Reshetar Systems, Inc. appeals the January 20, 2011 judgment of the bankruptcy court determining the debt owed to Reshetar Systems, Inc. by Debtor Scott A. Thompson was not excepted from discharge.
Bankruptcy Code Section 523(a)(4) excepts from discharge a debt “for fraud or defalcation while acting in a fiduciary capacity[.]” State law may impose fiduciary duties on a debtor. However, whether a given relationship is a fiduciary relationship withinthe meaning of Section 523(a)(4) is a question of federal law.
Section 523(a)(4) also excepts from discharge a debt for embezzlement. For the purposes of this exception, embezzlement is the “fraudulent appropriation of property of another by a person to whom such property has been entrusted or into whose hands it has lawfully come.” To prevail, the creditor must establish “the debtor improperly used the creditor’s property before complying with some obligation to the creditor.”
Section 523(a)(4) also excepts from discharge a debt for larceny. For the purposes of this exception, larceny is the “wrongful taking and carrying away of the property of another with the intent to convert such property to the taker’s use without the consent of the owner.” The exception does not apply if the debtor’s original possession of the property is lawful.
Section 523(a)(6) excepts from discharge a debt “for willful and malicious injury by the debtor to another entity or to the property of another entity[.]” Such a debt must be the result of an injury that is both a “willful injury” and a “malicious injury.” A willful injury is one resulting from the commission of an intentional tort. A malicious injury is one resulting from conduct “targeted at the creditor . . . at least in the sense that the conduct is certain or almost certain to cause financial harm.”
Giving due regard to the bankruptcy court’s opportunity to judge Debtor’s credibility the Panel could not say the bankruptcy court’s finding was clearly erroneous.
Affirmed.
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