Cornerstone Industries Corp. v. Kaufman (In re Kaufman)

(Bankr. W.D. Ky. Aug. 6, 2015)

The bankruptcy court enters summary judgment in favor of the plaintiff, holding a $1.8 million claim arising from a state court judgment non-dischargeable. The state court judgment has preclusive effect, and the jury’s findings establish the requisite elements under § 523(a)(2) and (a)(6). The court discusses the applicability of § 523(a)(4) but because the jury may not have defined the term “fiduciary” the same as the bankruptcy code, the court states it is not convinced the plaintiff is entitled to summary judgment under that particular section. Opinion below.

2015-08-06 – cornerstone industries v kaufman

Author: Matt Lindblom

Richardson v. Caswell (In re Caswell)

(Bankr. W.D. Ky. Mar. 25, 2015)

The bankruptcy court grants the plaintiff’s motion for summary judgment in this nondischargeability action. The plaintiff obtained a jury verdict against the debtor in state court based on a claim of fraud in selling to the plaintiff worthless stock. The bankruptcy court holds that the state court judgment precludes the debtor from defending against the plaintiff’s allegations under § 523(a)(2)(A). Opinion below.

2015-03-25 – richardson v caswell

Author: Matt Lindblom

Gerard v. Gerard

(7th Cir. Mar. 12, 2015)

The Seventh Circuit reverses the bankruptcy court’s decision applying issue preclusion in favor of the plaintiff in this nondischargeability action. Prepetition, the plaintiff obtained a state court slander of title judgment against the debtor. The plaintiff then filed the nondischargeability action under 523(a)(6) and argued to the bankruptcy court that the jury findings precluded the debtor from defending against the claim. The bankruptcy court held preclusion applied and the district court affirmed. The court reverses, holding the jury findings indicate that the jury determined that the debtor either acted with the requisite intent or acted negligently. Thus, issue preclusion should not apply and the plaintiff must prove the requisite intent in the adversary proceeding. Opinion below.

2015-03-12 – gerard v gerard

Author: Matt Lindblom

Haffey v. Deutsche Bank Trust Company, As Trustee For The 2007 QS-10 Trust (In re Haffey)

(Bankr. E.D. Ky. Feb. 2, 2015)

The bankruptcy court grants the defendant’s motion to dismiss the adversary complaint seeking a declaratory judgment that the defendant’s mortgage was invalid. The defendant argued and the bankruptcy court holds that the complaint was barred by the doctrine of res judicata. The parties had litigated the issue to judgment in a prior action before the district court. Opinion below.

2015-02-02 – haffey v deutsche bank

Author: Matt Lindblom

Go Wireless, Inc. v. Lehrmitt (In re Lehrmitt)

(Bankr. W.D. Ky. Jan. 27, 2015)

The bankruptcy court enters summary judgment in favor of the creditor, holding the debt owed to it is nondischargeable under § 523(a)(2), (4), and (6). The creditor had obtained a default judgment against the debtors in California state court, which judgment recited that the debtors had obtained funds from the creditor by fraud. The Full Faith and Credit Statute, 28 U.S.C. § 1738, as interpreted by the Sixth Circuit Court of Appeals precludes the debtors from defending against the findings in the state court judgment. Section 105 does not give the bankruptcy court authority to modify the otherwise non-dischargeable debt. Opinion below.

2015-01-27 – go wireless v lehrmitt

Author: Matt Lindblom

The Bank of Kentucky, Inc. v. Nageleisen (In re Nageleisen)

(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.

2014-12-30 – bank of ky v nageleisen