Filed: Apr. 03, 2020
Latest Update: Apr. 03, 2020
Summary: FILED U.S. Bankruptcy Appellate Panel of the Tenth Circuit NOT FOR PUBLICATION * April 3, 2020 UNITED STATES BANKRUPTCY APPELLATE PANEL Blaine F. Bates OF THE TENTH CIRCUIT Clerk _ IN RE HOLLY MACINTYRE, BAP No. CO-19-039 Debtor. _ HOLLY MACINTYRE, Bankr. No. 10-32946 Adv. No. 19-01136 Appellant, Chapter 7 v. JP MORGAN CHASE BANK, N.A. OPINION Appellee. _ Appeal from the United States Bankruptcy Court for the District of Colorado _ Submitted on the briefs. ** _ Before CORNISH, JACOBVITZ, and HAL
Summary: FILED U.S. Bankruptcy Appellate Panel of the Tenth Circuit NOT FOR PUBLICATION * April 3, 2020 UNITED STATES BANKRUPTCY APPELLATE PANEL Blaine F. Bates OF THE TENTH CIRCUIT Clerk _ IN RE HOLLY MACINTYRE, BAP No. CO-19-039 Debtor. _ HOLLY MACINTYRE, Bankr. No. 10-32946 Adv. No. 19-01136 Appellant, Chapter 7 v. JP MORGAN CHASE BANK, N.A. OPINION Appellee. _ Appeal from the United States Bankruptcy Court for the District of Colorado _ Submitted on the briefs. ** _ Before CORNISH, JACOBVITZ, and HALL..
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FILED
U.S. Bankruptcy Appellate Panel
of the Tenth Circuit
NOT FOR PUBLICATION *
April 3, 2020
UNITED STATES BANKRUPTCY APPELLATE PANEL
Blaine F. Bates
OF THE TENTH CIRCUIT Clerk
_________________________________
IN RE HOLLY MACINTYRE, BAP No. CO-19-039
Debtor.
___________________________________
HOLLY MACINTYRE, Bankr. No. 10-32946
Adv. No. 19-01136
Appellant, Chapter 7
v.
JP MORGAN CHASE BANK, N.A. OPINION
Appellee.
_________________________________
Appeal from the United States Bankruptcy Court
for the District of Colorado
_________________________________
Submitted on the briefs. **
_________________________________
Before CORNISH, JACOBVITZ, and HALL, Bankruptcy Judges.
*
This unpublished opinion may be cited for its persuasive value, but is not
precedential, except under the doctrines of law of the case, claim preclusion, and issue
preclusion. 10th Cir. BAP L.R. 8026-6.
**
The parties did not request oral argument, and after examining the briefs and
appellate record, the Court has determined unanimously that oral argument would not
materially assist in the determination of this appeal. See Fed. R. Bankr. P. 8019(b). The
case is therefore ordered submitted without oral argument.
_________________________________
CORNISH, Bankruptcy Judge.
_________________________________
Chapter 7 debtor Holly MacIntyre (the “Debtor”) received a discharge in 2011.
Some seven years later, after the Debtor’s mortgage lender obtained a foreclosure
judgment against her residence, the Debtor reopened her bankruptcy case and filed an
adversary complaint against the lender alleging violations of the discharge injunction
contained in 11 U.S.C. § 542(a). 1 The Bankruptcy Court for the District of Colorado (the
“Bankruptcy Court”) dismissed the adversary complaint for failure to state a claim upon
which relief may be granted. The Debtor appeals the dismissal, seeking reversal and
reinstatement of the adversary complaint. Applying de novo review we affirm.
I. Background
a. Bankruptcy Petition & Foreclosure
The Debtor filed a voluntary chapter 7 petition on September 9, 2010. On the
petition date, the Debtor resided at 13025 West 63rd Place, Unit E, Arvada, Colorado (the
“Residence”). JP Morgan Chase Bank, N.A. (the “Bank”) held first and second deeds of
trust secured by the Residence. The Bankruptcy Court entered a discharge on January 6,
2011 and closed the Debtor’s case on February 23, 2011.
