                               In the

United States Court of Appeals
                For the Seventh Circuit

No. 10-1882

IN RE:

    JAY B ERMAN,
                                                                    Debtor.

F OLLETT H IGHER E DUCATION G ROUP, INC.,
an Illinois corporation,
                                      Plaintiff-Appellant,
                           v.


JAY B ERMAN,
                                                  Defendant-Appellee.


              Appeal from the United States District Court
         for the Northern District of Illinois, Eastern Division.
            No. 1:09-cv-03377—Robert M. Dow, Jr., Judge.



   A RGUED O CTOBER 22, 2010—D ECIDED JANUARY 21, 2011




  Before K ANNE, T INDER, and H AMILTON, Circuit Judges.
  H AMILTON, Circuit Judge. The bankruptcy court held
that a creditor failed to prove that a debt owed to it was
2                                               No. 10-1882

non-dischargeable under 11 U.S.C. § 523(a)(4), which
provides that a debt will not be discharged in bankruptcy
where that debtor has committed “fraud or defalcation
while acting in a fiduciary capacity, embezzlement, or
larceny.” Concluding that the creditor had not estab-
lished that the debtor acted in any fiduciary capacity
toward the creditor, the court entered judgment for the
debtor. The district court affirmed the finding that the
debt was dischargeable, as do we. We agree with our
colleagues on the bankruptcy court and district court
that the creditor failed to show that the debtor owed
the creditor a fiduciary duty.


I. The Facts
   Plaintiff-creditor Follett Higher Education Group, Inc.,
an Illinois corporation, manages more than 750 college
bookstores nationwide. In March 2004, Follett hired
Berman & Associates, Inc., an advertising brokerage
firm also located in Illinois, to place advertisements on
Follett’s behalf. Under the terms of their contract, Follett
paid Berman & Associates 110 percent of the cost of
advertisements that Berman & Associates placed with
media outlets around the country. Berman & Associates
then disbursed payments for the advertisements to news-
papers, radio stations, and billboard operators and re-
tained the extra ten percent as the fee for its services.
The two corporations renewed this arrangement
yearly until Follett learned in the summer of 2006 that
Berman & Associates had not paid several outstanding
advertising bills. Follett was forced to pay some media
No. 10-1882                                                   3

outlets directly without recovering the sums intended
for them that it had already given to Berman & Associates
for that purpose.1
  On August 23, 2006, defendant-debtor Jay Berman, who
served as president, a director, and sole shareholder of
Berman & Associates, petitioned for Chapter 7 bankruptcy.
In his petition, Berman listed debts incurred by Berman
& Associates, including the debt owed to Follett, on his
schedules of outstanding debts. Follett then filed an
adversary action in Berman’s bankruptcy proceedings
claiming that Berman had breached a fiduciary duty
owed to Follett and that, as a result, the debt it was
owed was non-dischargeable pursuant to 11 U.S.C.
§ 523(a)(4). At the conclusion of Follett’s presentation
of evidence at trial, Berman moved for judgment on
partial findings under Federal Rule of Bankruptcy Pro-
cedure 7052. 2 The bankruptcy judge granted Berman’s


1
  Berman & Associates ceased operations during the summer
of 2006 and dissolved by the end of that year. Defendant Jay
Berman and his wife abandoned or threw away any paper
records of Berman & Associates and “got rid of all the com-
puters” following the firm’s dissolution. The bankruptcy court
did not attribute any weight to Berman’s destruction of
the firm’s records. We defer to the discretion of the bankruptcy
judge, as trier of fact, in this regard.
2
  Rule 7052 incorporates into bankruptcy procedure Rule 52
of the Federal Rules of Civil Procedure. Berman’s motion
invoked section (c) of that rule: “If a party has been fully
heard on an issue during a nonjury trial and the court finds
                                                  (continued...)
4                                                No. 10-1882

motion, holding that Follett had failed to prove that
Berman was a fiduciary as required by the statute. The
bankruptcy court’s decision on the dischargeability of
a debt is a final judgment for purposes of appellate juris-
diction. In re Marchiando, 13 F.3d 1111, 1113-14 (7th Cir.
1994). The district court affirmed the bankruptcy court’s
judgment and this appeal followed. We have jurisdiction
to review the district court’s judgment pursuant to
28 U.S.C. § 158(d).


