Bullock v. BankChampaign, N.A., 133 S. Ct. 1754 (U.S. Sup. Ct. May 13, 2013)

(plaintiff was trustee of trust established for himself and his siblings by his father which contained father's life insurance policy; plaintiff borrowed from trust on three occasions (as authorized by trust terms) and repaid loans with interest; plaintiff's siblings later sued for breach of fiduciary duty based on self-dealing and obtained judgment with court imposing constructive trust on plaintiff's interest in trust with defendant serving as trustee; after inability to obtain funds to pay court-ordered payment, plaintiff filed bankruptcy and sought discharge of state-court imposed debts to trust; defendant opposed discharge and prevailed at bankruptcy court on basis that debts were within 11 U.S.C. Sec. 523(a)(4) exception to discharge for debts that are a "defalcation" while acting in a fiduciary capacity; appellate court (7th Cir.) affirmed; issue presented was whether "defalcation" requires finding of ill intent or scienter and, if so, what kind of scienter required; Court holds that "defalcation" requires positive fraud, or fraud in fact, involving moral turpitude or intentional wrong or conscious disregard to substantial and unjustifiable risk to known fiduciary duty; appellate court applied standard of "objective recklessness"; appellate court opinion vacated and case remanded).