After entry of the discharge, the Bank foreclosed on its liens against the Residence
and obtained an in rem foreclosure judgment on December 16, 2014. The Debtor
1
All future references to “Code,” “Section,” and “§” are to the Bankruptcy Code,
Title 11 of the United States Code, unless otherwise indicated.
2
appealed the foreclosure judgment to the Colorado Court of Appeals, and unsuccessfully
sought a stay pending appeal. In its appellee’s brief filed with the Colorado Court of
Appeals, the Bank included a request for appellate attorneys’ fees pursuant to the
promissory note and deed of trust. 2 The Bank made the request on October 27, 2015. The
Residence sold at foreclosure auction on January 21, 2016, before the Colorado Court of
Appeals disposed of the Debtor’s appeal. 3 The Colorado Court of Appeals affirmed the
foreclosure judgment and awarded the Bank attorneys’ fees and costs incurred in the
appeal. On April 28, 2016, the Colorado Court of Appeals remanded the case to the
Colorado district court for determination of the amount of fees and costs. On January 24,
2017, the Bank notified the Colorado district court it would not seek a determination of
the attorneys’ fees and costs or otherwise seek to enforce the award of appellate
attorneys’ fees.
b. Motion to Reopen & Adversary Proceeding
On July 5, 2018, the Debtor filed a motion to reopen the bankruptcy case,
requesting the case be reopened so that she could pursue remedies for the Bank’s alleged
violation of the discharge injunction (the “Motion to Reopen”). The Debtor alleged the
Bank violated the discharge injunction by requesting attorneys’ fees in its brief to the
Colorado Court of Appeals after the foreclosure sale occurred. The Bankruptcy Court
denied the Motion to Reopen. The Debtor appealed to this Court, which remanded to the
Bankruptcy Court. On remand, the Bankruptcy Court allowed the Debtor sixty days to
2
Complaint at 3, in Appellant’s App. at 10.
3
Complaint at 5, in Appellant’s App. at 12.
3
file an adversary complaint. The Debtor filed her adversary complaint alleging the Bank
violated § 524(a)’s discharge injunction (the “Complaint”) on May 28, 2019. The
Complaint requested the Bankruptcy Court hold the Bank in contempt of the discharge
injunction, award actual and punitive damages, and strike the Colorado Court of Appeals
award of the Bank’s appellate attorneys’ fees as void.
The Bank filed a motion to dismiss the adversary proceeding, arguing the
Bankruptcy Court should dismiss the Complaint for failure to state a claim pursuant to
Federal Rule of Civil Procedure 12(b)(6) (the “Motion to Dismiss”). 4 The Bank argued it
took no action to pursue the awarded attorneys’ fees after completion of the foreclosure
sale; therefore, it did not intentionally act in violation of the discharge injunction. The
Bank also argued the Bankruptcy Court could not review and overturn an order of the
Colorado Court of Appeals simply because the Debtor disagreed with the lawful
foreclosure.
After a hearing, the Bankruptcy Court granted the Bank’s Motion to Dismiss. The
Debtor appeals, asserting the Bankruptcy Court erred in dismissing the Complaint.
II. Jurisdiction & Standard of Review
“With the consent of the parties, this Court has jurisdiction to hear timely-filed
appeals from ‘final judgments, orders, and decrees’ of bankruptcy courts within the Tenth
4
Federal Rule of Civil Procedure 12 is made applicable to adversary proceedings by
Federal Rule of Bankruptcy Procedure 7012. All future references to “Rule(s)” are to the
Federal Rules of Civil Procedure.
4
Circuit.” 5 Neither party elected to have this appeal heard by the United States District
Court for the District of Colorado; thus they have consented to our review.
“A decision is considered final if it ‘ends the litigation on the merits and leaves
nothing for the court to do but execute the judgment.’” 6 The disposition of an adversary
proceeding is a final order or judgment for purposes of appellate review. 7 Accordingly,
we have jurisdiction to hear the appeal of the order granting the Motion to Dismiss.
