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Rooker-Feldman Doctrine-Foreclosure

By: WISCONSIN LAW JOURNAL STAFF//February 26, 2024//

Rooker-Feldman Doctrine-Foreclosure

By: WISCONSIN LAW JOURNAL STAFF//February 26, 2024//

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7th Circuit Court of Appeals

Case Name: Chicago Title Land Trust, Trust No. 127632 v. Joel Chupack

Case No.: 22-3265

Officials: Easterbrook, Scudder, and Lee, Circuit Judges.

Focus:  Rooker-Feldman Doctrine-Foreclosure

The Seventh Circuit addressed a disagreement concerning the proprietors of two Chicago real estate parcels. They argued that various banks were attempting to enforce notes and mortgages belonging to different financial institutions. While the state judiciary had ruled in favor of the banks’ right to foreclose on both parcels, no final judgments determining the debt had been established, and the properties remained unsold. Seeking federal intervention under the precedent set by Exxon Mobil Corp. v. Saudi Basic Industries Corp., the plaintiffs claimed their case was still pending. However, the district court dismissed their claim, citing the Rooker-Feldman doctrine, which stipulates that only the U.S. Supreme Court can review state court judgments in civil matters.

The Seventh Circuit concluded that applying the Rooker-Feldman doctrine here was erroneous because the foreclosure proceedings in Illinois were not yet “final.” According to the court, the foreclosure process in Illinois extends until the property is sold, the sale is confirmed, and the court either issues a deficiency judgment or distributes any surplus. Since these steps had not been completed, the plaintiffs had not definitively “lost,” thus allowing for concurrent state and federal litigation, as established in Exxon Mobil Corp. v. Saudi Basic Industries Corp.

However, by the time the district court dismissed the case, the state litigation for one parcel had concluded due to a sale being confirmed. Furthermore, by the time the Appeals court heard oral arguments, the same was true for the second parcel. The Appeals court pointed out that Illinois law prohibits successive litigation on the same claim, even if the second case presents new arguments. The court determined that the plaintiffs could have raised their constitutional arguments within the state court system and were not permitted to shift what amounted to an appellate argument to a different judicial forum.

Additionally, the court observed that Joel Chupack, the lead defendant, had been the trial judge in the state case but was not a party to either state case. He did not assert the benefit of preclusion and was deemed entitled to absolute immunity from damages as he acted in a judicial capacity.

The district court’s judgment was modified to reflect a dismissal with prejudice rather than a dismissal for lack of jurisdiction.

Affirmed and modified

Decided 02/21/24

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