Court Opinion

ID: 4697542
Source: CourtListenerOpinion
Date Created: 2021-06-22 18:00:51.235037+00
Date Added: 2024-06-11T08:05:47.091468
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 19‐3530
DANIEL LOUGHRAN and MARGARET LOUGHRAN,
                                  Plaintiffs‐Appellants,
                                 v.

WELLS FARGO BANK, N.A., et al.,
                                               Defendants‐Appellees.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
           No. 19 C 4023 — Virginia M. Kendall, Judge.
                     ____________________

    ARGUED NOVEMBER 30, 2020 — DECIDED JUNE 22, 2021
               ____________________

   Before EASTERBROOK, WOOD, and HAMILTON, Circuit
Judges.
    WOOD, Circuit Judge. Daniel and Margaret Loughran de‐
faulted on their home mortgage in 2011. In the ensuing fore‐
closure litigation, the Loughrans have not contested that they
are in default. Instead, they have pursued a series of proce‐
dural delay tactics, as a result of which they remain in posses‐
sion of their home despite not having made a mortgage pay‐
ment in nine years.
2                                                    No. 19‐3530

    This case concerns one of the Loughrans’ many maneu‐
vers. In January 2019, after their state‐court foreclosure litiga‐
tion was already over seven years old, the Loughrans accused
U.S. Bank and its counsel of committing fraud in the course of
those proceedings. In May 2019, sensing that their fraud claim
was going nowhere, the Loughrans tried their luck in federal
court, with a complaint that copied and pasted large swaths
of text from their state‐court filings. Citing the doctrine first
announced in Colorado River Water Conservation District v.
United States, 424 U.S. 800 (1976), and noting the practical
identity between the federal and state actions, the district
court stayed the federal proceedings. The Loughrans have ap‐
pealed that decision, which we now aﬃrm.

                                I
    This saga began in 2005, when plaintiﬀs Daniel and Mar‐
garet Loughran took out a $395,380 home‐mortgage loan from
defendant Wells Fargo Bank, N.A. (“Wells Fargo”). Wells
Fargo securitized the mortgage by transferring it to a New
York common‐law trust (the “Trust”). The Pooling and Ser‐
vicing Agreement (“PSA”) that governs the Trust appointed
U.S. Bank as Trustee and Wells Fargo as Servicer. In its capac‐
ity as Servicer, Wells Fargo is responsible for receiving and
processing loan payments and “initat[ing] or caus[ing] to be
initiated” foreclosure proceedings if a loan goes into default.
The PSA also designates Wells Fargo as the Custodian of the
Trust. In this capacity, Wells Fargo keeps physical possession
of the original notes and mortgages on the Trustee’s behalf.
    As we noted, the Loughrans defaulted on their mortgage
in 2011. In December of that year, U.S. Bank, in its capacity as
Trustee, initiated a foreclosure proceeding against the
No. 19‐3530                                                          3

Loughrans in the Circuit Court of Grundy County, Illinois.
Acting as Servicer, Wells Fargo retained counsel to pursue the
foreclosure proceedings on U.S. Bank’s behalf.
    During the first two years after the suit was filed, the
Loughrans attempted to obtain a Home Aﬀordable Modifica‐
tion Program (HAMP) loan modification through Wells
Fargo.1 Only in 2014, when it appeared that a modification
was not forthcoming, did the Loughrans file an answer, af‐
firmative defenses, and counterclaim in the foreclosure ac‐
tion. In these pleadings, the Loughrans alleged (among other
things) that U.S. Bank lacked standing to file the foreclosure
action and that Wells Fargo had violated Treasury Depart‐
ment guidelines by not (yet) oﬀering the Loughrans a HAMP
modification. In March 2015, explaining that certain provi‐
sions in the Trust PSA prevented it from modifying the loan,
Wells Fargo formally denied the Loughrans’ request for a
HAMP modification.
    In October 2015, U.S. Bank moved to strike and dismiss
the Loughrans’ aﬃrmative defenses and counterclaim. It de‐
fended its standing to sue on the ground that, as Trustee, it
was the “holder” of the Loughrans’ note by virtue of its trans‐
fer to the Trust. U.S. Bank also argued that Wells Fargo, as
Servicer, did not have any obligation to follow HAMP Treas‐
ury Guidelines that were inconsistent with the Trust PSA. The

