- Case Type:
- Case Status:
- No. 17-3073 (7th Circuit, Feb 26,2019) Published
- Relying on Illinois' single action rule, which requires parties to present all theories for litigation arising from a single transaction in a single proceeding, the Court found that creditors who fail to obtain deficiency judgments against one party in a foreclosure cannot assert claims for that deficiency in other actions, including bankruptcy cases. Of greater precedential import, this case's discussion of appellate jurisdiction, including a grid for evaluating finality, comprises a primer on finality for use in future appeals to this Court, including from interlocutory review below.
- Procedural context:
- Appeal from decision of the District Court for the Northern District of Illinois reversing holding by Bankruptcy Court for the Northern District of Illinois on interlocutory appeal. District Court's ruling reviewed without enunciation of the standard of review. Notably, this case contains an edifying discussion about the finality of interlocutory and other appeals from bankruptcy decisions for appellate review, including the observation that a Court of Appeals focuses on whether a District Court's decision is final for the purpose of further review under 28 U.S.C. § 158(d)(1), and not on whether the Bankruptcy Court decision below was final at the time of its appeal. In particular, the decision states that the opinion was circulated to all judges on the Court of Appeals in active service before issuance and that non favored a hearing en banc, giving this decision substantial future weight on jurisdictional standards in bankruptcy appeals.
- Two married couples jointly borrowed funds pursuant to a promissory note secured by a real estate mortgage. One couple filed bankruptcy cases and the other did not; the lender proceeded to file proof of claim in the bankruptcy cases based upon the husband's liability under the promissory note. After receiving relief from stay, the lender foreclosed on the property in state court and sought summary judgment for a deficiency judgment pursuant to a two court complaint for foreclosure and breach of contract. The state court granted judgment in personam against the non-debtor/s in personam and in rem - non-recourse - only against the debtor/s. The debtors subsequently objected to the lender's claims in the bankruptcy court for amounts due under the note on grounds that the state court judgment extinguished the lender's claim due to res judicata and, thus, the claim should be denied. The bankruptcy court denied the debtors' motion to dismiss the claim, but the District Court reversed, finding that the litigation of the state court action to a final judgment on the deficiency issues precluded the lender from asserting any in personam deficiency claim in the bankruptcy case.
- Easterbrook, Kanne, Brennan
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