Attempts To Undo State Court Foreclosure Judgments In Federal Court & The Rooker-Feldman Doctrine

A recent ruling by a Federal Court of Appeals is one of several that serve as a reminder to financially strapped homeowners (and their counsel) who are considering filing for bankruptcy (or filing any lawsuit in a Federal court) for the purpose of specifically attacking an ongoing foreclosure action in a state court, you better do it before a judgment is entered by the state court.

Any effort to run to Federal court in an attempt to attack, undo, void, set aside, etc. a foreclosure proceeding once a judgment is entered by a state court will probably be a waste of time and money, based on the application of the so-called Rooker-Feldman doctrine.(1) (and, for whatever it's worth, if you're an attorney who does this when representing a homeowner while squeezing your unwitting client for stiff legal fees, you're probably opening yourself up to a malpractice lawsuit).

Anyone looking to undo or otherwise attack a state court foreclosure judgment or the court proceeding itself once the judgment is entered is limited to either going back into the state court and file a motion to vacate, set aside, etc., based on jurisdictional issues (ie. lack of standing, defects in giving notice related to process server screw-ups, etc.) or pursue a review with a state appeals court (ie. file an appeal). For the ruling, see Wilson v. Deutsche Bank Nat'l Trust (In re Wilson), No. 10-2021-bk (2nd Cir. February 18, 2011).(2)

(1) The relevant excerpt from the court ruling follows (bold text is my emphasis):

• Under the Rooker-Feldman doctrine, lower federal courts lack subject-matter jurisdiction over claims that effectively challenge state-court judgments. See District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 486-87 (1983); Rooker v. Fidelity Trust Co., 263 U.S. 413, 415-16 (1923). After the doctrine was modified by the Supreme Court in Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280 (2005), we held that there are four requirements that must be met before the Rooker-Feldman doctrine may apply: (1) "the federal-court plaintiff must have lost in state court;" (2) "the plaintiff must complain of injuries caused by a state-court judgment;" (3) "the plaintiff must invite district court review and rejection of that judgment;" and (4) "the state-court judgment must have been rendered before the district court proceedings commenced." Hoblock v. Albany County Bd. of Elections, 422 F.3d 77, 85 (2d Cir. 2005) (internal quotation marks and alterations omitted). Because dismissal under the Rooker-Feldman doctrine is for lack of subject matter jurisdiction, this Court reviews de novo a court's application of the doctrine. Id. at 83. Here, application of the Rooker-Feldman doctrine was warranted in light of the connection between Wilson's federal complaint and the state court default foreclosure judgment in favor of DBNTC.

  First, the foreclosure judgment in favor of DBNTC indicates that Wilson "lost" in state court. See Hoblock, 422 F.3d at 85.

  Second, Wilson instituted adversary proceedings against DBNTC in order to "complain of injuries caused" by the state court foreclosure judgment, see id., as the crux of her complaint was that DBNTC wrongfully foreclosed on the property in question.

  Third, in filing her complaint, Wilson "invite[d] [federal] court review and rejection" of the state court foreclosure judgment, see id., as she explicitly sought reversal of that judgment and re-vestment of title through her argument that DBNTC had lacked standing to foreclose.

  Fourth, the foreclosure judgment was rendered in June 2008, over five months before she filed her Chapter 7 bankruptcy petition and adversary complaint. See id.

  Accordingly, we conclude that the bankruptcy court correctly dismissed Wilson's complaint pursuant to the Rooker-Feldman doctrine. As a result of this conclusion, we are not required to consider Wilson's argument that the Connecticut state court order denying her motion to open and vacate the foreclosure judgment was void, because it was issued in violation of the automatic stay provisions of 11 U.S.C. § 362(a).

  We have considered Wilson's other arguments on appeal and have found them to be without merit. Accordingly, the judgment of the district court is hereby AFFIRMED.

(2) For another court ruling reaching the conclusion coming out of the Eleventh Circuit Court of Appeals (in a Florida case), see Parker v. Potter, Nos. 08-16332, 08-16667 (11th cir. 2010) (unpublished).

For another recent bankruptcy case (a New York case) applying Rooker-Feldman, see In re Agard, Case 8-10-77338-reg (Bankr. E.D.N.Y. February 10, 2011).

Go here for links to a couple of dozen more Rooker-Feldman foreclosure cases.