Edwards v. New Century Mortgage Corp., et al. (In re New Century TRS Holdings, Inc.), Adv. Pro. No. 08-50000 (KJC) (February 2, 2010).
On April 2, 2007, New Century Mortgage Corporation and its affiliates (the "Debtors") filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code. On January 3, 2008, Gary Forrest Edwards ("Plaintiff" or "Edwards") commenced an adversary proceeding against the banks, individuals, and Court he held responsible for the foreclosure on his home. Edwards later filed an amended complaint, which contained a litany of requests for relief in connection with the state court mortgage foreclosure action. Various Defendants filed motions to dismiss for lack of subject matter jurisdiction, asserting that the Rooker-Feldman doctrine applied, and arguing that the complaint failed to state a claim upon which relief may be granted.
The issues before the Court concerned the application of the Rooker-Feldman doctrine in the bankruptcy context and whether the amended complaint contained sufficient facts to meet the pleading standard and survive a motion to dismiss for failure to state a claim. The Court held that the Rooker-Feldman doctrine applied in the bankruptcy context, stripping the Court of subject matter jurisdiction over the claims relating to the previously adjudicated state court foreclosure proceedings, and the amended complaint failed to specifically plead sufficient facts to overcome a motion to dismiss for failure to state a claim.
The Rooker-Feldman doctrine, derived from two United States Supreme Court decisions, Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923) and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983), "precludes lower federal courts ‘from exercising appellate jurisdiction over final state-court judgments’ because such appellate jurisdiction rests solely with the United States Supreme Court.’" Madera v. Ameriquest Mortgage Co. (In re Madera), 586 F.3d 228, 232 (3d Cir. 2009) (remarking that the doctrine applies "equally to federal bankruptcy courts"). The Court cited multiple decisions in which the Rooker-Feldman doctrine applied to preclude subject matter jurisdiction over previously adjudicated state court actions, including previously adjudicated foreclosure actions. Exxon Mobil Corp. v. Saudi Basic Ind. Corp., 544 U.S. 280, 284 (2005) (holding that the Rooker-Feldman doctrine applies to "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"); Madera, 586 F.3d 228, 232 (holding that plaintiff’s attempt to utilize adversary proceeding in bankruptcy to re-adjudicate state court foreclosure proceedings stripped the court of subject matter jurisdiction). Reasoning that Edwards was a state-court loser directly attacking the state court’s judgment, the Court held that the Rooker-Feldman doctrine applied and the Court lacked subject matter jurisdiction over the matter.
In an abundance of caution, the Court considered the motions to dismiss for failure to state a claim "to the extent it may be argued that all of the Plaintiff’s claims are not barred by the Rooker-Feldman doctrine." Citing to the legal pleading standards outlined in Bell Atlantic v. Twombly, 550 U.S. 544 (2007) and Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009), and reiterating a brief portion of the conclusory statements in what was supposed to be the facts section of Edwards’ amended complaint, the Court held that Edwards failed to meet the pleading standards and, accordingly, dismissed the remaining claims for failure to state a claim upon which relief may be granted.
