharge when the creditor fails to prove that a trust arose and imposed fiduciary duties on the debtor.

International Fidelity Insurance v. Marques (In Re Marques) · filed 2006-11-30(a)(4)

Based on the record made at trial, judgment is entered for the Debtors as International has not established the formation of a trust with its attendant fiduciary duties that would render International’s claims nondischargeable pursuant to § 523(a)(4).

Section 523(a)(4) makes a debt for defalcation nondischargeable when the debtor acted in a fiduciary relationship created by an express or technical trust.

Bemas Construction, Inc. v. Dorland (In Re Dorland) · filed 2007-03-23(a)(4)

In this case, the Court has held that the Defendant Varholdt has violated the Public Works Contractors’ Trust Fund Statute, a technical trust imposed under the law. Consequently, a fiduciary relationship has been demonstrated for the purposes of 11 U.S.C. § 523(a)(4). Moreover, the testimony and evidence at trial demonstrates that a defalcation was committed by Defendant Varholdt in the course of the fiduciary relationship.

Section 523(a)(4) excepts a debt from discharge when it arises from a debtor’s defalcation while acting in a fiduciary capacity under an express or technical trust.

New York Ex Rel. Spitzer v. Suarez (In Re John Suarez) · filed 2007-03-23(a)(4)

Based on the entire record, the Court finds that the Plaintiffs have established, by a preponderance of the evidence, that the Consent Judgment Debt should be excepted from discharge under Section 523(a)(4) of the Bankruptcy Code.

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

Memo Money Order Co. v. Davis (In Re Davis) · filed 2007-05-23(a)(4)

The court finds that Mr. Davis, as the president and major stockholder of Davis IGA and the sole manager of the grocery store, acted in a fiduciary capacity, as he was charged with maintaining the fiduciary relationship between Davis IGA and MEMO. The court finds that Mr. Davis’ conduct amounted to defalcation. ... The court does not find that Ms. Davis acted in a fiduciary capacity or committed a defalcation to support a claim under § 523(a)(4).

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

Estate of Brewer v. Jones (In Re Jones) · filed 2007-05-25(a)(4)

By transferring funds from Mrs. Brewer’s Fidelity account, for his personal benefit, while acting in a fiduciary capacity, the Defendant committed defalcation. The Plaintiffs, accordingly, have presented a prima facie case pursuant to 11 U.S.C. § 523(a)(4) that the debt owed to Plaintiffs is nondischargeable.

Section 523(a)(4) excepts a debt for diverted statutory trust funds from discharge when the debtor acted as a fiduciary and knew or should have known the funds were trust funds.

LeChase Data/Telecom Services, LLC v. Burgholzer (In Re Burgholzer) · filed 2007-06-05(a)(4)

This Court rejects the Debtor’s assertion that, because there was a “mistake of fact” as to the nature of the MCI Payments, there can be no finding of a defalcation. Although a true mistake of fact under some facts and circumstances may preclude a finding of a defalcation, here, where the Court of Appeals found that the Debtor knew or should have known that the Accounts were statutory trust funds, there is not a “mistake of fact.”

Section 523(a)(4) does not bar discharge of unpaid employer contributions when the debtor owed no fiduciary duty over those contributions.

Rahm v. Halpin (In Re Halpin) · filed 2007-06-07(a)(4)

Additionally, section 523 makes a debt nondischargeable only if it was “for fraud or defalcation while acting in a fiduciary capacity,” so only Appellee’s debts accrued while acting in a fiduciary capacity could fall under this statute. 11 U.S.C. § 523(a). Because Appellee’s failure to make the required contributions was not a breach of fiduciary responsibility, neither section applies; Appellee is not a fiduciary, bears no personal liability for the unpaid contributions, and the debt is dischargea-ble.

Section 523(a)(4)'s defalcation exception applies only to express or technical trusts.

Fabing v. Howell (In Re Howell) · filed 2007-08-17(a)(4)

The defalcation provision of 11 U.S.C. § 523(a)(4) applies only to express or technical trusts.

Section 523(a)(4) excepts from discharge a debtor’s personal liability for defalcation involving PACA trust assets when the trust establishes a fiduciary capacity.

KGB International, Inc. v. Watford (In Re Watford) · filed 2007-08-09(a)(4)

The trust imposed by PACA on PACA Trust Assets satisfies the fiduciary capacity prong of Section 523(a)(4). Southern Solutions’ use of PACA Trust Assets to pay Cunningham was clearly a defalcation within the meaning of Section 523(a)(4). Thus, the debts owed by Southern Solutions to the Plaintiffs, who are PACA trust beneficiaries, are nondis-chargeable under Section 523(a)(4). Because Watford owned, controlled, and managed the day-to-day affairs of Southern Solutions, the debts owed to the Plaintiffs are nondisehargeable in Watford’s personal bankruptcy.

Section 523(a)(4) excepts from discharge a debt arising from a personal representative’s defalcation while acting in a fiduciary capacity, including diversion of estate funds for personal benefit.

Cabana v. Kurzon (In Re Kurzon) · filed 2008-04-12(a)(4)

The Plaintiffs documentary evidence, independently of the Judgment, establishes the Judgment Debt is nondischargeable pursuant to 11 U.S.C. Section 523(a)(4). ... Such actions constitute defalcations of his fiduciary duty.

Section 523(a)(4) treats a Kansas natural guardian as a fiduciary when state law places the child’s property in trust, but spending those funds for the child did not establish defalcation without evidence that the guardian took them for himself.

Mohr v. Tatro (In Re Tatro) · filed 2008-05-22(a)(4)

In short, the natural guardian statute, § 59-3053(a), creates a technical or express trust, as required for a fiduciary relationship to exist under § 523(a)(4). ... On this record, where there is no evidence that Tatro spent or took the funds for himself, he cannot be found to have committed a defalcation with respect to these funds.

Section 523(a)(4) requires a creditor alleging fiduciary fraud or defalcation to prove by a preponderance of the evidence that the debtor acted in a fiduciary capacity and committed fraud or defalcation in that capacity.

Universal Foam v. Kohr (In Re Kohr) · filed 2008-08-27(a)(4)

The Plaintiff, to prevail in a Section 523(a)(4) nondischargeability action, must establish by a preponderance of the evidence: (i) the Debtor was acting in a fiduciary capacity; and (ii) while acting in a fiduciary capacity, he committed fraud or defalcation. ... The Plaintiff has not established the debt is nondischargeable pursuant to 11 U.S.C. Section 523(a)(4). The debt is dischargeable.

Section 523(a)(4) treats misappropriation of trust funds or failure to account for them as defalcation by a fiduciary.

Micco Construction Co. v. Brunett (In Re Brunett) · filed 2008-10-08(a)(4)

Under § 523(a)(4), a defalcation occurs when a debtor either misappropriates or fails to properly account for those funds held in a trust.

Section 523(a)(4) treats a guardian’s willful neglect of the duty to protect a ward’s funds as defalcation.

First National Bank v. Bingaman (In Re Bingaman) · filed 2008-11-25(a)(4)

Mr. Bingaman cannot escape liability under § 523(a)(4) by putting his head in the sand and claiming that he did not know what was going on with his daughter’s accounts. ... Mr. Bingaman’s willful neglect of his fiduciary duty to manage his daughter’s money constitutes defalcation.

Section 523(a)(4) makes a debt nondischargeable when a debtor fails to maintain client funds in an attorney trust account while acting in a fiduciary capacity.

Cotton v. Derer (In Re Derer) · filed 2008-10-14(a)(4)

The Debtor’s failure to maintain the funds in his attorney trust account was defalcation while acting in a fiduciary capacity. Accordingly, the Court concludes that Plaintiff Cotton has established that the Debtor’s obligation to her is nondischargeable pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) makes a PACA trustee’s debt nondischargeable when the trustee’s handling of trust assets is extremely reckless and constitutes defalcation.

A.J. Rinella & Co. v. Bartlett (In Re Bartlett) · filed 2008-12-01(a)(4)

The Bartletts chose to manage Ferris’ business account in a manner that failed to either safeguard sufficient funds for Rinella or permit a reasonable tracing of the proceeds of the sale of the Rinella proceeds — and used the available business funds to meet their personal obligations even after the closing of the Ferris business, notwithstanding their fiduciary duty to Rinella. That behavior, viewed in its totality, satisfies the extreme recklessness standard suggested by Baylis for a finding of defalcation within the meaning of § 523(a)(4).

Section 523(a)(4) makes only the portion of trust funds spent on expenses outside the surety’s liability nondischargeable.

Safeco Insurance Co. of America v. Hastings (In Re Hastings) · filed 2008-12-23(a)(4)

Only that portion of the trust res inappropriately expended by HGC will be nondischargeable under § 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when a fiduciary's reckless failure to perform a duty constitutes defalcation.