II. Exceptions from Discharge Under Section 523(a)(4)
  Under section 727 of the Bankruptcy Code, and subject
to certain conditions to be fulfilled by the debtor, a bank-
ruptcy court ordinarily will discharge a debtor’s debts,
releasing the debtor from liability for those debts. See 11
U.S.C. § 727. There are, however, some exceptions.
Section 523(a) of the Code excludes certain debts from
discharge, often, but not always, where the debt results
from some sort of intentional wrongdoing by the
debtor. Courts construe these exceptions narrowly, in
favor of the debtor, bearing in mind the goal of bank-
ruptcy law to give the debtor a fresh start. E.g., In re
Crosswhite, 148 F.3d 879, 881 (7th Cir. 1998) (“When de-
ciding whether a particular debt falls within a § 523


(...continued)
against the party on that issue, the court may enter judgment
against the party on a claim or defense that, under the con-
trolling law, can be maintained or defeated only with a favor-
able finding on that issue.” Fed. R. Civ. P. 52(c).
No. 10-1882                                                   5

exception, courts generally construe the statute strictly
against the objecting creditor and liberally in favor of the
debtor.”). Debts will be discharged unless proven non-
dischargeable by a preponderance of the evidence. See
Grogan v. Garner, 498 U.S. 279, 291 (1991).
   Follett argues that the debt owed to it should be ex-
cepted from discharge on the basis of Berman’s and
Berman & Associates’ alleged “defalcation while acting
in a fiduciary capacity.” 11 U.S.C. § 523(a)(4).3 To estab-
lish that a debt is non-dischargeable under section
523(a)(4), a creditor must show (1) that the debtor acted as
a fiduciary to the creditor at the time the debt was
created, and (2) that the debt was caused by fraud or
defalcation. See In re Frain, 230 F.3d 1014, 1019 (7th Cir.
2000); Klingman v. Levinson, 831 F.2d 1292, 1295 (7th Cir.
1987). Here, the parties dispute the first requirement:



3
   Black’s Law Dictionary defines “defalcation” as a “failure to
meet an obligation” or “a nonfraudulent default.” Black’s Law
Dictionary 479 (9th ed. 2009). Defalcation can be distinguished
from fraud and embezzlement on the basis that subjective,
deliberate wrongdoing is not required to establish defalca-
tion, though some degree of fault is required. See Central
Hanover Bank & Trust Co. v. Herbst, 93 F.2d 510, 512 (2d Cir.
1937) (L. Hand, J.) (a fiduciary who takes money upon a condi-
tional authority that may be revoked, and who knows that
the authority may be revoked, is guilty of a “defalcation”
even if the wrong falls short of fraud or embezzlement). We
have held that defalcation requires something more than
negligence or mistake, but less than fraud. See Meyer v.
Rigdon, 36 F.3d 1375, 1385 (7th Cir. 1994).
6                                               No. 10-1882

