In re Adams
- Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
- 5 months 3 weeks ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- No. 24-1212 (3rd Circuit, Sep 03,2025) Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the Third Circuit affirmed a bankruptcy court's order granting in rem relief from the automatic stay in favor of a mortgage creditor so it could sell a house based on a foreclosure judgment. The district court had dismissed the debtor-appellant's appeal for lack of jurisdiction under the Rooker-Feldman doctrine, but the Third Circuit affirmed on a different ground: because the debtor lost on the merits all the way through the Supreme Court of New Jersey, her claim that the New Jersey final foreclosure judgment was entered in error is precluded.
- Procedural context:
- A considerable portion of the Third Circuit's opinion is devoted to clarifying the difference between (a) the Rooker-Feldman doctrine and its applicability in bankruptcy, and (b) claim and issue preclusion and their "purposes and applications." The opinion states: "As we will explain, Rooker-Feldman is triggered only when a plaintiff flouts that grant of appellate jurisdiction to the Supreme Court, not every time a litigant seeks a re-do of a state-court decision." It further clarifies that "[p]reclusion, not Rooker-Feldman, is what typically prohibits a plaintiff's efforts to have her claims relitigated."
- Facts:
- Debtor/Appellant Eileen T. Adams and her husband defaulted on a mortgage on their house. The lender then holding the mortgage (the mortgage was assigned repeatedly over the years) filed a foreclosure action in New Jersey state court. Debtor answered the complaint pro se but didn't oppose a subsequent motion for summary judgment, which was granted in October 2015. On the same day a final judgment was entered in March 2017, Debtor and her husband filed a chapter 7 petition in the U.S. Bankruptcy Court for the District of New Jersey. In 2018, Debtor filed a chapter 13 petition and was given leave to challenge the state-court foreclosure judgment on the premise that the creditor who filed the foreclosure action did not hold the mortgage and, thus, lacked standing. The state court litigation recommenced, ending when the Supreme Court of New Jersey denied a petition for discretionary review in October 2020. Any questions regarding the validity of the mortgage transfers and standing to sue "were litigated to a final judgment on the merits [against Debtor and her husband] in the lengthy foreclosure proceedings." While the state court litigation was ongoing, Debtor and her husband filed alternating petitions for bankruptcy relief, "all surely to fend off the impending foreclosure sale." In Debtor's 2022 chapter 13 case, Appellee Nationstar Mortgage was granted in rem relief from the automatic stay so that it could sell the house. Debtor appealed this order to the U.S. District Court for the District of New Jersey, again contesting the foreclosure judgment's validity. The district court "affirmed the Bankruptcy Court, then dismissed the appeal for lack of jurisdiction on Rooker-Feldman grounds, reasoning that [Debtor] was asking the federal courts to void a previously entered state-court judgment." Debtor filed a further appeal to the Third Circuit in February 2024.
- Judge(s):
- BIBAS, PHIPPS, and AMBRO
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