In Re Harwood · filed 2009-01-30(a)(4)

In light of his fiduciary duty to protect FNFS from financial harm, and in light of his knowledge that he would personally benefit from any failure of recordation, Harwood's failure to ensure the proper recordation of the deeds of trust constituted a willful neglect of his duty to FNFS. That failure constitutes a defalcation while acting in a fiduciary capacity and renders Harwood's indebtedness to FNFS on the Master Note and his remaining indebtedness to FNFS on the Frazier Note, plus the Plaintiffs' reasonable attorneys' fees, nondischargeable under § 523(a)(4).

Section 523(a)(4)'s defalcation exception requires a fiduciary relationship; a statutory building fund trust does not arise without proof that the contractor received building contract funds.

Shafer Redi-Mix, Inc. v. Craft · filed 2009-03-17(a)(4)

This Court concludes that no statutory trust was activated under the Act and that the bankruptcy court therefore properly determined that the exception set forth in the defalcation provision, 11 U.S.C. § 523(a)(4), was inapplicable.

Defalcation under § 523(a)(4) includes misappropriating funds held in a fiduciary capacity or failing to account for them.

Clark v. Glogower · filed 2009-04-03(a)(4)

The term “defalcation” as used in § 523(a)(4) means either the “misappropriation of trust funds or money held in any fiduciary capacity” or the “failure to properly account for such funds.”

Section 523(a)(4) can except from discharge a debt arising when an ERISA plan trustee diverts deposited plan funds for personal use in breach of fiduciary duties.

Zamora v. Jacobs (In Re Jacobs) · filed 2009-04-09(a)(4)

Once the contributions have made it to the plan account, they are clearly assets of the plan and the ERISA fiduciary trust duties have undoubtedly kicked in. The relation between the plan trustee and the participant has been elevated to something more than one of contract. The ERISA fiduciary in that context cannot successfully argue he is not a section 523(a)(4) fiduciary and thus escape the full consequences of violating the employee participant’s vested benefit rights by appropriating the plan trust funds.

Section 523(a)(4) excepts a fiduciary’s debt from discharge when a reckless failure to protect a beneficiary’s collateral constitutes defalcation.

FNFS, Ltd. v. Harwood (In Re Harwood) · filed 2009-04-28(a)(4)

In light of his fiduciary duty to protect FNFS from financial harm, and in light of his knowledge that he would personally benefit from any failure of recordation, Harwood’s failure to ensure the proper recordation of the deeds of trust constituted a willful neglect of his duty to FNFS. That failure constitutes a defalcation while acting in a fiduciary capacity and renders Harwood’s indebtedness to FNFS on the Master Note and his remaining indebtedness to FNFS on the Frazier Note, plus the Plaintiffs’ reasonable attorneys’ fees, nondischargeable under § 523(a)(4).

Section 523(a)(4) requires objectively reckless handling of trust funds for defalcation; mere negligence or mistake is insufficient.

In Re Patel · filed 2009-05-12(a)(4)

Thus, there is no such thing as "defalcation per se" and instead the debtor must have been objectively reckless in failing to properly account for or allocate funds.

Section 523(a)(4) excepts from discharge a debt caused by defalcation while the debtor acted as a fiduciary.

Colemichael Investments, L.L.C. v. Burke (In Re Burke) · filed 2009-06-10(a)(4)

While the available evidence does not show Burke had the intent to defraud ColeMichael, it does demonstrate that Burke’s actions clearly rose to the level of a defalcation while acting in a fiduciary capacity. Accordingly, the Court finds that the $21,178,261 principal debt reflected by the Final Default Judgment is non-dischargeable under § 523(a)(4).

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

Harrold v. Raeder (In Re Raeder) · filed 2009-07-29(a)(4)

In short, the record before the court fails to establish that the Debtor was acting in a fiduciary capacity to Ms. Harrold; thus, the court cannot conclude that the Debtor committed any acts of defalcation.

Section 523(a)(4) excepts a debt from discharge when a debtor acting as trustee of an express trust commits defalcation by using trust property for personal benefit.

Greene v. Mullarkey (In Re Mullarkey) · filed 2009-08-13(a)(4)

Regardless of whether their intent was to rob Christine of her interest in the Fowler Property from the outset, the Mullarkeys violated the fiduciary duty to Christine (which they voluntarily assumed) by conspiring to retain the property solely in Matthew’s name and in extracting its equity through new mortgages to subsidize their lifestyle. These actions easily satisfy the First Circuit standards for “defalcation” under § 523(a)(4).

Section 523(a)(4) excepts from discharge a debt caused by defalcation while acting in a fiduciary capacity.

Baker v. Wentland (In Re Wentland) · filed 2009-07-13(a)(4)

Having demonstrated that Defendant owes him a debt for defalcation while acting in a fiduciary capacity, Plaintiff is entitled to a judgment declaring such debt nondischargeable under § 523(a)(4).

Section 523(a)(4) excepts from discharge a debt arising from defalcation while the debtor acts in an express or statutory trust capacity.

Barrett Residuary Trust v. Barrett (In Re Barrett) · filed 2009-08-06(a)(4)

A plaintiff asserting non-dischargeability under section 523(a)(4) must prove that the debtor was acting in an express or statutory trust capacity at the time the alleged fraud or defalcation occurred.

A PACA trustee acts in a fiduciary capacity under § 523(a)(4); whether that trustee committed defalcation can remain a factual question.

E. Armata, Inc. v. Parra · filed 2009-09-11(a)(4)

For the foregoing reasons, the Plaintiffs’ motion for summary judgment is granted in part, to the extent that the Court finds that the Defendant acted in a fiduciary capacity under § 523(a)(4), and denied in part, to the extent that an issue of material fact exists whether the Defendant committed a defalcation.

Section 523(a)(4) requires a creditor claiming that a debtor misused construction trust funds to show that the payments came from trust funds, even when the account also held other funds.

Swor v. Bartley Texas Builders Hardware Inc. · filed 2009-10-02(a)(4)

Where the law unambiguously permits trust and non-trust funds to mingle, the trustee will not be punished by merging the full amount into the trust. Bartley, therefore, bore the burden to show that trust funds were misused, causing the debt to fall within the § 523(a)(4) exception.

Section 523(a)(4) requires a creditor claiming defalcation by a fiduciary to prove more than a negligent failure to pay a trust beneficiary.

Ganther Construction, Inc. v. Ward (In Re Ward) · filed 2009-10-05(a)(4)

The plaintiff did not present any evidence demonstrating that the defendant’s failure to pay Richardson was the result of something more than mere negligence. ... Without such evidence, the Court cannot conclude that the plaintiff proved, by a preponderance of the evidence, that the defendant committed “defalcation” while acting in his fiduciary capacity.

Section 523(a)(4) supports a defalcation claim when a fiduciary knowingly diverts trust funds with conscious misconduct or extreme recklessness.

Scheidelman v. Henderson (In Re Henderson) · filed 2010-01-27(a)(4)

Here, Plaintiffs have sufficiently asserted a cause of action for defalcation while acting in a fiduciary capacity under § 523(a)(4). Plaintiffs allege that Mr. Henderson knowingly diverted trust assets, and that he understood he could face criminal liability for the same. Plaintiffs’ allegations allow the Court to infer for the limited purposes of its present ruling that Mr. Henderson acted recklessly or in conscious dereliction of his fiduciary duties. Accordingly, Plaintiffs are entitled to proceed on their § 523(a)(4) cause of action for defalcation while acting in a fiduciary capacity.

Section 523(a)(4) requires a creditor claiming defalcation by a fiduciary to prove a resulting loss.

Sangal v. Strickfaden (In Re Strickfaden) · filed 2009-12-18(a)(4)

Accordingly, the Court finds that although Strickfaden did breach his fiduciary duty by not paying specific subcontractors for whom he had received funds in Sworn Statement # 5, the Sangals did not prove a loss resulting from that breach. Therefore, no damages are awarded. Further, the Court finds no breach of fiduciary duty based on Strickfaden’s payment of funds to MGS laborers. Therefore, the claim under § 523(a)(4) is dismissed.

Section 523(a)(4) makes a debt nondischargeable when a fiduciary commits defalcation by using trust funds for an unauthorized purpose.

Levine v. Ward (In Re Ward) · filed 2010-03-15(a)(4)

The Court further finds that the plaintiffs did prove by a preponderance of the evidence that the defendant committed defalcation in a fiduciary capacity when he used the $20,000 deposit to pay closing costs, contrary to 11 U.S.C. § 523(a)(4), and therefore finds in favor of the plaintiffs, Michael and Jamie Levine, on Count II of the complaint.

Section 523(a)(4) requires a creditor claiming defalcation under the Michigan Builders Trust Fund Act to establish a trust relationship involving funds from an identified project before the debtor must account for those funds.

