(Slip Opinion)              OCTOBER TERM, 2012                                       1

                                       Syllabus

         NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
       being done in connection with this case, at the time the opinion is issued.
       The syllabus constitutes no part of the opinion of the Court but has been
       prepared by the Reporter of Decisions for the convenience of the reader.
       See United States v. Detroit Timber & Lumber Co., 

, 337.


SUPREME COURT OF THE UNITED STATES

                                       Syllabus

             BULLOCK v. BANKCHAMPAIGN, N. A.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
                THE ELEVENTH CIRCUIT

     No. 11–1518. Argued March 18, 2013 —Decided May 13, 2013
Petitioner’s father established a trust for the benefit of petitioner and
  his siblings, and made petitioner the (nonprofessional) trustee. The
  trust’s sole asset was the father’s life insurance policy. Petitioner
  borrowed funds from the trust three times; all borrowed funds were
  repaid with interest. His siblings obtained a judgment against him
  in state court for breach of fiduciary duty, though the court found no
  apparent malicious motive. The court imposed constructive trusts on
  certain of petitioner’s interests—including his interest in the original
  trust—in order to secure petitioner’s payment of the judgment, with
  respondent serving as trustee for all of the trusts. Petitioner filed for
  bankruptcy. Respondent opposed discharge of petitioner’s state-
  court-imposed debts to the trust, and the Bankruptcy Court granted
  respondent summary judgment, holding that petitioner’s debts were
  not dischargeable pursuant to 

. §523(a)(4), which provides
  that an individual cannot obtain a bankruptcy discharge from a debt
  “for fraud or defalcation while acting in a fiduciary capacity, embez-
  zlement, or larceny.” The Federal District Court and the Eleventh
  Circuit affirmed. The latter court reasoned that “defalcation requires
  a known breach of fiduciary duty, such that the conduct can be char-
  acterized as objectively reckless.”
Held: The term “defalcation” in the Bankruptcy Code includes a culpa-
 ble state of mind requirement involving knowledge of, or gross reck-
 lessness in respect to, the improper nature of the fiduciary behavior.
 Pp. 4−9.
    (a) While “defalcation” has been an exception to discharge in a
 bankruptcy statute since 1867, legal authorities have long disagreed
 about its meaning. Broad definitions of the term in modern and older
 dictionaries are unhelpful, and courts of appeals have disagreed
2                 BULLOCK v. BANKCHAMPAIGN, N. A.

                                   Syllabus

    about what mental state must accompany defalcation’s definition.
    Pp. 4−5.
       (b) In Neal v. Clark, 

, this Court interpreted the term
    “fraud” in the Bankruptcy Code’s exceptions to discharge to mean
    “positive fraud, or fraud in fact, involving moral turpitude or inten-
    tional wrong, as does embezzlement; and not implied fraud, or fraud
    in law, which may exist without the imputation of bad faith or immo-
    rality.” Id., at 709. The term “defalcation” should be treated similar-
    ly. Thus, where the conduct at issue does not involve bad faith, mor-
    al turpitude, or other immoral conduct, “defalcation” requires an
    intentional wrong. An intentional wrong includes not only conduct
    that the fiduciary knows is improper but also reckless conduct of the
    kind that the criminal law often treats as the equivalent. Where ac-
    tual knowledge of wrongdoing is lacking, conduct is considered as
    equivalent if, as set forth in the Model Penal Code, the fiduciary “con-
    sciously disregards,” or is willfully blind to, “a substantial and unjusti-
    fiable risk” that his conduct will violate a fiduciary duty. Pp. 5−7.
       (c) Several considerations support this interpretation. First, statu-
    tory context strongly favors it. The canon noscitur a sociis argues for
    interpreting “defalcation” as similar to its linguistic neighbors “em-
    bezzlement,” “larceny,” and “fraud,” which all require a showing of
    wrongful or felonious intent. See, e.g., Neal, supra, at 709. Second,
    the interpretation does not make the word identical to its statutory
    neighbors. “Embezzlement” requires conversion, “larceny” requires
    taking and carrying away another’s property, and “fraud” typically
    requires a false statement or omission; while “defalcation” can en-
    compass a breach of fiduciary obligation that involves neither conver-
    sion, nor taking and carrying away another’s property, nor falsity.
    Third, the interpretation is consistent with the longstanding princi-
    ple that “exceptions to discharge ‘should be confined to those plainly
    expressed.’ ” Kawaauhau v. Geiger, 

, 62. It is also con-
    sistent with statutory exceptions to discharge that Congress normally
    confines to circumstances where strong, special policy considerations,
    such as the presence of fault, argue for preserving the debt, thereby
    benefiting, for example, a typically more honest creditor. See, e.g., 

. §523(a)(2)(A). Fourth, some Circuits have interpreted the
    statute similarly for many years without administrative or other dif-
    ficulties. Finally, it is important to have a uniform interpretation of
    federal law, the choices are limited, and neither the parties nor the
    Government has presented strong considerations favoring a different
    interpretation. Pp. 7−9.

