(Bankr. E.D. Ky. Dec. 30, 2014)
The bankruptcy court denies the bank’s motion for judgment on the pleadings. The bank initiated an adversary proceeding against the debtor, seeking a declaratory judgment that the bankruptcy estate did not have an interest in certain real property and seeking a judgment that the debt owed to the bank was non dischargeable under 11 U.S.C. § 523(a)(6). A prepetition state court judgment against the debtor held that the debtor did not have legal title to one parcel and the debtor scheduled the other parcel as being titled in the name of a partnership. The bankruptcy court holds that the pleadings do not establish that the estate has no interest in the property, even if legal title is held by others (i.e., the estate could have a possessory interest). The bankruptcy court also finds that the state court judgment does not preclude the debtor’s defense of lack of fraudulent intent. The court must predict how the Kentucky Supreme Court would rule on the preclusive effect of the state court judgment’s alternative statements regarding a fraudulent transfer. The court holds that the conclusory alternative statement should not be a bar to the defense. Opinion below.