Astro Building Supplies, Inc. v. Slavik (In Re Slavik) · filed 2010-03-26(a)(4)

Plaintiffs argument with regards to discovery fails for the same reason his § 523(a)(4) argument fails: Plaintiff has the initial burden of proving the existence of a trust relationship. Until Plaintiff demonstrates that Defendant received funds held in trust on a specific project for which Plaintiff supplied materials, Defendant is not required to account for how Defendant spent the general revenue that flowed into his business.

Section 523(a)(4) makes a lottery retailer’s debt nondischargeable when the retailer fails to account for proceeds held in a fiduciary capacity.

Georgia Lottery Corp. v. Jackson (In Re Jackson) · filed 2010-02-09(a)(4)

The undisputed material facts show that Defendant owed fiduciary duties to Plaintiff and that Defendant’s debt to Plaintiff is the result of Defendant’s failure to properly perform those duties and is therefore non-dischargeable pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts from discharge a debt arising from a fiduciary’s defalcation, including an innocent failure to account fully for trust property.

Ryan v. Hatcher (In Re Hatcher) · filed 2010-02-25(a)(4)

Nevertheless, Eighth Circuit precedent mandates that even the innocent default of a fiduciary who fails to account fully for trust property constitutes a defalcation. Because it is clear from the admissions of Ms. Hatcher that she helped herself to, for example, gas money, compensation for her time, and $7,000 of the proceeds of the sale of Mr. Ryan’s home, in part for “lost profit” on the sale of her own home, from Mr. Ryan’s account in her fiduciary capacity as his conservator, she incurred a debt through the defalcation of her fiduciary duty. Therefore, under § 523(a)(4), it is not dischargeable.

The court affirmed that the debt to Brawta was excepted from discharge under § 523(a)(4).

Brown v. Manty (In Re Brown) · filed 2010-03-29(a)(4)

Accordingly, the bankruptcy court did not err in concluding that the debt to Brawta was excepted from discharge under § 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when a fiduciary’s reckless failure to perform a duty constitutes defalcation.

Harwood v. FNFS, Ltd. (In Re Harwood) · filed 2010-03-30(a)(4)

Harwood’s failure to ensure that the deeds of trust were recorded was a willful neglect of his duty to FNFS. Thus, this failure to record the deeds was a defalcation while acting in a fiduciary duty. Accordingly, Harwood’s debt could not be discharged in the bankruptcy proceedings.

Section 523(a)(4) covers a debtor’s use of assigned settlement proceeds when a state statute makes the debtor a trustee of those proceeds, even without fraudulent intent.

Arvest Mortgage Co. v. Nail (In Re Nail) · filed 2010-04-09(a)(4)

A trust relationship existed between the debtor and Arvest. As a result of that trust, the debtor was a trustee created by statute, and the Court finds that a fiduciary relationship existed between the debtor and Arvest. ... Although the Court does not find any fraudulent intent in the use of the proceeds, the proceeds came into the debtor’s hands as a result of a settlement relating to the condition of the property and, as such, are miscellaneous proceeds under the terms of the mortgage. Accordingly, the Court finds that the debtor committed defalcation while acting in a fiduciary capacity.

Section 523(a)(4) excepts a debt for fiduciary defalcation from discharge, and a state court judgment can establish that defalcation through collateral estoppel.

Sneed v. Hartsfield (In Re Hartsfield) · filed 2010-06-03(a)(4)

Because the state court’s opinion and order clearly and conclusively found a breach of fiduciary duty by the debtor that would support an equivalent finding that the debtor committed a defalcation while acting in a fiduciary capacity under 11 U.S.C. § 523(a)(4), the first element of the collateral estoppel doctrine is met.

Section 523(a)(4) requires an express or technical trust for a debt to be excepted from discharge on the basis of defalcation; a constructive trust does not suffice.

Berger v. Jacobson (In Re Jacobson) · filed 2010-07-06(a)(4)

First, the trust created by Tex. Fam.Code § 9.011(b) is a constructive trust, as opposed to an express or technical trust as required by clear Fifth Circuit precedent; and a constructive trust precludes any recovery under defalcation under § 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when a debtor fails to remit trust funds in breach of a preexisting fiduciary duty.

Tennessee Education Lottery Corp. v. Cooper (In Re Cooper) · filed 2010-06-03(a)(4)

Because there was an express trust created under the Retailer Contract, Retailer Application, Tennessee Code Annotated § 4-51-120, and the Retailer Rules and Regulations, the Defendant owed a fiduciary duty to the Plaintiff to pay over all lottery ticket sale proceeds, and his failure to do so constitutes defalcation for the purposes of § 523(a)(4). The $5,104.00 owed the Plaintiff by the Defendant in lottery ticket sale proceeds is nondischargeable.

Section 523(a)(4) requires property to which the debtor’s fiduciary duties apply for a debt arising from fiduciary fraud or defalcation to be excepted from discharge.

Birriel v. Odeh (In Re Odeh) · filed 2010-07-06(a)(4)

Nevertheless, Vivian cannot maintain a § 523(a)(4) claim because she alleges no facts establishing a res to which Odeh’s fiduciary duties would apply.

Section 523(a)(4) requires a supplier claiming defalcation of Michigan building trust funds to identify a specific project where it supplied materials and the contractor received payment before the contractor must account for those funds.

ASTRO BUILDING SUPPLIES, INC. v. Slavik · filed 2010-07-13(a)(4)

In nondischargeability actions brought under 11 U.S.C. § 523(a)(4) alleging violations of the MBTFA, a shifting burden of proof applies. A plaintiff must first establish that it provided supplies to the defendant contractor for use on a specific construction project and that the defendant contractor was paid by its customer for the specific construction project where those supplies were used. Once a plaintiff establishes these elements — once he establishes that a trust exists with regard to the disputed funds — the burden then shifts to the defendant contractor to show that he did not defalcate the funds received in trust.

Section 523(a)(4) makes a debt nondischargeable when it arises from fraud or defalcation in a fiduciary relationship.

Dimichele v. Nassbridges (In Re Nassbridges) · filed 2010-08-17(a)(4)

So the court has no difficulty in finding that the obligation should be non-dischargeable as well under § 523(a)(4) because that fiduciary relationship was violated by debtor’s fraud and defalcation.

Section 523(a)(4) requires an express, technical, or statutory trust for a debt arising from fiduciary defalcation to be excepted from discharge; a breach of ordinary fiduciary duties alone is insufficient.

Perry v. Ichida (In Re Ichida) · filed 2010-08-30(a)(4)

In the absence of a trust, a debtor’s failure to comply with his or her fiduciary duties in and of itself does not constitute defalcation while acting in a fiduciary capacity within the meaning of § 523(a)(4).

Section 523(a)(4) does not except a guaranty debt from discharge based on alleged fiduciary fraud that has no causal connection to the creditor’s judgment.

Associated Bank, N.A. v. Sever (In Re Sever) · filed 2010-09-22(a)(4)

An equally serious flaw in ASSOCIATED’S theory is that it seeks a determination of nondischargeability on the full amount of the judgment obtained on the DEBTOR’S guaranty, by making a general allegation of fiduciary fraud that bears no causal nexus to its judgment. In essence, ASSOCIATED is relying on a remedy which exists for the benefit of all creditors, to preserve its debt resulting from the guaranty. The absence of a fiduciary relationship specifically between ASSOCIATED and PTI is dispositive.

Section 523(a)(4) makes a debt nondischargeable when it arises from defalcation committed in a preexisting fiduciary relationship.

COLEMICHAEL INVESTMENTS, LLC v. Burke · filed 2010-09-01(a)(4)

Given that objective and the totality of the circumstances here, the Court affirms the bankruptcy court's holding that Burke's debt arose from his defalcation while acting as ColeMichael's fiduciary and is therefore nondischargeable under § 523(a)(4).

Section 523(a)(4) makes a debt arising from defalcation of Michigan Builders Trust Fund Act funds nondischargeable when the debtor held those funds in a fiduciary capacity.

Comfort Control Supply Co. v. Hunter (In Re Hunter) · filed 2010-09-21(a)(4)

Mr. Hunter owes Comfort a nondis-chargeable debt under § 523(a)(4) based upon the MBTFA.

Under § 523(a)(4), defalcation requires a knowing, willful or reckless breach of fiduciary duty; negligence alone is insufficient.

Hunt v. Hunt (In Re Hunt) · filed 2010-10-26(a)(4)

Although Meyer dealt with defalcation under § 523(a)(ll), the same terms used in the same section of the Bankruptcy Code should have the same meaning, and so the circuit’s conclusion is equally applicable to the meaning of defalcation under § 523(a)(4): it requires a knowing, willful or reckless breach of fiduciary duties.

Section 523(a)(4) requires more than negligence alone to establish defalcation by a fiduciary.

