B.C. Produce, Inc. v. Kaloyanides, 661 B.R. 481

Plaintiffs are wholesale produce suppliers who sold goods to Atlas Produce and Provisions LLC, alleged to be controlled by debtor Jason Kaloyanides.
Plaintiffs allege unpaid amounts for produce subject to the Perishable Agricultural Commodities Act (PACA) trust.
Plaintiffs seek a ruling that Debtor's debts are nondischargeable under 11 U.S.C. § 523(a)(4) as resulting from defalcation while acting in a fiduciary capacity.
Parties filed cross-motions for summary judgment on whether a PACA trust creates the requisite "fiduciary capacity" under § 523(a)(4).
The Court's decision follows the Supreme Court's denial of certiorari in a similar Eleventh Circuit case, making the issue ripe.
The Court ultimately held for Kaloyanides, ruling that PACA trusts do not create the fiduciary capacity required by § 523(a)(4).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does a PACA trust create a fiduciary capacity under § 523(a)(4)?	PACA trusts meet the requirements for fiduciary relationship under § 523(a)(4).	PACA does not create a trust that satisfies § 523(a)(4)'s narrow definition of fiduciary capacity.	PACA does not create the fiduciary capacity required by § 523(a)(4).
Are unpaid PACA debts therefore per se nondischargeable?	Yes—failure to pay under a PACA trust is defalcation while acting in a fiduciary capacity.	No—mere nonpayment under PACA is not defalcation within the meaning of § 523(a)(4).	PACA debts are dischargeable; nonpayment is not defalcation while in fiduciary capacity.
Is summary judgment appropriate on the legal issue?	No genuine issue of material fact—judgment should be for plaintiffs as a matter of law.	No disputed facts, but judgment should be for defendant as a matter of law.	Summary judgment granted for defendant on nondischargeability under § 523(a)(4).
Do PACA trusts satisfy the “express or technical trust” standard?	Yes—they have defined res, duties, and arise prior to breach.	No—PACA trusts lack asset segregation and essential trust-like duties required for § 523(a)(4).	PACA trusts lack sufficient technical trust features (e.g., no segregation, duties not explicit).

Davis v. Aetna Acceptance Co., 293 U.S. 328 (strict and narrow construction of "fiduciary capacity" for discharge exceptions)
Hiller Cranberry Prods., Inc. v. Koplovsky, 165 F.3d 1 (discussing personal liability of PACA trustees for breach of fiduciary duty but not in the § 523 context)
Coosemans Specialties, Inc. v. Gargiulo, 485 F.3d 701 (holding that those controlling PACA trust assets may be personally liable)
Sunkist Growers, Inc. v. Fisher, 104 F.3d 280 (noting personal liability under PACA for individuals in control)
Tom Lange Co. v. Lombardo Fruit & Produce Co., 12 F.3d 806 (PACA trust protects sellers by prioritizing their claims)
Consumers Produce Co. v. Volante Wholesale Produce, Inc., 16 F.3d 1374 (PACA creates statutory trust with certain protections)