In the

United States Court of Appeals

For the Seventh Circuit ____________________

Nos. 12-1715 & 12-1894

DAN K. ARNOLD,

Plaintiff-Appellant,

v.

KJD REAL ESTATE, LLC,

Defendant-Appellee, Cross-Appellant,

v.

GEISSLER ROOFING CO., INC., and

D & D PROPERTY MANAGEMENT, INC.

Defendants-Appellees, Cross-Appellees.

____________________

Appeals from the United States District Court for the

Southern District of Illinois.

No. 10-913-GPM — G. Patrick Murphy, Judge.

____________________

ARGUED DECEMBER 11, 2013 — DECIDED MAY 20, 2014

____________________

Before WOOD, Chief Judge, and FLAUM and SYKES, Circuit 

Judges.

WOOD, Chief Judge. The Rooker-Feldman doctrine rests on

the fact that only the Supreme Court of the United States has 
2 Nos. 12-1715 & 12-1894 

appellate jurisdiction over state court decisions (and its authority extends only to federal questions, see 28 U.S.C. 

§ 1257). In this case, a state court ordered Dan Arnold to deliver certain corporate stock to Geissler Roofing and D&D 

Property Management (collectively, the Corporate Defendants) pursuant to an earlier alleged settlement agreement. 

The state court did not know that Arnold had already sold 

the stock to a third party, KJD Real Estate (KJD). Arnold filed 

an interpleader action in the district court under Federal 

Rule of Civil Procedure 22 in which he asked the court to decide to whom he should transfer the stock. The district court 

dismissed the interpleader action under the Rooker-Feldman 

doctrine and ordered Arnold to compensate KJD in cash. We 

conclude that this was mistaken: the interpleader action does 

not attack the state court judgment itself, and so further proceedings are necessary. 

I

Arnold was a former officer of both Corporate Defendants, and he held a significant amount of stock in each (38%

of Geissler’s shares and 50% of D&D’s). In 1999, Arnold sued 

the Corporate Defendants in Illinois state court on claims of 

shareholder oppression. That action remained pending for 

seven years. In November 2006, the parties allegedly agreed 

to settle the case. They never executed any settlement documents, however, and none of the defendants has ever paid 

Arnold any of the $207,500 that the purported agreement 

would have required. Nonetheless, relying on the alleged 

settlement agreement, the Corporate Defendants moved to 

dismiss the state case. While that motion was pending, Arnold moved for a voluntary dismissal. The court granted 
Nos. 12-1715 & 12-1894 3

Arnold’s motion and dismissed with prejudice without deciding whether the case had been settled.

About a month later, Arnold agreed to sell his stock in 

the Corporate Defendants to KJD for $290,000. KJD advanced $100,000 to Arnold as required by the written stock 

purchase agreement, and Arnold represented that he had 

good title to the stock and could transfer it. After the stockpurchase agreement was finalized, KJD notified the Corporate Defendants that it had purchased the stock and wished 

to inspect the corporate books. The Corporate Defendants 

did not respond to KJD’s request.

Instead, they moved to vacate the dismissal of Arnold’s 

original suit in state court, reiterating their view that the case 

had been settled. Pursuant to that alleged settlement, they 

contended, Arnold already had transferred his stock to the 

two corporations. Taking a belt-and-suspenders approach, 

the Corporate Defendants also filed a second action against 

Arnold in Illinois state court before a different judge. Although Arnold was properly served, he did not appear, and 

so the second state court issued a default judgment ordering 

Arnold to execute the settlement papers and comply with 

that agreement. The Appellate Court of Illinois affirmed that

judgment. KJD was never joined as a party in the second 

state court action despite the Corporate Defendants’ 

knowledge of KJD’s interest in the stock.

Meanwhile, back in the first state court proceeding, all 

the parties here, including KJD, appeared in response to the 

Corporate Defendants’ motion to vacate the dismissal of Arnold’s shareholder suit. Without informing the court or Arnold’s counsel of the default judgment then in existence, the 

Corporate Defendants requested a continuance on the mo-
4 Nos. 12-1715 & 12-1894 

tion to vacate. At a later hearing, the Corporate Defendants 

informed the court of the default judgment, which by that 

time had become final under Illinois law. The court stayed 

further proceedings; to our knowledge, that action remains 

pending.

After the Appellate Court’s decision was issued, Arnold 

filed this Rule 22 interpleader action, naming both the Corporate Defendants and KJD as defendants. Arnold’s complaint specifically stated that he “makes no claim to continued ownership of the Geissler and D&D stock and stands 

willing to transfer the stock to whichever Interpleader Defendant the Court determines has the superior right to the 

stock.” Arnold asked to be “fully and finally released from 

any and all liability to the Interpleader Defendants” once he 

delivered the stock to whichever defendant the court specified. KJD asserted a cross-claim against the Corporate Defendants for a declaratory judgment that it owned the stock. 

