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IN RE PEMSTEIN

BAP No. CC-12-1430-TaPaMk. Bankruptcy No. 2:12-bk-15900-RK. Adversary No. 2:12-ap-01291-RK.

492 B.R. 274 (2013)

In re Martin PEMSTEIN and Diana Pemstein, Debtors. Harold Pemstein, Appellant, v. Martin Pemstein; Diana Pemstein, Appellees.

United States Bankruptcy Appellate Panel of the Ninth Circuit.

Decided June 5, 2013.

Attorney(s) appearing for the Case

Christopher L. Blank , Newport Beach, CA, for Appellant Harold Pemstein; Alan Wayne Forsley , Los Angeles, CA, of Fredman Knupfer Lieberman LLP for Appellees Martin Pemstein and Diana Pemstein.

Before: TAYLOR, PAPPAS, and MARKELL, Bankruptcy Judges.

MEMORANDUM*

INTRODUCTION

This appeal presents the question whether defalcation under § 523(a)(4)1 pertains solely to funds actually received by a fiduciary.2 The bankruptcy court interpreted Ninth Circuit authority to so require. As a result, in plaintiff Harold Pemstein's nondischargeability action against debtor/defendant Martin Pemstein,3

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