Monday, May 13, 2013

Bullock v. BankChampaign, N.A.

Bankruptcy: discharge from a debt: 11 U. S. C. §523(a)(4), which 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; the term “defalcation” in the Bankruptcy Code includes a culpa­ble state of mind requirement involving knowledge of, or gross reck­lessness in respect to, the improper nature of the fiduciary behavior; while “defalcation” has been an exception to discharge in a bankruptcy statute since 1867, legal authorities have long disagreed about its meaning. Broad definitions of the term in modern and older dictionaries are unhelpful, and courts of appeals have disagreed about what mental state must accompany defalcation’s definition; in Neal v. Clark, 95 U. S. 704, this Court interpreted the term “fraud” in the Bankruptcy Code’s exceptions to discharge to mean “positive fraud, or fraud in fact, involving moral turpitude or inten­tional wrong, as does embezzlement; and not implied fraud, or fraud in law, which may exist without the imputation of bad faith or immo­rality.” Id., at 709. The term “defalcation” should be treated similar­ly. Thus, where the conduct at issue does not involve bad faith, mor­al turpitude, or other immoral conduct, “defalcation” requires an intentional wrong. An intentional wrong includes not only conduct that the fiduciary knows is improper but also reckless conduct of the kind that the criminal law often treats as the equivalent. Where ac­tual knowledge of wrongdoing is lacking, conduct is considered as equivalent if, as set forth in the Model Penal Code, the fiduciary “con­sciously disregards,” or is willfully blind to, “a substantial and unjusti­fiable risk” that his conduct will violate a fiduciary duty; “embezzlement” requires conversion, “larceny” requires taking and carrying away another’s property, and “fraud” typically requires a false statement or omission; while “defalcation” can en­compass a breach of fiduciary obligation that involves neither conver­sion, nor taking and carrying away another’s property, nor falsity (U.S. S. Ct., 13.05.13, Bullock v. BankChampaign, N.A., J. Breyer, unanimous).

Faillite : décharge d'une dette : la loi fédérale sur la faillite prévoit qu'une personne ne peut obtenir d'être déchargée d'une dette dans la faillite si elle a commis une fraude ou une "défalcation" alors qu'elle agissait à titre fiduciaire, ou si elle a commis un "embezzlement" ou un "larceny". Le terme "défalcation" tel qu'utilisé dans la loi sur la faillite comporte un état d'esprit coupable impliquant la connaissance de la nature inappropriée du comportement en tant que fiduciaire, ou impliquant une absence de considération de ce comportement. Au plan subjectif, la "défalcation" implique donc l'intention (y compris "aurait dû savoir") ou à défaut une certaine mauvaise foi ou une certaine immoralité.

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