We review a bankruptcy court’s dismissal of an adversary proceeding pursuant to
Rule 12(b)(6) de novo. 8 “De novo review requires an independent determination of the
issues, giving no special weight to the bankruptcy court’s decision.” 9 “[T]o withstand a
Rule 12(b)(6) motion to dismiss, a complaint must contain enough allegations of fact,
taken as true, ‘to state a claim to relief that is plausible on its face.’” 10 “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the
5
Straight v. Wyo. Dep’t of Trans. (In re Straight), 248 B.R. 403, 409 (10th Cir.
BAP 2000) (first quoting 28 U.S.C. § 158(a)(1), and then citing 28 U.S.C. § 158(b)(1),
(c)(1) and Fed. R. Bankr. P. 8002).
6
In re Duncan, 294 B.R. 339, 341 (10th Cir. BAP 2003) (quoting Quackenbush v.
Allstate Ins. Co.,
517 U.S. 706, 712 (1996)).
7
Hook v. Manzanares, (In Hook), 391 B.R. 211,
2008 WL 2663370, at *2 (10th Cir.
BAP July 8, 2008) (first citing 28 U.S.C. § 158(a)(1) & (c)(1); Fed. R. Bankr. P. 8001–
8002; 10th Cir. BAP L.R. 8001–1; and then citing Quackenbush v. Allstate Ins. Co.,
517
U.S. 706, 712 (1996) (order is final if it “‘ends the litigation on the merits and leaves
nothing for the court to do but execute the judgment.’”)).
8
Gee v. Pacheco, 627 F.3d 1178, 1183 (10th Cir. 2010) (“We review de novo the
grant of a Rule 12(b)(6) motion to dismiss . . . .” (citing Howard v. Waide,
534 F.3d
1227, 1242-43 (10th Cir. 2008))).
9
LTF Real Estate Co. v. Expert S. Tulsa, LLC (In re Expert S. Tulsa, LLC), 522
B.R. 634, 643 (10th Cir. BAP 2014) (citing Salve Regina Coll. v. Russell,
499 U.S. 225,
238 (1991)).
10
Khalik v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir. 2012) (quoting Bell Atl.
Corp. v. Twombly,
550 U.S. 554, 570 (2007)).
5
reasonable inference that the defendant is liable for the misconduct alleged.” 11 Because
the Debtor proceeds pro se, we liberally construe the Complaint under the pleading
requirements. 12
III. Analysis
a. The Bankruptcy Court’s Ruling
The Bankruptcy Court granted the Motion to Dismiss based on four premises.
First, the Bankruptcy Court determined the Debtor voluntarily “returned to the fray”
postdischarge by defending the judicial foreclosure and appealing the decision. 13 Second,
the Bankruptcy Court concluded there was no evidence the Bank took any action in
violation of the discharge injunction. Third, the Debtor suffered no actual damages.
Finally, the Bankruptcy Court concluded it lacked jurisdiction to hear the adversary
proceeding because the Complaint sought to modify a state court judgment in
contravention of the Rooker-Feldman doctrine.
The Debtor argues the Bankruptcy Court erred in dismissing the Complaint.
Applying the pleading standards established by the Supreme Court in Bell Atlantic Corp.
v. Twombly14 and Ashcroft v. Iqbal15 requires considering the Complaint with two
underlying principles in mind. First, while factual allegations contained in the Complaint
11
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556).
12
Kay v. Bemis, 500 F.3d 1214, 1218 (10th Cir. 2007) (quoting Gaines v. Stenseng,
292 F.3d 1222, 1224 (10th Cir. 2002) (“[W]e must construe a pro se appellant’s
complaint liberally.”)).
13
Order at 6, in Appellant’s App. at 56.