It also asserted, in the alternative, a counterclaim against Arnold for rescission of the stock-purchase agreement and return of the $100,000 advance KJD paid under that agreement.

Invoking the Rooker-Feldman doctrine, the district court 

dismissed Arnold’s interpleader action and KJD’s cross-claim 

on the ground that “the injury complained of by both Arnold 

and KJD clearly is the state court’s order directing Arnold to 

execute the settlement agreement with [the Corporate Defendants] under the terms of which Arnold is required to 

tender back to [the Corporate Defendants] his shares in the 

companies in return for consideration in the amount of 

$207,500.” The district court granted KJD’s counterclaim 

against Arnold and ordered Arnold to return the $100,000 
Nos. 12-1715 & 12-1894 5

advance payment. Both Arnold and KJD have appealed to 

this court.

II

We begin with a brief word about the district court’s jurisdiction in this matter, wholly apart from the RookerFeldman issue that lies at the center of this case. As we have 

noted, Arnold relied on Rule 22 for his interpleader action. 

Rule 22 provides that “[p]ersons with claims that may expose a plaintiff to double or multiple liability may be joined 

as defendants and required to interplead.” FED. R. CIV. P.

22(a)(1). Unlike statutory interpleader actions under 28

U.S.C. § 1335, “[i]nterpleader actions under Rule 22 ... must 

be based upon the general jurisdiction statutes applicable to 

civil actions in the federal courts.” 7 Charles Alan Wright, 

Arthur R. Miller & Mary Kay Kane, FEDERAL PRACTICE AND 

PROCEDURE § 1710 (3d ed. 1998 & Supp. 2010); see also 

Comm’l Nat’l Bank of Chi. v. Demos, 18 F.3d 485, 488 (7th Cir. 

1994) (“Rule 22[a] provides a procedural framework for interpleader actions, but it does not confer subject-matter jurisdiction on federal courts.”). A plaintiff such as Arnold, 

who is relying on the general diversity statute, 28 U.S.C. 

§ 1332, must demonstrate complete diversity between the 

plaintiff-stakeholder and the claimant-defendants. An interpleader plaintiff need not show that each competing claimant has a winning claim; a reasonable fear of double liability 

is enough. Aaron v. Mahl, 550 F.3d 659, 663 (7th Cir. 2008).

In this case, the contest between the defendant-claimants, 

both of which are citizens of Illinois, involves only a question of Illinois law. Nevertheless, diversity jurisdiction is 

proper because complete diversity is assessed by looking at 

the plaintiff-stakeholder and the defendant-claimants. Ar-
6 Nos. 12-1715 & 12-1894 

nold, a Florida citizen, is diverse from all parties claiming an 

interest in the stock, and Arnold’s complaint asks the court 

to relieve him of potential double liability to these claimants. 

As our account of the facts already has shown, the amount in 

controversy exceeds $75,000. Jurisdiction is therefore proper 

under 28 U.S.C. § 1332(a). 

III

We turn, then, to the heart of the case: the Rooker-Feldman 

doctrine. As we noted at the outset, this doctrine reflects a 

limitation on the subject-matter jurisdiction of lower federal 

courts. Long v. Shorebank Dev. Corp., 182 F.3d 548, 555 (7th Cir. 

1999). We review de novo the question whether, as the district 

court thought, Rooker-Feldman applies here. Brokaw v. Weaver, 

305 F.3d 660, 664 (7th Cir. 2002).

The Rooker-Feldman doctrine derives from two Supreme 

Court cases in which plaintiffs “litigated and lost in state 

court ... [then] essentially invited federal courts of first instance to review and reverse [the] unfavorable state court 

judgments.” Exxon Mobil Corp. v. Saudi Basic Inds. Corp., 544 

U.S. 280, 283 (2005), discussing Rooker v. Fidelity Trust Co., 263 

U.S. 413 (1923) and D.C. Ct. of App. v. Feldman, 460 U.S. 462 

(1983). Because Congress empowered only the Supreme 

Court to exercise appellate authority to reverse and modify 

state court judgments, see 28 U.S.C. § 1257, such suits were 

declared “out of bounds, i.e., properly dismissed for want of 

subject-matter jurisdiction.” Saudi Basic Inds., 544 U.S. at 283–

84. The doctrine is narrowly confined to “cases brought by 

state-court losers complaining of injuries caused by statecourt judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Id. at 284.
Nos. 12-1715 & 12-1894 7

Like the due process claim in Long, 182 F.3d at 555–56, 

cases requiring dismissal under Rooker-Feldman involve 

plaintiffs who are “attacking the judgment itself” or the procedures used in obtaining that judgment. GASH Assocs. v.

