Sentenza

SUPREME COURT OF THE UNITED STATES BULLOCK v. BANKCHAMPAIGN, N. A. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

SUPREME COURT OF THE UNITED STATES 
BULLOCK v. BANKCHAMPAIGN, N. A.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE ELEVENTH CIRCUIT
No. 11–1518. Argued March 18, 2013 —Decided May 13, 2013
Petitioner's father established a trus
t for the benefit of petitioner and
his siblings, and made petitioner th
e (nonprofessional) trustee. The
trust's sole asset was the father's
life insurance policy.
Petitioner
borrowed funds from the trust three times; all borrowed funds were
repaid with interest. His siblings
obtained a judgment against him
in state court for breach of fiduciary duty, though the court found no
apparent malicious motive. The court imposed constructive trusts on
certain of petitioner's interests—incl
uding his interest in the original
trust—in order to secure petitioner's payment of the judgment, with
respondent serving as trustee for all
of the trusts. Petitioner filed for
bankruptcy. Respondent opposed
discharge of petitioner's state
-
court-imposed debts to the trust,
and the Bankruptcy Court granted
respondent summary judgment, holdin
g that petitioner's debts were
not dischargeable pursuant to 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, embez
-
zlement, or larceny.” The Federa
l District Court and the Eleventh
Circuit affirmed. The latter court reasoned that “defalcation requires
a known breach of fiduciary duty, such that the conduct can be char
-
acterized as objectively reckless.”
Held
: The term “defalcation” in the Bankruptcy Code includes a culpa
-
ble state of mind requirement invo
lving knowledge of, or gross reck
-
lessness in respect to, th
e improper nature of the fiduciary behavior.
Pp. 4
−
9.
(a)
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
2
BULLOCK
v.
BANKCHAMPAIGN, N. A.
Syllabus
about what mental state must accompany defalcation's definition.
Pp. 4
−
5.
(b)
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 inten
-
tional wrong, as does embezzlement; and not implied fraud, or fraud
in law, which may exist without the
imputation of bad faith or immo
-
rality.”
Id.
, at 709. The term “defalcation” should be treated similar
-
ly. Thus, where the conduct at issu
e does not involve bad faith, mor
-
al turpitude, or other immoral co
nduct, “defalcation” requires an
intentional wrong. An intentiona
l wrong includes not only conduct
that the fiduciary knows is improper
but also reckless conduct of the
kind that the criminal law often trea
ts as the equivalent. Where ac
-
tual knowledge of wrongdoing is la
cking, conduct is considered as
equivalent if, as set forth in the Model Penal Code, the fiduciary “con
-
sciously disregards,” or is willfully blind to, “a substantial and unjusti
-
fiable risk” that his conduct will violate a fiduciary duty. Pp. 5
−
7.
(c)
Several considerations support this interpretation. First, statu
-
tory context strongly favors it. The canon
noscitur a sociis
argues for
interpreting “defalcation” as similar to its linguistic neighbors “em
-
bezzlement,” “larceny,” and “fraud,”
which all require a showing of
wrongful or felonious intent. See,
e.g., Neal
,
supra,
at 709.
Second,
the interpretation does not make th
e word identical to its statutory
neighbors. “Embezzlement” requires
conversion, “larceny” requires
taking and carrying away another's property, and “fraud” typically
requires a false statement or omi
ssion; while “defalcation” can en
-
compass a breach of fiduciary obligation that involves neither conver
-
sion, nor taking and carrying away another's property, nor falsity.
Third, the interpretation is consis
tent with the longstanding princi
-
ple that “exceptions to discharge ‘s
hould be confined to those plainly
expressed.'
”
Kawaauhau
v.
Geiger
, 523 U. S. 57, 62. It is also con
-
sistent with statutory exceptions to discharge that Congress normally
confines to circumstances where st
rong, special policy considerations,
such as the presence of fault, ar
gue for preserving the debt, thereby
benefiting, for example, a typically more honest creditor. See,
e.g.
, 11
U.
S. C. §523(a)(2)(A). Fourth, some Circuits have interpreted the
statute similarly for many years without administrative or other dif
-
ficulties. Finally, it is important
to have a uniform interpretation of
federal law, the choices are limited, and neither the parties nor the
Government has presented strong co
nsiderations favoring a different
interpretation. Pp. 7
−
9.
670 F. 3d 1160, vacated and remanded.
B
REYER
, J.,
delivered the opinion for a unanimous Court.
_________________
_________________
1
Cite as: 569 U. S. ____ (2013)
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash
-
ington, D. C. 20543,
of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
No. 11–1518
RANDY CURTIS BULLOCK, PETITIONER
v.
BANKCHAMPAIGN, N. A.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE ELEVENTH CIRCUIT
[May 13, 2013]
J
USTICE
B
REYER
delivered the opinion of the Court.
Section 523(a)(4) of the Federal Bankruptcy Code pro
-
vides that an individual cannot obtain a bankruptcy dis
-
charge 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 t
hat 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.
I
In 1978, the father of petitioner Randy Bullock estab
-
lished a trust for the benefit of
his five children. He made
petitioner the (nonprofessi
onal) trustee; and he trans
-
ferred to the trust a single asset, an insurance policy on
his life. 670 F. 3d 1160, 1162 (CA11 2012); App. to Pet.
for Cert. 33a. The trust instrument permitted the trustee
to borrow funds from the insurer against the policy's
value (which, in practice, was available at an insurance
-