   1  HAMP is a program administered by Fannie Mae, under which “fi‐
nancially struggling homeowners avoid foreclosure by modifying loans to
a level that is affordable … and sustainable … .” See Overview, HOME
AFFORDABLE MODIFICATION PROGRAM, https://www.hmpadmin.com/por‐
tal/programs/hamp.jsp.
4                                                   No. 19‐3530

Loughrans did not oppose U.S. Bank’s motion, and so their
aﬃrmative defenses and counterclaim were stricken.
    U.S. Bank followed up with a motion for summary judg‐
ment. That triggered a two‐year fight over the Loughrans’
right to obtain a copy of the Trust PSA and to view their orig‐
inal note. Eventually the Loughrans obtained a copy of the
PSA, which (they say) revealed to them for the first time that
Wells Fargo—not U.S. Bank—was in physical possession of
the original note (albeit on U.S. Bank’s behalf and in its capac‐
ity as Servicer). Materials turned over in discovery also
alerted the Loughrans for the first time that Wells Fargo had
hired U.S. Bank’s counsel in the foreclosure proceeding
(again, in its capacity as Servicer).
    Though the terms of the Trust PSA explained Wells
Fargo’s involvement on both counts, the Loughrans seized on
this new information as proof of misconduct. In June 2018,
they filed a third‐party complaint against Wells Fargo, in
which they alleged that Wells Fargo had intentionally misrep‐
resented which entity possessed the Loughrans’ note in the
course of denying their HAMP modification. (As we under‐
stand it, the Loughrans’ theory was that restrictions in the
Trust PSA would have bound Wells Fargo only if the Trust
physically possessed the note. Because Wells Fargo held the
note, nothing in their view prevented a HAMP modification.)
Around this time, the Loughrans also filed a petition to re‐
move the judge presiding over the foreclosure action for cause
under 735 ILCS 5/2‐1001(a)(3). The judge denied that motion,
after which the Loughrans voluntarily dismissed their third‐
party complaint against Wells Fargo.
  In January 2019, U.S. Bank filed another motion for judg‐
ment of foreclosure. In response, the Loughrans raised three
No. 19‐3530                                                      5

new aﬃrmative defenses: (1) U.S. Bank lacked standing to
bring the foreclosure action because it did not have physical
possession of the note; (2) the foreclosure complaint was null
and void because Wells Fargo had brought it in U.S. Bank’s
name but without U.S. Bank’s authorization; and (3) U.S.
Bank, Wells Fargo, and their lawyers had perpetrated a fraud
on the state court by representing that U.S. Bank was in pos‐
session of the note.
    U.S. Bank moved to strike the aﬃrmative defenses. On
June 14, 2019, while that motion was pending, the Loughrans
filed the federal action now before us. The new complaint
named as defendants Wells Fargo; its parent company; and
the three law firms that had represented U.S. Bank and Wells
Fargo in the foreclosure proceeding—Pierce & Associates,
P.C.; McCalla Raymer Liebert Pierce, LLC; and Mayer Brown
LLP (the “Law Firm Defendants”). (Unless the context re‐
quires otherwise, we refer to the defendants collectively as
Wells Fargo.) The Loughrans did not include U.S. Bank as a
defendant. The allegations of fraud and misrepresentations in
the federal complaint mirror the Loughrans’ aﬃrmative de‐
fenses in state court. In fact, substantial portions of the federal
complaint are copied verbatim from the Loughrans’ filings in
the state foreclosure action. The federal complaint seeks dam‐
ages under ten diﬀerent legal theories, including the Fair Debt
Collection Practices Act (FDCPA), the Racketeer Influenced
and Corrupt Organizations Act (RICO), the Illinois Consumer
Fraud and Deceptive Business Practices Act, common‐law
fraud, conspiracy to commit fraud, and intentional infliction
of emotional distress.
   Wells Fargo responded to the federal complaint by mov‐
ing to stay the action pending the outcome of the state
6                                                   No. 19‐3530

