Business Funding Group v. Dommer Construction Corporation
1:11-cv-00565
W.D.N.Y.Mar 26, 2012Background
- BFG seeks reversal of a bankruptcy-court order allowing Dommer to offset a debt owed to BFG.
- Judge Kaplan disagreed with a New York state court conclusion on the debt 'in the context' of Rooker-Feldman.
- State court found Dommer liable for $438,725.17, but the judgment was not final due to the automatic stay in bankruptcy.
- Dommer filed Chapter 11; the stay was lifted to permit entry of the state judgment and potential appeal; parties later agreed bankruptcy review could proceed.
- BFG argued Rooker-Feldman barred review; district court upheld that the doctrine did not apply, affirming the bankruptcy court’s adjudication.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Rooker-Feldman bar the bankruptcy court’s review of the state judgment? | BFG contends the state court judgment bars federal review. | Dommer argues Rooker-Feldman does not apply to permit the bankruptcy court’s review. | No, Rooker-Feldman does not apply. |
| Did the 'caused by' injury requirement under Hoblock v. Albany County apply to render the review barred? | BFG asserts the state judgment caused the injuries claimed in federal court. | Dommer contends the injuries were not caused by the state judgment. | The 'caused by' factor was not satisfied; Rooker-Feldman does not apply. |
| Did Stern v. Marshall require dismissal or limit bankruptcy-court jurisdiction in this context? | BFG raised Stern-based jurisdiction concerns in reply. | Dommer argues Stern arguments were not properly raised and are premature. | Stern issue denied as untimely/undetermined on the record. |
Key Cases Cited
- Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (U.S. 2005) (limits Rooker-Feldman to state-judgment injuries)
- Hoblock v. Albany Cnty. Bd. of Elections, 422 F.3d 77 (2d Cir. 2005) (four-part test for Rooker-Feldman; 'caused by' injury requirement)
- Green v. Mattingly, 585 F.3d 97 (2d Cir. 2009) (Rooker-Feldman narrowing in Second Circuit post-Exxon)
- Feldman v. State of New York, 460 U.S. 462 (U.S. 1983) (original basis for Rooker-Feldman doctrine)
- Stern v. Marshall, 131 S. Ct. 2594 (U.S. 2011) (limits bankruptcy-court jurisdiction over purely state-law counterclaims)