Invocation of Rooker-Feldman Requires Finality in the State Court Judgment

The Eleventh Circuit explained when the Rooker-Feldman doctrine does not apply despite a judgment in state court.

Named for two Supreme Court decisions, Rooker-Feldman means that federal courts lack subject matter jurisdiction to review judgments by state courts. As the circuit court said in its November 5 per curiam opinion, the doctrine means “that a federal district court may not review and reverse a state court civil judgment, because only the United States Supreme Court has appellate jurisdiction over judgments of state courts in civil cases.”

In the case on appeal, the mortgage lender won a judgment of foreclosure in state court. The homeowners did not appeal the foreclosure judgment. Instead, they later mounted a challenge in state court to the conduct of the foreclosure sale. The state trial court upheld the sale and was affirmed in the intermediate state appellate court.

After the state appellate court rendered its opinion but before the appellate court issued the mandate, the homeowners filed a chapter 7 petition. After receiving their discharges, the couple sued the mortgage lender in bankruptcy court, alleging that the lender did not have a valid mortgage and that the conduct of the foreclosure sale was defective.

Invoking Rooker-Feldman, the bankruptcy court dismissed the adversary proceeding. The district court affirmed.

On a second appeal, the Eleventh Circuit ruled that the challenge to the validity of the mortgage was barred by Rooker-Feldman. However, the appeals court reversed the bankruptcy court’s dismissal of the debtors’ challenge to the conduct of the foreclosure sale.

Citing its own precedent, the circuit court explained that the doctrine “bars litigation in federal court of claims that were actually raised in the state court and those ‘inextricably intertwined’ with the state court judgment.” A claim is inextricably intertwined “if it would effectively nullify the state court judgment.”

Of significance for the case on appeal, the circuit court said that a claim based on conduct occurring after a state court judgment is not barred by Rooker-Feldman. A corollary means that the “doctrine is inapplicable if the federal action was commenced before the state proceedings ended.”

Consequently, the federal court must determine whether the state proceedings have “ended.”

Previously, the Eleventh Circuit held that state proceedings have ended if the time for appeal has expired but have not ended if the losing party has appealed. The appeals court said it “follows” that Rooker-Feldman does not apply “if an appeal from the state court judgment remains pending at the time that the plaintiff files the federal case.”

The Eleventh Circuit therefore ruled that Rooker-Feldman prevented the debtors from invalidating the judgment of foreclosure or attacking the validity of the mortgage.

On the other hand, the appeals court ruled that the debtors’ claims about defects in the foreclosure sale “cannot be barred under the Rooker-Feldman doctrine” since they dealt with “conduct that occurred after the final foreclosure judgment was entered and the time for appeal expired.”

Because the state appellate court had not issued a mandate, the Eleventh Circuit ruled that the challenge to the foreclosure sale “had not yet ended,” making Rooker-Feldman inapplicable.

Although it reversed the lower court for dismissing the adversary proceeding with regard to the conduct of the foreclosure sale, the appeals court was careful to say it was not ruling on whether the mortgage lender might have other defenses to the adversary proceeding.