In re Ward, 09-47334-CEC.

• Decision Date: 12 January 2010
• Docket Number: No. 09-47334-CEC.,09-47334-CEC.
• Citation: 423 B.R. 22
• Parties: In re Mary L. WARD, Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of New York

423 B.R. 22

In re Mary L. WARD, Debtor.

No. 09-47334-CEC.

United States Bankruptcy Court, E.D. New York.

January 12, 2010.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Michael J. Macco, Melville, NY, Chapter 13 Trustee.

Bruce Goldstein, Esq. Brooklyn, NY, for 768 Dean Inc.

Mary L. Ward, Brooklyn, NY, Debtor, pro se.

DECISION

CARLA E. CRAIG, Bankruptcy Judge.

This matter comes before the Court on the motion of 768 Dean Inc. (the "Purchaser") for relief from the automatic stay pursuant to § 362 of the Bankruptcy Code¹ to evict the Debtor and to obtain possession of the Debtor's residence, a house located at 320 Tompkins Avenue, Brooklyn, New York (the "Property"). Also before the Court is the motion of Michael J. Macco (the "Trustee"), the chapter 13 trustee, to dismiss this case. Mary L. Ward (the "Debtor") opposes both motions. For the following reasons, both motions are granted.

Jurisdiction

This Court has jurisdiction of this core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A) and (G) and 1334 and the Eastern District of New York standing order of reference dated August 28, 1986. This decision constitutes the Court's findings of fact and conclusion of law to the extent required by the Federal Rule of Bankruptcy Procedure 7052.

Background

The following facts are undisputed, or are matters of which this Court may take judicial notice.

On August 26, 2009, the pro se Debtor filed a voluntary petition under chapter 13 of the Bankruptcy Code. Thereafter, on September 15, 2009, the Debtor filed Schedules A through I. On Schedule A, the Debtor stated that she owned the Property in fee simple, valuing it at $500,000, and that the Property was encumbered by a secured claim of $100,000 held by Bankers Trust of California. On Schedule F, the Debtor listed approximately $1,700 in unsecured debt owed to Petro Oil Company and the New York City Department of Environmental Protection/New York City Water Board. On Schedule I, the Debtor listed monthly income of $3,240. On October 2, 2009, the Debtor filed Schedule J, listing total monthly expenses of $2,173.

On September 15, 2009, the Debtor filed her chapter 13 plan, proposing to pay $30 per month for 60 months, of which 10% would be paid towards the Trustee's fees. The plan also provides that the "first and second mortgages [will be] paid by Debtor outside [the] Plan," but that, through the plan, the Debtor will cure the default to Mortgage Lenders Network. Unsecured creditors will receive nothing pursuant to the proposed chapter 13 plan.

On September 23, 2009, the Purchaser filed its motion seeking relief from the automatic stay to continue its efforts to evict the Debtor from the Property, as well as prospective relief in the event of any future filing of the Debtor, or in the alternative, in any bankruptcy case filed by the Debtor within 180 days. (Mot. for Relief From Stay, docket entry # 15.) The Purchaser asserts that Shameem Chowdhury² was the successful bidder at a foreclosure auction of the Property held on June 12, 2008, which was conducted pursuant to a judgment of foreclosure issued on February 22, 2008 (the "Foreclosure Judgment"). (Goldstein Affirmation in Supp., docket entry # 23, at Ex. A, Foreclosure Judgment, Referee's Report of Sale, Referee's Deed.) The Purchaser further contends that it was assigned Mr. Chowdhury's winning bid, and that it closed on the Property on July 30, 2008. (Chowdhury Aff., docket entry # 15, ¶ 2; Goldstein Affirmation in Supp., docket entry # 23, at Ex. A, Referee's Report of Sale and Referee's Deed.) Since that time, it has sought to obtain possession of the Property.

A hearing on the Purchaser's motion was held on October 8, 2009, at the conclusion of which the Court requested that the Purchaser provide documentary evidence in support of its motion, and adjourned the hearing to November 3, 2009. In accordance with the Court's direction, on October 22, 2009, the Purchaser filed copies of the Foreclosure Judgment, the Referee's Report of Sale dated July 30, 2009, and the Referee's Deed dated July 30, 2008 transferring the Property to the Purchaser.

On October 22, 2009, the Trustee filed his motion to dismiss this case because the Debtor did not appear at the initial § 341 meeting of creditors, did not submit monthly pre-confirmation plan payments, and did not provide copies of required tax returns, copies of filings required under § 521, and all disclosures required by E.D.N.Y. LBR 2003-1. The Debtor did not file any opposition to the Trustee's motion.

A further hearing on the Purchaser's motion was held on November 3, 2009, and a hearing on both motions was held on November 24, 2009.