Village of Rosemont, Ill., 995 F.2d 726, 728 (7th Cir. 1993). In 

GASH, for example, the plaintiff alleged that the Village of 

Rosemont committed an unconstitutional taking by maneuvering to purchase plaintiff’s property for a depressed price 

at a foreclosure sale. Id. at 727. A state court had confirmed 

the sale over plaintiff’s “vigorous objection.” Id. Because 

plaintiff’s “injury came from the judgment confirming the 

sale” rather than “an injury out of court,” Rooker-Feldman

barred the suit. Id. at 729. Similarly, in Leaf v. Supreme Court of 

Wisconsin, the plaintiff sued the state high court for suspending her law license, alleging both that the suspension and the 

ethics rule on which it was based were unconstitutional. 979 

F.2d 589, 594 (7th Cir. 1992). Leaf’s claims were attacks on the 

propriety of the judgment and therefore barred by RookerFeldman. Id. at 598–600.

Rooker-Feldman thus comes into play only when the federal court assesses the propriety of a state court judgment. 

“If a federal plaintiff presents some independent claim, albeit one that denies a legal conclusion that a state court has 

reached,” then Rooker-Feldman does not bar the court’s jurisdiction. Saudi Basic Inds., 544 U.S. at 293, citing GASH, 995 

F.2d at 728. In so ruling, the Court disapproved some more 

expansive applications of the doctrine that had developed in 

the lower courts.

With that message in mind, we have no trouble 

concluding that Rooker-Feldman does not bar Arnold’s suit. 

Indeed, Arnold’s interpleader action proceeds on the 
8 Nos. 12-1715 & 12-1894 

premise that the state court’s adjudication of the rights 

between himself and the Corporate Defendants was a valid 

and binding judgment. But it was a judgment that bound 

only him; KJD was not a party to the suit. See Kamilewicz v. 

Bank of Boston, 100 F.3d 1348, 1351 (7th Cir. 1996) 

(Easterbrook, J., dissenting from denial of rehearing en banc) 

(“[T]he Rooker-Feldman doctrine does not affect suits by or 

against persons who were not parties to the initial case.”); 

see also Downs v. Westphal, 87 F.3d 202, 203 (7th Cir. 1996) 

(Rovner, J., concurring). It is one thing to resolve whether a 

person has a binding contract or an interest in an item such 

as corporate stock; it is quite another to resolve the question 

whether A’s property right is superior to B’s, or vice versa. 

Arnold’s interpleader action raises the second question, 

which was never before the state court. In the course of 

deciding that priority issue, Arnold asks the court to relieve 

him of his exposure to double liability from his conflicting 

obligations related to the stock. Although Arnold’s injury is 

undoubtedly related to the state court judgment, his suit 

does not “attack[] the judgment itself.” See GASH, 995 F.3d 

at 728. 

It does not, we clarify, unless the nature of the relief that

the state court ordered makes a difference. The Corporate 

Defendants argued—and the district court agreed—that the 

state court ordered specific performance with respect to Arnold’s delivery of the stock. That was precisely what the 

Corporate Defendants had requested. The state trial court’s

default judgment ordered Arnold to execute all settlement 

documents that he had received. Only in denying Arnold’s 

motion to vacate the default judgment did the court add that 

Arnold was “ordered to execute settlement documents and 

comply with the terms of the settlement agreement.” Order, 
Nos. 12-1715 & 12-1894 9

No. 07-CH-1044 (St. Clair Co. Cir. Ct., Dec. 15, 2008) (emphasis added).

We conclude that this detail does not change our RookerFeldman analysis. Arnold’s interpleader action merely compels the Corporate Defendants and KJD to litigate ownership 

of the stock among themselves. Each one has an asserted basis for a claim of right to the stock, one contractual and one 

based on the state court judgment. If the federal court decides that KJD’s claim to the stock is superior to that of the 

Corporate Defendants, the court may skip the formalistic 

step of Arnold’s transferring the stock to the Corporate Defendants (pursuant to the state court’s specific-performance 

decree) only to have the Corporate Defendants immediately 

transfer the stock to KJD (pursuant to the interpleader 

court’s order). Because all concerned parties are participating 

in the interpleader action, the court may order a direct transfer from Arnold to whichever party prevails. See State Farm 

Fire & Cas. Co. v. Tashire, 386 U.S. 523, 533 (1967) (discussing 

the ways in which “[c]onsiderations of judicial administration” inform interpleader procedures).

