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Dinsdale Bros., Inc. v. Charles D. Leonard (In re Leonard), Ch. 7, BK15-82016, A17-8010 (Jan. 17, 2018)

The court granted summary judgment to the debtor in a non-dischargeability action under § 523(a)(4) brought by a defendant in a state-court lawsuit filed by a creditor of the debtor. The debtor had purchased cattle from the state-court plaintiff, a livestock auction company, for resale to the state-court defendant, a cattle feeding operation. The cattle feeder paid the debtor for the cattle, but the debtor’s check to the auction company was dishonored and remains unpaid. When the auction company sued the cattle feeder in state court to recover payment for the animals, the cattle feeder specifically denied that the debtor had acted as its agent and fiduciary, but it filed this adversary proceeding to protect itself in the event it was held liable in the state-court litigation.

The evidence submitted on the summary judgment motion did not support a finding that the parties had a technical or express trust that would give rise to a fiduciary relationship as required under § 523(a)(4), nor that there was any intentional wrongdoing by the debtor.
 

Date: 
Wednesday, January 17, 2018