foreclosure proceedings. It also moved to dismiss the com‐
plaint under Rule 12(b)(6), arguing that the Loughrans failed
to state a claim for fraud because the complaint and relevant
documents show that under Illinois law, U.S. Bank was the
legal holder of the Loughrans’ note by virtue of the transfer of
the note to the Trust and Wells Fargo’s physical possession of
the note as Trust Custodian.
   The district court granted Wells Fargo’s motion to stay.
Given this decision, it did not rule on the Rule 12(b)(6) motion.
The Loughrans appealed. Following the district court’s stay
order, U.S. Bank withdrew its motion to strike the Loughrans’
aﬃrmative defenses in the state foreclosure proceeding. The
Loughrans then withdrew Aﬃrmative Defenses 2 and 3.

                               II
    Before turning to the merits, we need to say a few words
about appellate jurisdiction. When the district court invoked
the Colorado River doctrine, it stayed, rather than dismissed,
the federal action. Ordinarily a stay of district‐court proceed‐
ings is not immediately appealable because it is not a “final
decision[]” for purposes of 28 U.S.C. § 1291, and it does not
fall within any statute or rule permitting interlocutory ap‐
peals. The Supreme Court has recognized, however, that cer‐
tain stay orders should be treated as final for purposes of ap‐
peal if the practical eﬀect is equivalent to a dismissal.
     In Moses H. Cone Memorial Hospital v. Mercury Construction
Corp., 460 U.S. 1 (1983), the Court held that a stay of federal
litigation pending the resolution of a state suit was final for
the purposes of section 1291 where the federal and state ac‐
tions “involved [an] identical issue” and that issue was “the
only substantive issue present in the federal suit.” Id. at 10
No. 19‐3530                                                      7

(internal quotation omitted). The Court observed that because
“the state court’s judgment on the issue would be res judi‐
cata,” the stay of federal proceedings pending the resolution
of the state suit “meant that there would be no further litiga‐
tion in the federal forum.” Id. As a result, the Court reasoned,
the stay order was final in the sense that it put the plaintiﬀ
“eﬀectively out of court.” Id.
    A stay may be appropriate where issues are “substantially
the same,” not just “identical.” Freed v. J.P. Morgan Chase Bank,
N.A., 756 F.3d 1013, 1019 (7th Cir. 2017). The critical question
is “whether the state case is likely to dispose of” the claims in
federal court. Huon v. Johnson & Bell, Ltd., 657 F.3d 641, 646
(7th Cir. 2011). We have the necessary substantial similarity
here. It is true that, unlike in Moses Cone, the state‐court action
here may not resolve everything. The problem is asymmetry.
If the state court decides that U.S. Bank is the legal holder of
the Loughrans’ note, and thus had standing to litigate the
foreclosure action, then the Loughrans’ federal action will
largely go away. But if the state court decides the issue in the
Loughrans’ favor, then the fraud claims that they have raised
in federal court may not be completely resolved. But that is a
common pattern.
   We do not read Moses Cone as establishing rigid criteria for
stay orders. In fact, the opinion signals that the contrary is
true. As support for its jurisdictional analysis, the Moses Cone
Court drew heavily from Idlewild Bon Voyage Liquor Corp. v.
Epstein, 370 U.S. 713 (1962), a case that involved a stay of fed‐
eral‐court proceedings under the abstention doctrine an‐
nounced in Railroad Commission of Texas v. Pullman, 312 U.S.
496 (1941). In Idlewild the Court held that the district court’s
stay order was final and appealable because a Pullman stay
8                                                        No. 19‐3530

