The Rooker-Feldman Doctrine and the Automatic Stay

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Feb 2002

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The majority rule is that the state and federal courts have concurrent jurisdiction
to determine the applicability of the automatic stay. Bankruptcy Code
§362(a).<a href="#1" name="1a">1</a> Illustrative is In re Glass,<a href="#2" name="2a">2</a> where the court stated:

<blockquote>
The court agrees with the holdings in the Second and Sixth Circuits that
"[t]he court in which the litigation claimed to be stayed is pending has
jurisdiction to determine not only its own jurisdiction but also the more
precise question [of] whether the proceeding pending before it is subject to
the automatic stay." Thus, the applicability of the automatic stay falls
concurrently within the purview of the bankruptcy court and that of the state
court. Therefore, the court rejects the debtor's implicit argument that a
state court decision interpreting the scope of the automatic stay is void ab
initio (citations and footnote omitted).<a href="#3" name="3a">3</a>
</blockquote>

The Rooker-Feldman doctrine provides that the lower federal courts lack subject
matter jurisdiction to engage in appellate review of state court determinations.<a href="#4" name="4a">4</a>
As one court explained:

The Rooker-Feldman doctrine is derived from two Supreme Court cases decided
nearly 60 years apart. According to the Rooker-Feldman doctrine, "a U.S.
district court has no authority to review final judgments of a state court in
judicial proceedings. Review of such judgments may be had only in [the U.S.
Supreme Court]." The doctrine expresses the principle that federal courts are
courts of original jurisdiction that do not sit in an appellate capacity with
respect to state courts. See <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §1331</a> (providing that federal
district courts are courts of original jurisdiction); <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §1257
(1999)</a> (limiting federal review of state court proceedings to U.S.
Supreme Court) (citations omitted).<a href="#5" name="5a">5</a>

</blockquote>

A pertinent case involving the Rooker-Feldman doctrine and the automatic stay
is Singleton v. Fifth Third Bank of Western Ohio (In re Singleton).<a href="#6" name="6a">6</a> A
state court made a determination that the debtor's chapter 13 case did not stay
the foreclosure of property owned by his corporation. The debtor did not appeal the
state court's determination, but instead filed an adversary proceeding. The
Bankruptcy Appellate Panel for the Sixth Circuit held that the bankruptcy court
lacked subject matter jurisdiction to adjudicate the adversary proceeding. The court
stated:

<blockquote>
The Rooker-Feldman doctrine bars a lower federal court from conducting a
virtual "review" of a state court judgment for errors in construing federal law
or constitutional claims "inextricably linked" with the state court judgment.
<a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… v. Torrance Bank (In re Morrow),</a><a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=…; 189 B.R. 793,
808-09 (Bankr. C.D. Cal. 1995)</a> (footnotes omitted). The
state and federal claims need not be identical for the doctrine to apply. In
order to determine whether a claim is "inextricably intertwined" with a state
court claim, the federal court must analyze whether the relief requested in
the federal action would effectively reverse the state court decision or void
its ruling. In other words, the federal claim is inextricably intertwined
with the state-court judgment if the federal claim succeeds only to the extent
that the state court wrongly decided the issues before it (citations
omitted).<a href="#7" name="7a">7</a>

</blockquote>

Here, the debtor's federal claim was "inextricably intertwined with the
state-court judgment [because] the federal claim [would] succeed...only to the
extent that the state court wrongly decided the issues before it." Absent an
exception, the Rooker-Feldman doctrine barred the exercise of jurisdiction by the
bankruptcy court (citation omitted).<a href="#8" name="8a">8</a>

The court noted that the Rooker-Feldman doctrine applies even when the state
court judgment may be in error.