whether there existed a fiduciary relationship that could
render the debt to Follett non-dischargeable. The bank-
ruptcy judge found none. Distinguishing this case from
prior cases where fiduciary duties were found, Judge
Goldgar determined that Berman & Associates’ role as
Follett’s agent in purchasing advertising did not amount to
a fiduciary relationship. The judge also concluded that
even if the corporate parties’ relationship could be con-
sidered fiduciary, Follett had not established any kind
of obligation between Follett and Jay Berman, the indi-
vidual debtor, nor had it shown that Berman &
Associates was Berman’s alter ego. Not finding any
fiduciary obligation on Berman’s part, the bankruptcy
court entered judgment in Berman’s favor.
  We apply the same standard of review as the district
court, examining the bankruptcy court’s legal findings
de novo and its findings of fact for clear error. Ojeda v.
Goldberg, 599 F.3d 712, 716 (7th Cir. 2010); Frain, 230 F.3d
at 1017; Peterson v. Scott (In re Scott), 172 F.3d 959, 966
(7th Cir. 1999). Where the trial court correctly states the
law, its determination of whether the facts met the legal
standard will be disturbed only if it is clearly erroneous.
See Pinkston v. Madry, 440 F.3d 879, 888 (7th Cir. 2006).
   Unlike most claims of non-dischargeability, this case
presents an added challenge for Follett because it con-
tracted with Berman & Associates, not with Jay Berman,
the individual debtor. Berman & Associates is not the
debtor before us. Jay Berman is, and his debts are
subject to discharge unless Follett has proven an excep-
tion. Follett offers two theories for holding that the debt
is not dischargeable. Neither is persuasive.
No. 10-1882                                                   7

  A. Officer of an Insolvent Corporation
  Follett argues first that Jay Berman owed a fiduciary
duty to the creditors of Berman & Associates because
he was an officer and director of an insolvent corpora-
tion. Under Illinois law, like the law of many states, a
corporate officer or director assumes a fiduciary duty
toward the corporation, its shareholders, and, upon the
corporation’s insolvency, also to its creditors. See, e.g.,
Atwater v. American Exchange National Bank of Chicago, 38
N.E. 1017, 1022 (Ill. 1893) (“directors . . . occupy a fiduciary
relation towards the creditors when the corporation
becomes insolvent”); Paul H. Schwendener, Inc. v. Jupiter
Electricity Co., 829 N.E.2d 818, 828 (Ill. App. 2005) (“once a
corporation becomes insolvent, the fiduciary duty of an
officer is extended to the creditors of the corporation”);
see also 5 William L. Norton, Jr., Norton Bankruptcy Law
& Practice § 96:4 (3d ed. 2010) (majority view is that
insolvency places corporate assets in trust for corporate
creditors, and in some jurisdictions the fiduciary duty
of directors shifts to include creditors).
  Follett argues that this duty under state law amounts
to a fiduciary duty for purposes of federal bankruptcy
law under section 523(a)(4). Accepting this argument,
in the absence of proof of fraud, would go a long way
toward imposing non-dischargeable personal liability
on corporate officers and directors for general corporate
debts of faltering corporations.
  This theory has divided bankruptcy and district
courts. Adopting the theory, for example, see Salem
Services, Inc. v. Hussain (In re Hussain), 308 B.R. 861, 867-68
8                                                No. 10-1882

(Bankr. N.D. Ill. 2004) (accepting theory but finding no
defalcation); Energy Products Engineering, Inc. v. Reuscher
(In re Reuscher), 169 B.R. 398, 402-03 (S.D. Ill. 1994) (ac-
cepting theory and reversing bankruptcy court’s dis-
missal of complaint); see also Berres v. Bruning (In re
Bruning), 143 B.R. 253, 256 (D. Colo. 1992) (holding that
a fiduciary obligation arises upon insolvency and falls
within section 523(a)(4)’s ambit). Other courts have
adopted a more limited view, recognizing that the Su-
preme Court has construed the scope of a fiduciary re-
lationship under section 523(a)(4) more narrowly than
state law does for other purposes. See, e.g., Murphy &
Robinson Investment Co. v. Cross (In re Cross), 666 F.2d
873, 880-81 (5th Cir. Unit B 1982) (concluding that an
officer did not owe the corporation’s creditor any
fiduciary duty within the meaning of section 523(a)(4));
Economic Development Growth Enterprises Corp. v. McDermott
(In re McDermott), 434 B.R. 271, 281 (Bankr. N.D.N.Y.
2010), appeal docketed, No. 6:10-CV-0696 (N.D.N.Y. June 17,
2010) (determining that fiduciary obligations of officers
of insolvent corporations are insufficient for the pur-
poses of section 523(a)(4)); First Options of Chicago, Inc. v.
Kaplan (In re Kaplan), 162 B.R. 684, 704-06 (Bankr. E.D. Pa.
1993) (rejecting the premise that an officer’s debt would
be non-dischargeable as a result of the corporation’s
wrongdoing, despite state law making the officer a fidu-
ciary).
  In this case, the bankruptcy court found that Follett
had not proved that Berman & Associates was insolvent,
so the court did not reach the question whether Berman,
as a director and officer, had a fiduciary duty to
No. 10-1882                                                9