puts the appellant “eﬀectively out of court.” 370 U.S. at 715
n.2. In this context, “eﬀectively out of court” does not neces‐
sarily mean permanently out of court. That is because, as the
Court noted in Moses Cone, a “stay pursuant to Pullman ab‐
stention” (such as the one in Idlewild) “is entered with the ex‐
pectation that the federal litigation will resume in the event that
the plaintiﬀ does not obtain relief in state court on state‐law
grounds.” Moses Cone, 460 U.S. at 10 (emphasis added).
    Thus, under Idlewild and Moses Cone, appellate jurisdiction
over stay orders is not limited to situations in which the state
court will finally decide the federal court claims with preclu‐
sive eﬀect, as was the case in Moses Cone. Rather, jurisdiction
under section 1291 extends to cases in which there remains
some chance that the case will return to federal court to dis‐
pose of residual issues. The key question for jurisdictional
purposes is whether the “object of the stay order is to require
all or an essential part of the federal suit to be litigated in a state
forum.” Moses Cone, 460 U.S. at 10–11 n.11 (emphasis added).
Since the stay order in the present case was entered with the
expectation that the state litigation would “largely” resolve
the federal litigation, that test is met.
    This is enough to resolve the jurisdictional question. We
have no need to reach the question whether the collateral‐or‐
der doctrine would also support appellate jurisdiction. See
Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949). Alt‐
hough the Supreme Court reaﬃrmed Cohen in Mohawk Indus‐
tries, Inc. v. Carpenter, 558 U.S. 100, 106 (2009), it also cautioned
that the Cohen theory should be used sparingly. Id. at 106–07.
What matters for our case is that, without any help from Co‐
hen, our appellate jurisdiction is secure. We are now ready to
No. 19‐3530                                                    9

consider whether the district court properly stayed its pro‐
ceedings.

                               III
    We begin with the acknowledgement that federal courts
have a “virtually unflagging obligation … to exercise the ju‐
risdiction given them.” Colorado River, 424 U.S. at 817. It fol‐
lows that “[a]bstention from the exercise of federal jurisdic‐
tion is the exception, not the rule.” Id. at 813.
    Nonetheless, in a limited number of circumstances federal
courts may decline to hear cases that otherwise fall within
their jurisdiction. The Supreme Court recognized one such sit‐
uation in Colorado River, in which it held that a court may dis‐
miss a federal suit in favor of a concurrent state‐court action
if “exceptional circumstances” merit abstention and deference
to the state‐court action would promote “wise judicial admin‐
istration.” Id. at 813, 818. Indeed, the authority to coordinate
mirror‐image cases is one that courts have long enjoyed. We
assess the present stay under the Colorado River rubric because
that is where the Supreme Court discussed these issues most
directly, and that is how the parties presented their case.
    We have used a two‐step inquiry in our assessment of
whether Colorado River abstention is appropriate. First, we ask
“whether the concurrent state and federal actions are … par‐
allel.” DePuy Synthes Sales, Inc. v. OrthoLA, Inc., 953 F.3d 469,
477 (7th Cir. 2020) (quoting LaDuke v. Burlington N. R.R. Co.,
879 F.2d 1556, 1559 (7th Cir. 1989)). If not, then we do not have
mirror‐image cases. If so, we consider “whether the necessary
exceptional circumstances exist to support a stay or dismis‐
sal.” DePuy, 953 F.3d at 477. A variety of considerations can
10                                                    No. 19‐3530

inform this inquiry. See Colorado River, 424 U.S. at 818–20.
Courts have developed a checklist of ten common ones:
     1. Whether the case concerns rights in property, and if so,
        whether the state has assumed jurisdiction over that
        property;
     2. The inconvenience of the federal forum;
     3. The desirability of consolidating litigation in one
        place—that is, the value in avoiding “piecemeal” liti‐
        gation;
     4. The order in which jurisdiction was obtained in the
        concurrent fora;
     5. The source of governing law—federal or state;
     6. The adequacy of the state court action to protect the
        federal plaintiﬀs’ rights;
     7. The relative progress of the state and federal proceed‐
        ings;
     8. The presence or absence of concurrent jurisdiction;
     9. The availability of removal; and
     10. Whether the federal action is vexatious or contrived.
DePuy, 953 F.3d at 477; see also Lumen Constr. Corp. v. Brant
Const. Co., 780 F.2d 691, 694–95 (7th Cir. 1985). This list, we
emphasize, is primarily useful as a heuristic aid: it is designed
to be helpful, not a straitjacket. Diﬀerent considerations may
be more pertinent to some cases, and one or more of these fac‐
tors will be irrelevant in other cases. A district court is free to
“tak[e] into account a special characteristic of the case before
it” in assessing whether the circumstances meriting absten‐
tion are “exceptional.” DePuy, 953 F.3d at 477.
No. 19‐3530                                                    11

