General Produce, Inc. v. Tucker, Case No. 06-50092, 2007 Bankr. LEXIS 1322 (Bankr. M.D. Ga. April 10, 2007)(Walker).
Debtor was the president and primary shareholder of a business that sold produce purchased from the plaintiff. All transactions were covered by the Perishable Agricultural Commodities Act ("PACA"). Debtor’s company sold the produce, but did not submit the proceeds to the plaintiff as required by PACA. After Debtor filed a bankruptcy petition, the plaintiff filed an adversary claiming that the debt was nondischargeable pursuant to Section 523(a)(4), fraud or defalcation while acting as a fiduciary.
The Court held that PACA did create a trust, and that as a controlling person, the debtor had personal liability for the sales proceeds. Further, the debtor’s choice to pay other business obligations with the proceeds constituted the defalcation required of section 523(a)(4). Therefore, summary judgment was granted to the plaintiff and the debt was nondischargeable.