498 B.R. 221
W.D. Wis.2013Background
- Schmid filed a chapter 13 bankruptcy petition.
- Bank of America, N.A. and Associated Bank, N.A. filed claims for ~$40,000 and ~$30,000 respectively against the estate.
- Schmid objected to the claims and initiated an adversary proceeding in bankruptcy court.
- The complaint consisted of 38 paragraphs, with requests for relief, and the bankruptcy court treated it as an objection to Bank of America's claim, a lien challenge, and a fraud claim seeking fees.
- Bankruptcy court denied leave to file a second amended complaint as untimely and granted BOA’s motion to dismiss on multiple grounds (Rooker-Feldman, claim preclusion, standing, and failure to state a claim).
- The district judge concluded the fraud claim was barred by Rooker-Feldman and dismissed it, noting Associated Bank was forfeited due to lack of response.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Rooker-Feldman bar the fraud claim | Schmid argues extrinsic fraud could avoid R-F | R-F applies to prevent federal review of state judgments | Yes, barred by Rooker-Feldman. |
| Whether bankruptcy court had authority to consider fraud and lien issues | Bankruptcy court may decide fraud and lien as part of claims | Court authority exists for core issues; fraud not core | Bankruptcy court could decide lien and core issues; fraud remains non-core and barred by R-F. |
| Whether Schmid forfeitedclaims against Associated Bank | Intended to pursue fraud/claims against Associated Bank | Associated Bank did not respond; claim forfeited | Claim against Associated Bank forfeited. |
Key Cases Cited
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (limits bankruptcy court authority; core vs non-core proceedings)
- In re Ortiz, 665 F.3d 906 (7th Cir. 2011) (Article III concerns and bankruptcy authority)
- Katchen v. Landy, 382 U.S. 323 (1966) (bankruptcy proceedings and claim allowance authority)
- Taylor v. Federal National Mortgage Association, 374 F.3d 529 (7th Cir. 2004) (Rooker-Feldman bars challenges to foreclosure judgments in federal court)
- Hukic v. Aurora Loan Services, 588 F.3d 420 (7th Cir. 2009) (Rooker-Feldman applicability to foreclosure-related injuries)
- In re Pulaski, 475 B.R. 681 (Bankr.W.D.Wis. 2012) (bankruptcy court authority to decide lien/claim issues)