creditors, let alone whether any such fiduciary duty
qualified Berman’s debt as non-dischargeable under
section 523(a)(4). Bearing in mind Berman’s controlling
role in the corporation, his own personal bankruptcy,
the end of the corporation’s business in 2006, and the
corporation’s inability to pay what it owed to Follett,
we believe the better approach is to address Follett’s
argument on the merits, which can be decided as a
matter of law. We hold that even if the evidence
showed that Berman & Associates was insolvent when
all or some part of the debt arose, so that Berman would
have had a fiduciary duty toward creditors under
Illinois law, this state law duty would not have con-
stituted a basis for non-dischargeability of the debt
owed to Follett under section 523(a)(4).
  Not all persons treated as fiduciaries under state law
are considered to “act in a fiduciary capacity” for pur-
poses of federal bankruptcy law. The existence of a fidu-
ciary relationship under section 523(a)(4) is a matter
of federal law. Frain, 230 F.3d at 1017. As we observed in
In re McGee, bankruptcy law “depends on, and imple-
ments, entitlements defined by state law, but which of
these entitlements is subject to discharge or a trustee’s
avoiding power is beyond state control.” 353 F.3d 537,
540 (7th Cir. 2003) (citations omitted). It is not sufficient
to show merely that a debtor was a fiduciary under
applicable state law. Although an officer or director of an
insolvent corporation may be deemed a fiduciary for
creditors under state law, the officer or director may not
be deemed, on that basis alone, a fiduciary under 11
U.S.C. § 523(a)(4).
10                                                  No. 10-1882

  The Supreme Court taught in Davis v. Aetna Acceptance
Co., 293 U.S. 328 (1934), that the non-dischargeability
exception’s reference to fiduciary capacity was “strict
and narrow.” 293 U.S. at 333. As Justice Cardozo wrote
for the Court, the debtor “must have been a trustee
before the wrong and without reference thereto.” Id.4
Those facts are not present in a situation such as this,
where the corporation’s breach of its contract created
the debt. The resulting obligation to the creditor is not
“turned into” one arising from a trust. Id. at 334. Such
obligations are “remote from the conventional trust or
fiduciary setting, in which someone . . . in whom confi-
dence is reposed is entrusted with another person’s
money for safekeeping.” See Marchiando, 13 F.3d at 1116.
At least in the absence of fraud, we decline to stretch
the section 523(a)(4) exception so far as to make officers
and directors of insolvent corporations personally
liable, without the ability to secure discharge in bank-
ruptcy, for a wide range of corporate debts.


    B. Express Trust or Implied Fiduciary Status
  Under its second theory, Follett urges us to hold that
Berman & Associates owed it a fiduciary duty and then


