The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Appellant Kevin Adams'
("Adams") appeal of an order issued by a bankruptcy court. For
the reasons stated below, we affirm the bankruptcy court.
Appellee MidAmerica Bank, fsb (MidAmerica") held a mortgage
lien on property owned by Adams that is located in Aurora,
Illinois ("Property"). Adams filed a Chapter 13 petition in the
bankruptcy court in August of 2003. In December of 2003,
MidAmerica filed a motion in those bankruptcy proceedings to
modify the automatic stay in the proceedings to allow MidAmerica
to institute a foreclosure of mortgage case against the Property.
The motion to modify the stay was granted and MidAmerica
subsequently filed a foreclosure of mortgage case. Judgment of foreclosure was entered on August 5, 2004, and the judgment
provided that the redemption period expired on November 8, 2004.
Adams subsequently filed a Chapter 13 bankruptcy petition on
November 22, 2004 instituting the present action. MidAmerica
claimed that before the Property was sold on November 23, 2004,
MidAmerica conducted a search for Adams' name to make sure that
he had not filed another Chapter 13 bankruptcy and MidAmerica
discovered no such filing by Adams. On November 23, 2004, the
Property was auctioned at a Sheriff's sale and was sold to a
third party and on December 8, 2004, the state court entered an
order approving the sale. After the sale was confirmed, Adams'
counsel informed MidAmerica that Adams had filed a Chapter 13
petition for bankruptcy before the sale of the Property, but that
the filing had been made under the name of "Keith L. Adams"
rather than "Kevin L. Adams."
MidAmerica then appeared before the bankruptcy court in the
instant action and filed a motion to annul the automatic stay in
the instant action in order to validate the final approval by the
state court of the sale of the Property on December 8, 2004. We
note that Adams claims that the sale was confirmed on December 8,
2005, (Applt. 2), but that such a date is clearly inaccurate, in
that it is in the future. MidAmerica pointed out in its motion to
annul the stay that Adams was in substantial default on the
mortgage for the Property prior to the filing of his petition for
bankruptcy. The bankruptcy court granted MidAmerica's motion to
annul the stay, noting that the court lacked jurisdiction to
nullify the state court order approving the sale. Adams filed a motion with the bankruptcy
court seeking a rehearing and a vacation of the order granting
MidAmerica's motion to annul. The bankruptcy court denied the
motion for rehearing and the motion to vacate. Adams is now
before this court to appeal the bankruptcy court's ruling
granting MidAmerica's motion to annul and denying the motion for
a rehearing and vacation of the order.
A federal district court has jurisdiction, pursuant to
28 U.S.C. § 158, to hear appeals from the rulings of a bankruptcy
court. On appeal, the district court reviews the factual findings
of the bankruptcy court under the clearly erroneous standard and
reviews the bankruptcy court's legal findings under the de novo
standard. In re A-1 Paving and Contracting, Inc., 116 F.3d 242,
243 (7th Cir. 1997).
Adams argues that the bankruptcy court erred in concluding that
it lacked jurisdiction over the third party-purchaser of the
property. Adams argues that the automatic stay under
11 U.S.C. § 362 ("Section 362") encompassed the Property. Pursuant to
11 U.S.C. § 541, the bankruptcy estate includes "all legal or
equitable interests of the debtor in property as of the
commencement of the case." 11 U.S.C. § 541(a)(1). Adams argues
that the Property was thus part of the bankruptcy estate on November 22, 2004, before the Property was sold and was covered
by the automatic stay. Under Section 362, the stay applies to
"any act to obtain possession of property of the estate or of
property from the estate or to exercise control over property of
the estate." 11 U.S.C. § 362(a)(3). Adams argues that the sale of
the Property, which is part of the bankruptcy estate, constitutes
an exercise of control over the property of the estate and falls
within the prohibition of Section 362.
Adams acknowledges that he failed to notify MidAmerica of his
filing of bankruptcy on November 22, 2004 until after the sale
and the approval of the sale by the state court. Adams claims
that his attorney attempted to send a letter to MidAmerica
informing it of Adams' filing, but that "[t]he letter was
inadvertently sent via the wrong fax number. . . ." (Mot. 9).
Adams argues that, regardless of the fact that MidAmerica did not
receive notice of his filing prior to the sale, the automatic
stay is effective without the necessity of notice to any party
that would be subject to the stay. See In re Garcia,
23 B.R. 266, 267 (N.D. Ill. 1982) (stating that notice to creditor of
stay is not required).
I. Rooker-Feldman Doctrine
The bankruptcy court did not, as Adams suggests, find that the
automatic stay was not in effect on November 23, 2004 when the
Property was sold. Rather, the bankruptcy court pointed out that
it was not disputed that at that juncture, the Property had
already been sold and that the sale had already been approved by
the state court. (1/15/05 Hr. tr. 4-5). The bankruptcy court
acknowledged that a third-party purchaser had acquired a deed in
the Property and that the state court entered an order approving
the sale. (1/15/05 Hr. tr. 6-7). The bankruptcy court properly
concluded that it did not have jurisdiction over the state court
matter and that it did not have jurisdiction over the third-party
purchaser. The bankruptcy court granted the annulment of the
automatic stay, but did so with the express proviso that, if
Adams pursued his remedies in the state court and the state court
vacated the sale, Adams could renew his arguments before the
bankruptcy court. (1/15/05 Hr. tr. 4-5). Also, in denying Adams'
motion to vacate, the bankruptcy court denied the motion without
prejudice, stating that if Adams was able to get the state court
to vacate the confirmation of the sale, Adams could renew his
motion to vacate with the bankruptcy court. (2/4/05 Hr. tr. 5).
The bankruptcy court stated that under the Rooker-Feldman
doctrine, a federal bankruptcy court does not have jurisdiction
to reverse the final orders of state courts and that a judgment
of foreclosure that has proceeded to an order confirming a sale
is a final order. Under the Rooker-Feldman Doctrine, the lower
federal courts are precluded from "jurisdiction over claims
seeking review of a state court judgment" and over claims
"inextricably intertwined" with a state court judgment. Rooker
v. Fidelity Trust, 263 U.S. 413, 415-16 (1923); District of
Columbia Court of Appeals v. Feldman, 460 U.S. 462, 482-86
(1983). In determining whether Rooker-Feldman is applicable, an
inferior federal court must determine whether the claim seeks to "set aside a state court judgment" or whether the claim
is in fact "an independent claim." 4901 Corporation v. Town of
Cicero, 220 F.3d 522, 527-28 (7th Cir. 2000). If a ...