In Banister v. U.S. Bank Nat’l Ass’n, 2021 U.S. App. LEXIS 28565 (7th Cir. 2021), the United States Court of Appeals for the Seventh Circuit (that includes Indiana) affirmed an Illinois district court’s decision to dismiss on jurisdictional grounds a federal court lawsuit filed by a borrower/mortgagor. The suit was the borrower’s fifth attempt to overturn a state court judgment foreclosing the mortgage on her home. The plaintiff borrower asserted the defendants committed bank fraud and sought $20MM in damages, together with an order to set aside the sheriff’s sale due to the alleged “illegal foreclosure.” The borrower’s claims were blocked by the Rooker-Feldman doctrine, which prohibits a federal court action to vacate a state foreclosure order. To the extent the federal case sought damages, “a federal court could not award them without invalidating the foreclosure judgment—something that only an Illinois appellate court or the Supreme Court of the United States could do.”
A recent opinion by the United States District Court for the Northern District of Indiana reached the same result. Shaffer v. Felts, 2021 U.S. Dist. LEXIS 198114 (N.D. Ind. 2021) held that it “has no jurisdiction to set aside a state-court foreclosure judgment.” One of the lessens in Shaffer is that a federal court complaint “simply invoking the word ‘fraud’ does not grant a district court jurisdiction to set aside a state-court order.” The opinion cited to the 7th Circuit’s 2015 Iqbal decision:
The Rooker-Feldman doctrine is concerned not with why a state court’s judgment might be mistaken (fraud is one such reason; there are many others) but with which federal court is authorized to intervene. The reason a litigant gives for contesting the state court’s decision cannot endow a federal district court with authority; that’s what it means to say that the Rooker-Feldman doctrine is jurisdictional.
I previously wrote about the Iqbal case here: Dismissal Of Mortgagor’s Post-Foreclosure Federal Lawsuit: Usually, But Not Always.
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I represent lenders, as well as their mortgage loan servicers, entangled in loan-related disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@dinsmore.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.