, vacated and remanded.

    BREYER, J., delivered the opinion for a unanimous Court.
                        Cite as: 569 U. S. ____ (2013)                              1

                             Opinion of the Court

     NOTICE: This opinion is subject to formal revision before publication in the
     preliminary print of the United States Reports. Readers are requested to
     notify the Reporter of Decisions, Supreme Court of the United States, Wash-
     ington, D. C. 20543, of any typographical or other formal errors, in order
     that corrections may be made before the preliminary print goes to press.


SUPREME COURT OF THE UNITED STATES
                                   _________________

                                   No. 11–1518
                                   _________________


      RANDY CURTIS BULLOCK, PETITIONER v.

             BANKCHAMPAIGN, N. A.

 ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

          APPEALS FOR THE ELEVENTH CIRCUIT

                                 [May 13, 2013]


   JUSTICE BREYER delivered the opinion of the Court.
   Section 523(a)(4) of the Federal Bankruptcy Code pro-
vides that an individual cannot obtain a bankruptcy dis-
charge from a debt “for fraud or defalcation while acting
in a fiduciary capacity, embezzlement, or larceny.” 

. §523(a)(4). We here consider the scope of the term
“defalcation.” We hold that it includes a culpable state of
mind requirement akin to that which accompanies appli-
cation of the other terms in the same statutory phrase.
We describe that state of mind as one involving knowledge
of, or gross recklessness in respect to, the improper nature
of the relevant fiduciary behavior.
                               I
   In 1978, the father of petitioner Randy Bullock estab-
lished a trust for the benefit of his five children. He made
petitioner the (nonprofessional) trustee; and he trans-
ferred to the trust a single asset, an insurance policy on
his life. 

, 1162 (CA11 2012); App. to Pet.
for Cert. 33a. The trust instrument permitted the trustee
to borrow funds from the insurer against the policy’s
value (which, in practice, was available at an insurance-
2            BULLOCK v. BANKCHAMPAIGN, N. A.

                      Opinion of the Court

company-determined 6% interest rate). Id., at 17a, 34a,
50a.
   In 1981, petitioner, at his father’s request, borrowed
money from the trust, paying the funds to his mother who
used them to repay a debt to the father’s business. In
1984, petitioner again borrowed funds from the trust, this
time using the funds to pay for certificates of deposit,
which he and his mother used to buy a mill. In 1990,
petitioner once again borrowed funds, this time using the
money to buy real property for himself and his mother.

, at 1162. Petitioner saw that all of the borrowed
funds were repaid to the trust along with 6% interest.
App. to Pet. for Cert. 17a, 45a, 50a; Brief for Petitioner 3;
Brief for Respondent 2.
   In 1999, petitioner’s brothers sued petitioner in Illinois
state court. The state court held that petitioner had com-
mitted a breach of fiduciary duty. It explained that peti-
tioner “does not appear to have had a malicious motive in
borrowing funds from the trust” but nonetheless “was
clearly involved in self-dealing.” App. to Pet. for Cert. 45a,
52a. It ordered petitioner to pay the trust “the benefits he
received from his breaches” (along with costs and attor-
ney’s fees). Id., at 47a. The court imposed constructive
trusts on petitioner’s interests in the mill and the original
trust, in order to secure petitioner’s payment of its judg-
ment, with respondent BankChampaign serving as trustee
for all of the trusts. 

