October Term 2012 · Docket 11-1518
Does defalcation require intent to defraud?
The dispute centers on whether a trustee's self-dealing constitutes defalcation without proof of intent to defraud.
Verified source milestones
- — An official oral-argument transcript was verified.
The arguments, in order
This case may have been argued more than once. Each entry below uses that session's official transcript. Later arguments do not erase earlier ones.
Argument 1 ·
What happened at the argument
Mr. Byrne stated that defalcation is a confounding question in bankruptcy law.
Mr. Bensinger argued that the trustee's self-dealing was a reckless breach of duty.
Mr. Gannon contended that no particular mens rea is inherent in defalcation.
Justice Breyer noted that the trustee acted knowingly, which is stronger than recklessness.
Read the official transcript for this argument · Official argument details
Sources used for this argument breakdown
- Official Supreme Court Transcript — file page 10, lines 21-25 — Transcript, file page 10, lines 21-25
- Official Supreme Court Transcript — file page 10, lines 9-15 — Transcript, file page 10, lines 9-15
- Official Supreme Court Transcript — file page 23, lines 11-19 — Transcript, file page 23, lines 11-19
- Official Supreme Court Transcript — file page 3, lines 17-9 — Transcript, file page 3, lines 17-9
- Official Supreme Court Transcript — file page 3, lines 7-15 — Transcript, file page 3, lines 7-15
- Official Supreme Court Transcript — file page 4, lines 11-17 — Transcript, file page 4, lines 11-17
- Official Supreme Court Transcript — file page 4, lines 37-3 — Transcript, file page 4, lines 37-3
- Official Supreme Court Transcript — file page 41, lines 25-33 — Transcript, file page 41, lines 25-33
- Official Supreme Court Transcript — file page 5, lines 17-29 — Transcript, file page 5, lines 17-29
- Official Supreme Court Transcript — file page 6, lines 25-29 — Transcript, file page 6, lines 25-29
- Official Supreme Court Transcript — file page 6, lines 47-13 — Transcript, file page 6, lines 47-13
- Official Supreme Court Transcript — file page 7, lines 25-31 — Transcript, file page 7, lines 25-31
- Official Supreme Court Transcript — file page 7, lines 39-45 — Transcript, file page 7, lines 39-45
- Official Supreme Court Transcript — file page 8, lines 3-15 — Transcript, file page 8, lines 3-15
- Official Supreme Court Transcript — file page 9, lines 27-43 — Transcript, file page 9, lines 27-43
A citizen's guide to the whole case
What this case is about
This case examines the mental state required for defalcation under bankruptcy law. the side that brought the case argues that reckless self-dealing suffices. the opposing side contends that intent to defraud is necessary. The Court must define the term defalcation in Section 523(a)(4).
Official sources for this section
- Official Supreme Court Transcript — file page 23, lines 11-19 — Transcript, file page 23, lines 11-19
- Official Supreme Court Transcript — file page 3, lines 17-9 — Transcript, file page 3, lines 17-9
- Official Supreme Court Transcript — file page 41, lines 25-33 — Transcript, file page 41, lines 25-33
How the case got here
The Supreme Court heard oral argument in this case on March 18, 2013.
Official sources for this section
- Official Supreme Court Transcript — file page 3, lines 7-15 — Transcript, file page 3, lines 7-15
What each side wants
the side that brought the case wants the Court to hold that reckless self-dealing meets the defalcation standard.
the opposing side wants the Court to require proof of intent to defraud for defalcation.
Official sources for this section
- Official Supreme Court Transcript — file page 23, lines 11-19 — Transcript, file page 23, lines 11-19
- Official Supreme Court Transcript — file page 3, lines 17-9 — Transcript, file page 3, lines 17-9
- Official Supreme Court Transcript — file page 41, lines 25-33 — Transcript, file page 41, lines 25-33
What each side says
the side that brought the case argues that a reckless breach of fiduciary duty is a defalcation.
the opposing side argues that no specific mental state is inherent in the term defalcation.
Official sources for this section
- Official Supreme Court Transcript — file page 23, lines 11-19 — Transcript, file page 23, lines 11-19
- Official Supreme Court Transcript — file page 3, lines 17-9 — Transcript, file page 3, lines 17-9
- Official Supreme Court Transcript — file page 41, lines 25-33 — Transcript, file page 41, lines 25-33
What the justices asked
Justice Alito asked whether the mental state applies to facts or law.
