Crestview Village Apartments v. U.S. H.U.D.

• Citation: 383 F.3d 552
• Decision Date: 02 September 2004
• Docket Number: No. 03-3060.,03-3060.
• Parties: CRESTVIEW VILLAGE APARTMENTS, Plaintiff-Appellant, v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

383 F.3d 552

CRESTVIEW VILLAGE APARTMENTS, Plaintiff-Appellant, v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, et al., Defendants-Appellees.

No. 03-3060.

United States Court of Appeals, Seventh Circuit.

Argued March 31, 2004.

Decided September 2, 2004.

Appeal from the United States District Court for the Northern District of Illinois, William J. Hibbler, J.

COPYRIGHT MATERIAL OMITTED

Jeffrey N. Cole, Jennifer L. Camden (argued), Cole & Staes, Chicago, IL, for Plaintiff-Appellant.

Thomas P. Walsh, Ernest Y. Ling (argued), Office of the United States Attorney, Chicago, IL, William W. Kurnik (argued), Knight, Hoppe, Kurnik & Knight, Des Plaines, IL, William F. Smith, O'Brien & Smith, Bradley, IL, for Defendants-Appellees.

Before BAUER, POSNER, and WILLIAMS, Circuit Judges.

WILLIAMS, Circuit Judge.

Crestview Village Apartments Limited Partnership ("Crestview") appeals from the district court's dismissal of its claim for lack of subject matter jurisdiction. The district court reasoned that the Rooker-Feldman doctrine, which generally prohibits federal court review of state court judgments, precluded it from exercising jurisdiction over Crestview's claims. We agree and, therefore, affirm the district court's dismissal for lack of jurisdiction.

I. Background

Crestview owns and manages Crestview Village Apartments, an apartment complex in Kankakee, Illinois bought with financing insured by the United States Department of Housing and Urban Development ("HUD"). According to Crestview, its tenants are primarily African American and most receive federal housing assistance. Crestview alleges that it has been targeted by local and federal government officials due to the racial composition of its tenants.

Crestview's problems with regulators began in November 1998, when HUD cited it for failure to file required financial statements for the years 1995 through 1997. In March 2000, HUD filed an administrative complaint seeking civil penalties based on Crestview's continued failure to submit the financial statements. In February 2001, after Crestview neglected to respond to the complaint, the administrative law judge entered a default judgment against Crestview for $80,000.

Meanwhile, Crestview also encountered difficulties with the City of Kankakee (the "City"). In October 1999, the City filed a building code enforcement action against Crestview in state court. The City later amended its complaint to include a demolition claim and a claim for unpaid sewer and public service fees. In November 2000, when HUD learned about the local building code violations, as charged in the City's complaint, it notified Crestview that, given the building's disrepair, it intended to initiate foreclosure proceedings against Crestview. In March 2001, Crestview and the City settled the state action, agreeing that Crestview would repair 378 building code violations and the City would withdraw its demolition claims and its claim for unpaid fees. The state court then entered an order approving the settlement.

In September 2001, Crestview filed a complaint in federal court, naming the following parties as defendants: HUD; HUD employees Margarita Maisonet, Gregory Gustin, and Edward Hinsberger;¹ the City; Mayor Donald Green; Terry Lewis, director of the City's Code Enforcement; and Tony Perry, owner of the property adjoining Crestview. Count I of the complaint sought damages for discriminatory housing practices pursuant to the Fair Housing Act, 42 U.S.C. § 3613, ("FHA"). Counts II through V alleged that the defendants conspired to violate Crestview's civil rights pursuant to the federal civil rights statutes, 42 U.S.C. §§ 1981, 1982, 1983, and 1985.

The district court dismissed Crestview's complaint, finding that the Rooker-Feldman doctrine precluded the court from exercising jurisdiction over Crestview's claims. With respect to the federal defendants, the district court also found that subject matter jurisdiction was lacking, reasoning that (1) the FHA does not provide for a right of action against the federal defendants and (2) Crestview's complaint alleged that the federal defendants were doing their jobs, but §§ 1981, 1982, 1983, and 1985 do not provide a jurisdictional basis for suits against HUD or its employees acting under the color of federal law. The district court also alternatively noted that even if jurisdiction existed, the claims should be dismissed for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

On appeal, Crestview asserts that the district court's finding that the Rooker-Feldman doctrine precluded the court from exercising jurisdiction was erroneous. Crestview does not, however, challenge the district court's separate rationale for declining to exercise subject matter jurisdiction over the federal defendants and accordingly, Crestview has waived its challenge regarding the dismissal of the federal defendants. See Duncan v. Wis. Dep't of Health and Family Servs., 166 F.3d 930, 934 (7th Cir.1999) (stating that "a party must develop any arguments it wishes this court to consider in its appellate brief, or they will be deemed waived or abandoned"). On appeal, Crestview also asserts that, after finding itself without jurisdiction, the district court should not have proceeded to decide the merits of the case by alternatively dismissing the complaint for failure to state a claim. Finally, Crestview argues that the district court abused its discretion by declining to grant Crestview leave to file an amended complaint, which Crestview contends might have cured any jurisdictional deficiencies.

