Randy Curtis Bullock, Petitioner v. Bankchampaign, N. A. (569 U.S. 267)
U.S. Supreme Court · decided May 13, 2013 · Supreme Court Database (Spaeth)
- Citation
- 569 U.S. 267 · 133 S. Ct. 1754
- Decided
- May 13, 2013
- Term
- October Term 2012
- Vote
- 9–0
- Majority author
- Justice Breyer
- Issue area
- Economic Activity
- Disposition
- Vacated and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Liberal
Opinion excerpt
Justice BREYER delivered the opinion of the Court. 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. I In 1978, the father of petitioner Randy Bullock established a trust for the benefit of his five children. He made petitioner the (nonprofessional) trustee; and he transferred to the trust a single asset, an insurance policy on his life. 670 F.3d 1160, 1162 (C.A.11 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-company-determined 6% interest rate). Id ., at 17a, 34a, 50a. In 1981, petitioner, at his father's request, borrowed money from the trust, paying the funds to his mother who used them to repay a debt to the father's business. In 1984, petitioner again borrowed funds from the trust,…
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