   We evaluate a district court’s determination that state and
federal proceedings are parallel de novo, and we review its
overall decision to abstain for abuse of discretion. See Freed,
756 F.3d at 1019, 1021; see also DePuy, 953 F.3d at 477.

                                A
    Turning to the first step of the inquiry, we agree with the
district court that the Loughrans’ federal suit and the state
foreclosure action are parallel. It is not necessary for concur‐
rent suits to be “formally symmetrical.” Freed, 756 F.3d at
1019. It is enough if the state and federal suits involve “sub‐
stantially the same parties … contemporaneously litigating
substantially the same issues.” Huon, 657 F.3d at 646 (internal
quotation omitted). At bottom, the “critical question” is
whether there is a “substantial likelihood that the state litiga‐
tion will dispose of all claims presented in the federal case.”
Id. (internal quotation omitted).
    The Loughrans contend that the cases are not parallel be‐
cause U.S. Bank is not a defendant in the federal suit, and
Wells Fargo and the Law Firm Defendants are not plaintiﬀs in
the state foreclosure action. That much is true, but it alone is
not dispositive. We have held that “the parallel nature of the
actions cannot be destroyed by simply tacking on a few more
defendants,” Clark v. Lacy, 376 F.3d 682, 686–87 (7th Cir. 2004),
or by removing key parties for “no legitimate reason,” Freed,
756 F.3d at 1020. The parties in the two suits need only be sub‐
stantially the same. Id. What matters is whether the interests
of the parties are “nearly identical.” Clark, 376 F.3d at 686. Put
another way, the question is whether the addition of new par‐
ties with diﬀerent interests alters the central issues in the
12                                                    No. 19‐3530

concurrent case, thereby undermining the “overall similarity
of the disputes.” Id.
    Here, Wells Fargo and the Law Firm Defendants are de‐
fendants in the federal action solely by virtue of their involve‐
ment in the state foreclosure case. As for U.S. Bank’s absence
from the federal suit, there is no doubt that the Loughrans
could have named the bank as a defendant but “actively chose
to exclude” it. Freed, 756 F.3d at 1020.
     The parties’ interests in the two suits also align: the federal
defendants are being sued for actions that they took on U.S.
Bank’s behalf with respect to the sole issue that U.S. Bank is
litigating in the state court—its possession of the Loughran’s
note. The parties in both cases thus have similar incentives
and goals. That is enough to make the parties in the two suits
functionally the same.
   The federal and state litigation also involve parallel issues.
The Loughrans’ main contention in both suits is that U.S.
Bank lacked standing to pursue the foreclosure action because
Wells Fargo, not U.S. Bank, had physical possession of the
Loughrans’ note. The Loughrans further allege that U.S. Bank,
Wells Fargo, and their lawyers perpetrated a fraud against the
Loughrans and the state court when they repeatedly asserted
that U.S. Bank was the “note holder.” (They never explain
why Wells Fargo, U.S. Bank, and the Law Firm Defendants
would be motivated to commit such a fraud, particularly
when the Loughrans’ default is not in dispute, but for present
purposes we do not need to explore this anomaly.)
   Our earlier summary of the proceedings leaves no doubt
that the Loughrans raised nearly identical allegations of fraud
against Wells Fargo, U.S. Bank, and their lawyers throughout
No. 19‐3530                                                    13