Another relevant case concerning the Rooker-Feldman doctrine is Siskin v.
Complete Aircraft Services Inc. (In re Siskin).<a href="#9" name="9a">9</a> In this case, a chapter
7 debtor was incarcerated for failure to comply with certain court orders. The
debtors' counsel made an application to have Mr. Siskin released from confinement.
The state court denied the application, and no appeal was taken from the denial
of the application. The debtors commenced an adversary proceeding to recover damages
for a violation of the automatic stay. The bankruptcy court dismissed the adversary
proceeding because of a lack of subject-matter jurisdiction. The court stated:

<blockquote>
In this case, the state court was fully apprised that the debtor had filed
a petition in bankruptcy after the warrant was issued, but before the
bankruptcy filing, and that execution took place post-petition. The state
court recognized the argument and refused to release the debtor from
incarceration based on that court's determination that the debtor was in
contempt of its court. This court is precluded from acting as an appellate
court to determine if the state court decision was appropriate.<a href="#10" name="10a">10</a>
</blockquote>

<h3>Conclusion</h3>

Debtor's counsel has to be cognizant that state and federal courts have concurrent
jurisdiction concerning the applicability of the automatic stay. If a state court
renders an incorrect determination concerning the automatic stay, then under
Rooker-Feldman, debtor's counsel must appeal the state court decision within the
state judicial system, rather than appeal to a bankruptcy court. Rooker-Feldman
holds that a bankruptcy court lacks subject matter jurisdiction to review a state
court determination concerning the applicability of the automatic stay. Thus, if
debtor's counsel is uncertain that the state court understands the concept of the
automatic stay, then he or she should seek declaratory and injunctive relief from
the bankruptcy court.

<hr>

<h3>Footnotes</h3>

<a name="1">1</a> See, e.g., <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… v. Fifth Third Bank of Western Ohio (In re Singleton), 230 B.R. 533, 538 (Bankr. 6th
Cir. 1999)</a>; <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Bona, 124 B.R. 11, 15 (S.D.N.Y. 1991)</a>; <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… v. Complete Aircraft Services Inc. (In
re Siskin), 258 B.R. 554, 562 (Bankr. E.D.N.Y. 2001)</a>; <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Glass, 240 B.R. 782, 785 (Bankr.
M.D. Fla. 1999)</a>; <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Cummings, 201 B.R. 586, 588 (Bankr. S.D. Fla. 1996)</a>; contra, <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Gruntz,

202 F.3d 1074 (9th Cir. 2000) (en banc)</a>. <a href="#1a">Return to article</a>

<a name="2">2</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… B.R. 782 (Bankr. M.D. Fla. 1999)</a>. <a href="#2a">Return to article</a>

<a name="3">3</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=…; at 787</a>. <a href="#3a">Return to article</a>

<a name="4">4</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… v. Wilson (In re Wilson), 116 F.3d 87, 90 (3rd Cir. 1997)</a>; <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Brazleton Cedar Rapids Group
LC, 264 B.R. 195, 198 (Bankr. N.D. Iowa 2001)</a>. <a href="#4a">Return to article</a>

<a name="5">5</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Glass, 240 B.R. 782, 785 (Bankr. M.D. Fla. 1999)</a>. <a href="#5a">Return to article</a>

<a name="6">6</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… B.R. 533 (Bankr. 6th Cir. 1999)</a>. <a href="#6a">Return to article</a>

<a name="7">7</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… v. Fifth Third Bank of Western Ohio (In re Singleton), 230 B.R. 533, 536-37 (Bankr. 6th Cir.
1999)</a>. <a href="#7a">Return to article</a>

<a name="8">8</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=…; at 538</a>. <a href="#8a">Return to article</a>

<a name="9">9</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… B.R. 554 (Bankr. E.D.N.Y. 2001)</a>. <a href="#9a">Return to article</a>

<a name="10">10</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=…; at 565</a>. <a href="#10a">Return to article</a>

Journal Authors

Carlos J. Cuevas

Journal Date

Friday, February 1, 2002 - 12:00

Bankruptcy Rule

2002