In the case of Randy Curtis Bullock v. BankChampaign, N.A., 2012, the U.S Supreme Court was tasked with interpreting a provision in bankruptcy law that prevents debtors from discharging debts "for fraud or defalcation while acting in a fiduciary capacity." The petitioner, Randy Bullock, had been found guilty of breach of fiduciary duty for borrowing funds from a life insurance trust where he served as trustee. He later filed for bankruptcy and sought to discharge his debt arising from this judgment. However, both lower courts ruled against him based on the aforementioned provision. The Supreme Court unanimously reversed these decisions stating that "defalcation" requires an intentional wrong which includes not just reckless conduct but also conscious misbehavior or extreme recklessness involving knowledge of improper behavior. Since there was no evidence showing that Bullock acted with ill intent or gross recklessness when managing the trust's assets - he repaid all loans with interest and did not personally benefit beyond receiving those loan repayments - his actions did not meet this standard; hence his debts were discharged.

In the dissenting opinion for Randy Curtis Bullock v. BankChampaign, N.A., Justice Scalia disagreed with the majority's interpretation of "defalcation" in Section 523(a)(4) of the Bankruptcy Code. He argued that this term should be understood as it was at common law when Congress adopted it - to mean a failure to meet an obligation, regardless of whether there was any intent to defraud or wrongdoing involved. In his view, by interpreting "defalcation" as requiring some level of culpability beyond mere negligence, the Court had effectively rewritten a statute passed by Congress and exceeded its judicial authority. Furthermore, he pointed out that such an interpretation could lead to unfair results where individuals who acted without ill-intent but failed in their fiduciary duties due to negligence could still have their debts discharged under bankruptcy law.