FRANCIS et al v. EMC MORTGAGE LLC et al
OPINION AND ORDER - Michael and Carmen Francis sought relief that the bankruptcy court had no power to grant, so the bankruptcy court dismissed their adversary petition. The bankruptcy court ruled correctly, and had no jurisdiction to rule in any other way. The bankruptcy court's verdict is AFFIRMED. (See Order.) Copy to Appellants via US Mail. Signed by Judge Robert L. Miller, Jr on 6/20/2018.(BRR)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
MICHAEL FRANCIS and CARMEN
EMC MORTGAGE LLC, et al.,
Cause No. 1:17-cv-2281 RLM-DML
OPINION AND ORDER
Michael and Carmen Francis sought relief that the bankruptcy court had
no power to grant, so the bankruptcy court dismissed their adversary petition.
Mr. and Mrs. Francis appeal, but the bankruptcy court was exactly right.
The Francises were granted a discharge in bankruptcy in their 2014
Chapter 7 case. In February 2016, the Marion Superior Court entered a
foreclosure judgment against the Francises and in favor of EMC Mortgage LLC.
The Francises returned to the bankruptcy court and filed a new voluntary
Chapter 13 petition in April 2016. The bankruptcy court dismissed that petition
after a June 2016 hearing on the U.S. Trustee’s motion because it was too soon
after the bankruptcy discharge in the 2014 case. Back in state court, the Indiana
Court of Appeals affirmed the foreclosure order in February 2017, also declining
to consider “new evidence” that wasn’t in the appellate record. In the same
month, the Francises’ home was sold at a sheriff’s sale.
In June 2017, back in the bankruptcy court, the Francises filed the
adversary petition that gave rise to the order from which they appeal today. They
styled their filing a “Motion for Order of Contempt Pursuant to FRBP 9020 of the
Bankruptcy Court Orders and Motion for Sanctions, Against the Creditor of EMC
Mortgage Corporation, LLC, Successors in interest EMC Mortgage Corporation,
a Subsidiary of J.P. Morgan Chase Bank, et al.” The adversary complaint sought
damages from EMC for its alleged violation of the discharge injunction –
foreclosing on their home – in the state courts.
Bankruptcy Judge James Carr issued a rule to show cause why the
adversary petition shouldn’t be dismissed. The Francises filed an amended
petition on the day of the show cause hearing. Judge Carr patiently explained to
Mr. Francis that while he would review the amended petition, it didn’t look to
him as though the court had the authority to consider the Francises’ grievances.
First, the actions of EMC and the others in state court couldn’t have violated any
order in the 2016 bankruptcy court because that case had been dismissed
without a discharge order. Second, to the extent the Francises complained about
what had happened in the state proceedings, federal courts (other than the
Supreme Court) don’t have the power to reverse actions taken by state courts,
D.C. Ct. App. v, Feldman, 460 U.S. 462, 476, 482-483 (1983); Rooker v. Fidelity
Trust Co., 263 U.S. 413, 415-416 (1923), so any remedy for the Francises lay in
their then-pending (and eventually denied) belated motion to transfer the state
case to the Indiana Supreme Court. Because the amended complaint contained
nothing that would create jurisdiction – the court’s power to decide a case –
Judge Carr dismissed the adversary petition on June 30, 2017. This appeal
followed five days later.
The Francises devote the lion’s share of their appellate brief to an
explanation of why they shouldn’t have lost their house and why it happened
anyway, but only a few pages address the bankruptcy court’s conclusion that it
had no authority to hear the Francis’s complaint.
Apart from the Supreme Court, which was created by the constitution
rather than by statute, all federal courts are limited in what authority they have.
United States v. Alkaramla, 872 F.3d 532, 534 (7th Cir. 2017). No federal court
other than the Supreme Court has appellate authority over the courts of any
state. See 28 U.S.C. § 1257; United States v. Alkaramla, 872 F.3d at 534. A party
seeking federal review of a state court judgment can only get there by litigating
to (and losing in) the state’s highest court, then asking the United States
Supreme Court to issue a writ of certiorari and consider the case.