14
550 U.S. 554 (2007).
15
556 U.S. 662 (2009).
6
should be accepted as true, this principle does not apply to legal conclusions contained in
the Complaint. 16 With this in mind, the Supreme Court instructs “a court considering a
motion to dismiss can choose to begin by identifying pleadings that, because they are no
more than conclusions, are not entitled to the assumption of truth.” 17 After determining
the validity of any legal conclusions contained in the Complaint, the Court is then tasked
with deciding whether the Complaint “states a plausible claim for relief” sufficient to
“survive[] a motion to dismiss.” 18 As such, we begin our review with the legal
conclusions set out in the Complaint.
b. Review of the Legal Conclusions Contained in the Complaint
The Complaint’s allegations center on the Debtor’s belief that the foreclosure sale
mooted her appeal of the foreclosure judgment and required the Colorado Court of
Appeals to vacate the judgment. The Debtor explains, “[e]xecution of the judgment,
while the appeal was pending, would moot the appeal, as Colorado case law makes
incontrovertibly clear.” 19 Based on the proposition that the appeal of the foreclosure
judgment became moot upon the sale of the Residence, the Debtor argues the “loss of her
right to appeal would entitle her to have the foreclosure judgment vacated.” 20 The Debtor
relies on the Tenth Circuit case, In re Otasco, Inc., 21 to support her position that the
16
Id. at 678. (citing
Twombly, 550 U.S. at 555 (“Although for the purposes of a
motion to dismiss we must take all of the factual allegations in the complaint as true, we
‘are not bound to accept as true a legal conclusion couched as a factual allegation.’”)).
17
Id. at 679.
18
Id. (citing Twombly, 550 U.S. at 556).
19
Complaint at 3, in Appellant’s App. at 10.
20
Id., in Appellant’s App. at 10.
21
18 F.3d 841 (10th Cir. 1994).
7
Colorado Court of Appeals had “a duty to vacate the mooted judgment.” 22 Concluding
the Colorado Court of Appeals should have dismissed the appeal as moot, the Debtor
suggests the Bank “contrived an alternative issue for the court to rule on, to keep the
otherwise moot appeal artificially alive: appellate attorney’s fees.” 23 Then the Debtor
alleges the Bank violated the discharge injunction by requesting appellate attorneys’ fees
because the request kept the appeal alive despite its purported mootness. These
allegations rely on three legal conclusions that the Debtor contends support her claims for
relief. We review each legal conclusion in turn.
i. The Foreclosure Sale did not Moot the Appeal
The Debtor’s first legal conclusion suggests the foreclosure sale of property moots
a challenge to a judgment creditor’s enforcement of a judgment. The Debtor does not cite
any case law supporting this proposition. The legal conclusions alleged in the Complaint
regarding the mootness doctrine are not in line with recent Colorado Court of Appeals’
opinions. While one Colorado Court of Appeals opinion, Mount Carbon Metropolitan
District v. Lake George Company, held an “appeal is moot [where] the foreclosure sale
has been held and the redemption period has expired,” 24 subsequent opinions reject this
holding. In FCC Construction, Inc. v. Casino Creek Holdings, Ltd., the Colorado Court
of Appeals declined to follow Mount Carbon, holding “when a judgment debtor, in
obedience to an order of the court or under compulsion of an execution, satisfies a
22
Complaint at 3, in Appellant’s App. at 10 (quoting In re Otasco, 18 F.3d 841, 844
(10th Cir. 1994)).
23
Id., in Appellant’s App. at 10.
24
847 P.2d 254, 256 (Colo. App. 1993).
8
judgment rendered against him or her, the right to have the judgment reviewed is not
waived.” 25 The Colorado Court of Appeals reiterated this holding in two subsequent
opinions, Thomas v. Lynx United Group, LLC 26 and Igou v. Bank of America, N.A. 27
Accordingly, the Debtor’s conclusion that the foreclosure sale mooted the appeal of the
foreclosure judgment is not in line with Colorado case law.
