Rapid Settlements Ltd v. Scott Shcolnik, 670 F.3d 624

Debtor was a former officer of Capstone Associated Services and Rapid Settlements Ltd., claiming an ownership interest he reportedly rejected.
Shcolnik allegedly threatened to reveal alleged illegal activity unless bought out for over $1,000,000, and allegedly absconded with documents.
Capstone, Rapid, and others initiated arbitration seeking a declaratory ruling that Shcolnik had no ownership interest; arbitrator awarded $50,000 in fees to the entities.
State court confirmed the arbitration award, four days before Shcolnik filed for Chapter 7 bankruptcy.
Capstone and Rapid filed a nondischargeability action under 11 U.S.C. §§ 523(a)(4) and (a)(6), seeking to bar the debt from discharge; bankruptcy court granted summary judgment for the debtor.
Appeals court reversed on the § 523(a)(6) issue and remanded for trial; the § 523(a)(4) ruling was sustained.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 523(a)(4) applies	Capstone/Rapid contends Shcolnik owed a fiduciary-nonde dischargeable debt.	Shcolnik was not acting as a fiduciary under § 523(a)(4); even if a corporate officer may be fiduciary, the debt isn’t for fraud/defalcation in a fiduciary capacity.	No genuine issue; § 523(a)(4) does not apply.
Whether § 523(a)(6) non-dischargeability applies	Shcolnik’s misrepresentations and coercive conduct caused willful and malicious injury, triggering § 523(a)(6).	No evidence that Shcolnik intended to cause the actual injury or that the fees were caused by willful and malicious injury; reliance on Kawaauhau.	Material fact issue exists; remand for trial on § 523(a)(6).

Matter of Tran, 151 F.3d 339 (5th Cir. 1998) (fiduciary under § 523(a)(4) limited to express or technical trusts)
In re Hickman, 260 F.3d 400 (5th Cir. 2001) (fiduciary concept under § 523(a)(4) as described by Fifth Circuit)
In re Gupta, 394 F.3d 347 (5th Cir. 2004) (state-law fiduciary relationships may render debt nondischargeable)
Matter of Moreno, 892 F.2d 417 (5th Cir. 1990) (officer as fiduciary for § 523(a)(4) purposes)
In re Miller, 156 F.3d 598 (5th Cir. 1998) (willful and malicious injury requires objective substantial certainty or subjective motive)
In re Williams, 337 F.3d 504 (5th Cir. 2003) (willful and malicious injury framework under § 523(a)(6))
State of Texas v. Walker, 142 F.3d 813 (5th Cir. 1998) (intent to injure in relation to willful/malicious standard)
In re Delaney, 97 F.3d 800 (5th Cir. 1996) (intentional injury standard in context of § 523(a)(6))
In re Keaty, 397 F.3d 264 (5th Cir. 2005) (sanctions and harassing litigation as willful/malicious injury under § 523(a)(6))
Local Loan Co. v. Hunt, 292 U.S. 234 (U.S. 1934) (fresh start purpose and strict construction of discharge exceptions)