Brendan McLaughlin 

St. John’s University School of Law

American Bankruptcy Institute Law Review Staff

In re Gilani presents a “paradigm” Rooker-Feldman situation where a state court judgment for breach of contract against John Gilani precluded him from then bringing a similar action in federal court, which he sought to bring to combat what he thought was a “void [state court] judgment.”^[1] The Rooker-Feldman doctrine applies to state court matters where the losing party comes to federal district court “complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.”^[2] The Rooker-Feldman doctrine has roots in the idea that the federal courts below the U.S. Supreme Court “lack the requisite appellate authority . . . to reverse or modify a state-court judgment.”^[3] Under Rooker-Feldman, the federal court system does “not sit as an [a]ppellate [c]ourt to alter that [state court] decision.”^[4]

In December 2009, a Nevada state criminal action was commenced against John Gilani for issuing a check without sufficient funds, among other felonies.^[5] Three years later, Gilani entered into a plea agreement and filed a petition for relief under chapter 7 of title 11, United States Code (the “Bankruptcy Code”).^[6] As part of the plea, Gilani admitted to using checks–totaling $735,000–without sufficient funds with the intent to defraud multiple Las Vegas casinos and hotels.^[7] In addition, a state court judgment was entered against Gilani in favor of Wynn Las Vegas, L.L.C. (“Wynn”) in the amount of $250,000.^[8] The U.S. Bankruptcy Court for the Eastern District of Texas held that the judgment against Gilani held by Wynn was an unsecured and non-dischargeable claim under Bankruptcy Code section 523.^[9] The plea also provided that if Gilani paid $100,000 included in the 2013 plea agreement stipulation as damages to the harmed hotels and casinos, the adjudication would be stayed for five years and then Gilani could withdraw his plea and enter a gross misdemeanor plea.^[10] Despite opposition from Gilani and as part of the entered misdemeanor conviction, the state court granted Wynn's petition to enforce the criminal restitution, which then required Gilani to pay $218,123.83 to Wynn.^[11] In June 2011, the bankruptcy court granted Gilani’s discharge.^[12]

In February 2022, following Wynn’s petition to enforce the restitution, the Nevada state court stated that such payment by Gilani to Wynn fell within section 523(a)(7) of the Bankruptcy Code.^[13] In March 2022, Gilani filed a motion with the bankruptcy court seeking to enforce the permanent injunction contained in the earlier plea against Wynn, which would eliminate the need for him to make the restitution payment.^[14] The bankruptcy court denied Gilani’s motion because the issue had already been decided in Nevada state court in 2022 when the state court granted Wynn’s motion to enforce the restitution order.^[15] The bankruptcy court's reasoning was consistent with the principles of Rooker-Feldman, but the doctrine itself was not specifically raised.^[16] Gilani filed a motion for reconsideration that was denied by the bankruptcy court, which he appealed twice to arrive at the U.S. Court of Appeals for the Fifth Circuit.^[17] The district court dismissed the appeal for lack of subject matter jurisdiction, as discussed below. Gilani argued to the Fifth Circuit that the Rooker-Feldman doctrine was inapplicable in his case, “because it only applies when a state-court judgment is ‘final,’ and the judgment in this case was not final when the bankruptcy court reopened the bankruptcy proceeding, in March of 2022, because the time for appealing the state-court judgment had not expired.”^[18]Gilani also argued that Rooker-Feldman does not apply because the state court judgment was void in light of his discharge.^[19]

The Fifth Circuit reviewed the appeal from the district court's dismissal for subject matter jurisdiction de novo.^[20] In its evaluation, the Fifth Circuit found that Gilani had a meritless argument regarding the inapplicability of Rooker-Feldman.^[21] They further noted Gilani’s point concerning finality was never raised during the bankruptcy court proceeding, so they could not hear and consider the issue.^[22] The Fifth Circuit held that the district court's dismissal of Gilani’s motion to enforce the permanent injunction was consistent with Rooker-Feldman and thus affirmed the district court’s decision.^[23] The Fifth Circuit concluded that it “did not matter whether a federal district or appellate court agreed or disagreed with the state-court judgment” and that the appropriate course of action is for review by the state appellate courts instead of the federal courts.^[24]

This decision reinforces the broad impact of the Rooker-Feldman doctrine on prior state-court judgments. The Rooker-Feldman doctrine allows for greater judicial economy for the federal docket and limits the opportunities for a losing party to get a second chance to garner a judgment in their favor.