ii. Mootness would not Require Vacating the Foreclosure
Judgment
The next legal conclusion in the Complaint, that the purported mootness of the
appeal required the Colorado Court of Appeals to vacate the foreclosure judgment, is also
erroneous. This conclusion is based on the incorrect premise that the appeal became
moot. Furthermore, the conclusion improperly cites In re Otasco, Inc. as requiring a court
to vacate a mooted judgment. Review of In re Otasco, Inc., provides its holding only
applies in rare instances where a case fails to remain “alive” throughout the course of
appellate review. 28 In such cases, where “causes beyond the appellant’s control make a
case moot pending appeal, a federal appellate court generally should vacate the judgment
below and remand with a direction to dismiss.” 29
25
916 P.2d 1196, 1198 (Colo. App. 1996).
26
159 P.3d 789, 792 (Colo. App. 2006) (following the holding in FCC Construction,
Inc. v. Casino Creek Holdings, Ltd.,
916 P.2d 1196 (Colo. App. 1996) over Mt. Carbon
Metro. Dist. v. Lake George Co.,
847 P.2d 254 (Colo. App. 1993)).
27
No. 18CA0841, 2020 WL 477194, at *7 (Colo. App. Jan. 30, 2020) (citing
Thomas v. Lynx United Grp., LLC,
159 P.3d 789, 792 (Colo. App. 2006)).
28
13C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure, §
3533.10 Cases Moot on Appeal (3d. ed. 2020).
29
In re Otasco, Inc., 18 F.3d 841, 843 (10th Cir. 1994).
9
However, the mootness referred to in In re Otasco, Inc. involves the situation
where an event other than the execution of the judgment on appeal moots the case and the
mooted judgment would preclude subsequent review of an issue should it be justiciable in
the future. In such cases, the practice of appellate courts is to vacate the judgment as
moot and recommend dismissal of the pending trial court case. 30 Vacating the judgment
in such cases “‘clears the path for future relitigation of the issues between the parties and
eliminates a judgment, review of which was prevented through happenstance[,]’ and
[also] prevents the moot judgment ‘from spawning any legal consequences.’” 31 The
“legal consequences” are the potential for a moot judgment or order to preclude
“relitigation of unreviewed issues.” 32 That is not the case in this appeal as the event the
Complaint alleges mooted the state court appeal was the execution of the foreclosure
judgment and there is no ongoing dispute in which there would be “legal consequences.”
Accordingly, the allegation that the purported mootness required vacating the foreclosure
judgment relies on an inaccurate interpretation of law.
30
The facts in In re Otasco, Inc. differ from the present case as a creditor asked the
bankruptcy court to review its claim of lien on goods two separate times. The bankruptcy
court limited the extent of the lien and the creditor appealed. The Tenth Circuit Court of
Appeals dismissed the appeal as moot because the debtor had already sold the goods the
creditor claimed a lien against. The bankruptcy court found the now moot appeal
collaterally estopped the creditor from seeking a second decision on the extent of its lien.
On appeal, the Tenth Circuit affirmed, holding that while it should have vacated the first
order, failure to do so did not prevent the mooted order from precluding re-litigation of
the lien issue based on the creditor’s failure to request the order be vacated.
31
Floyd v. Gallegos, 42 F. App’x, 92, 94 (10th Cir. 2002) (quoting Marc Dev., Inc.
v. FDIC, 12 F.3d 948, 949 (10th Cir. 1993) (en banc)) (unpublished).
32
In re Otasco, Inc., 18 F.3d at 843 (quoting United States v. Munsingwear, Inc.,
340 U.S. 36, 40 (1950)).
10
iii. The Bank did not Violate the Discharge Injunction
The Complaint’s final legal conclusion, that the Bank violated the discharge
injunction, 33 is dependent on the two previous legal conclusions and is therefore
incorrect. The Complaint appears to suggest that keeping the appeal alive by requesting
attorneys’ fees resulted in a violation of the discharge injunction. It is not entirely clear to
this Court how the continuance of an appeal of an admittedly in rem foreclosure
judgment resulted in a violation of the Debtor’s discharge. 34 However, the Debtor also
argues that because the award of appellate attorneys’ fees was not specifically in rem, the
fee award also violated the discharge injunction.