LaMacchia v. Tarbell (In Re Tarbell) · filed 2010-11-29(a)(4)

This Court adopts the conclusion in Chao and rejects the view that negligence alone can support an exception to discharge under Section 523(a) (tí based on defalcation.

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

South Philadelphia Donuts, Inc. v. Nenner (In Re Nenner) · filed 2010-11-29(a)(4)

By recklessly failing to account for funds entrusted to him, Nenner breached his fiduciary obligations owed to SPD. The debts owed by Nenner to SPD are nondis-chargeable pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires proof of conscious misbehavior or extreme recklessness for a fiduciary’s defalcation debt to be excepted from discharge.

White's Lumber, Inc. v. Barksdale (In Re Barksdale) · filed 2010-09-29(a)(4)

Rather, the Court must conclude from the record before it that Plaintiff did not make the requisite showing of “conscious misbehavior or extreme recklessness” by John.

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

Wadzinski v. Rieck (In Re Rieck) · filed 2010-10-28(a)(4)

To succeed on their § 523(a)(4) claim, the plaintiffs are obligated to prove, at a minimum, that the defendant knowingly or “recklessly” breached his fiduciary duty under Wis. Stat. § 779.02(5).

Section 523(a)(4) excepts a corporate officer’s debt to the corporation when it arose from defalcation while acting as a fiduciary.

Redmond v. Karr (In Re Karr) · filed 2011-01-19(a)(4)

The Trustee is entitled to summary judgment on his claim of exception to discharge under § 523(a)(4). The uncontro-verted facts establish that Karr’s debts to the Alexico estate were incurred by defalcations committed when Karr was acting as a fiduciary to Alexico.

Section 523(a)(4) excepts from discharge a debt arising from defalcation while acting in a fiduciary capacity, including a debt caused by breaching ERISA fiduciary duties.

In Re Palombo · filed 2011-03-23(a)(4)

Finally, Palombo’s debt arose from a defalcation while acting in his fiduciary capacity as to the Fund. Thus, his debt is non-dischargeable under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) makes a debt nondischargeable when a fiduciary recklessly fails to perfect liens securing personal loans from an entity to which he owes a fiduciary duty.

Harwood v. FNFS, Limited · filed 2011-04-05(a)(4)

Even if the existence of the loans themselves was not a defalcation, the bankruptcy court did not err in further concluding that Harwood recklessly breached his duty to FNFS by failing to protect against the increasing financial risk created by those loans by ensuring that FNFS perfected its lien on the pledged collateral, particularly where his failure accrued to his benefit.

Section 523(a)(4) makes a debt nondischargeable when a fiduciary fails to account for entrusted funds.

Corona Sierra Colorado, Inc. v. Brennan (In Re Brennan) · filed 2011-04-14(a)(4)

Such defalcation while acting in a fiduciary capacity renders the $18,576.52 debt owed by Mr. Brennan’s company to Corona nondischargeable pursuant to 11 U.S.C. § 523(a)(4).

Section 523 makes debts arising from fraud or defalcation while acting as a fiduciary nondischargeable; an award arising entirely from that conduct need not be apportioned.

Albro v. Leonelli-Spina (In Re Leonell-Spina) · filed 2011-05-04(a)(2)(A), (a)(4)

Debts incurred as a result of fraudulent conduct or defalcation while acting as a fiduciary are not dischargeable in bankruptcy. See 11 U.S.C. § 523(a)(2)(A) and (a)(4). ... As the District Court observed, however, an examination of the underlying state court opinion and judgment makes clear that the award against Leonelli-Spina arises directly from her fraudulent conduct or defalcation of pension payments entrusted to her. Apportionment of damages was not warranted.

Section 523(a)(4) requires misconduct beyond an innocent mistake for a debt to be nondischargeable as fiduciary defalcation.

Bannon v. Tyson (In Re Tyson) · filed 2011-05-04(a)(4)

Therefore, I hold today only that fiduciary defalcation under § 523(a)(4) requires some showing of misconduct greater than innocent mistake and I leave a more precise definition of the scienter standard to another day.

Section 523(a)(4) excepts a debt from discharge when a debtor acting in a preexisting fiduciary capacity recklessly neglects a duty owed to the creditor.

Harwood v. FNFS, Limited · filed 2011-04-21(a)(4)

We conclude that an officer of a corporate general partner who is entrusted with the management of the limited partnership and who exercises control over the limited partnership in a fashion analogous to Bennett and McBeth owes a fiduciary duty to the partnership that satisfies Section 523(a)(4). ... Even if the existence of the loans themselves was not a defalcation, the bankruptcy court did not err in further concluding that Harwood recklessly breached his duty to FNFS by failing to protect against the increasing financial risk created by those loans by ensuring that FNFS perfected its liens on the pledged collateral, particularly where his failure accrued to his benefit.

Section 523(a)(4) excepts from discharge a debt caused by defalcation while the debtor acts in a fiduciary capacity under an existing technical trust.

Nevels v. Caples (In Re Caples) · filed 2011-07-07(a)(4)

Based upon the forgoing, the Court finds that the plaintiff has established by a preponderance of the evidence that the debtor committed an act of defalcation while acting in a fiduciary capacity for purposes of § 523(a)(4). The debt of $78,000 is nondischargeable.

Section 523(a)(4) excepts a fiduciary’s debt for defalcation from discharge when the conduct shows conscious misbehavior or extreme recklessness.

Indo-Med Commodities, Inc. v. Wisell (In re Wisell) · filed 2011-08-16(a)(4)

Applying this standard, this Court finds that the findings of the State Court are sufficient to establish the Debtor’s “conscious misbehavior or extreme recklessness,” i.e., defalcation which acting in a fiduciary capacity.

Section 523(a)(4) makes a debt nondischargeable when a debtor misuses entrusted funds in breach of a fiduciary duty.

Randall v. Atkins (In Re Atkins) · filed 2011-09-01(a)(4)

Defendant misappropriated Plaintiffs’ money for his personal use. Plaintiffs have met their burden under section 523(a)(4) and Defendant’s debt to Plaintiffs is found to be non-dischargeable.

Section 523(a)(4) requires more than a negligent breach of fiduciary duty to establish defalcation.

Midwest Property Management v. Polus (In Re Polus) · filed 2011-07-06(a)(4)

A contractor who negligently breaches his statutory duties created by the theft-by-contractor statute has not committed defalcation under § 523(a)(4).

Section 523(a)(4) treats misuse of trust funds as defalcation only when the fiduciary acts with conscious misbehavior or extreme recklessness.

Tiffany v. Dziedzic (In Re Dziedzic) · filed 2011-07-15(a)(4)

Under the standard of Denton v. Hyman, therefore, defalcation “requires a showing of conscious misbehavior or extreme recklessness.” ... As a conscious misapplication of trust funds, this use of $22,240.29 represents a defalcation while acting in a fiduciary capacity.

Section 523(a)(4) treats a fiduciary’s use of his position to induce a principal to write checks to him as defalcation, even if the conduct falls short of embezzlement.

Collier v. Goepp (In Re Goepp) · filed 2011-08-16(a)(4)

But this is not what Debtor did; rather, he used his position of power to induce Plaintiff into writing the checks. While these actions may not be sufficient to rise to the level of embezzlement, this court is convinced that they are precisely the sort of near-embezzlement malfeasance contemplated by § 523(a)(4)’s use of the nebulous term defalcation.

Section 523(a)(4) excepts a contractor’s debt arising from a violation of Wisconsin’s theft by contractor trust statute from discharge without separate proof of wrongful intent.

In Re Carlson · filed 2011-08-30(a)(4)

Here, the underlying judgment arose under Wisconsin's theft by contractor statute, and while the stipulation did not admit intentional or wrongful conduct, Paragraph 2 admitted that the damages provided for were "caused by Defendant's theft by contractor." ... The provisions of the statute meet all the elements for nondischargeability under 11 U.S.C. § 523(a)(4), the damages have been determined, and the defendant's debt to the plaintiff is not subject to discharge.

Section 523(a)(4) excepts a debt for fiduciary defalcation from discharge when the fiduciary misappropriates or fails to account for funds held in trust.

In re: Samuel E. Fanday · filed 2011-10-12(a)(4)

Even assuming Fanday was in a fiduciary relationship with Coe, Coe never alleged, or proved at trial, that Fanday held funds in trust and/or that Fanday misappropriated or failed to account for any funds. Thus, Fanday could not have committed defalcation, and Coe’s claim under § 523(a)(4) fails.

Section 523(a)(4) excepts a landlord’s debt for defalcation involving a tenant’s security deposit from discharge when the landlord held the deposit in a fiduciary capacity.

Taylor-Kennedy v. Frempong (In Re Frempong) · filed 2011-10-14(a)(4)

A landlord who spends the money has committed an act of “defalcation” and the debt (i.e. the security deposit and any damages) is not dischargeable in bankruptcy (see 11 U.S.C. § 523(a)(4)).

