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Mains v. Citibank, N.A.

United States Court of Appeals, Seventh Circuit

March 29, 2017

Eric Mains, Plaintiff-Appellant,
Citibank, N.A., et al, Defendants-Appellees.

          Argued November 2, 2016

         Appeal from the United States District Court for the Southern District of Indiana, New Albany Division. No. 4:15-cv-00036-SEB-TAB - Sarah Evans Barker, Judge.

          Before Wood, Chief Judge, and Posner and Williams, Circuit Judges.

          WOOD, Chief Judge.

         Eric Mains has been battling the impending foreclosure of his home for quite some time. Most recently, he brought an action in federal court raising various state and federal law theories, related primarily to alleged fraudulent activity by the defendants. But the state courts resolved these matters long before he turned to the federal court. Mindful of our limited jurisdiction and the need to respect the finality of state-court judgments, we affirm the district court's dismissal of this case.


         Mains executed a mortgage on his home with Washington Mutual ("WAMU") in December 2006 and made timely payments for a little more than two years. WAMU failed in September 2008, and the Federal Deposit Insurance Corporation ("FDIC") became its receiver. Chase Bank ("Chase") purchased WAMU's loans and loan commitments, including Mains's mortgage and note. Mains received notice in May 2009 that Chase was the servicer of his loan. (Chase would later assign the mortgage and note to Citibank in 2010.)

         Around the time of WAMU's demise, Mains began falling behind on his mortgage payments. He requested loan modifications from Chase three times in early 2009 and discontinued his mortgage payments altogether in March of that year. Chase's law firm, Nelson & Frankenberger, P.C. ("Nelson"), sent Mains a default and acceleration notice in June 2009. On April 20, 2010, Citibank (by now the holder of the paper) filed a mortgage foreclosure action in the Circuit Court of Clark County, Indiana. Citibank filed a motion for summary judgment in August 2010, but it withdrew that motion in November 2010 because it was under investigation for its alleged improper foreclosure practices. On February 11, 2013, Citibank re-filed its motion, and the state court granted summary judgment for Citibank on May 3, 2013. Mains appealed on September 12, 2013, contending that Citibank was not the proper party to foreclose on the loan and that it had committed fraud because it was not the real party in interest, yet it instructed its employees fraudulently to sign documents. The Indiana Court of Appeals affirmed the trial court's order, and the Indiana Supreme Court denied Mains's motion for transfer on January 22, 2015.

         Mains then turned to the federal courts, filing a rambling, 90-page complaint on March 20, 2015. He alleged that he had discovered new evidence of fraud that he could not have presented to the state court-specifically, the existence of previously undisclosed consent judgments, parties in interest, and evidence of robo-signing. He also claimed to have rescinded his mortgage on February 27, 2015. In addition to Chase and Citibank, the complaint named a host of others: Cynthia Riley, a former employee of WAMU; Black Knight Financial In-foserv ("Black Knight"), a computer software and form provider for Chase; Nelson & Frankenberger, Citibank's counsel; Bose McKinney Citibank's appellate counsel in the Indiana foreclosure judgment; and Wyatt, Tarrant & Combs ("Wy-att"), Chase's non-litigation counsel. The federal complaint alleged violations of a number of federal statutes: the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601-2617; the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1631-1651, and "Regulation Z, " 12 C.F.R. § 226; the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692-1692p; and the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968. Mains also brought claims under Indiana Code § 32-30-10.5 (relating to foreclosure prevention agreements), and state tort law for negligent or intentional infliction of emotional distress, negligent misrepresentation, common law fraud, and negligence.

         The district court found that Mains's claims would effectively nullify the state-court judgment if resolved in his favor, and dismissed for lack of subject matter jurisdiction under the Rooker-Feldman doctrine. See Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983). We agree with that court that Mains is, in effect, asking us to overturn the state court's judgment-an action we have no jurisdiction to take. The district court indicated that its dismissal was with prejudice. Because it rests on a limitation on the federal court's jurisdiction, however, we modify it (with minor exceptions described below) to be without prejudice.


         The crux of Mains's argument on appeal is that the district court erred in dismissing his claims pursuant to Rooker-Feldman because he discovered evidence of fraud that was not known to the state court, and it would be unfair in light of that to hold him to the state court's judgment.

         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. ExxonMobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). It ensures that lower federal courts do not exercise appellate authority over state courts. Claims that directly seek to set aside a state-court judgment are de facto appeals that trigger the doctrine. Sykes v. Cook Cnty. Cir. Ct. Prob. Div., 837 F.3d 736, 742 (7th Cir. 2016). But even federal claims that were not raised in state court, or that do not on their face require review of a state court's decision, may be subject to Rooker-Feldman if those claims are closely enough related to a state-court judgment. Id.

         Another way of expressing the same point is to ask whether the federal plaintiff is alleging that his injury was caused by the state-court judgment. Richardson v. Koch Law Firm, P.C.,768 F.3d 732, 733 (7th Cir. 2014). If the claim alleges an injury independent of the state-court judgment that the state court failed to remedy Rooker-Feldman does not apply. Sykes, 837 F.3d at 742. "In other words, [for Rooker-Feldman to apply] there must be no way for the injury complained of by a plaintiff to be separated from a state court judgment." Id. Rooker-Feldman thus applies where the plaintiff seeks relief that is tantamount to vacating the state judgment. Taylor v. Fannie Mae,374 F.3d 529, 533 (7th Cir. 2004). But if the suit does not seek to vacate the ...

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