In the Complaint, the Debtor admits “[t]he foreclosure judgment, due to the
discharge of the mortgages and Promissory Note, is purely in rem and cannot ever
become a personal obligation” against her. 35 As the Colorado Supreme Court has noted,
“[t]he effect of a judgment in an in rem . . . action is limited to the property that supports
jurisdiction. Such a judgment does not impose personal liability on the defendant.” 36 This
33
See Sprague v. Williams (In re Van Winkle), 583 B.R. 759, 766 (10th Cir. BAP
2018) (citing In re Houlik,
481 B.R. 661, 668 (10th Cir. BAP 2012) (“Whether a creditor
violated the discharge injunction is a question of law reviewed de novo.”)).
34
The Debtor concedes the foreclosure judgment “is purely in rem.” Complaint at 2,
in Appellant’s App. at 9. See Chandler Bank of Lyons v. Ray, 804 F.2d 577, 579 (10th
Cir. 1986) (“[T]he injunction on discharge under § 524 of the Code does not preclude in
rem actions by secured creditors.”).
35
Complaint at 2, in Appellant’s App. at 9.
36
Remine v. Dist. Court for City & Cty. of Denver, 709 P.2d 1379, 1382 (Colo.
1985) (citing Shaffer v. Heitner,
433 U.S. 186, 199 (1977)) (en banc).
11
Court has held “in rem actions, which include actions to enforce a lien against
encumbered property, are not prohibited by the discharge injunction.” 37
Based on the allegations in the Complaint, which if true confirm the foreclosure
action proceeded in rem, we cannot agree the request for attorneys’ fees violated the
discharge injunction. Since the appeal was an appeal of an in rem judgment based on a
promissory note and deed of trust, absent any evidence that the request sought to hold the
Debtor personally liable for the attorneys’ fees, nothing in the record supports the
conclusion the Bank violated the discharge injunction. First, the Bank requested the
attorneys’ fees on appeal well before the Residence sold at foreclosure, suggesting it
intended to add the fees to the foreclosure judgment. 38 Furthermore, the Complaint
acknowledges the Bank took no action to collect on the appellate attorneys’ fee award as
a personal liability of the Debtor and recognizes that after remand the Bank promptly
filed notice in the Colorado district court that it would not seek the fees on remand.
Although the Debtor alleges the request for attorneys’ fees is part of a grander scheme to
prevent the appeal of the foreclosure judgment from becoming moot and necessarily
vacated, her analysis is not in line with this Court’s reading of In re Otasco, Inc. and
37
Bednar v. RCB Bank (In re Bednar), No. WO-19-001, 2019 WL 3928844, at *9
(10th Cir. BAP Aug. 20, 2019) (quoting In re Jester, No. EO-15-002,
2015 WL 6389290,
at *5 (10th Cir. BAP Oct. 22, 2015), aff’d 656 F. App’x 425 (10th Cir. 2016)).
38
See Taggart v. Lorenzen, 139 S. Ct. 1795, 1802 (2019) (explaining a discharge
injunction only occurs when “there is no objectively reasonable basis for concluding that
the creditor’s conduct might be lawful under the discharge order.”).
12
similar cases. 39 Accordingly, the Complaint provides no basis to conclude the Bank
violated the discharge injunction.
c. The Bankruptcy Court Properly Dismissed the Complaint
Rule 8, made applicable to adversary proceedings by Federal Rule of Bankruptcy
Procedure 7008, provides a pleading must contain a “short and plain statement of the
claim showing that the pleader is entitled to relief.” 40 In interpreting this standard, the
Supreme Court provides
[t]o survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to “state a claim to relief that is plausible on its
face.” A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged. 41
A reviewing court must accept factual allegations as true but is “not bound to accept as
true a legal conclusion couched as a factual allegation.” 42 “While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.” 43
Reviewing the Complaint liberally, it lacks any factual allegations to support the
conclusion the Bank violated the discharge injunction. While the Complaint asserts the
Bank improperly sought appellate attorneys’ fees, the Bank made the request before
execution of the foreclosure sale. Because the Bank could add any attorneys’ fees to its in
39
Kelly v. O’Connor, 49 F. App’x 239 (10th Cir. 2002) (unpublished); Floyd v.