II. Analysis

A. Subject Matter Jurisdiction

We first consider whether the Rooker-Feldman doctrine bars the district court, and indeed this court, from exercising subject matter jurisdiction over this matter. The doctrine, which emerged from two Supreme Court cases, Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923) and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983), prohibits the inferior federal courts from reviewing state court decisions. Zurich American Ins. Co. v. Superior Court for the State of California, 326 F.3d 816, 821 (7th Cir.2003). It is a jurisdictional doctrine premised upon the fact that, because federal district courts are courts of original jurisdiction, lower federal courts are not authorized to review appeals from state court judgments except, of course, where Congress has explicitly authorized such collateral review. Garry v. Geils, 82 F.3d 1362, 1365 (7th Cir.1996). Instead, "only the Supreme Court has appellate jurisdiction over the civil judgments of state courts." Id. We review de novo a district court's application of the Rooker-Feldman doctrine. Zurich, 326 F.3d at 821.

To assess whether the Rooker-Feldman doctrine is applicable, "the fundamental and appropriate question to ask is whether the injury alleged by the federal plaintiff resulted from the state court judgment itself or is distinct from that judgment. If the injury alleged resulted from the state court judgment itself, Rooker-Feldman directs that the lower federal courts lack jurisdiction." Garry, 82 F.3d at 1365; see also Kamilewicz v. Bank of Boston Corp., 92 F.3d 506, 510 (7th Cir.1996) (The Rooker-Feldman doctrine asks "whether the federal plaintiff seeks to set aside a state court judgment or whether he is, in fact, presenting an independent claim."). Likewise, if the federal injury is "inextricably intertwined" with the state court judgment, Rooker-Feldman bars the federal action. Ritter v. Ross, 992 F.2d 750, 753 (7th Cir.1993). But, as the "inextricably intertwined" inquiry is a difficult one, "the crucial point is whether `the district court is in essence being called upon to review the state-court decision.'" Id. at 754 (quoting Feldman, 460 U.S. at 483-84 n. 16, 103 S.Ct. 1303). For Rooker-Feldman purposes, a "state court approved settlement agreement is a judgment or decision...." 4901 Corp. v. Town of Cicero, 220 F.3d 522, 528 n. 5 (7th Cir.2000).

Each count of Crestview's federal complaint alleges that, as a result of a conspiracy involving defendants, it was injured in that it was "forced to defend unsubstantiated lawsuits, and excessively harsh administrative actions...." (emphasis added). Thus, in essence, Crestview is challenging as baseless the state court order requiring Crestview to cure the building code violations. After all, Crestview's alleged injury — having to defend unsubstantiated lawsuits — was only complete after the state court entered the order and thereby made an implicit finding that the suit was not unsubstantiated. See Garry, 82 F.3d at 1368 (finding plaintiffs' claim that defendants brought a state condemnation action against them due to political retaliation barred by Rooker-Feldman, as "the injury alleged was only complete when the state court actually condemned the property").

A finding by the district court that defendants did, as Crestview alleges, conspire to bring unsubstantiated lawsuits would undermine the state court's implicit holding that the state action was justified. See Shooting Point v. Cumming, 368 F.3d 379, 384 (4th Cir.2004) (finding that Rooker-Feldman precluded jurisdiction over plaintiff's claim that state transportation regulations were selectively enforced against plaintiff, as a "district court finding of selective enforcement ... would clearly contravene the state court's [implicit] judgment" that plaintiff was "properly subject to the [ ] regulations"). As this court has consistently made clear, the Rooker-Feldman doctrine prohibits federal courts from entertaining such attempts to undo state court decisions. See, e.g., Wright v. Tackett, 39 F.3d 155, 157 (7th Cir.1994) (finding Rooker-Feldman prohibited §§ 1983, 1985, and 1986 action alleging conspiracy to violate plaintiff's civil rights by initiating a foreclosure proceeding, as plaintiff essentially ...