By: WISCONSIN LAW JOURNAL STAFF//January 21, 2011//
Bankruptcy
Nondischargeability; fiduciary duty
Even if a corporate director or officer of an insolvent corporation owes a fiduciary duty to creditors, that duty is not a basis for non-dischargeability of the debt, absent fraud.
“Here, the bankruptcy judge correctly concluded that an ordinary principal-agent or buyer-seller relationship, without more, is not a fiduciary relationship under section 523(a)(4). Nothing in the substance of the relationship between Follett and Berman & Associates qualified it as a fiduciary relationship within the meaning of section 523(a)(4). Their creditor-debtor relation did not involve any ‘special confidence[s]’ like those present in other types of relationships that we and other courts have recognized to fit within the exception on a case-by-case basis. Marchiando, 13 F.3d at 1116. See, e.g., Johns v. Johns (In re Johns), 181 B.R. 965, 970-73 (Bankr. D. Ariz. 1995) (parent, a trustee of funds for the benefit of his son, was a fiduciary for purposes of non-dischargeability); Griffiths v. Peterson (In re Peterson), 96 B.R. 314, 321- 24 (Bankr. D. Colo. 1988) (investment advisor with statutory duties qualified as fiduciary within the meaning of section 523(a)(4)); Purcell v. Janikowski (In re Janikowski), 60 B.R. 784, 789 (Bankr. N.D. Ill. 1986) (fiduciary relationship created between an attorney and client under Illinois law fell within section 523(a)(4) exception); Eau Claire County v. Loken (In re Loken), 32 B.R. 205, 210-11 (Bankr. W.D. Wis. 1983) (public register of deeds and fee collector served in fiduciary capacity for purposes of section 523(a)(4)).”
Affirmed.
10-1882 In re Berman
Appeal from the United States District Court for the Northern District of Illinois, Dow, J., Hamilton, J.