Reshetar Systems, Inc. v. Thompson, No. 11-6008 (8th Cir. 2011)
Annotate this CaseReshetar Systems, Inc. appealed a judgment of the bankruptcy court determining that the debt owed to Reshetar by debtor was not excepted from discharge. The court held that the debt was not excepted from discharge as the trustee of a constructive trust was not a fiduciary within the meaning of Code. Sec. 523(a)(4) and Minnesota law did not create the fiduciary relationship required by the section. The court also held that nothing in the statute, the contract, or the subcontract gave Reshetar specific property rights in the payments Construction 70 received from Applebee's. Those payments belonged to Construction 70, and Construction 70's use of its own property did not amount to embezzlement. The court also held that Construction 70's use of its own property did not amount to larceny where the payments from Applebee's to Construction 70 belonged to Construction 70. The court finally held that, giving due regard to the bankruptcy court's opportunity to judge debtor's credibility, the court could not say that the bankruptcy court's finding was clearly erroneous.
Court Description: Bankruptcy Appellate Panel. Bankruptcy court did not err in determining the debt in question was not excepted from discharge as the trustee of a constructive trust is not a fiduciary within the meaning of Code Sec. 523(a)(4) and Minnesota law did not create the fiduciary relationship required by the section; nor was the debt excepted under the embezzlement or larceny provisions of Sec. 523(a)(4) or the willful and malicious injury provisions of Sec. 523(a)(6).
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