Section 523(a)(4) excepts a debt from discharge when a debtor fails to account for funds held in a technical trust while acting as a fiduciary.

Georgia Lottery Corp. v. Kunkle (In Re Kunkle) · filed 2011-10-31(a)(4)

The undisputed material facts show that Defendant committed a defalcation while acting in a fiduciary capacity, and therefore, the debt is nondischargeable pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires a trust relationship involving a specific res for a debt based on fiduciary defalcation to be nondischargeable.

Astro Building Supplies v. Slavik III · filed 2011-12-12(a)(4)

This rule is limited to a trust relationship arising from the placement of a specific res in the hands of the debtor. ... Here, Astro has not shown that it provided materials to Slavik for a specific project. Instead, it provided them to Slavik on an open account. That is simply not enough to create a trust under the Act.

Section 523(a)(4) excepts from discharge a debt arising from a debtor's defalcation of identifiable trust funds while acting as a fiduciary.

Great American Insurance v. Poynter (In Re Poynter) · filed 2011-11-15(a)(4)

The undisputed facts herein warrant entry of summary judgment in GAIC’s favor on its Complaint against Debtor under 11 U.S.C. § 523(a)(4). The debt owed by Poynter to GAIC is proven in the amount of $600,210.01 which represents the amounts paid out by GAIC under the Bonds and its attorney’s fees, all due to Debtor’s defalcation of the trust funds. Accordingly, the debt is nondischargeable under 11 U.S.C. 523(a)(4).

Section 523(a)(4)’s fraud or defalcation exception requires an express trust or fiduciary relationship and fraud or defalcation committed in the course of that relationship.

Shriners Hospital for Children v. Bauman (In Re Bauman) · filed 2011-12-23(a)(4)

The uncontested facts neither support the Plaintiffs arguments nor establish any of the elements required under the fraud or defalcation prong of section 523(a)(4). First and foremost, there is no evidence of an express trust or a fiduciary relationship between the parties as required under the statutory exception.

Section 523(a)(4) requires a known breach of fiduciary duty that is objectively reckless for defalcation; mere negligence is insufficient.

Bullock v. Bankchampaign, NA · filed 2012-02-14(a)(4)

Given our Circuit’s explicit alignment with the Central Hanover case, this Court finds that defalcation under § 523(a)(4) requires more than mere negligence. Instead, this Court concludes that defalcation requires a known breach of a fiduciary duty, such that the conduct can be characterized as objectively reckless.

Section 523(a)(4) can make a co-trustee’s debt nondischargeable when willful ignorance of trust duties contributes to a loss caused directly by another co-trustee.

Hawkins v. Thomas (In re Thomas) · filed 2012-03-14(a)(4)

In accordance with Section 523(a)(4), this Court concludes that willful ignorance cannot be used as a defense to a complaint seeking to characterize harm resulting from certain acts or omissions as nondischargeable regardless of whether same was more immediately caused by another person acting as co-trustee.

Section 523(a)(4) excepts from discharge debts arising from fiduciary defalcation, embezzlement, or larceny.

Data Mountain Solutions, Inc. v. Giordano (In re Giordano) · filed 2012-03-30(a)(4)

The Court finds that the remaining $5,000, however, is non-dischargeable under all three prongs of Section 523(a)(4)—defalcation while acting in a fiduciary capacity, embezzlement and larceny.

Section 523(a)(4) does not except a debt for defalcation from discharge when the creditor entrusted no money or property to the debtor.

Knaub v. Golba (In re Golba) · filed 2012-05-15(a)(4)

Here, in the absence of a down payment or other funds entrusted to Rollison, Gemm, or Avalon, the Knaubs’ § 523(a)(4) claim against Rollison must fail.

Section 523(a)(4) does not treat a fiduciary’s negligent failure to collect rents as defalcation without proof that the fiduciary received funds and failed to account for them.

Pemstein v. Pemstein (In re Pemstein) · filed 2012-07-26(a)(4)

Harold has likewise failed to present sufficient, if any, evidence that Martin actually received any funds that he allegedly failed to account for. Simple negligence to collect rents, even if one has a fiduciary duty to do so, does not constitute defalcation.

Section 523(a)(4) excepts a debt from discharge for fraud or defalcation only when the debtor acted in a fiduciary capacity.

Rose ex rel. Estate of Lee v. Davis (In re Davis) · filed 2012-08-02(a)(4)

For the foregoing reasons, the Court finds that Defendants did not commit fraud or defalcation while acting in a fiduciary capacity. ... Any debt due and owing to the Estate of Katherine Marie Lee is dischargeable under § 523(a)(4).

Section 523(a)(4) requires a creditor alleging defalcation by a fiduciary to prove conscious misbehavior or extreme recklessness by a preponderance of the evidence.

Economic Development Growth Enterprises Corp. v. McDermott · filed 2012-08-07(a)(4)

For the reasons discussed above as well as those set forth in the Bankruptcy Court’s Memorandum-Decision and Order, the Court finds that Plaintiffs-Appellants have failed to establish by a preponderance of the evidence that Defendant-Ap-pellee acted with conscious misbehavior or extreme recklessness in causing ISI to pay the SBA over other creditors. Accordingly, the Court finds that Defendant-Appel-lee’s debt was dischargeable under § 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when a debtor acting under a preexisting express or technical trust commits defalcation through objectively reckless conduct.

Allen v. Scott (In re Scott) · filed 2012-09-27(a)(4)

Consequently, the Court concludes that whatever debts due the plaintiff the defendant generated while holding Maddie Woods’ power of attorney are not dis-chargeable in this case under section 523(a)(4) of the Bankruptcy Code.

Section 523(a)(4) makes a debt nondischargeable when a debtor acting in a fiduciary capacity commits defalcation; intentional self-dealing by a statutory custodian qualifies.

Payne v. Lampe (In re Lampe) · filed 2012-08-14(a)(4)

AND this Court, therefore, concluding that the Debtor’s conduct, rather than being an innocent mistake or mere negligence, constitutes a more intentional, culpable type of conduct (albeit not fraudulent or malicious)... which satisfies the requirement for “defalcation” under § 523(a)(4) such that the Debtor’s debt to Payne, as the successor custodian for L.L. of her nine shares of stock in WEL, shall be held nondischargeable;... (1) Plaintiff is entitled to judgment in his favor and against the Debtor on the Amended Complaint.

Section 523(a)(4) excepts a debt from discharge when a landlord who holds a tenant’s security deposit in a fiduciary capacity consciously misuses it.

Dennis v. Hall (In re Hall) · filed 2012-11-19(a)(4)

Consequently, the court determines that the Debtor’s conduct constituted a “defalcation” within the meaning of Section 523(a)(4). Accordingly, the subject debt is deemed nondis-chargeable pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when issue preclusion establishes that the debtor committed defalcation while acting in a fiduciary capacity.

McCarthy v. Nature's Wing Fin Design, LLC · filed 2012-10-17(a)(4)

The bankruptcy court properly granted summary judgment on the basis of issue preclusion because a prior, final state court decision between the parties necessarily decided that McCarthy committed “defalcation while acting in a fiduciary capacity” with respect to Nature’s Wing.

Section 523(a)(4) excepts a debt from discharge when a de facto manager personally mismanages funds held by an LLC under a statutory trust.

Hawks Holdings, LLC v. Kalinowski (In re Kalinowski) · filed 2012-11-14(a)(4)

K2 owed a fiduciary duty to Hawks, and William was responsible for its performance of that duty. William’s mismanagement of funds entrusted to K2 by Hawks rendered him liable to Hawks for defalcation while acting in a fiduciary capacity. Therefore, we AFFIRM the trial court’s judgment in favor of Hawks on its claim of non-dischargeability.

Section 523(a)(4) requires an express or technical trust for a fiduciary defalcation claim; a general fiduciary duty alone does not suffice.

Duggins v. Bratt (In re Bratt) · filed 2013-03-28(a)(4)

Unless the trust is an express or technical one, other relationships from which general fiduciary duties might be implied by state law principles will not support a defalcation claim under § 523(a)(4).

Section 523(a)(4) excepts from discharge a corporate officer’s debt arising from defalcation of a fiduciary duty to the corporation.

S & S Food Corp. v. Sherali (In re Sherali) · filed 2013-03-14(a)(4)

Sherali’s actions in causing S & S to make the unlawful Distributions to himself during the Relevant Period constitute defalcation of his fiduciary duty as an officer and director of S & S and render his debt to S & S in the amount of $670,356 non-dischargeable under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) requires knowledge or conscious disregard of a substantial and unjustifiable risk of violating a fiduciary duty to establish defalcation; a finding of conversion alone does not establish it.

