Estate of Stanley Cora v. Jahrling (In re Jahrling)

(7th Cir. Mar. 18, 2016)

The seventh circuit affirms the lower courts’ decisions finding the debt nondischargeable under 11 U.S.C. § 523(a)(4), because the debt arose from the debtor’s “defalcation while acting in a fiduciary capacity.” The debtor was an Illinois attorney that represented the plaintiff when he sold his home. The plaintiff spoke only Polish, and the attorney relied on the buyer’s attorney to translate. The sale price was far below market price and the one term the plaintiff required, a life-estate interest in a portion of the property, was not included. The plaintiff obtained a pre-petition state court judgment for the loss. The seventh circuit explains that defalcation does not require deliberate wrongdoing, but fault greater than negligence is required. In this case, the applicable standard was met. Opinion below.

Judge: Hamilton

Attorneys for Plaintiff: Bert J. Zaczek

Attorneys for Debtor: Golan & Christie, LLP, Robert R. Benjamin, Beverly A. Berneman, Anthony J D’Agostino

2016-03-18 – in re jahrling

Author: Matt Lindblom

Stoughton Lumber Company v. Sveum

(7th Cir. June 4, 2015)

The Seventh Circuit affirms the bankruptcy court’s order denying discharge of a debt under 11 U.S.C. § 523(a)(4). Under Wisconsin law, the debtor had committed “theft by contractor” when he paid other creditors out of funds held in trust for the creditor. The creditor had sold hundreds of thousands of dollars’ worth of building materials to the debtor’s construction company. The court affirms, finding the evidence was sufficient to establish the requisite intent. Opinion below.

2015-06-04 – stoughton lumber co v sveum

Author: Matt Lindblom