Differing with an unpublished opinion by the Tenth Circuit, Bankruptcy Judge Robert D. Berger of Kansas City, Kan., held that a state court judgment based on a reaffirmation agreement in violation of Section 524 is void and therefore not protected by the Rooker-Feldman doctrine, res judicata, or full faith and credit.
Judge Berger’s opinion was fuzzy on the facts because the pro se debtor filed a terse pleading alleging that a creditor with a claim of about $10,000 violated the discharge injunction under Section 524, despite receiving notice of bankruptcy and the debtor’s chapter 7 discharge.
After discharge, the debtor had signed an agreement reaffirming the debt, but not in compliance with the requirements pertaining to reaffirmation agreements under Section 524(c) and (d). When the creditor sued in state court to enforce the agreement, the debtor raised his discharge as a defense. The state court evidently rejected the discharge defense and entered judgment in favor of the creditor, apparently persuaded that the debtor had defrauded the bankruptcy court by making fraudulent representations about his ownership and value of property.
Judge Berger interpreted the pro se debtor’s pleading as a complaint to enforce the discharge injunction. The creditor responded with a motion to dismiss, arguing that the bankruptcy court was without jurisdiction and that the state court judgment was entitled to enforcement by virtue of Rooker-Feldman, res judicata, and full faith and credit.
In his June 7 opinion, Judge Berger rejected all of the creditor’s contentions and scheduled a hearing to determine whether sanctions are appropriate.
Named for two Supreme Court decisions, the Rooker-Feldman doctrine means that federal courts lack subject matter jurisdiction to review judgments by state courts. With regard to state court judgments violating the automatic stay under Section 362(a), Judge Berger said it is “long established” that they are “void, without effect, and, hence, subject to collateral attack.” However, he said it “remains unsettled” whether “the Rooker-Feldman doctrine prohibits a federal court from reviewing and rejecting a state court judgment that is void by virtue of Section 524(a).”
More broadly, he said the Supreme Court has not decided whether Rooker-Feldman applies to void state court judgments. He noted, though, how Rooker observed that a wrong decision is not a void decision and that modifying a wrong decision is a prohibited exercise of appellate jurisdiction.
Latching onto the difference between wrong and void decisions by state courts, Judge Berger cited the Tenth Circuit for holding that a judgment in violation of the automatic stay is void and subject to collateral attack. Citing the Collier treatise, he held that a judgment in violation of the discharge injunction likewise “is void and a legal nullity” and therefore “beyond the reach” of Rooker-Feldman.
Judge Berger said he was not bound by an unpublished Tenth Circuit opinion from 2016 employing Rooker-Feldman to bar a complaint under Section 524 seeking to nullify a state court order.
Because the state court’s judgment was void, Judge Berger held that issue preclusion and the full faith and credit statute, 28 U.S.C. § 1738, are similarly inapplicable.