Isaacs v. DBI-ASG Coinvester Fund III, LLC (In re Isaacs)

(6th Cir. B.A.P. July 3, 2017)

The Sixth Circuit B.A.P. vacates the bankruptcy court’s judgment and remands for dismissal based on lack of subject matter jurisdiction. The creditor failed to record its mortgage prior to the first Chapter 7 case, recorded it during that case, and it was not challenged. The creditor then sought to foreclose on the mortgage and obtained a state court in rem judgment permitting foreclosure. The debtor then filed a Chapter 13 case and challenged the state court judgment, based on the stay violation in the Chapter 7. The bankruptcy court held that the Rooker-Feldman doctrine did not apply because the state court judgment modified the discharge injunction inappropriately, as the lien was not valid based on the Chapter 7 discharge. The B.A.P. reverses, finding that the Rooker-Feldman doctrine does apply, and that the lien was effective under Kentucky law even if not perfected prior to the Chapter 7. Opinion below.

Judge: Humphrey

Attorney for Debtor: Marcus H. Herbert

Attorney for Creditor: DBI-ASG Coinvester Fund, III, LLC

2017-07-03 – in re isaacs

Author: Matt Lindblom

Zadeh v. Nelson (In re Nelson)

(Bankr. E.D. Ky. Nov. 15, 2016)

The Court grants the debtor’s motion to dismiss the nondischargeability action. The debtor’s ex-spouse sought to declare nondischargeable a state court judgment awarding him his overpayment of child support. However, he failed to timely serve the summons and complaint under Bankruptcy rule 7004(e), the statute of limitations barred the claim to the extent it sought relief under § 523(a)(2)(A), and the Rooker-Feldman doctrine prevented the bankruptcy court from ruling on the issue because multiple state courts had already done so. Opinion below.

Judge: Wise

Plaintiff and Defendant: Pro Se

2016-11-15-in-re-nelson

Author: Matt Lindblom

In re Isaacs

(Bankr. W.D. Ky. May 19, 2016)

The bankruptcy court grants summary judgment in favor of the debtor, holding a mortgage debt had been discharged in the Chapter 7 and the recording of the mortgage and foreclosure action constituted a violation of the automatic stay and the discharge injunction. The mortgagee had failed to record the mortgage prepetition, and it contained a provision that stated the lien did not attach until recorded. The court rejects the creditor’s argument that an equitable lien arose, in part because the creditor had control over attachment and simply failed to record for approximately one year before the bankruptcy was filed. The court also rejects the creditor’s argument that the post-bankruptcy state court foreclosure judgment could not be disturbed under the Rooker-Feldman doctrine. Opinion below.

Judge: Fulton

Attorney for Debtor: Marcus H. Herbert

Attorneys for Creditor: David C. Nalley, Gregory A. Stout

2016-05-19 – in re isaacs

Author: Matt Lindblom

Kotsopoulos v. Fifth Third Mortgage Co. (In re Kotsopoulos)

(Bankr. N.D. Ind. Oct. 10, 2014)

The bankruptcy court grants the bank’s motion for summary judgment and dismisses the debtors’ adversary complaint against it. Prepetition, the bank had foreclosed on the debtors’ mortgage in state court. The debtors’ complaint alleged that the bank knew it had an invalid mortgage when it sought the relief in state court, which constituted fraud and an abuse of process. The court held that the Rooker-Feldman doctrine barred the complaint. That doctrine prohibits a lower federal court from reviewing a state court’s final judgment. Because the state court enforced the mortgage in favor of the bank, the bankruptcy court could not reconsider whether the mortgage was valid. Opinion below.

2014-10-10 – in re kotsopoulos