IV

Although the state court judgment does not foreclose Arnold’s federal suit, it may preclude some of the relief Arnold 

seeks. Courts often confuse Rooker-Feldman cases with cases 

involving ordinary claim or issue preclusion. See Saudi Basic 

Inds., 544 U.S. at 283 (criticizing lower courts for “superseding the ordinary application of preclusion law” in favor of 

Rooker-Feldman). “In contrast to the Rooker-Feldman doctrine 

... res judicata constitutes an affirmative defense and is dependent upon the Full Faith and Credit statute, 28 U.S.C. 

§ 1738, which requires federal courts to give a state court 
10 Nos. 12-1715 & 12-1894 

judgment the same preclusive effect it would have in state 

court.” Long, 182 F.3d at 560.

Arnold’s goal in this litigation is to obtain a declaratory 

judgment that he is not liable to whichever claimant loses in 

the interpleader dispute. This potentially sweeps more 

broadly than a request to decide only which party is entitled 

to the stock. We already have explained why, if the district 

court on remand determines that KJD has the superior claim 

to the stock, it can order Arnold to transfer the stock to KJD. 

Such a ruling would not disturb the state court’s judgment, 

nor would it fail to give that judgment full faith and credit, 

because the question of liability implicates more than the 

disposition of the shares. The state court’s judgment might 

entitle the Corporate Defendants to some other remedy 

against Arnold. If the interpleader court concludes that the 

Corporate Defendants have the superior claim to the stock, 

then it could either stop there or proceed to decide the related question whether Arnold remains liable to KJD in some 

way. It would be premature for us to rule on those questions 

at this stage, since anything we might say would be based on 

speculation about the outcome of the interpleader dispute.

In addition, as we now point out, the interpleader court 

might wish to abstain on some or all of these issues. 

V

The Corporate Defendants have argued that even if Rooker-Feldman does not bar the suit, abstention is appropriate 

under the doctrine of Brillhart v. Excess Ins. Co. of Amer., 316 

U.S. 491 (1942) and Wilton v. Seven Falls Co., 515 U.S. 277 

(1995). Wilton-Brillhart abstention applies when ”a federal 

court [is called upon] to proceed in a declaratory judgment 

suit where another suit is pending in state court presenting 
Nos. 12-1715 & 12-1894 11

the same issues, not governed by federal law, between the 

same parties.” Brillhart, 316 U.S. at 495. In such a case, “the 

question for [the] district court ... is ‘whether the questions 

in controversy between the parties to the federal suit ... can 

better be settled in the proceeding pending in the state 

court.’” Wilton, 515 U.S. at 282, quoting Brillhart. A concern 

for comity underlies this doctrine. As the Court put it in Wilton, “where another suit involving the same parties and presenting opportunity for ventilation of the same state law issues is pending in state court, a district court might be indulging in gratuitous interference if it permitted the federal 

declaratory action to proceed.” Id. at 283 (quotation omitted).

Wilton-Brillhart abstention is possible because of the federal court’s “unique and substantial discretion in deciding 

whether to declare the rights of litigants.” Id. at 286; see also 

28 U.S.C. § 2201(a) (providing that the court “may declare the 

rights and other legal relations of any interested party seeking such declaration”) (emphasis added). The Declaratory 

Judgment Act is “an enabling Act, which confers a discretion 

upon the courts rather than an absolute right upon the litigant.” Id. at 287, quoting Pub. Serv. Comm’n of Utah v. Wycoff 

Co., 344 U.S. 237, 241 (1952). “[T]he propriety of declaratory 

relief in a particular case will depend upon a circumspect 

sense of its fitness informed by the teachings and experience 

concerning the functions and extent of federal judicial power.” Wycoff, 344 U.S. at 243. In contrast to most other actions, 

“there is nothing automatic or obligatory about the assumption of jurisdiction by a federal court to hear a declaratory 

judgment action.” Wilton, 515 U.S. at 288 (quotation omitted).
12 Nos. 12-1715 & 12-1894 

Several factors guide the court’s discretion, including 

“the scope of the pending state court proceeding” and 

“whether the claims of all parties in interest can satisfactorily 

be adjudicated in that proceeding.” Brillhart, 316 U.S. at 495. 

This is an inherently discretionary call for the district court, 

“because facts bearing on the usefulness of the declaratory 

judgment remedy, and the fitness of the case for resolution, 

are peculiarly within [its] grasp.” Wilton, 515 U.S. at 289; see 

also Miller v. Fenton, 474 U.S. 104, 114 (1985).

Although the district court briefly addressed the issue before, Wilton-Brillhart abstention should be reconsidered on 

remand. The underlying dispute concerns a matter of Illinois 

law entirely between Illinois parties. That dispute is currently pending in the stayed state court lawsuit, which involves 

all the interested parties. This is a question that the district 

court should address anew. 

VI

Rooker-Feldman does not bar Arnold’s interpleader action. 

We VACATE the district court’s judgment dismissing on that 

basis and REMAND for further proceedings consistent with 

this opinion.