The Rooker-Feldman doctrine prevents lower federal courts from
exercising jurisdiction over cases brought by state court losers
challenging state court judgments rendered before the district court
proceedings commenced. The rationale for the doctrine is that no
matter how wrong a state court judgment may be under federal law,
only the Supreme Court of the United States has jurisdiction to
Jakupovic v. Curran, 850 F.3d 898, 902 (7th Cir. 2017), quoting Sykes v. Cook
Cty. Cir. Ct. Prob. Div., 837 F.3d 736, 741–742 (7th Cir. 2016) (citations omitted).
A court must consider whether a federal claim is inextricably intertwined with a
state court judgment such that the federal claim seeks, directly or indirectly, to
set aside the state claim. Taylor v. Fed. Nat'l Mortg. Ass'n, 374 F.3d 529, 533
(7th Cir. 2004). If a federal claim is inextricably intertwined with a state court
judgment, the Rooker-Feldman doctrine bars the federal claim as long as the
plaintiff had a reasonable opportunity to raise the issue in state court
Mains v. Citibank, N.A., 852 F.3d 669 (7th Cir. 2017), provides an example
of the doctrine’s operation in a case similar to the Francis’s adversary complaint.
Mr. Mains took out a home mortgage with Washington Mutual. Id. at 674. After
the mortgage went through several hands, Chase Bank served Mr. Mains time
default and acceleration notice in June 2009 and filed a foreclosure action in
April 2010. Id. Mr. Mains contended that Chase Bank wasn’t the real party in
interest, but the trial court disagreed and granted Chase Bank summary
judgment. Id. The Indiana Court of Appeals affirmed the judgment, and Indiana
Supreme Court denied transfer. Id. Mr. Mains then brought suit in this (federal)
court, which ruled against him. Id. The court of appeals affirmed the judgment
under the Rooker-Feldman doctrine, explaining:
Reading through the verbiage of Mains's filings, we are left with the
impression that the foundation of the present suit is his allegation
that the state court's foreclosure judgment was in error because it
rested on a fraud perpetrated by the defendants. Mains wants the
federal courts to redress that wrong. That is precisely what RookerFeldman prohibits, however. If we were to delve into the question
whether fraud tainted the state court's judgment, the only relief we
could give would be to vacate that judgment. That would amount to
an exercise of de facto appellate jurisdiction, which is not
permissible. Mains's remedies lie in the Indiana courts. Indiana
allows a party to file for relief from judgment based on newly
discovered evidence or on the fraud or misrepresentation of an
adverse party, either through a motion or through an independent
action. See Ind. R. Trial P. 60(B). The state's courts are quite capable
of protecting their own integrity.
Id. at 676. See also Podemski v. US Bank Nat’l Ass’n for Residential Funding
Mortgage Prods., Inc., 2017 WL 5714760 at *2 (N.D. Ind. March 30, 2017) (“In
filing her lawsuit and seeking the injunctive relief, Plaintiff essentially wants to
set aside state court rulings regarding the foreclosure of the property in question,
the sheriff’s sale, and her eviction. If this Court were to agree with Plaintiff’s
preposition—wrong as it is—that she properly rescinded the mortgage loan, it
would necessarily overrule the Indiana court of appeals and the superior court.
This is prohibited by the Rooker-Feldman doctrine.”).
Whatever differences there might be between the facts of Mains and the
facts of this case don’t affect the operation of the Rooker-Feldman doctrine. The
Francises wanted the bankruptcy court to, for all practical purposes, overturn
the state court’s judgment ordering their house sold. As in Mains, the Francises’
arguments about fraud and contempt amount to the same challenge to the
Marion Superior Court judgment. The only federal court with the power to
conduct an appellate review of the actions of the Indiana courts is the United
States Supreme Court, not the United States Bankruptcy Court for the Southern
District of Indiana. United States v. Alkaramla, 872 F.3d at 534.
The bankruptcy court ruled correctly, and had no jurisdiction to rule in
any other way. The bankruptcy court’s verdict is AFFIRMED.
ENTERED: June 20, 2018
/s/ Robert L. Miller, Jr.
Judge, United States District Court
All ECF-registered counsel of record via email generated by the court’s ECF
Via United States Mail:
MICHAEL AND CARMEN JAY FRANCIS
4904 Winston Drive
Indianapolis, IN 46226
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