In the

United States Court of Appeals

For the Seventh Circuit ____________________

Nos. 13-3865 & 14-1887

IN RE:

DESA L. RINALDI 

and ROGER P. RINALDI,

Debtors-Appellants,

and

WENDY A. NORA,

Appellant,

v.

HSBC BANK USA, N.A., et al.,

Appellees.

____________________

Appeal from the United States District Court for the

Eastern District of Wisconsin.

No. 2:13-cv-00336-JPS — J.P. Stadtmueller, Judge.

____________________

ARGUED OCTOBER 28, 2014 — DECIDED FEBRUARY 11, 2015,

____________________

Before BAUER, POSNER, and TINDER, Circuit Judges.
2 Nos. 13-3865 & 14-1887

TINDER, Circuit Judge. This appeal arises from the bankruptcy of Desa and Roger Rinaldi, whose attorney, Wendy 

Nora, complicated the underlying proceedings by filing numerous vexatious motions, similar to her conduct in PNC 

Bank, N.A., v. Spencer, 763 F.3d 650 (7th Cir. 2014). Nora also 

challenges a sanction against her for submitting frivolous 

filings. We uphold the decisions against both the Rinaldis 

and Nora.

I. Background

In 2005, Roger Rinaldi signed a note promising to repay a 

mortgage loan from Wells Fargo and, along with his wife 

Desa, agreed to secure the loan with the couple’s property in 

Bristol, Wisconsin. Within four years, he defaulted on the 

loan, and HSBC Bank initiated a Wisconsin foreclosure action as assignee of the mortgage. The Rinaldis counterclaimed against HSBC, Wells Fargo, and the lawyers involved in the foreclosure, alleging that the mortgage paperwork produced by HSBC had been fraudulently altered and 

that HSBC lacked standing to enforce the mortgage. The 

Rinaldis lost at summary judgment and did not appeal. A 

year later, however, the state court vacated its foreclosure 

judgment after HSBC agreed to modify the loan rather than 

foreclose. The Rinaldis then filed a new state lawsuit reasserting their counterclaims against the same parties. The defendants moved to dismiss, but before the state court ruled 

on the motion, the Rinaldis filed for bankruptcy, automatically staying the state case. 

In the bankruptcy proceeding, HSBC filed a proof of 

claim based on the mortgage. The Rinaldis objected and filed 

adversary claims against the parties that they had counterclaimed against in the state action, alleging fraud, abuse of 
Nos. 13-3865 & 14-1887 3

process, tortious interference, breach of contract, and violations of RICO and the Fair Debt Collection Practices Act. The 

bankruptcy court found in favor of HSBC’s proof of claim 

and recommended denial of the adversarial claims. 

In October 2013, the district court affirmed the bankruptcy court’s decisions on the proof of claim and adopted its 

recommendations on the adversary claims. The court concluded that it did not even need to reach the merits of the 

proof-of-claim decision because the Rinaldis failed to designate the record or issues for appeal as required by the Federal Rules of Bankruptcy Procedure. The court also rejected the 

Rinaldis’ appeal on the merits, explaining that HSBC had 

produced documents showing that it was entitled to enforce 

the mortgage. The court further dismissed each of the 

Rinaldis’ adversary claims as meritless, noting that their 

submission on those claims was “an unfocused, stream-ofconsciousness-style recitation of general grievances the 

debtors have asserted in various forms since the origination 

of this litigation in state court.” The court warned the 

Rinaldis that they would likely face sanctions if they filed 

additional frivolous filings because their litigation tactics 

had “quite obviously been vexatious and time- and resourceconsuming” and their filings were “nigh-unintelligible.”

Within two weeks, the Rinaldis moved to alter or amend 

the judgment under Federal Rule of Civil Procedure 59(e), 

rehashing their arguments about the mortgage. Not only 

were these arguments meritless, the district court decided, 

but “the Rinaldis, through their attorney Wendy Nora, have 

at every turn filed briefs that have done little to clarify the 

matters under consideration while further confusing matters” (emphasis in original). The court added that Nora’s 
4 Nos. 13-3865 & 14-1887

briefs were rambling, failed to comply with court rules, contained many spelling and grammatical errors, cited legal authority sparingly if at all, repeated rejected arguments, and 

used “irrelevant and argumentative language that has no 

place in a legal brief.” The court warned that “any further 

frivolous submissions will result in an award of appropriate 

sanctions against the Rinaldis’ attorney” (emphasis in original).

In December 2013, the Rinaldis appealed to this court, 

but then in March 2014, they moved to dismiss their case in 

the bankruptcy court. They asserted that the bankruptcy 

court had shown a “willingness to override state law” in regard to the validity of their mortgage, so they had “decided 

not to engage in litigation of their new issues in this Court 

and wish to be set free from the underlying bankruptcy.” 

