Court Opinion

ID: 8500590
Source: CourtListenerOpinion
Date Created: 2022-11-22 22:47:58.463859+00
Date Added: 2024-06-11T16:50:38.108995
License: Public Domain

CONCURRENCE
TRACEY N. WISE, Bankruptcy Appellate Panel Judge,
concurring in the judgment.
The Rooker-Feldman doctrine precluded the bankruptcy court from reviewing the merits of the state court’s in rem judgment. This conclusion ends the analysis. As a result, I write separately to concur with the majority’s result, but to respectfully disagree with its reasoning and the scope of its opinion.
Without subject matter jurisdiction, the majority engages in a merits analysis much like the bankruptcy court’s analysis to which it assigned error. Reasoning that “the unusual facts of this case do not lend themselves to a straight-forward application of’ Hamilton v. Herr (In re Hamilton), 540 F.3d 367 (6th Cir. 2008) (see supra pp. 144-45), the majority misconstrues the discharge injunction and the inquiry authorized by Hamilton. Bearing in mind Hamilton’s admonition that state courts may construe the discharge injunction if they do it properly, Hamilton’s. application to these “unusual facts” must begin with a review of what the discharge enjoins.
In Hamilton, there was no dispute that the debt at issue was unsecured and that the creditor obtained a judgment of personal liability against the debtor for a pre-petition debt covered by hid discharge order in violation of 11 U.S.C. § 524(a). But, as the majority recognizes in passing, “there are only two things that a discharge actually does: it voids judgments and it enjoins collection of claims as a personal obligation of the debtor.” In re Livensparger, Case No. 12-10361, 2015 WL 1803922, at *3, 2015 Bankr. LEXIS 1427, at *10 (Bankr. W.D. Mich. Apr. 17, 2015). “Actions against a debtor in rem do not violate the discharge injunction.” In re Black, Case No. 09-78266, 2014 WL 690159, at *3, 2014 Bankr. LEXIS 682, at *1 (Bankr. E.D. Mich. Feb. 14, 2014).
The Judgment in the instant matter did not seek to impose personal liability against Debtor Linda Isaacs for a discharged debt. Rather, the state court lawsuit sought to foreclose on a mortgage lien on Debtor’s property, and a discharge under § 524 does not affect an in rem judgment against a debtor’s property related to a pre-petition lien. Johnson v. Home State Bank, 501 U.S. 78, 83, 111 S.Ct. 2150, 115 L.Ed.2d 66 (1991) (“[T]he Code provides that a creditor’s right to foreclose on the mortgage survives or passes through the *152bankruptcy. See 11 U.S.C. § 522(c)(2).”); cf. 4 Collier on Bankruptcy ¶ 524.02[1] (Alan N. Resnick & Henry J. Sommer eds,, 16th ed. 2011) (“[A] creditor may enforce a prepetition judgment lien after the discharge, if the automatic stay is no longer in effect and the lien has not been avoided, paid, or modified so as to preclude enforcement.”).
The bankruptcy court held that the chapter 7 discharge order discharged the mortgage debt at issue. It then made another determination regarding the attendant mortgage lien based on this statement in the subject mortgage; “The lien of this Mortgage will attach on the date this Mortgage is recorded,” (Mem-Op. at 4-7, ECP No. 77.) Relying on this language, the court concluded:
[T]he debt & question was unsecured by virtue of GMAC’s failure to record the Second Mortgage prior to Debtor’s petition and [ ] it was discharged at the time Debtor concluded her 2004 Chapter 7 case, The Circuit Court judgment served as an improper modification of this Court’s discharge order, and, as a result, the Rooker-Feldman doctrine does not apply. This Court, therefore, grants summary judgment in favor of Debtor and finds the Circuit Court judgment void ab initio as it relates to the debt in question.
(Id. at 2.) In reaching its conclusion, however, the bankruptcy court did not distinguish between personal liability and an in rem action.
The majority takes issue with the bankruptcy court’s conclusion regarding the validity of the unavoided lien and finding of a discharge violation. To that end, the majority focuses attention on matters outside its subject matter jurisdiction. The state court here, unlike the state court in Hamilton, did not assess personal liability against Debtor in violation of the discharge injunction — it merely addressed the validity . of a lien, a state law determination made in all in rem foreclosure actions. The majority’s reasoning suggests the bankruptcy courts can serve as an appellate court over every foreclosure action under the rationale that an otherwise permissible in rem action may violate the discharge injunction if the lien is deemed invalid. Under this reasoning, the Hamilton exception swallows the Rooker-Feldman rule.
Finally, while the procedural posture of the underlying action is unusual, what is not unusual is that a creditor violated the automatic stay. The bankruptcy code provides remedies for such violations. See 11 U.S.C. § 362(k). A debtor in this circumstance may pursue the available remedy for a violation of the automatic stay, but may not seek federal appellate review of a state court’s in rem judgment.1
I concur with the majority’s ultimate holding that the bankruptcy court lacked subject matter jurisdiction under the *153Rooker-Feldman doctrine. But I respectfully disagree that the Hamilton exception authorized either the bankruptcy court or the majority to engage in a contract interpretation analysis where the state court action adjudicated only in rem relief and not personal liability against Debtor for a discharged debt.

. Nor am I persuaded by the law or reasoning proffered by the majority to support the proposition that "post-discharge in rem conduct may violate Code § 524(a) and the debtor’s discharge.” (See supra p. 145 n.8.) First, a creditor’s action cannot be deemed in rem when the debtor owns no real property. See Jarrett v. Ohio (In re Jarrett), 293 B.R. 127 (Bankr. N.D. Ohio 2002); In re Norvell, 198 B.R. 697 (Bankr. W.D. Ky. 1996); In re Blakely, Case No. 13-50069 2013 Bankr, LEXIS 5474 (Bankr. E.D. Ky. Mar. 27, 2013). Emelity addressed a lien awarded post-petition in a domestic dispute. In re Emelity, 251 B.R, 151 (Bankr. S.D. Cal. 2000). None of these cases apply to a consensual prepetition mortgage on real property and a post-petition action to enforce that mortgage. Finally, Breul was procedurally a stay violation action — the precise remedy available to Mrs. Isaacs, In re Breul, 533 B.R, 782 (Bankr. C.D. Cal. 2015). The bankruptcy court did not "determine whether the foreclosure judgment impaired Isaacs’ discharge” as the majority contends (see supra pp. 150-51); rather, it revisited the state court’s determination of the Mortgage's validity.
*153Simply stated, a bankruptcy court does not have subject matter jurisdiction to revisit a state court’s in rem judgment concerning a lien’s validity under the auspices of a Hamilton exception. A bankruptcy court, however, may entertain an avoidance action or a stay violation action in such circumstances.