Nora v. Residential Funding Co.
543 F. App'x 601
7th Cir.2013Background
- Nora obtained a $135,900 mortgage from Aegis; the loan was later assigned to Residential Funding.
- Nora defaulted; Residential Funding sued in Wisconsin circuit court and obtained a judgment of foreclosure.
- In the state foreclosure, Nora alleged the assignment was fraudulent (designed to evade Aegis’s bankruptcy) and argued Residential Funding lacked standing; the state court rejected those fraud allegations. Nora did not appeal.
- Nora then filed in federal district court seeking damages under RICO and the FDCPA and asking for title to her home free and clear, alleging a wider conspiracy to fraudulently assign many loans.
- The district court dismissed for lack of subject-matter jurisdiction under the Rooker–Feldman doctrine and denied postdismissal requests to present new evidence, amend, or rely on an automatic bankruptcy stay.
- The court of appeals affirmed, holding Nora’s federal claims were inextricably linked to the state-court foreclosure judgment and therefore barred by Rooker–Feldman; the court also found denial of reconsideration/amendment proper because the new evidence was cumulative and amendment would be futile.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court had jurisdiction over fraud/conspiracy claims tied to a state foreclosure | Nora: federal RICO/FDCPA damages and title relief are separate federal claims and not barred | Defendants: claims seek review/rejection of state-court foreclosure and are therefore barred by Rooker–Feldman | Held: barred — federal court lacks jurisdiction because claims are inextricably intertwined with the state foreclosure judgment |
| Whether a damages claim under federal statutes avoids Rooker–Feldman | Nora: statutory damages make the claim independent | Defendants: damages flow from alleged fraud that caused the state judgment, so claim invites review of that judgment | Held: statutory damages do not avoid the bar when relief would effectively undo the state judgment |
| Whether district court abused discretion by refusing to reopen to consider new evidence or allow amendment | Nora: new deposition and additional details would show fraud and change the outcome | Defendants: new evidence is cumulative and would not overcome jurisdictional bar | Held: no abuse — evidence cumulative and amendment would be futile |
| Whether automatic bankruptcy stay prevented dismissal after some defendants filed bankruptcy | Nora: bankruptcy stay enjoins continuation and dismissal should have been enjoined | Defendants: §362 stays suits against debtors but does not prevent non-merits dismissal for lack of jurisdiction | Held: stay does not block non-merits dismissal; district court properly dismissed |
Key Cases Cited
- Rooker v. Fid. Trust Co., 263 U.S. 413 (establishes that federal district courts cannot review state-court judgments)
- D.C. Court of Appeals v. Feldman, 460 U.S. 462 (clarifies limits on federal review of state-court adjudications)
- Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (Rooker–Feldman bar applies to state-court losers seeking review of state judgments)
- Kelley v. Med-1 Solutions, LLC, 548 F.3d 600 (7th Cir.) (distinguishes pre-judgment independent claims from those barred by Rooker–Feldman)
- Taylor v. Fed. Nat’l Mortgage Ass’n, 374 F.3d 529 (7th Cir.) (claims attacking validity of state foreclosure are barred)
- Wright v. Tackett, 39 F.3d 155 (7th Cir.) (damages claims tied to state judgment do not escape Rooker–Feldman)
- Gilbert v. Ill. State Bd. of Educ., 591 F.3d 896 (7th Cir.) (only Supreme Court may review state-court rejection of claims)