The Bankruptcy Appellate Panel reversed a bankruptcy court judgment. The court held that the fiduciary capacity requirement of the bankruptcy code dischargeability exception for debts arising from fraud of defalcation while acting in a fiduciary capacity is not satisfied absent an express, technical, or statutory trust and a clear identifiable trust res. The court held further that a California real estate broker did not inherently qualify as a fiduciary under the exception where a creditor sought to avoid discharge of a state court judgment in which a jury found that the broker intentionally breached her fiduciary duty in a real estate sales transaction.
Marcella Honkanen filed a chapter 7 bankruptcy petition in California. Relying solely upon 11 U.S.C. §523(a)(4), creditor Susan Archer brought an adversary proceeding contesting the dischargeability of a state court judgment rendered against Honkanen. Archer’s claim rested on the doctrine of issue preclusion, or collateral estoppel, on the basis of the state court jury verdict. In particular, Archer contended a California state court jury found Honkanen had intentionally breached her fiduciary duty to Archer by making misrepresentations and concealing information while acting in a fiduciary capacity.
