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Judge Dismisses RESPA Claim Under Rooker-Feldman

Link: Adler v. Bayview Loan Servicing, LLC, Case No. 17-c-6735 (N.D. Ill., Sept. 18, 2018).

Plaintiffs Ronald and Lisa Adler, represented by attorney Daniel Brown of Main Street Attorney, LLC, brought claims under the Real Estate Settlement Procedures Act (“RESPA”) and the Illinois Consumer Fraud Act (“ICFA”) against their mortgage servicing company Bayview (and against the investor Bank of New York Mellon based on vicarious liability) relating to their attempts to modify the mortgage loan on their primary residence. They alleged that after successfully completing two trial period plans under the Home Affordable Modification Program in 2013 and 2014, the Plaintiffs received a proposed loan modification that did not account for the fact they discharged the debt in bankruptcy and should not be personally liable for it. After sending in qualified written requests under RESPA seeking clarification, Bayview sent them false, confusing and vexatious responses then told them they were going to sell their home at a foreclosure sale.

The Plaintiffs sought to file counterclaims in the state court proceeding and stay the sale, but the state court judge denied that relief. The home was sold at auction and Plaintiffs were subsequently evicted.

Defendants sought to dismiss the amended complaint under 12(b)(6) for failure to state a claim, and the judge granted the motion based on the Rooker-Feldman doctrine. The Rooker-Feldman doctrine, derived from Rooker v. Fidelity Trust Company, 263 U.S. 413 (1923) and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983), “precludes lower federal court jurisdiction over claims seeking review of state court judgments . . . [because] no matter how erroneous or unconstitutional the state court judgment may be, the Supreme Court of the United States is the only federal court that could have jurisdiction to review a state court judgment.”

The court, judge Charles P. Kocoras, explained:

The state court entered an order of foreclosure and sale on February 27, 2012, and an order of possession on November 2, 2015. Now, the Adlers are attempting to collaterally attack the state court’s judgment by arguing that the foreclosure sale was improper under RESPA and ICFA violations. The Adlers’ request for relief is inextricably intertwined with the Defendants’ prior foreclosure proceedings … In the foreclosure proceeding on September 16, 2015, the Adlers argued that the sale of the subject property should be stayed because of the Defendants’ breach of contract in the loan modification process. In this Amended Complaint, the Adlers outright assert that “[a]s a direct and proximate result of Defendant’s misconduct, Plaintiffs lost their family home.” However, a district court cannot vacate the foreclosure judgment, and the Adlers’ request for relief is putting this Court in a position of appellate review, which Rooker-Feldman prohibits.

The court dismissed the ICFA claim finding that 28 U.S.C. § 1367 of the allows a federal district court to exercise supplemental jurisdiction over state law claims only if the court has original jurisdiction.

Posted in ICFA, RESPA

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