They added that they “wish to proceed to state court” with 

“newly discovered evidence” that the mortgage is void. The 

bankruptcy court granted the Rinaldis’ motion, though it 

warned them that the dismissal might moot their pending 

appeal.

Meanwhile, Nora moved in the district court to withdraw as the Rinaldis’ attorney, and then, before the court 

ruled on that motion, moved to intervene in the case and for 

relief under Federal Rule of Civil Procedure 60(b). In April 

2014, the district court allowed Nora to withdraw but denied 

the other two motions, explaining that Nora had no standing 

to intervene and that the court had no intention of altering 

its decision about the Rinaldis’ claims. Further, the court explained that, because of its earlier warning and the fact that 

these motions were frivolous, the court had “no choice but to 

impose sanctions against Ms. Nora.” The court ordered Nora 
Nos. 13-3865 & 14-1887 5

to pay $1,000 and warned that further frivolous filings 

would result in higher sanctions. Nora appealed this order 

on behalf of herself and the Rinaldis.

II. Discussion

On appeal, the Rinaldis again rehash their arguments 

about alleged problems with their mortgage. The appellees 

raise a host of reasons to reject the Rinaldis’ arguments, including urging us to dismiss their appeal as moot because of 

the dismissal of the bankruptcy case. The Rinaldis argue that 

their appeal is not moot because of the possible “res judicata 

effect” of the underlying rulings. But the potential for a 

judgment to have preclusive effect in future cases is not 

enough to avoid mootness; if it were, “no case would ever be 

moot.” Parvati Corp. v. City of Oak Forest, Ill., 630 F.3d 512, 

518 (7th Cir. 2010); see CFTC v. Bd. of Trade of Chi., 701 F.2d 

653, 657 (7th Cir. 1983) (“Since the future is unknown, one 

can never be certain that findings made in a decision concluding one lawsuit will not some day (if allowed to do so) 

control the outcome of another suit. But if that were enough 

to avoid mootness, no case would ever be moot.”). There is 

some authority suggesting that adversary claims might survive dismissal of a related bankruptcy proceeding. See In re 

Statistical Tabulating Corp., 60 F.3d 1286, 1289–90 (7th Cir. 

1995). But this idea is not meaningfully addressed in the 

Rinaldis’ appellate brief, and moreover, even if the adversary claims are not moot, the Rinaldis offer no persuasive 

challenge to the district court’s thorough analysis of those 

claims. Thus, to the extent the adversary claims are not 

moot, we affirm the dismissal of those claims for substantially the reasons discussed by the district court.
6 Nos. 13-3865 & 14-1887

The appellees note that, when an appeal becomes moot, 

we ordinarily vacate the underlying rulings in the case. 

See United States v. Munsingwear, Inc., 340 U.S. 36, 39 (1950). 

This rule is meant “to ensure that a decision carries no precedential force after mootness prevents further review.” Van 

Straaten v. Shell Oil Prods. Co., 678 F.3d 486, 491 (7th Cir. 

2012); see In re Smith, 964 F.2d 636, 637 (7th Cir. 1992). Here, 

however, applying this rule would lead to the odd result 

that, by rejecting the Rinaldis’ argument against mootness, 

we would give them exactly the relief that they seek.

There is a solution to this strange result. We have long 

recognized an exception to the rule in Munsingwear for situations where a losing party causes an appeal to become moot 

in order to avoid the preclusive effect of an unfavorable ruling. See Gould v. Bowyer, 11 F.3d 82, 84 (7th Cir. 1993); In re 

Smith, 964 F.2d at 637; Harris v. Bd. of Governors of the Fed. Reserve Sys., 938 F.2d 720, 724 (7th Cir. 1991); CFTC, 701 F.2d at 

657; cf. Karcher v. May, 484 U.S. 72, 82–83 (1987) (refusing to 

vacate judgment when losing party’s actions caused mootness of appeal). This appeal is a good candidate for that exception. As the district court explained, by the time the 

Rinaldis reached that court, they had already presented their 

arguments “before two separate courts in three separate 

proceedings.” Then, once the district court rejected the 

Rinaldis’ arguments and refused to reconsider, the Rinaldis 

indicated in dismissing their bankruptcy case that they 

wanted to proceed to challenge their mortgage again in state 

court. We refuse to indulge this type of gamesmanship by 

depriving the sound decisions of the bankruptcy court and 

district court of preclusive effect.
Nos. 13-3865 & 14-1887 7

Finally, we affirm the sanction order, which we review 

for an abuse of discretion. See Tucker v. Williams, 682 F.3d 

654, 661 (7th Cir. 2012). Nora offers only a cursory defense 

for her actions, maintaining that she did “nothing more than

what she [was] required by law to do in the course of representing her clients.” But Nora’s obligations to her clients did 

not excuse her disregard of the district court’s clear and repeated warnings against continued submission of confusing, 

frivolous, and needlessly argumentative filings. Thus, the 

court did not abuse its discretion by sanctioning Nora.

The orders of the district court are AFFIRMED.