Gallegos, 42 F. App’x 92 (10th Cir. 2002) (unpublished).
40
Fed. R. Civ. P. 8(a)(2).
41
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)).
42
Twombly, 550 U.S. at 555 (quoting Papasan v. Allain,
478 U.S. 265, 286 (1986)).
43
Iqbal, 556 U.S. at 679.
13
rem judgment, there was an objectively reasonable basis for requesting the fees that did
not violate the discharge injunction. 44 Furthermore, in the Complaint, the Debtor
concedes the Bank did not take any action to enforce the award of attorneys’ fees and
informed the Colorado district court it would not seek a determination of the amount of
fees. Aside from the faulty legal conclusion that the Bank sought to prolong the appeal to
avoid having the foreclosure judgment vacated, the Complaint alleges no facts to support
concluding the Bank violated the discharge injunction. Accordingly, the Bankruptcy
Court properly dismissed the Complaint for failure to state a claim upon which relief can
be granted.
d. De Novo Review does not Require Consideration of the Bankruptcy
Court’s Conclusions
On appeal, the Debtor asserts the Bankruptcy Court committed three legal errors
when it concluded: (1) the Bank was entitled to post-petition attorneys’ fees because the
Debtor “returned to the fray” by defending the foreclosure action and appealing the
judgment; (2) the Debtor must prove actual damages to properly plead a violation of the
discharge injunction; and (3) the Debtor asked the Bankruptcy Court to reconsider the
final state court judgment in violation of the Rooker-Feldman doctrine. 45 As we review
the Bankruptcy Court’s dismissal for failure to state a claim de novo, giving no deference
44
See Taggart v. Lorenzen, 139 S. Ct. 1795, 1802 (2019) (explaining the appropriate
standard for determining if a creditor is liable for contempt is whether “there is no
objectively reasonable basis for concluding that the creditor’s conduct might be lawful
under the discharge order.”).
45
The Rooker-Feldman doctrine is based on a pair of Supreme Court decisions:
Rooker v. Fid. Tr. Co., 263 U.S. 413 (1923) and Dist. of Columbia Court of Appeals v.
Feldman,
460 U.S. 462 (1983).
14
to the Bankruptcy Court’s legal conclusions, we “may affirm for any basis present in the
record.” 46 However, to the extent, the Complaint alleges the Bankruptcy Court should
strike the Colorado Court of Appeals’ award of attorneys’ fees because the underlying
foreclosure judgment is void, we find justification in the Bankruptcy Court’s dismissal
under the Rooker-Feldman doctrine.
“The Tenth Circuit has explained that ‘[t]he Rooker-Feldman doctrine precludes a
losing party in state court who complains of injury caused by the state-court judgment
from bringing a case seeking review and rejection of that judgment in federal court.’” 47
Rooker-Feldman does “not deprive a federal court of jurisdiction to hear a claim just
because it could result in a judgment inconsistent with a state-court judgment.” 48
“Instead, the doctrine prohibits ‘a federal action that tries to modify or set aside a state-
court judgment because the state proceedings should not have led to that judgment.’” 49
“Rooker-Feldman can bar a federal-court claim [ ] only if ‘an element of the claim is that
[a prior state-court] judgment was wrongful.” 50 “Rooker-Feldman is jurisdictional in the
sense that federal courts do not have jurisdiction to modify or set aside a state court
judgment because the state proceedings should not have led to that judgment.” 51
46
Mayfield v. Presbyterian Hosp. Admin., 772 F. App’x 680, 686, n.2 (10th Cir.
2019) (citing Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1130 (10th Cir. 2011)).