, at 1162; App. to Pet. for
Cert. 47a–48a. After petitioner tried unsuccessfully to
liquidate his interests in the mill and other constructive
trust assets to obtain funds to make the court-ordered
payment, petitioner filed for bankruptcy in federal court.
Id., at 27a, 30a.
   BankChampaign opposed petitioner’s efforts to obtain a
bankruptcy discharge of his state-court-imposed debts to
the trust. And the Bankruptcy Court granted summary
judgment in the bank’s favor. It held that the debts fell
                  Cite as: 569 U. S. ____ (2013)            3

                      Opinion of the Court

within §523(a)(4)’s exception “as a debt for defalcation while
acting in a fiduciary capacity.” Id., at 40a–41a. Hence,
they were not dischargeable.
   The Federal District Court reviewed the Bankruptcy
Court’s determination. It said that it was “convinced” that
BankChampaign was “abusing its position of trust by fail-
ing to liquidate the assets,” but it nonetheless affirmed the
Bankruptcy Court’s decision. Id., at 27a–28a.
   In turn, the Court of Appeals affirmed the District
Court. It wrote that “defalcation requires a known breach
of a fiduciary duty, such that the conduct can be character-
ized as objectively reckless.” 

, at 1166. And it
found that petitioner’s conduct satisfied this standard.
Ibid.

   Petitioner sought certiorari. In effect he has asked us
to decide whether the bankruptcy term “defalcation” applies
“in the absence of any specific finding of ill intent or evi-
dence of an ultimate loss of trust principal.” Brief for
United States as Amicus Curiae 1. See also Pet. for Cert.
i. The lower courts have long disagreed about whether
“defalcation” includes a scienter requirement and, if so,
what kind of scienter it requires. Compare In re Sherman,

, 1017 (CA9 2011) (“defalcation” includes
“even innocent acts of failure to fully account for money
received in trust” (internal quotation marks and brackets
omitted)), with In re Uwimana, 

, 811 (CA4
2001) (defalcation occurs when “negligence or even an in-
nocent mistake . . . results in misappropriation”), with 

, at 1166 (“defalcation requires . . . conduct [that] can
be characterized as objectively reckless”), and with In re
Baylis, 

, 20 (CA1 2002) (“defalcation requires
something close to a showing of extreme recklessness”). In
light of that disagreement, we granted the petition.
4            BULLOCK v. BANKCHAMPAIGN, N. A.

                     Opinion of the Court

                              II

                              A

   Congress first included the term “defalcation” as an
exception to discharge in a federal bankruptcy statute in
1867. See id., at 17. And legal authorities have disagreed
about its meaning almost ever since. Dictionary defini-
tions of “defalcation” are not particularly helpful. On the
one hand, a law dictionary in use in 1867 defines the word
“defalcation” as “the act of a defaulter,” which, in turn, it
defines broadly as one “who is deficient in his accounts, or
fails in making his accounts correct.” 1 J. Bouvier, Law
Dictionary 387, 388 (4th ed. 1852). See also 4 Oxford
English Dictionary 369 (2d ed. 1989) (quoting an 1846
definition that defines the term as “ ‘a breach of trust by
one who has charge or management of money’ ”). Modern
dictionaries contain similarly broad definitional language.
Black’s Law Dictionary, for example, defines “defalcation”
first as “EMBEZZLEMENT,” but, second, as “[l]oosely, the
failure to meet an obligation; a nonfraudulent default.”
Black’s Law Dictionary 479 (9th ed. 2009) (hereinafter
Black’s). See also American Heritage Dictionary 474 (5th
ed. 2011) (“To misuse funds; embezzle”); 4 Oxford English
Dictionary, supra, at 369 (“monetary deficiency through
breach of trust by one who has the management or charge
of funds; a fraudulent deficiency in money matters”);
Webster’s New International Dictionary 686 (2d ed. 1954)
(“An abstraction or misappropriation of money by one, esp.
an officer or agent, having it in trust”); Webster’s Third
New International Dictionary 590 (1986) (“misappropria-
tion of money in one’s keeping”).
   On the other hand, an 1842 bankruptcy treatise warns
that fiduciaries “are not supposed to commit defalcation in
the matter of their trust, without . . . at least such crimi-
nal negligence as admits of no excuse.” G. Bicknell, Com-
mentary on the Bankrupt Law of 1841, Showing Its
Operation and Effect 12 (2d ed. 1842). Modern dictionaries
                 Cite as: 569 U. S. ____ (2013)            5

                     Opinion of the Court

often accompany their broad definitions with illustrative
terms such as “embezzle,” American Heritage Dictionary,
supra, at 474, or “fraudulent deficiency,” 4 Oxford English
Dictionary, supra, at 369. And the editor of Black’s Law
Dictionary has written that the term should be read as
limited to deficiencies that are “fraudulent” and which are
“the fault of someone put in trust of the money.” B. Gar-
ner, Modern American Usage 232 (3d ed. 2009) (emphasis
added).
   Similarly, courts of appeals have long disagreed about
the mental state that must accompany the bankruptcy-
related definition of “defalcation.” Many years ago Judge
Augustus Hand wrote that “the misappropriation must be
due to a known breach of the duty, and not to mere negli-
gence or mistake.” In re Bernard, 