4
  The Davis Court was interpreting a predecessor statute that
stated in relevant part: “A discharge in bankruptcy shall release
a bankrupt from all his provable debts, except such as . . . were
created by his fraud, embezzlement, misappropriation, or
defalcation while acting as an officer or in any fiduciary capac-
ity.” Bankruptcy Act of 1898, § 17, 30 Stat. 544, 550, formerly
codified at 11 U.S.C. § 35 (repealed 1978).
No. 10-1882                                                   11

to pierce the corporate veil to hold Jay Berman personally
responsible for the debt of Berman & Associates. We
agree with the bankruptcy and district courts that Follett
failed to prove that the corporation owed it a fiduciary
duty, so we do not reach the veil-piercing issue.
  Long before its discussion in Davis v. Aetna Acceptance
Co., the Supreme Court addressed the scope of the non-
dischargeable debt exception in Chapman v. Forsyth, 43 U.S.
(2 How.) 202 (1844). There, the Court held that a
cotton “factor” tasked with selling 150 bales of cotton on
behalf of his principal did not fall within the statutory
exception.5 The Court cautioned about the implications
of a broad interpretation—one that risked swallowing
the rule of dischargeability—and concluded that the
exception was intended to be limited: “In almost all the
commercial transactions of the country, confidence is
reposed in the punctuality and integrity of the debtor,
and a violation of these is, in a commercial sense, a disre-
gard of a trust. But this is not the relation spoken of in . . .
the act.” 43 U.S. at 207. The Court reiterated its
limited interpretation, and the consistency of its applica-
tion, in Davis. See 293 U.S. at 333.


5
  As in Davis, the Court was interpreting an earlier version of
the exception, which stated in relevant part that “all persons
whatsoever, residing in any state, territory or district of the
United States owing debts which shall not have been created
in consequence of a defalcation as a public officer, or as
executor, administrator, guardian, or trustee, or while acting
in any other fiduciary capacity shall . . . be entitled to a dis-
charge.” Forsyth, 43 U.S. at 206 (internal quotation marks
omitted).
12                                              No. 10-1882

  Our application of the Court’s guiding principle is no
different. We have recognized that the exception encom-
passes only “a subset” of fiduciary obligations. In re
Woldman, 92 F.3d 546, 547 (7th Cir. 1996). At the time of
Davis, the subset was limited to express trusts, and did
not include trusts implied by law. See 293 U.S. at 333.
Since then, however, courts have expanded the applica-
tion of section 523(a)(4) beyond express trusts to
certain relationships where the law imposes fiduciary
obligations, such as the obligation an attorney owes to a
client or a director owes to shareholders. See Marchiando,
11 F.3d at 1115; see also LSP Investment Partnership v.
Bennett (In re Bennett), 989 F.2d 779, 784-85 (5th Cir. 1993)
(holding that the “technical” or “express” trust require-
ment is no longer “limited to trusts that arise by virtue
of a formal trust agreement, but includes relationships
in which trust-type obligations are imposed pursuant to
statute or common law”). Thus, our threshold inquiry
is whether Berman & Associates owed Follett a fiduciary
obligation through the presence of either an express
trust or an implied fiduciary status arising from their
contractual relationship.


     1.   No Express Trust
  Follett maintains that it has shown sufficient evidence
to demonstrate the existence of an express trust settled
by Follett, with itself as the beneficiary and Berman &
Associates as the trustee, over the years of their con-
tractual relationship. We disagree. In McGee, we de-
scribed the hallmarks of a trust to include “[s]egregation
No. 10-1882                                             13

