In one of its infrequent but steady appearances in the Fifth Circuit, the Rooker/Feldman doctrine arose in a federal court lawsuit alleging misconduct in state court about the confirmation and enforcement of a large arbitration award. Building on Truong v. Bank of America, 717 F.3d 377 (5th Cir. 2013), the Court affirmed the dismissal of claims about collection efforts, finding that “the [state court judgment itself was the source of these injuies.” As to civil rights claims about the proceedings leading up to confirmation, however, “the timing of the injury was before the state court entered judgment. And unlike . . . the conversion claim described above, none of the alleged conspirators was acting under the authority of the turnover orders in seeking to obtain a remedy.” Land & Bay Gauging, LLC v. Shor, No. 14-40259 (Aug. 21, 2015, unpublished).
Alphonse lost his home to foreclosure. He then sued in federal court, alleging unfair trade practices. Alphonse v. Arch Bay Holdings LLC, No. 13-30154 (Dec. 11, 2013, unpublished). The district court dismissed based on the Rooker/Feldman doctrine, but by the time the Fifth Circuit took up the case, all parties conceded that ruling was incorrect because of Truong v. Bank of America, 717 F.3d 377, 381-83 (5th Cir. 2013). The appellees urged affirmance based on res judicata from the foreclosure proceeding, but the Fifth Circuit remanded for further factual development. The party to the foreclosure proceeding was a “Series 2010B” that owned the mortgage; the parties to the federal case were that entity’s parent and its mortgage servicer; and the Court was not convinced that the pleadings — standing alone — established the right relationships to find preclusion. The Court also remanded for further consideration of whether Delaware law about 2010B entities applied to third party claims, noting a potential exception the “internal affairs” doctrine in choice-of-law analysis.
Washington Mutual (“WaMu”) failed; Chase took over its mortgage operations from the FDIC. In the meantime, borrower Dixon (after receiving notice from Chase that it was replacing WaMu as mortgagee and servicer) obtained a default judgment in state court against WaMu for $2.8 million and a declaration that all liens were cancelled. A year later, Chase foreclosed on the property and obtained title at a foreclosure sale. Chase sued in federal court to quiet the cloud on title created by the recordation of the default judgment. JP Morgan Chase Bank NA v. Dixon, No. 12-40590 (Oct. 7, 2013, unpublished). The district court granted summary judgment to Chase. Dixon argued that this ruling violated the Rooker/Feldman doctrine about federal review of state court judgments. The Fifth Circuit disagreed, noting that the federal ruling did not technically “nullify” the state court judgment, and that Chase was not a party to the state proceedings and thus Rooker/Feldman was not implicated.
After sidestepping an issue about the Rooker-Feldman doctrine in the context of mortgage servicing earlier this year, the Fifth Circuit revisited the topic in Truong v. Bank of America, 717 F.3d 377 (2013). After a review of the doctrine (“‘Reduced to its essence, the Rooker/Feldman doctrine holds that inferior federal courts do not have the power to modify or reverse state court judgments’ except when authorized by Congress.”), the Court found that it did not prevent a claim arising from alleged misconduct during the course of a foreclosure case. On the merits, however, the claim failed because of an exemption in Louisiana’s unfair trade practices act for “[a]ny federally insured financial institution,” and the Court affirmed dismissal on that basis.
Knoles v. Wells Fargo presented a rare encounter between an eviction and the Rooker-Feldman doctrine. No. 12-40369 (Feb. 19, 2013, unpublished). The borrower lost a forcible entry & detainer (eviction) matter at trial in JP court and on appeal. The borrower then sued for damages, Wells removed, and the borrower unsuccessfully tried to get a TRO about possession from the federal district court. The district court denied relief based on the Rooker-Feldman doctrine about federal review of final state court judgments. The Fifth Circuit found that it had jurisdiction over the interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(1), even though the appeal was nominally from a TRO, because the relief at issue was “more in the nature of a temporary injunction in fact, though not in name.” The court deflected an argument about mootness to hold that the order sought a federal injunction against a final state court judgment in violation of the Anti-Injunction Act.
In Illinois Central Railroad Co. v. Guy, the Court reviewed a jury verdict that two lawyers had improperly induced a railroad into settling asbestos exposure claims. No. 10-61006 (May 29, 2012). The Court rejected jurisdictional challenges that were based on the Rooker-Feldman and Burford doctrines, finding sufficient distance between the facts of the case and the underlying state court proceedings. Op. at 14, 16. The Court also found sufficient evidence of affirmative acts of concealment, and due diligence by the railroad, to toll limitations, Op. at 20, although a dissent argued otherwise. Op. at 27 (“I would reverse because doing nothing is not due diligence.”). The Court rejected a waiver defense, distinguishing the defendants’ cases as arising when a fraud plaintiff accepted a benefit after it knew or should have known of fraudulent inducement. Op. at 25.