, 707 (CA2
1937). But Judge Learned Hand suggested that the term
“may have included innocent defaults.” Central Hanover
Bank & Trust Co. v. Herbst, 

, 511 (CA2 1937)
(emphasis added). A more modern treatise on trusts ends
its discussion of the subject with a question mark. 4 A.
Scott, W. Fratcher, & M. Ascher, Scott and Ascher on
Trusts §24.26 p. 1797 (5th ed. 2007).
   In resolving these differences, we note that this long-
standing disagreement concerns state of mind, not whether
“defalcation” can cover a trustee’s failure (as here) to make
a trust more than whole. We consequently shall assume
without deciding that the statutory term is broad enough
to cover the latter type of conduct and answer only the
“state of mind” question.
                            B
                            1
  We base our approach and our answer upon one of this
Court’s precedents. In 1878, this Court interpreted the
related statutory term “fraud” in the portion of the Bank-
ruptcy Code laying out exceptions to discharge. Justice
6            BULLOCK v. BANKCHAMPAIGN, N. A.

                      Opinion of the Court

Harlan wrote for the Court:
    “[D]ebts created by ‘fraud’ are associated directly with
    debts created by ‘embezzlement.’ Such association
    justifies, if it does not imperatively require, the con-
    clusion that the ‘fraud’ referred to in that section
    means positive fraud, or fraud in fact, involving moral
    turpitude or intentional wrong, as does embezzlement;
    and not implied fraud, or fraud in law, which may ex-
    ist without the imputation of bad faith or immorality.”
    Neal v. Clark, 

, 709 (1878).
We believe that the statutory term “defalcation” should be
treated similarly.
  Thus, where the conduct at issue does not involve bad
faith, moral turpitude, or other immoral conduct, the term
requires an intentional wrong. We include as intentional
not only conduct that the fiduciary knows is improper
but also reckless conduct of the kind that the criminal
law often treats as the equivalent. Thus, we include reck-
less conduct of the kind set forth in the Model Penal
Code. Where actual knowledge of wrongdoing is lacking, we
consider conduct as equivalent if the fiduciary “consciously
disregards” (or is willfully blind to) “a substantial and
unjustifiable risk” that his conduct will turn out to violate
a fiduciary duty. ALI, Model Penal Code §2.02(2)(c), p.
226 (1985). See id., §2.02 Comment 9, at 248 (explaining
that the Model Penal Code’s definition of “knowledge” was
designed to include “ ‘wilful blindness’ ”). That risk “must
be of such a nature and degree that, considering the
nature and purpose of the actor’s conduct and the cir-
cumstances known to him, its disregard involves a gross
deviation from the standard of conduct that a law-abiding
person would observe in the actor’s situation.”           Id.,
§2.02(2)(c), at 226 (emphasis added). Cf. Ernst & Ernst v.
Hochfelder, 

, 194, n. 12 (1976) (defining
scienter for securities law purposes as “a mental state
                  Cite as: 569 U. S. ____ (2013)             7

                      Opinion of the Court

embracing intent to deceive, manipulate, or defraud”).
                              2
   Several considerations lead us to interpret the statutory
term “defalcation” in this way. First, as Justice Harlan
pointed out in Neal, statutory context strongly favors this
interpretation.     Applying the canon of interpretation
noscitur a sociis, the Court there looked to fraud’s linguis-
tic neighbor, “embezzlement.” It found that both terms
refer to different forms of generally similar conduct. It
wrote that both are “ ‘ejusdem generis,’ ” of the same kind,
and that both are “ ‘referable to the same subject-matter.’ ”
95 U. S., at 709. Moreover, embezzlement requires a
showing of wrongful intent. Ibid. (noting that embezzle-
ment “involv[es] moral turpitude or intentional wrong”).
See Moore v. United States, 

