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Main Street Bank & Trust v. Saltonstall

August 16, 2006

MAIN STREET BANK & TRUST, PLAINTIFF,
v.
SAM HOLDER SALTONSTALL, DEFENDANT.



The opinion of the court was delivered by: Joe Billy McDade United States District Judge

ORDER

Before the Court is Defendant Sam Holder Saltonstall's ("Saltonstall") Notice of Removal [Doc. #1]; Motion to Open Judgment by Confession [Doc. #2]; Motion to Amend/Correct Scrivener's Errors [Doc. #7]; and Motion for Leave to File Short Reply to Plaintiff's Response [Doc. #8]. For the reasons that follow, all motions are DENIED and this case is REMANDED to the state court for lack of subject matter jurisdiction pursuant to the Rooker-Feldman Doctrine.

I. BACKGROUND

On April 3, 2006, Plaintiff filed a Complaint and Confession of Judgment [Doc. #1-3] in the Eleventh Judicial Circuit Court for McLean County, Illinois. Plaintiff alleged that Saltonstall defaulted on a note that had been duly executed by him and that provided Plaintiff with a power of attorney to confess judgment. On April 6, 2006, the Illinois state court entered an "Order of Judgment on Complaint and Cognovit" [Doc. #1-2], granting Plaintiff's judgment by confession. The state court determined that it had jurisdiction, that Saltonstall had duly executed the power of attorney to confess judgment, that the attorneys' fees ordered were usual and reasonable, and that the note was not a consumer transaction.

A copy of the state court order was mailed to Saltonstall on April 19, 2006. On May 3, 2006, Saltonstall filed with this Court a Notice of Removal [Doc. #1], along with a Motion to Open Judgment by Confession [Doc. #2]. In addition, on May 19, 2006, Saltonstall filed a Motion to Amend/Correct Scrivener's Errors [Doc. #7] and a Motion for Leave to File Short Reply to Plaintiff's Response [Doc. #8]. As a result, this Court entered a Text Order on June 8, 2006, ordering the parties to brief the issue of whether the Rooker-Feldman doctrine was applicable to the instant case. The parties' briefs are now before the Court. See [Def. Brief, Doc. #12; and Pl. Brief, Doc. #13].

II. LEGAL STANDARD

Before reaching the merits of Saltonstall's Motion to Open Judgment by Confession, this Court must first determine whether it has jurisdiction over the instant matter. As this Court has previously explained, "'[s]ubject-matter jurisdiction is the first question in every case, and if the court concludes that it lacks jurisdiction it must proceed no further.'" Green v. Green, No. 05-4006, 2005 U.S. Dist. LEXIS 27892, at *5-6 (C.D. Ill Nov. 8, 2005) (quoting Illinois v. City of Chicago, 137 F.3d 474, 478 (7th Cir. 1998)). "This is true even if the parties fail to raise the jurisdictional issue themselves." Id. (citing Robinson v. Bergstrom, 579 F.2d 401, 404 (7th Cir. 1978) and Levin v. Attorney Registration & Disciplinary Comm'n of the Supreme Court of Illinois, 74 F.3d 763, 766 (7th Cir. 1996) (stating that subject matter jurisdiction cannot be waived and may be raised sua sponte at any point in the proceedings)).

Rooker-Feldman Doctrine

Under the Rooker-Feldman doctrine, lower federal courts lack subject matter jurisdiction to hear claims seeking review of state court judgments. See Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923) (stating that "[u]nless and until . . . reversed or modified, [the state-court judgment] would be an effective and conclusive adjudication"); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983). This is because "no matter how erroneous or unconstitutional the state court judgment may be, the Supreme Court of the United States is the only federal court that could have jurisdiction to review a state court judgment." Brokaw v. Weaver, 305 F.3d 660, 664 (7th Cir. 2002).

As the United States Supreme Court has recently held, the Rooker-Feldman doctrine "is confined to cases of the kind from which the doctrine acquired its name: cases brought by state- court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). Under these circumstances, "claims that directly seek to set aside a state court judgment are de facto appeals and are barred without additional inquiry." Taylor v. Fannie Mae, 374 F.3d 529, 532 (7th Cir. 2004). However, claims that indirectly seek to set aside a state court judgment, i.e., are "inextricably intertwined" with the judgment, may only be barred by the Rooker-Feldman doctrine if the state-court loser had a reasonable opportunity to raise his claims or issues in the state court. Taylor, 374 F.3d at 533. Thus, even claims that were not actually presented or argued in the state court may still be barred by the doctrine. See Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999).

In determining whether a federal district court is in fact being asked to review a state court judgment, "[t]he fundamental and appropriate question to ask is whether the injury alleged by the [state-court loser] resulted from the state court judgment itself or is distinct from that judgment." Garry v. Geils, 82 F.3d 1362, 1365 (7th Cir. 1996). If the alleged injury resulted from the state court judgment, then it may not be reviewed by a federal district court. See Centres, Inc. v. Town of Brookfield, 148 F.3d 699, 702 (7th Cir. 1998). In that situation, the state-court loser must seek relief through the state court system and ultimately to the United States Supreme Court; the federal district court does not serve as a bypass. See Long, 182 F.3d at 554. However, if the alleged injury is independent of the state court judgment and not "inextricably intertwined" with it, then the Rooker-Feldman doctrine does not apply. See Centres, 148 F.3d at 702.

The Seventh Circuit has identified at least two circumstances in which the alleged injury will be deemed independent of the state court judgment: (1) where the state-court loser challenges the constitutionality of a state law in general, rather than attacking the validity of the state court's judgment in his particular case, see Ritter v. Ross, 992 F.2d 750, 754 (7th Cir. 1993) and Feldman, 460 U.S. at 485-86 (stating that general challenges to the constitutionality of a state court rule do not necessarily require a federal district court to review a particular state court decision); and (2) where the state-court loser alleges a prior injury that the state court judgment failed to remedy, rather than an injury caused by the state court judgment itself, see Centres, 148 F.3d at 702.

These fine line distinctions, however, have proven much easier for the federal courts to articulate, than to actually apply in given cases. See Ritter v. Ross, 992 F.2d 750, 754 (7th Cir. 1993) (stating that "[t]his difficulty is evinced by the varying outcomes courts reach when faced with similar facts."); Gary Thompson, Note, The Rooker-Feldman Doctrine and the Subject Matter Jurisdiction of Federal District Courts, 42 Rutgers L. Rev. 859, 880 n.95, 881 n.98 (1990) (comparing conflicting court decisions). As a result, the Seventh Circuit has developed a general rule of thumb for determining when to dismiss a case based on the Rooker-Feldman doctrine.*fn1 See Centres, 148 F.3d at 702-03. In Homola v. McNamara, the court provided the following guideline:

A plaintiff who loses and tries again encounters the law of preclusion. The second complaint shows that the plaintiff wants to ignore rather than upset the judgment of the state tribunal. A defendant who has lost in state court and sues in federal court does not assert injury at the hands of his adversary; he asserts injury at the hands of the court, and the second suit therefore is an effort to obtain collateral review.[*fn2 ] It must be dismissed ...


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