Herbert v. Davies (In re Davies) · filed 2013-05-31(a)(4)

Thus, the Award’s finding that Donald Davies’ use of partnership assets constituted conversion did not necessarily decide that Donald Davies committed defalcation while acting in a fiduciary capacity. The question is whether Mr. Davies knew or “consciously disregarded” a substantial and unjustifiable risk that his use of partnership assets would violate his fiduciary duties.

Section 523(a)(4) excepts a debt from discharge when a fiduciary’s breach of the duty of loyalty constitutes defalcation.

Raso v. Fahey (In re Fahey) · filed 2013-06-11(a)(4)

In so doing, he violated the duty of loyalty to the beneficiaries of the Funds. Therefore, I find that the Debtor committed a defalcation within the meaning of 11 U.S.C. § 523(a)(4).

Defalcation under § 523(a)(4) requires knowledge of wrongdoing or gross recklessness about whether fiduciary conduct is improper.

Bullock v. BankChampaign, N. A. · filed 2013-05-13(a)(4)

We here consider the scope of the term “defalcation.” We hold that it includes a culpable state of mind requirement akin to that which accompanies appli- cation of the other terms in the same statutory phrase. We describe that state of mind as one involving knowledge of, or gross recklessness in respect to, the improper nature of the relevant fiduciary behavior.

Section 523(a)(4) excepts a debt from discharge when a fiduciary's bad faith conduct constitutes defalcation.

In re: Florence Tomasi and William S. Tomasi · filed 2013-08-15(a)(4)

Thus, under Bullock, Tomasi's "bad faith" conduct satisfies § 523(a)(4) and the inquiry could stop here.

Section 523(a)(4) excepts from discharge a debt arising from defalcation of funds held in an express trust.

Poynter v. Great American Insurance (In Re Poynter) · filed 2013-09-06(a)(4)

As a result, we hold Poynter Construction (and Poynter individually) was the designated trustee and that an express trust was formed in accordance with the AOI trust fund provision. ... Therefore, we determine that Poynter breached his fiduciary duty by engaging in a defalcation while acting in a fiduciary capacity.

Section 523(a)(4) requires wrongful intent or conscious disregard of fiduciary duties to make a debt nondischargeable for defalcation.

Jantz v. Karch (In re Karch) · filed 2013-10-15(a)(4)

After Bullock, in order to hold a debt non-dischargeable under § 523(a)(4), a bankruptcy court must find that the debtor acted with wrongful intent, or, at a minimum, with a conscious disregard of his or her fiduciary duties.

Section 523(a)(4) covers defalcation when a fiduciary intentionally misuses trust funds or consciously disregards a substantial and unjustifiable risk of violating fiduciary duties.

Developers Surety &, Indemnity Co. v. Bi-Tech Construction, Inc. · filed 2013-10-17(a)(4)

Applying this standard to the facts of this case, the Court finds that the Indemnitors acted “intentionally” with knowledge that their actions were improper in carrying out their fiduciary duties in handling the Trust Funds for the benefit of the Surety. The Court further finds that the Indemnitors acted “recklessly”, with a “conscious disregard” or being “willfully blind” to a substantial and unjustifiable risk that their conduct would -violate the fiduciary duties in the handling of the Trust Funds, thereby constituting defalcation. This finding satisfies the definition of “defalcation” under 11 U.S.C. § 523(a)(4) as addressed in Bullock.

Section 523(a)(4) excepts a debt arising from a fiduciary’s defalcation from discharge.

Edwards v. Emberton (In re Emberton) · filed 2013-11-05(a)(4)

The Court thus finds that Mr. Emberton’s payment of $34,319.36 in bonuses constitutes a defalcation while acting in a fiduciary capacity, sufficient for a determination of nondis-chargeability under § 523(a)(4).

Section 523(a)(4) excepts compensatory and punitive damages for a fiduciary’s breach of duty from discharge when the breach amounts to defalcation.

Clear Sky Properties LLC v. Roussel (In re Roussel) · filed 2013-12-30(a)(4)

Accordingly, the portion of Roussel’s judgment debt awarding compensatory and punitive damages for breach of fiduciary duty is nondischargeable under § 523(a)(4), and the Bankruptcy Court’s determination to the contrary is reversed.

Section 523(a)(4) requires a creditor claiming defalcation to establish an express or technical trust, including an intent to create a trust and a trustee.

Rice v. Morse (In re Morse) · filed 2014-01-10(a)(4)

Nor does the court find, based on the allegations made in the Complaint, that Plaintiffs have alleged the first two elements of their defalcation claim, demonstration of an intent to create a trust and a trustee.

Section 523(a)(4) requires a creditor seeking to except a debt from discharge for fiduciary defalcation to prove the debtor acted with knowledge or gross recklessness.

Jantz v. Karch (In re Karch) · filed 2013-11-15(a)(4)

On the facts of this case, following the advice of retained legal counsel does not rise to the minimum level of mental culpability required to sustain a nondis-chargeability claim under § 523(a)(4). Plaintiffs failed to meet their burden of proof on this issue.

Section 523(a)(4) makes a fiduciary debt nondischargeable when the debtor’s conduct shows conscious awareness of, or willful blindness to, a substantial risk of breaching fiduciary duty.

Fogg ex rel. Estate of Brown v. Pearl (In re Pearl) · filed 2013-12-05(a)(4)

The cavernous gap between the Debtor’s legal duty and her actual conduct is sufficiently extreme and obvious as to warrant the conclusion that either she was aware of, or she willfully blinded herself to, the impropriety of her conduct. This satisfies the recklessness standard for defalcation in 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts from discharge a judgment debt arising from a bankruptcy trustee’s fraud while acting in a fiduciary capacity.

Shaffer v. Bird (In re Bird) · filed 2014-01-07(a)(4)

The court unequivocally found that Bird owed a fiduciary duty to the bankruptcy estates and he breached that duty by committing enumerated instances of fraud in the course of performing his trustee responsibilities and as an officer of the court. ... The bankruptcy court’s findings are tailor-made to fit right into a § 523(a)(4) analysis and they clearly establish the non-dischargeability of this debt.

Section 523(a)(4) excepts a debt for defalcation from discharge when the debtor acted in a fiduciary capacity with wrongful intent or conscious disregard of fiduciary duties.

Hubanks v. Jouett (In re Jouett) · filed 2014-03-12(a)(4)

Two elements must be established to except a debt from discharge under § 523(a)(4): (1) there must be a showing of defalcation; and (2) the debtor must have been acting in a fiduciary capacity. ... The entire judgment is non-dischargeable under § 523(a)(4).

Section 523(a)(4) requires a creditor relying on Michigan’s Building Contract Fund Act to prove that the debtor knew the conduct was improper or consciously disregarded a substantial and unjustifiable risk of breaching a fiduciary duty.

Shears v. Vestal (In re Vestal) · filed 2014-02-11(a)(4)

After Bullock, a plaintiff who relies on the MBCFA to except a debt from discharge must therefore establish more than a breach of a fiduciary duty or a right to relief under the state statute; he must also establish under the federal statute— § 523(a)(4) — that the defendant knew that his conduct was improper, or disregarded “ ‘a substantial and unjustifiable risk’ that his conduct will turn out to violate a fiduciary duty.”

Section 523(a)(4) requires a debtor’s own culpable mental state for fiduciary defalcation; a spouse’s wrongful intent cannot be imputed merely because an agency relationship exists.

Maxwell v. Maxwell (In re Maxwell) · filed 2014-04-10(a)(4)

Even if an agency relationship existed between Bobby and Cherie, moreover, the court concludes that any wrongful intent on Cherie’s part cannot be imputed vicariously to Bobby. Consistent with Bullock, Bobby’s mental state must have been shown to be culpable with respect to Cherie’s actions, whether by his knowledge and acquiescence in her conduct or by his gross recklessness as to a “substantial and unjustifiable risk” that her actions would violate his fiduciary duties.

Section 523(a)(4) requires proof of the debtor’s requisite mental state to establish fraud or defalcation while acting in a fiduciary capacity.

Estate of Cora v. Jahrling (In re Jahrling) · filed 2014-04-15(a)(4)

A trial on the merits is required to determine whether Jahrling had the requisite state of mind to support Plaintiffs § 523(a)(4) claim.

Section 523(a)(4) excepts a debt from discharge when a fiduciary commits fraud or defalcation, including by knowingly taking partnership funds for himself.

Stasen ex rel. Mentor Special Situation Fund v. Sager (In re Sager) · filed 2014-06-06(a)(4)

This Court concurs that, for present purposes, Sager cannot use his baseless appeal as a shield. His above described conduct satisfies the elements of both fraud and defalcation, while acting in a fiduciary capacity, and by far more than a. preponderance of the evidence. Accordingly, summary judgment on this issue will be entered against Sager and in favor of Stasen.

Section 523(a)(4) excepts a debt from discharge when a fiduciary consciously disregards a substantial and unjustifiable risk of breaching fiduciary duties.