, 269–270 (1895)
(describing embezzlement and larceny as requiring “felo-
nious intent”). See also, e.g., W. LaFave, Criminal Law
§19.6(a), p. 995 (5th ed. 2010) (“intent to deprive” is part of
embezzlement). Hence, the Court concluded, “fraud” must
require an equivalent showing. Neal, supra, at 709. Neal
has been the law for more than a century. And here, the
additional neighbors (“larceny” and, as defined in Neal,
“fraud”) mean that the canon noscitur a sociis argues even
more strongly for similarly interpreting the similar statu-
tory term “defalcation.”
   Second, this interpretation does not make the word
identical to its statutory neighbors. See Babbitt v. Sweet
Home Chapter, Communities for Great Ore., 

, 698 (1995) (noting “[a] reluctance to treat statutory
terms as surplusage”). As commonly used, “embezzlement”
requires conversion, and “larceny” requires taking and
carrying away another’s property. See LaFave, Criminal
Law §§19.2, 19.5 (larceny); id., §19.6 (embezzlement).
“Fraud” typically requires a false statement or omission.
See id., §19.7 (discussing fraud in the context of false
8            BULLOCK v. BANKCHAMPAIGN, N. A.

                      Opinion of the Court

pretenses). “Defalcation,” as commonly used (hence as
Congress might have understood it), can encompass a
breach of fiduciary obligation that involves neither conver-
sion, nor taking and carrying away another’s property, nor
falsity. Black’s 479. See, e.g., In re Frankel, 

(Bkrtcy. Ct. WDNY 1987) (finding a breach of fiduciary
duty and defalcation based on an unreasonable sale of
assets).
  Nor are embezzlement, larceny, and fiduciary fraud
simply special cases of defalcation as so defined. The
statutory provision makes clear that the first two terms
apply outside of the fiduciary context; and “defalcation,”
unlike “fraud,” may be used to refer to nonfraudulent
breaches of fiduciary duty. Black’s 479.
  Third, the interpretation is consistent with the long-
standing principle that “exceptions to discharge ‘should
be confined to those plainly expressed.’ ” Kawaauhau v.
Geiger, 

, 62 (1998) (quoting Gleason v.
Thaw, 

, 562 (1915)). See Local Loan Co.
v. Hunt, 

, 244 (1934); Neal, supra, at 709. It
is also consistent with a set of statutory exceptions that
Congress normally confines to circumstances where strong,
special policy considerations, such as the presence of
fault, argue for preserving the debt, thereby benefiting,
for example, a typically more honest creditor. See, e.g., 

. §§523(a)(2)(A), (a)(2)(B), (a)(6), (a)(9) (fault). See
also, e.g., §§523(a)(1), (a)(7), (a)(14), (a)(14A) (taxes);
§523(a)(8) (educational loans); §523(a)(15) (spousal and
child support). In the absence of fault, it is difficult to find
strong policy reasons favoring a broader exception here, at
least in respect to those whom a scienter requirement will
most likely help, namely nonprofessional trustees, perhaps
administering small family trusts potentially immersed in
intrafamily arguments that are difficult to evaluate in
terms of comparative fault.
  Fourth, as far as the briefs before us reveal, at least
                  Cite as: 569 U. S. ____ (2013)            9

                      Opinion of the Court

some Circuits have interpreted the statute similarly for
many years without administrative, or other practical,
difficulties. Baylis, 

. See also In re Hyman,

, 69 (CA2 2007) (“This [scienter] standard . . .
also has the virtue of ease of application since the courts
and litigants have reference to a robust body of securities
law examining what these terms mean”).
   Finally, it is important to have a uniform interpreta-
tion of federal law, the choices are limited, and neither
the parties nor the Government has presented us with
strong considerations favoring a different interpretation. In
addition to those we have already discussed, the Govern-
ment has pointed to the fact that in 1970 Congress
rewrote the statute, eliminating the word “misappropria-
tion” and placing the term “defalcation” (previously in a
different exemption provision) alongside its present three
neighbors. See Brief for United States as Amicus Curiae
16–17. The Government believes that these changes
support reading “defalcation” without a scienter require-
ment. But one might argue, with equal plausibility, that
the changes reflect a decision to make certain that courts
would read in similar ways “defalcation,” “fraud,” “embez-
zlement,” and “larceny.” In fact, we believe the 1970
changes are inconclusive.
                              III
  In this case the Court of Appeals applied a standard of
“objectiv[e] reckless[ness]” to facts presented at summary
judgment. 

, at 1166. We consequently remand
the case to permit the court to determine whether further
proceedings are needed and, if so, to apply the heightened
standard that we have set forth. For these reasons we
vacate the judgment of the Court of Appeals and remand
the case for further proceedings consistent with this
opinion.
                                             It is so ordered.