of funds, management by financial intermediaries, and
recognition that the entity in control of the assets has
at most ‘bare’ legal title to them.” 353 F.3d at 540-41.
These hallmarks, as well as a demonstration of clear
intent to create a trust, can distinguish a trust relation-
ship from an ordinary contractual relationship. See
Robert E. Ginsberg, Robert D. Martin & Susan V. Kelley,
Ginsberg & Martin on Bankruptcy § 11.06 at 11-112 (5th
ed. 2010) (collecting cases). Implied trusts lacking these
hallmarks, such as constructive or resulting trusts
imposed on transactions as a matter of equity, do not
fall within the statutory exception. See Marchiando, 13
F.3d at 1115-16. Unlike express trust arrangements, fidu-
ciary duties arising under constructive or resulting trusts
are found to be implied by courts only as a result
of existing debts. For a section 523(a)(4) exception to
apply, the fiduciary duties must exist prior to the debt.
See id.; Carlisle Cashway, Inc. v. Johnson (In re Johnson),
691 F.2d 249, 251-52 (6th Cir. 1982) (noting that the
term “fiduciary” in the non-dischargeable debt excep-
tion does not extend to implied trusts).
  The contracts between Berman & Associates and Follett
stated that Berman & Associates would provide Follett
with bill-paying services. Nothing in those contracts
reflected an intent to create an express trust. Nothing in
the record suggests that Berman & Associates main-
tained any separate fiduciary account or that the con-
tracts required segregation of funds on Follett’s behalf.
We agree with the bankruptcy and district courts that
Follett did not prove the existence of an express trust.
14                                             No. 10-1882

     2.   No Implied Fiduciary Status
  In the absence of an express trust, Follett faces an
uphill battle to prove a fiduciary relationship. Follett
points to our holdings in Marchiando and McGee to argue
that the nature of the three-year relationship between
the two corporations was sufficient to imply fiduciary
duties within the meaning of the statute. Follett
misreads those cases, which provide useful guidance
on the implied fiduciary theory.
  In Marchiando, the owner of a convenience store
declared bankruptcy after failing to remit the proceeds
of state lottery ticket sales. 13 F.3d at 1113. An Illinois
state statute provided that lottery ticket proceeds
“shall constitute a trust fund” until paid to the state. 20
ILCS § 1605/10.3. We acknowledged that a fiduciary
relationship may arise separately from an express trust,
but we held that the state statute alone did not create
a fiduciary obligation within the meaning of section
523(a)(4). Non-dischargeability requires more. We ex-
plained that the non-dischargeability standard could
be met where a fiduciary relationship involved a dif-
ference in knowledge or power giving one party a
position of ascendancy over another. 13 F.3d at 1116.
Though the relationship in that case did not meet the
standard, we described how the law, and the non-
dischargeability exception in particular, separates rela-
tionships “in which one party to the relation is incapable
of monitoring the other’s performance” from relation-
ships between equals. Id.
  In McGee, a city ordinance created a fiduciary obligation
on the part of a landlord to hold all security deposits
No. 10-1882                                                  15

separate from other funds. 353 F.3d at 540. In that case,
again, the ordinance’s label of the landlord’s obligation
as “fiduciary” did not qualify the parties’ relationship as
falling within the section 523(a)(4) exception. But its
requirement that the deposit be segregated, as well as
the disparity in power governing those funds, led us to
conclude that the “economic relation” created by the
ordinance imposed fiduciary obligations within the
meaning of section 523(a)(4). Id. at 541.6
   This analysis applies beyond cases like Marchiando
and McGee, where a statute or ordinance forms the basis
of a fiduciary obligation, to those more closely re-
sembling this case, where a contract is necessary to estab-
lish a fiduciary relationship. Justice Cardozo wrote for
the Davis Court that it is the substance of a transaction,
rather than the label assigned to it, that determines
whether there is a fiduciary relationship for bankruptcy
purposes. 293 U.S. at 334. Thus, in such cases, we have
held that the obligations of the contract, like the legisla-
tive labels in Marchiando and McGee, do not alone
establish a fiduciary relationship within the meaning