Discussion

I. Purchaser's Motion

The Purchaser argues that it has owned the Property since July 30, 2008, and seeks relief from the automatic stay in order to evict the Debtor and obtain possession of the Property. The Debtor argues that the Purchaser's motion should be denied because the Foreclosure Judgment, pursuant to which the foreclosure sale took place, was erroneous. The Debtor argues that no original note was produced (Tr.³ 11/3/09 at 5-6), that the mortgage was rescinded (Debtor's Opp'n, docket entry # 24, ¶ 3), that the plaintiff in the action doesn't exist or that it was not a proper party to the foreclosure action (Tr. 11/3/09 at 21), and that "everything was done irregularly and underneath [the] table" (Tr. 11/3/09 at 9).

The Rooker-Feldman doctrine prevents this Court from reviewing the validity of the Foreclosure Judgment. This doctrine bars "cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005). The Rooker-Feldman doctrine "strip[s] federal subject matter jurisdiction over lawsuits that are, in substance, appeals from state court decisions." Book v. Mortgage Elec. Registration Systems, 608 F.Supp.2d 277, 288 (D.Conn.2009) (citing Hoblock v. Albany County Bd. of Elections, 422 F.3d 77, 84 (2d Cir.2005)).

The Rooker-Feldman doctrine does not divest the federal court of jurisdiction of an "independent claim based on an injury not `caused by' the state-court judgment, even if the claim denies a legal conclusion of the state court." Estate of Keys v. Union Planters Bank, N.A., 578 F.Supp.2d 629, 637 (S.D.N.Y.2008). "[T]he applicability of the Rooker-Feldman doctrine turns not on the similarity between a party's state-court and federal-court claims (which is, generally speaking, the focus of ordinary preclusion law), but rather on the causal relationship between the state-court judgment and the injury of which the party complains in federal court." McKithen v. Brown, 481 F.3d 89, 97-98 (2d Cir.2007). "[A] party is not complaining of an injury `caused by' a state-court judgment when the exact injury of which the party complains in federal court existed prior in time to the state-court proceedings, and so could not have been `caused by' those proceedings." Id. at 98.

For instance, it has been held that the Rooker-Feldman doctrine was inapplicable when a party who lost in a state court foreclosure action asserted claims of conversion and intentional infliction of emotional distress, because those claims alleged fraud in the procurement of the foreclosure judgment, and because the party did not seek to vacate the foreclosure judgment, but sought the remedy of money damages. Goddard v. Citibank, NA, No. 04CV5317, 2006 WL 842925, at *4 (E.D.N.Y. Mar. 27, 2006). However, the Rooker-Feldman doctrine was held to apply when a party sought to set aside a transfer of a house pursuant to a judgment of foreclosure, even though the party argued that the judgment was procured by fraud. Keys, 578 F.Supp.2d at 637.

The Rooker-Feldman doctrine applies in this case because the Debtor lost in the state court foreclosure action, the Foreclosure Judgment was rendered before the Debtor commenced this case, and the Debtor seeks this Court's review of the Foreclosure Judgment in the context of her opposition to the Purchaser's motion for relief from the automatic stay. The injury complained of, i.e., the foreclosure sale to the Purchaser, was "caused by" the Foreclosure Judgment because "the foreclosure [sale] would not have occurred but-for" the Foreclosure Judgment. Id. at 637. Accordingly, the Rooker-Feldman doctrine does not permit this Court to disregard the Foreclosure Judgment. See Gray v. Americredit Fin. Servs., Inc., No. 07 Civ. 4039, 2009 WL 1787710, at *4 (S.D.N.Y. June 23, 2009) ("Courts in this Circuit have consistently held that a plaintiff who lost possession of his home in a state court foreclosure proceeding is barred by the Rooker-Feldman doctrine from attacking the state court judgment in federal district court."); Goddard, 2006 WL 842925, at *4 ("To the extent that Plaintiff asks that this court find the Judgment of Foreclosure to be invalid because her mortgage payments were up to date ... I find that this claim is barred by the Rooker-Feldman doctrine.").

Even if this Court had jurisdiction to review the validity of the Foreclosure Judgment, res judicata bars the Debtor's argument that the Foreclosure Judgment is erroneous on the bases that the plaintiff was not a proper party, the mortgage was rescinded, or that no original note was ever produced. "Res judicata, or claim preclusion, operates to prevent a party from re-litigating a claim after the claim has already been decided by a court of competent jurisdiction." Charell v. Gonzalez (In re Gonzalez), 241 B.R. 67, 72 (S.D.N.Y.1999); see also Brown v. Felsen, 442 U.S. 127, 131, 99 S.Ct. 2205, 60 L.Ed.2d 767 (1979); Monahan v. New York City Dep't of Corr., 214 F.3d 275, 284 (2d Cir.2000). This doctrine "ensures the finality of decisions." Brown, 442 U.S. at 131, 99 S.Ct. 2205. To...