H. Brooks & Co. v. Yerges (In re Yerges) · filed 2014-07-02(a)(4)

For the foregoing reasons, the Defendant’s debt to the Plaintiff is determined to be nondischargeable under 11 U.S.C. § 523(a)(4).

Section 523(a)(4) does not except unpaid employer matching contributions from discharge when no fiduciary duty to make them existed before the debt arose.

Herbert v. Hesse (In re Hesse) · filed 2014-07-28(a)(4)

Because there was no preexisting fiduciary obligation to make the Matching Contributions — which is a necessary element to establishing a claim under § 523(a)(4) — any debts relating to the Matching Contributions are not excepted from discharge.

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

Universal Restoration Services, Inc. v. Hartung (In re Hartung) · filed 2014-06-05(a)(4)

Thus, where two separate elements — first, the existence of a fiduciary relationship; second, fraud or defalcation while acting in that capacity — are satisfied, a bankruptcy court may not discharge the relevant debt.

Section 523(a)(4) requires evidence that a debtor knew of a fiduciary duty and the risk of violating it to establish defalcation through conscious disregard.

MacArthur Co. v. Cupit (In re Cupit) · filed 2014-07-18(a)(4)

A debtor cannot consciously disregard a risk of violating a fiduciary duty if he or she is wholly unaware of that duty. There must be some evidence that the debtor was aware of the fiduciary duty and of the risk that his conduct would violate that duty.

Section 523(a)(4)’s defalcation requirement can be satisfied when a debtor uses funds she was required to disburse for her own benefit.

Cervac v. Littman (In re Littman) · filed 2014-09-11(a)(4)

The un-controverted facts before the court overwhelmingly established that funds were not disbursed as required, and that failure was the result of the Debtor’s using those funds for her own personal use and benefit. Taken together, more than enough facts were extant for the court to reach the conclusion that the elements of § 523(a)(4) had been satisfied.

Section 523(a)(4) makes a debt arising from a fiduciary’s misapplication of construction trust funds nondischargeable when the defalcation standard is met.

Monaco v. Monaco (In re Monaco) · filed 2014-08-01(a)(4)

The Court finds that Tag had standing to pursue its cause of action by virtue of equitable subrogation; that Adam Monaco misapplied trust funds in the amount of $171,942.03; and that any claims or setoffs relating to retainage are unavailable to him. Pursuant to 11 U.S.C. § 523(a)(4) the Court concludes that this $171,942.03 debt is nondischargeable as to Adam Monaco.

Section 523(a)(4) excepts a debt arising from an attorney’s defalcation of fiduciary duty from discharge.

Estate of Cora v. Jahrling (In re Jahrling) · filed 2014-08-21(a)(4)

The $26,000 legal malpractice debt will not be discharged because it is based on a defalcation of Jahrling’s fiduciary duty; he failed to do what was expected of him.

Section 523(a)(4) excepts a debt from discharge when a fiduciary commits defalcation through intentional wrongdoing or reckless disregard of fiduciary duties.

West v. Chrisman · filed 2014-09-19(a)(4)

Accordingly, the Court will affirm the Bankruptcy Court’s finding that West committed a defalcation while acting as a fiduciary, in violation of 11 U.S.C. § 523(a)(4).

Section 523(a)(4) excepts a judgment debt from discharge when the judgment and jury instructions establish a trustee’s fiduciary defalcation.

Thomas v. Causey (In re Causey) · filed 2014-10-01(a)(4)

The Court finds that the foregoing judgment and instructions are sufficient to render the State Court Judgment non-dis-chargeable pursuant to Section 523(a)(4).

Section 523(a)(4) requires knowledge of, or gross recklessness about, the improper nature of a fiduciary breach for defalcation.

Al-Naji v. Al-Naji (In re Al-Naji) · filed 2014-10-30(a)(4)

For purposes of 11 U.S.C. § 523(a)(4), defalcation requires either knowledge of, or gross recklessness with regard to, the improper nature of activity that constitutes a breach of fiduciary duty.

Section 523(a)(4) excepts from discharge debts arising from embezzlement or defalcation in a fiduciary capacity, including a controlling shareholder’s knowing diversion of company revenue.

Kriescher v. Gibson (In re Gibson) · filed 2014-11-06(a)(4)

For the reasons set forth below, summary judgment is granted with respect to the claim under section 523(a)(4) for the acts resulting in damages in the amount of $200,487.00. This claim satisfies both the embezzlement and defalcation in a fiduciary capacity exceptions to discharge contained within section 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when the debtor intentionally misappropriates funds while acting in a fiduciary capacity.

Wians v. Wians (In re Wians) · filed 2014-12-17(a)(4)

These findings show that the Defendant committed acts of defalcation when he converted $196,000 during the course of his fiduciary relationship with Clara Wians and that his actions were intentional.

Section 523(a)(4) excepts a debt from discharge when a fiduciary knowingly or recklessly breaches duties imposed by a technical trust.

Chitester v. Watterson (In re Watterson) · filed 2015-01-08(a)(4)

Because the SCP Act defined the trust res, imposed a trust without reference to the alleged wrongful act, and imposed defined obligations upon the Debtor, giving rise to a technical trust, the Court finds that a fiduciary relationship existed between the Debtor and the decedent’s estate for purposes of § 523(a)(4). ... All of the facts show the Court that the Debtor had the requisite mental state of actual knowledge of, and reckless disregard to, his wrongdoing to meet the defalcation standard within the meaning of § 523(a)(4). Accordingly, the $4,860 judgment is nondischargeable under § 523(a)(4).

Section 523(a)(4) makes a fiduciary’s debt nondischargeable when the fiduciary consciously disregards a substantial and unjustifiable risk that failing to account will breach a fiduciary duty.

Cincinnati Insurance v. Chidester (In re Chidester) · filed 2015-01-28(a)(4)

The Court GRANTS Cincinnati Insurance’s renewed motion for summary judgment and holds that Mr. Chidester committed defalcation, as defined in Bankruptcy Code section 523(a)(4) and the Supreme Court’s Bullock v. BankChampaign, N.A. decision.

A creditor seeking nondischargeability through the Texas Construction Trust Fund Statute must show intentional, knowing, or fraudulent diversion of trust funds and that the statute’s affirmative defenses do not apply.

Ratliff Ready-Mix, L.P. v. Pledger · filed 2015-01-23(a)(4)

Therefore, under Nicholas, a creditor claiming Section 523(a)(4) nondischargeability through the Texas Construction Trust Fund Statute must show that (1) the contractor intentionally, knowingly, or with intent to defraud diverted trust funds and (2) the affirmative defenses in the statute do not apply.

Section 523(a)(4) excepts a debt for fiduciary defalcation from discharge when the debtor intentionally breaches a fiduciary duty or consciously disregards or is willfully blind to a substantial and unjustifiable risk of breach.

Caitlin Energy, Inc. v. Rachel (In re Rachel) · filed 2015-03-17(a)(4)

Once a court has determined that a debtor either consciously disregarded or was willfully blind to a risk of violating a fiduciary duty, the court must determine that the risk disregarded was substantial and unjustifiable in order to establish the type of recklessness that makes a claim non-dischargeable under Section 523(a)(4).

Section 523(a)(4) makes a debt arising from fiduciary defalcation nondischargeable when the debtor knew, or was willfully blind to the risk, that his conduct violated a fiduciary duty.

Aiello v. Aiello (In re Aiello) · filed 2015-07-13(a)(4)

Having determined that summary judgment is appropriate to find that David committed defalcation, the debt to Maria is nondischargeable pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) does not let a debtor avoid nondischargeability by deliberately ignoring the details of an apparent breach of fiduciary duty.

Sveum v. Stoughton Lumber Co. · filed 2015-07-07(a)(4)

Said another way, a debtor cannot escape a determination of nondischargeability by deliberately keeping himself in the dark as to the details of an apparent breach of fiduciary duty.

Section 523(a)(4) bars discharge of a construction contractor’s debt when he knowingly diverts trust funds owed to a subcontractor.

Stoughton Lumber Company, Inc. v. Sveum · filed 2015-06-04(a)(4)

It’s not just that Sveum should have known that Kegonsa as a prime contractor in the construction and sale of homes was required to hold its revenues from sales of the homes in trust until the firm’s subcontractors, such as Stoughton, were paid; it was a permissible inference that he did know, or at the least that he was playing ostrich—that is, that he sus- pected that he was violating the law but avoided confirming his suspicion in order to preserve a patina of innocence.

Section 523(a)(4) excepts a debt from discharge when a debtor’s defalcation in a pre-existing fiduciary relationship causes a loss.

Jenkins v. Schmank (In re Schmank) · filed 2015-07-28(a)(4)

Having found a pre-existing fiduciary relationship recognized by the applicable state law, the court finds that the Plaintiffs have met the first element of a claim for defalcation. With respect to the second and third elements, the court has previously found that the instruction to pay Integrity Log Homes rather than J & S and the deposit of money into the Integrity account rather than into the partnership account, as required by the Agreement, were violations of his express partnership obligations. ... Finally, the court has also found that the loss was $11,500.

