In Re Michael Frain, Debtor-Appellee’s Empirical Analysis

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Most-quoted passages

The sentences later courts lift from this opinion, ranked by how many decisions quote each — the parts of the opinion doing the work. These counts are smaller than the citation total above because most of the 67 citing decisions cite the case generally; a passage count includes only decisions quoting that exact language verbatim.

1. “While the parties’ access to knowledge and information may have been reasonably similar, the concentration of power was substantially one-sided. The shareholder’s agreement was structured to give Frain [the debtor] ultimate power over both his own employment and the direction of the corporation. Frain’s control over the day-to-day business of the corporation and ownership of 50% of the shares gave him significant freedom to run the corporation as he saw fit, including oversight of such items as salary and distributions of corporate cash flow. The only real limit to his power was the chance of deadlock; that is, if he voted his 50% one way and O’Shea and Schoenfeld [the plaintiff shareholders] voted their combined 50% the other, nothing would happen. A further reading of the thirty-plus-page contract discloses that “major decisions shall require the consent of the holders of seventy-five percent (75%) of the voting common shares” (with some decisions requiring 100%). The contract defined “major decisions” to include “all decisions affecting the Corporation which are not in the ordinary course of business of the Corporation.” So no major decisions can be made unless Frain agrees. In this case, a fiduciary relationship was created by the structure of the corporation under the shareholder agreement, which had given Frain a position of ascendancy under our case law. Frain argues that violations of a contract entered into by equals are not covered by § 523(a)(4). However, Frain had”

   4 later decisions quote this exact passage · from the majority
   e.g. KMK Factoring, L.L.C. v. McKnew (In Re McKnew) · Delange v. Tsikouris (In Re Tsikouris)

2. “A “fiduciary duty” under this test covers circumstances which, although not comprising a literal “trust,” do “call for the imposition of the same high standard.” See Marchiando, 13 F.3d at 1115 (citing Restatement (Second) of Trusts § 2, comment b (1959)). For example, a lawyer-client relation, a director-shareholder relation, or a managing partner-limited partner relation all call for the principal to “repose a special confidence in the fiduciary.” See id., 13 F.3d at 1116 . (emphasis supplied)”

   3 later decisions quote this exact passage · from the majority
   e.g. Lefelstein v. Donlevy (In re Donlevy) · Delange v. Tsikouris (In Re Tsikouris)

3. “[S]ection 523(a)(4) reaches only those fiduciary obligations in which there is substantial inequality in power or knowledge in favor of the debtor seeking the discharge and against the creditor resisting discharge!)]”

   2 later decisions quote this exact passage · from the majority
   e.g. Larson v. Bayer (In re Bayer) · COLEMICHAEL INVESTMENTS, LLC v. Burke