Justice Sotomayor noted the trustee wanted profits from the investment.
Official sources for this section
- Official Supreme Court Transcript — file page 10, lines 21-25 — Transcript, file page 10, lines 21-25
- Official Supreme Court Transcript — file page 10, lines 9-15 — Transcript, file page 10, lines 9-15
- Official Supreme Court Transcript — file page 3, lines 7-15 — Transcript, file page 3, lines 7-15
- Official Supreme Court Transcript — file page 4, lines 11-17 — Transcript, file page 4, lines 11-17
- Official Supreme Court Transcript — file page 4, lines 37-3 — Transcript, file page 4, lines 37-3
- Official Supreme Court Transcript — file page 5, lines 17-29 — Transcript, file page 5, lines 17-29
- Official Supreme Court Transcript — file page 6, lines 25-29 — Transcript, file page 6, lines 25-29
- Official Supreme Court Transcript — file page 6, lines 47-13 — Transcript, file page 6, lines 47-13
- Official Supreme Court Transcript — file page 7, lines 25-31 — Transcript, file page 7, lines 25-31
- Official Supreme Court Transcript — file page 7, lines 39-45 — Transcript, file page 7, lines 39-45
- Official Supreme Court Transcript — file page 8, lines 3-15 — Transcript, file page 8, lines 3-15
- Official Supreme Court Transcript — file page 9, lines 27-43 — Transcript, file page 9, lines 27-43
Why it matters
This case defines the mental state required for defalcation. It determines when a trustee's self-dealing bars debt discharge. It clarifies the scope of fiduciary duties in bankruptcy. It impacts how courts treat reckless breaches of trust.
Official sources for this section
- Official Supreme Court Transcript — file page 23, lines 11-19 — Transcript, file page 23, lines 11-19
- Official Supreme Court Transcript — file page 3, lines 17-9 — Transcript, file page 3, lines 17-9
- Official Supreme Court Transcript — file page 41, lines 25-33 — Transcript, file page 41, lines 25-33
What happens next
This article currently covers the argument record. Use the official docket link for later case activity.
Official sources for this section
- Official Supreme Court Transcript — file page 10, lines 21-25 — Transcript, file page 10, lines 21-25
- Official Supreme Court Transcript — file page 10, lines 9-15 — Transcript, file page 10, lines 9-15
- Official Supreme Court Transcript — file page 3, lines 7-15 — Transcript, file page 3, lines 7-15
- Official Supreme Court Transcript — file page 4, lines 11-17 — Transcript, file page 4, lines 11-17
- Official Supreme Court Transcript — file page 4, lines 37-3 — Transcript, file page 4, lines 37-3
- Official Supreme Court Transcript — file page 5, lines 17-29 — Transcript, file page 5, lines 17-29
- Official Supreme Court Transcript — file page 6, lines 25-29 — Transcript, file page 6, lines 25-29
- Official Supreme Court Transcript — file page 6, lines 47-13 — Transcript, file page 6, lines 47-13
- Official Supreme Court Transcript — file page 7, lines 25-31 — Transcript, file page 7, lines 25-31
- Official Supreme Court Transcript — file page 7, lines 39-45 — Transcript, file page 7, lines 39-45
- Official Supreme Court Transcript — file page 8, lines 3-15 — Transcript, file page 8, lines 3-15
- Official Supreme Court Transcript — file page 9, lines 27-43 — Transcript, file page 9, lines 27-43
Official Court provenance
Official docket and case history · Official Supreme Court oral-argument detail page
Title and summary sources
- Official Supreme Court Transcript — file page 23, lines 11-19 — Transcript, file page 23, lines 11-19
- Official Supreme Court Transcript — file page 3, lines 17-9 — Transcript, file page 3, lines 17-9
- Official Supreme Court Transcript — file page 41, lines 25-33 — Transcript, file page 41, lines 25-33
- Official Supreme Court Transcript — file page 23, lines 11-19 — Transcript, file page 23, lines 11-19
- Official Supreme Court Transcript — file page 3, lines 17-9 — Transcript, file page 3, lines 17-9
- Official Supreme Court Transcript — file page 41, lines 25-33 — Transcript, file page 41, lines 25-33
Revision history
- Revision 1 · Official Transcript ·
Correction: Rewritten to the concise citizen-facing editorial standard.
- Revision 2 · Official Transcript ·
Correction: Migrated to the dated official Court activity contract without model use.