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The Rooker-Feldman Doctrine and the Automatic Stay

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The majority rule is that the state and federal courts have concurrent jurisdiction to determine the applicability of the automatic stay. Bankruptcy Code §362(a).1 Illustrative is In re Glass,2 where the court stated:

The court agrees with the holdings in the Second and Sixth Circuits that "[t]he court in which the litigation claimed to be stayed is pending has jurisdiction to determine not only its own jurisdiction but also the more precise question [of] whether the proceeding pending before it is subject to the automatic stay." Thus, the applicability of the automatic stay falls concurrently within the purview of the bankruptcy court and that of the state court. Therefore, the court rejects the debtor's implicit argument that a state court decision interpreting the scope of the automatic stay is void ab initio (citations and footnote omitted).3

The Rooker-Feldman doctrine provides that the lower federal courts lack subject matter jurisdiction to engage in appellate review of state court determinations.4 As one court explained:

The Rooker-Feldman doctrine is derived from two Supreme Court cases decided nearly 60 years apart. According to the Rooker-Feldman doctrine, "a U.S. district court has no authority to review final judgments of a state court in judicial proceedings. Review of such judgments may be had only in [the U.S. Supreme Court]." The doctrine expresses the principle that federal courts are courts of original jurisdiction that do not sit in an appellate capacity with respect to state courts. See 28 U.S.C. §1331 (providing that federal district courts are courts of original jurisdiction); 28 U.S.C. §1257 (1999) (limiting federal review of state court proceedings to U.S. Supreme Court) (citations omitted).5

A pertinent case involving the Rooker-Feldman doctrine and the automatic stay is Singleton v. Fifth Third Bank of Western Ohio (In re Singleton).6 A state court made a determination that the debtor's chapter 13 case did not stay the foreclosure of property owned by his corporation. The debtor did not appeal the state court's determination, but instead filed an adversary proceeding. The Bankruptcy Appellate Panel for the Sixth Circuit held that the bankruptcy court lacked subject matter jurisdiction to adjudicate the adversary proceeding. The court stated:

The Rooker-Feldman doctrine bars a lower federal court from conducting a virtual "review" of a state court judgment for errors in construing federal law or constitutional claims "inextricably linked" with the state court judgment. Morrow v. Torrance Bank (In re Morrow), 189 B.R. 793, 808-09 (Bankr. C.D. Cal. 1995) (footnotes omitted). The state and federal claims need not be identical for the doctrine to apply. In order to determine whether a claim is "inextricably intertwined" with a state court claim, the federal court must analyze whether the relief requested in the federal action would effectively reverse the state court decision or void its ruling. In other words, the federal claim is inextricably intertwined with the state-court judgment if the federal claim succeeds only to the extent that the state court wrongly decided the issues before it (citations omitted).7

Here, the debtor's federal claim was "inextricably intertwined with the state-court judgment [because] the federal claim [would] succeed...only to the extent that the state court wrongly decided the issues before it." Absent an exception, the Rooker-Feldman doctrine barred the exercise of jurisdiction by the bankruptcy court (citation omitted).8

The court noted that the Rooker-Feldman doctrine applies even when the state court judgment may be in error.

Another relevant case concerning the Rooker-Feldman doctrine is Siskin v. Complete Aircraft Services Inc. (In re Siskin).9 In this case, a chapter 7 debtor was incarcerated for failure to comply with certain court orders. The debtors' counsel made an application to have Mr. Siskin released from confinement. The state court denied the application, and no appeal was taken from the denial of the application. The debtors commenced an adversary proceeding to recover damages for a violation of the automatic stay. The bankruptcy court dismissed the adversary proceeding because of a lack of subject-matter jurisdiction. The court stated:

In this case, the state court was fully apprised that the debtor had filed a petition in bankruptcy after the warrant was issued, but before the bankruptcy filing, and that execution took place post-petition. The state court recognized the argument and refused to release the debtor from incarceration based on that court's determination that the debtor was in contempt of its court. This court is precluded from acting as an appellate court to determine if the state court decision was appropriate.10

Conclusion

Debtor's counsel has to be cognizant that state and federal courts have concurrent jurisdiction concerning the applicability of the automatic stay. If a state court renders an incorrect determination concerning the automatic stay, then under Rooker-Feldman, debtor's counsel must appeal the state court decision within the state judicial system, rather than appeal to a bankruptcy court. Rooker-Feldman holds that a bankruptcy court lacks subject matter jurisdiction to review a state court determination concerning the applicability of the automatic stay. Thus, if debtor's counsel is uncertain that the state court understands the concept of the automatic stay, then he or she should seek declaratory and injunctive relief from the bankruptcy court.


Footnotes

1 See, e.g., Singleton v. Fifth Third Bank of Western Ohio (In re Singleton), 230 B.R. 533, 538 (Bankr. 6th Cir. 1999); In re Bona, 124 B.R. 11, 15 (S.D.N.Y. 1991); Siskin v. Complete Aircraft Services Inc. (In re Siskin), 258 B.R. 554, 562 (Bankr. E.D.N.Y. 2001); In re Glass, 240 B.R. 782, 785 (Bankr. M.D. Fla. 1999); In re Cummings, 201 B.R. 586, 588 (Bankr. S.D. Fla. 1996); contra, In re Gruntz, 202 F.3d 1074 (9th Cir. 2000) (en banc). Return to article

2 240 B.R. 782 (Bankr. M.D. Fla. 1999). Return to article

3 Id. at 787. Return to article

4 Baldino v. Wilson (In re Wilson), 116 F.3d 87, 90 (3rd Cir. 1997); In re Brazleton Cedar Rapids Group LC, 264 B.R. 195, 198 (Bankr. N.D. Iowa 2001). Return to article

5 In re Glass, 240 B.R. 782, 785 (Bankr. M.D. Fla. 1999). Return to article

6 230 B.R. 533 (Bankr. 6th Cir. 1999). Return to article

7 Singleton v. Fifth Third Bank of Western Ohio (In re Singleton), 230 B.R. 533, 536-37 (Bankr. 6th Cir. 1999). Return to article

8 Id. at 538. Return to article

9 258 B.R. 554 (Bankr. E.D.N.Y. 2001). Return to article

10 Id. at 565. Return to article

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Friday, February 1, 2002

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