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BULLOCK, PETITIONER v.BANKCHAMPAIGN, N. A.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
[May 13, 2013]
Justice Breyer for The Court Remanding the Case
Section 523(a)(4) of the Federal Bankruptcy Code provides that an individual cannot obtain a bankruptcy discharge from a debt "for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny." 11 U. S. C. 523(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 application 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 [P 1]
Thus, where the conduct at issue does not involve bad faith, moral turpitude, or other immoral conduct, the term requires an intentional wrong. [P 6]
I found this interesting and thought I'd share it. Justice Breyer includes a quote from Justice Harlan in the Neal case. I thought the statement on page 6 an execellent example of judicial language. I had thought without much reflection that "bad faith, moral turpitude, or other immoral conduct" are intentional.
What do yo think? Has the case solved the "defalcation" question?
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