6
  Follett argues on appeal that the bankruptcy court “disre-
garded” McGee and that, had it known the court would take
that approach, it would have argued its claim under an embez-
zlement theory (which would not have required proof of
fiduciary capacity) in the alternative. We think the bankruptcy
court’s interpretation of our prior case law was correct. And
Follett had every opportunity to argue its claim under what-
ever theory or theories it liked. It was not entitled to try one
theory, lose with it, and then start over.
16                                             No. 10-1882

of section 523(a)(4). See Frain, 230 F.3d at 1017; Woldman,
92 F.3d at 547.
  We addressed this issue in Frain, in which share-
holders of a closely held corporation sought to except
from discharge a debt owed to them by the corpora-
tion’s major shareholder on the ground that he had vio-
lated provisions of a shareholder agreement. We acknowl-
edged that Frain, the debtor and the corporation’s
chief operating officer, had a “natural advantage” over
the other two shareholders because of his knowledge of
the corporation’s finances. That fact alone was not enough
to meet the high standard of section 523(a)(4), but Frain
also maintained “ultimate power” over both his own
employment and the direction of the corporation. Id. at
1017-18. His “control over the day-to-day business of
the corporation and ownership of 50% of the shares gave
him significant freedom to run the corporation as he
saw fit.” Id. at 1018. This substantial concentration of
power under the corporation’s internal structure created
a fiduciary duty that fell within the meaning of
section 523(a)(4).
  Our analysis in Woldman was similar, though the out-
come differed. There, two lawyers agreed to share
equally any attorney fees generated by a personal
injury case that one lawyer had referred to the other.
92 F.3d at 546. Although under Illinois law, partners or
joint venturers owe each other a fiduciary obligation,
we did not extend the section 523(a)(4) exception so far.
Id. at 546-47. We observed that, as here, the debtor’s
only duty was to honor the agreement. There was no
No. 10-1882                                               17

substantial inequality in power or knowledge between
the parties to distinguish them as anything other than
equal partners. Their relationship fell “at the opposite
end of the broad spectrum of fiduciary obligations”
from cases within the meaning of the section 523(a)(4)
exception, such as those involving a trustee and child
beneficiary or a lawyer and client. Id. at 547.
   Here, the bankruptcy judge correctly concluded that
an ordinary principal-agent or buyer-seller relationship,
without more, is not a fiduciary relationship under
section 523(a)(4). Nothing in the substance of the rela-
tionship between Follett and Berman & Associates quali-
fied it as a fiduciary relationship within the meaning of
section 523(a)(4). Their creditor-debtor relation did not
involve any “special confidence[s]” like those present
in other types of relationships that we and other courts
have recognized to fit within the exception on a case-by-
case basis. Marchiando, 13 F.3d at 1116. See, e.g., Johns v.
Johns (In re Johns), 181 B.R. 965, 970-73 (Bankr. D. Ariz.
1995) (parent, a trustee of funds for the benefit of his
son, was a fiduciary for purposes of non-dischargeability);
Griffiths v. Peterson (In re Peterson), 96 B.R. 314, 321-
24 (Bankr. D. Colo. 1988) (investment advisor with statu-
tory duties qualified as fiduciary within the meaning of
section 523(a)(4)); Purcell v. Janikowski (In re Janikowski),
60 B.R. 784, 789 (Bankr. N.D. Ill. 1986) (fiduciary rela-
tionship created between an attorney and client under
Illinois law fell within section 523(a)(4) exception); Eau
Claire County v. Loken (In re Loken), 32 B.R. 205, 210-11
(Bankr. W.D. Wis. 1983) (public register of deeds and
18                                              No. 10-1882

fee collector served in fiduciary capacity for purposes
of section 523(a)(4)).
  A commercial principal like Follett, or like the cotton
principal long ago in Forsyth, who seeks the protection
of a trust in the event of bankruptcy can create an
express trust by putting clear requirements to that effect
in its contracts, such as requiring segregation of funds
held in trust for it. Otherwise, as the Supreme Court
observed, if the non-dischargeable debt exception were
to include such ordinary relationships as this one, it
would be difficult to limit its application at all. Forsyth,
43 U.S. at 207.


III. Conclusion
  Follett did not establish that Berman & Associates
acted in a fiduciary capacity, under any theory, within
the meaning of 11 U.S.C. § 523(a)(4). We therefore affirm
the bankruptcy court’s decision holding the debt to
Follett to be dischargeable.
                                                 A FFIRMED.




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