47
Bednar v. RCB Bank (In re Bednar), No. WO-19-001, 2019 WL 3928844, at *7
(10th Cir. BAP Aug. 20, 2019) (quoting In re Miller,
666 F.3d 1255, 1261 (10th Cir.
2012)).
48
Mayotte v. U.S. Bank Nat’l Ass’n, as Tr. for Structured Asset Inv. Loan Tr. Mortg.
Pass-Through Certificates, Series 2006-4, 880 F.3d 1169, 1174 (10th Cir. 2018).
49
In re Bednar, 2019 WL 3928844, at *7 (quoting
Mayotte, 880 F.3d at 1174).
50
Id. (quoting Mayotte, 880 F.3d at 1175).
51
Id. (citing Mayotte, 880 F.3d at 1170).
15
Applying Rooker-Feldman to the Complaint we note that to the extent the
Complaint asserts the portion of the Colorado Court of Appeals’ opinion awarding
appellate attorneys’ fees is void pursuant to § 524(a), the Bankruptcy Court would have
jurisdiction to consider such allegations. 52 However, a comprehensive reading of the
Complaint suggests the Debtor asked the Bankruptcy Court to conclude the Bank violated
the discharge injunction by pursuing attorneys’ fees as part of a scheme to prevent the
Colorado Court of Appeals from dismissing the appeal as moot and vacating the
foreclosure judgment. 53 To the extent the Complaint alleges the Colorado Court of
Appeals improperly allowed the appeal to proceed instead of dismissing it as moot and
vacating the foreclosure judgment, the Rooker-Feldman doctrine precluded the
Bankruptcy Court’s review. 54 Under such a reading of the Complaint, the Bankruptcy
Court did not err in dismissing the Complaint, in part, pursuant to the Rooker-Feldman
doctrine. 55
52
Sprague v. Williams (In re Van Winkle),
583 B.R. 759, 767 (10th Cir. BAP 2018)
(citing In re Skinner,
917 F.2d 444, 447-48 (10th Cir. 1990)) (“bankruptcy courts clearly
have jurisdiction to review alleged violations of their own orders, including civil
contempt matters arising out of core matters.”).
53
See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)
(explaining “courts must consider the complaint in its entirety . . . when ruling on Rule
12(b)(6) motions to dismiss.”).
54
In re Bednar, 2019 WL 3928844, at *7.
55
See In re Miller, 666 F.3d 1255, 1262 (10th Cir. 2012) (citing Exxon Mobil Corp.
v. Saudi Basic Indus. Corp.,
544 U.S. 280-291-92 (2005)) (“The Rooker-Feldman
doctrine precludes a losing party in state court who complains of injury caused by the
state-court judgment from bringing a case seeking review and rejection of that judgment
in federal court.”); In re Bednar,
2019 WL 3928844, at *7 (holding Rooker-Feldman
precluded bankruptcy court from revisiting state court foreclosure of mortgage lien); In re
Jester, No. EO-15-002,
2015 WL 6389290 (10th Cir. BAP Oct. 22, 2015) (holding
Rooker-Feldman precluded bankruptcy court from considering pro se debtor’s request to
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IV. Conclusion
The Complaint contains numerous legal conclusions to support a theory that the
Bank improperly requested appellate attorneys’ fees to prevent the Colorado Court of
Appeals from vacating the foreclosure judgment. Reviewing the Complaint under the
standards set forth in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal, we are not
convinced it contains sufficient factual allegations to support the conclusion the Bank
violated § 524’s discharge injunction. Accordingly, the Bankruptcy Court’s dismissal is
AFFIRMED.
set aside foreclosure judgment), aff’d 656 F. App’x 425 (10th Cir. 2016); Abboud v.
Abboud (In re Abboud), 237 B.R. 777, 780 (10th Cir. BAP 1999) (citing cases explaining
limits of the Rooker-Feldman doctrine) (“Jurisdiction to review valid state court
judgments thus lies exclusively with the superior state courts and, ultimately, the
Supreme Court.”).
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