Section 523(a)(4) does not make unpaid employee benefit contributions nondischargeable as defalcation when the employer did not control a plan asset before nonpayment.

Bos v. Board of Trustees · filed 2015-07-30(a)(4)

Therefore, consistent with our general rule that unpaid contributions to employee benefit funds are not plan assets, see Cline, 200 F.3d at 1234, Bos did not engage in defalcation for purposes of § 523(a)(4).

Section 523(a)(4) excepts a debt for fiduciary defalcation from discharge when the debtor committed the defalcation while serving in a fiduciary capacity.

In re: Martin Pemstein and Diana Pemstein · filed 2015-09-21(a)(4)

To establish a claim under § 523(a)(4) for fiduciary defalcation, the plaintiff must show that the defendant committed a defalcation and that the defendant was serving in a fiduciary capacity at the time of the defalcation.

Section 523(a)(4) excepts a debt from discharge when fraudulent misuse of construction trust funds occurs while the debtor acts in a fiduciary capacity.

Margolis v. Hensley (In re Hensley) · filed 2015-09-22(a)(4)

Under the CTFA, and controlling Fifth Circuit law, that created the fiduciary relationship necessary for a determination of nondischargeability under § 523(a)(4). There is no genuine issue of material fact remaining and the Bankruptcy Court was correct in granting summary judgment on the issue that the amount it identified was nondischargeable.

Section 523(a)(4) makes a debt nondischargeable when a fiduciary commits defalcation by recklessly or consciously disregarding a substantial or unjustifiable risk of violating a fiduciary duty.

Chaney v. Grigg · filed 2015-10-06(a)(4)

Defalcation may be shown in cases where the fiduciary engages in reckless conduct or “consciously disregards . . . a substantial or unjustifiable risk that his conduct will turn out to violate a fiduciary duty.” ... Accordingly, Grigg’s debt to Chaney is nondischargeable pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) makes a Texas construction trust fund violation nondischargeable as defalcation only if the creditor proves an intentional wrong, criminal recklessness, or moral turpitude.

Kahkeshani v. Hann (In re Hann) · filed 2016-01-12(a)(4)

For a violation of the Texas Construction Trust Fund Act to constitute a nondischargeable “defalcation” under 11 U.S.C. § 523(a)(4), Kahkeshani must prove that Hann’s conduct involved an intentional wrong, criminal recklessness, or moral turpitude.

Section 523(a)(4) makes a corporate director’s debt for a knowing breach of fiduciary duty nondischargeable as defalcation.

LeCann v. Cobham (In re Cobham) · filed 2016-01-05(a)(4)

In sum, the court holds that plaintiffs’ motion for summary judgment properly was granted under § 523(a)(4) and that defendant’s debt thus is not subject to discharge in bankruptcy. As a director of the Practices, defendant owed a fiduciary duty to both those corporations and their shareholders. Although that duty did not arise from an “express” trust, it did arise from a special relationship where defendant was entrusted with certain powers and corporate assets. In addition, the Business Court’s award of punitive damages satisfies the . standard for “defalcation” set out by the Supreme Court in Bullock, 133 S.Ct. 1754. In particular, the Business Court found that defendant knew she was violating the duties she owed to the Practices and, in doing so, acted with a state of mind more culpable than gross negligence.

Section 523(a)(4) requires more than negligence to establish defalcation by a fiduciary; a violation of professional conduct rules alone is insufficient.

Estate of Cora v. Jahrling (In Re Jahrling) · filed 2016-03-18(a)(4)

To be clear, a finding that an attorney has violated a rule of professional conduct is not sufficient, by itself, to show defalcation by a fiduciary under § 523(a)(4).

Section 523(a)(4) requires culpable intent for a debt arising from a fiduciary breach to be excepted from discharge.

Cloninger v. Cloninger (In re Cloninger) · filed 2016-03-18(a)(4)

In summary, assuming the Debtor breached his fiduciary’ duty, the Court finds that he did not have the requisite ' culpable intent that § 523(a)(4) requires for the liability to be nondischargeable.

Section 523(a)(4) excepts a debt from discharge when a fiduciary knowingly diverts entrusted funds for personal or business expenses instead of returning them.

Wilcox v. Juerakhan (In re Juerakhan) · filed 2016-02-04(a)(4)

It is undisputed that Juerakhan accepted $159,100 from Wilcox as a bail bond agent and diverted those funds for personal and business expenses rather than returning them to Wilcox upon demand. Those acts establish Juerakhan committed a defalcation while acting in a fiduciary capacity. Accordingly, Wilcox is entitled to judgment as a matter of law on his § 523(a)(4) claim.

Section 523(a)(4) makes a debt arising from a fiduciary’s intentional defalcation nondischargeable.

Aiello v. Aiello · filed 2016-02-17(a)(4)

Accordingly, in applying well-established law and in examining the many instances in which Appellant conduct constituted “an intentional wrong,” the Court will affirm the Bankruptcy Court’s holding that Appellant’s debt is nondischargeable pursuant to 11 U.S.C. § 523(a)(4).

Section 523(a)(4) makes a debt for defalcation nondischargeable when the debtor knowingly neglects a fiduciary duty while acting in that capacity.

Whitaker v. Moroney Farms Homeowners' Ass'n (In Re Whitaker) · filed 2016-03-18(a)(4)

The bankruptcy court and district court correctly concluded that Whitaker was a fiduciary under federal law and that he committed acts of defalcation while acting in that capacity. Thus, those courts correctly found his debts to the HOA non-dischargeable under § 523(a)(4).

Section 523(a)(4) excepts a debt from discharge when a fiduciary’s failure to account for trust funds amounts to defalcation, including grossly reckless conduct.

Georgia Lottery Corp. v. Thao Huynh (In re Thao Huynh) · filed 2016-04-07(a)(4)

Based upon the undisputed facts as demonstrated by the Debtor’s sworn deposition testimony, the Court concludes that the Debtor’s failure to account for lottery funds held in trust for the GLC was an act of defalcation while acting in a fiduciary capacity that renders the debt nondis-chargeable pursuant to § 523(a)(4).

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

Richardson v. Mills (In re Mills) · filed 2016-08-22(a)(4)

In view of the foregoing, the Court shall enter a judgment in favor of Richardson and against Mills pursuant to 11 U.S.C. § 523(a)(4). The sum of $445,781.50 owed by Mills to Richardson is excepted from discharge.

Section 523(a)(4) makes a fiduciary’s debt for defalcation nondischargeable when a finding of intentional statutory theft establishes the required mental state.

Jalbert v. Mulligan (In re Mulligan) · filed 2016-09-29(a)(4)

The State Court’s finding that Mulligan committed statutory theft therefore controls this court’s determination that he also committed defalcation while acting in a fiduciary capacity. As a consequence, those damages that result from the statutory theft count are non-dischargeable in bankruptcy pursuant to 11 U.S.C. § 523(a)(4) and the plaintiffs are entitled to summary judgment on Count II.

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

Cross Point Church v. Andrews (In re Andrews) · filed 2016-10-20(a)(4)

Based on the foregoing, the Court concludes that the $69,505.31 debt owed to Cross Point Church should be excepted from discharge on the grounds that Andrews’ conversion of the funds was a defalcation while acting in a fiduciary capacity and an embezzlement under § 523(a)(4).

Section 523(a)(4) makes a debt for fiduciary defalcation nondischargeable when the debtor knowingly breaches a fiduciary duty or consciously disregards a substantial risk of doing so.

In Re: David J. Aiello v. · filed 2016-11-28(a)(4)

The Bankruptcy Court correctly concluded no reasonable trier of fact could find that Mr. Aiello did not act in violation of his fiduciary duty with the state of mind required by Bullock.

Section 523(a)(4) excepts a debt from discharge for fiduciary defalcation when the debtor misappropriates property held in an express trust with knowledge of, or gross recklessness about, the misconduct.

J. Jennings, Jr. v. Ramos Properties, L.P. · filed 2016-12-02(a)(4)

Mr. Jennings was holding the property in an express trust for Plaintiffs, and he misappropriated the property with “knowledge of, or gross recklessness in respect to, the improper nature of the relevant fiduciary behavior.” Bullock v. BankChampaign, N.A., 133 S. Ct. 1754, 1757 (2013). Because there were no issues of material fact on these points, summary judgment was properly entered against him.

Section 523(a)(4) does not make a fiduciary debt nondischargeable for self-dealing alone.

Lerner Master Fund, LLC v. Paige (In re Paige) · filed 2016-12-29(a)(4)

Bullock, however, stands for the proposition that simple self dealing is not sufficient to support a loss of dischargeahiiity under § 523(a)(4).