the state proceedings. Trying to avoid the obvious compari‐
sons, the Loughrans argue that we may not consider the alle‐
gations of fraud that they made in their aﬃrmative defenses
in the foreclosure action because they dismissed Aﬃrmative
Defense 3 (the fraud defense) shortly after the district court
issued its stay order in the federal case. We have our doubts,
however, that a party may circumvent, after the fact, a federal‐
court stay by dismissing without prejudice parallel aspects of
the concurrent state case. We need not decide that issue,
though, because the two suits remain parallel even if we limit
our analysis to the Loughrans’ sole remaining aﬃrmative de‐
fense (i.e., that U.S. Bank lacked standing).
    Although the federal complaint invokes several diﬀerent
theories, the allegation at the heart of each of them is the same:
that U.S. Bank was not the legal possessor of the note; Wells
Fargo, U.S. Bank, and their lawyers knew this; and yet they
falsely represented that it was. This is the precise issue before
the state court; in the course of adjudicating the Loughrans’
standing defense, the foreclosure court will necessarily and
conclusively determine whether U.S. Bank was the “holder”
of the Loughrans’ note as a matter of Illinois law. The remain‐
der of the Loughrans’ claims depend on the answer to their
standing argument; if it fails, so will everything else.
    The Loughrans insist that this must be wrong, because the
pleadings in the state and federal suits invoke diﬀerent rights
and remedies (that is to say, diﬀerent theories in support of a
single claim). The Loughrans point out that they are seeking
to vindicate federal and state statutory rights in federal court,
whereas they are asserting only aﬃrmative defenses in state
court.
14                                                  No. 19‐3530

    This argument is fundamentally mistaken. In Clark, we ex‐
plained that the parallel nature of concurrent cases cannot “be
dispelled by repackaging the same issue under diﬀerent
causes of action.” 376 F.3d at 687. Whether the rights and rem‐
edies diﬀer in the two suits is beside the point: the key inquiry
is not whether the alignment of the claims and remedies in the
two cases is the same, but rather whether “the central legal
issues[] remain the same in both cases.” Id. They are.
   One further objection, which the Loughrans do not
squarely raise but is implicit in their arguments, arises from
the fact noted earlier that the preclusive eﬀect of the state
court’s standing determination is one‐sided. If the state court
determines that U.S. Bank is the legal holder of the
Loughrans’ note, then a foundational building block of all the
Loughrans’ federal‐court claims will disappear. If, on the
other hand, the state court determines that U.S. Bank is not the
legal holder of the Loughrans’ note, then there may be more
work for the federal court to do to resolve their claim.
    As we said earlier, this one‐sidedness is neither unusual
nor fatal to a finding that the two cases are parallel. We con‐
fronted a similar situation in Freed. There, the plaintiﬀ in con‐
current state and federal actions raised claims in the federal
court that would have been fully resolved if the state court
ruled one way, but only partially addressed if the state court
ruled in the other direction. See Freed, 756 F.3d at 1021. Nev‐
ertheless, we held that the state and federal actions were par‐
allel. We found that the federal‐ and state‐court claims were
interdependent, and we reasoned that because “[a] resolution
in state court of [the predicate] issues … [wa]s necessary be‐
fore” the federal case could be decided, “it was rational for the
district court to determine that the state court litigation will
No. 19‐3530                                                    15

be an adequate vehicle for the complete and prompt resolu‐
tion of the larger dispute.” Id. (internal quotation omitted); see
also Lumen, 780 F.2d at 696 (finding that deference to state‐
court proceedings was appropriate where “a decision on [fed‐
eral‐court] claims [could] not be had until [an] underlying …
dispute[,] … [fully] presented only in the state court proceed‐
ing and … governed by state law,” was resolved). We find the
same to be true of the Loughrans’ dispute here.

                                B
    Since the state and federal actions are parallel, we next
consider whether the district court abused its discretion in
reaching its decision to abstain. DePuy, 953 F.3d at 480. The
bottom line is no: district courts have discretion to stay pro‐
ceedings in federal suits that substantially duplicate litigation
that was well underway in state court when the federal case
was filed. Because it may be helpful to the parties and the dis‐
trict court, we explain why this conclusion is also consistent
with Colorado River. We do so with a quick look at the tradi‐
tional points courts have consulted.
    The district court determined that Colorado River factors 1,
3, 4, 6, 7, and 10 favored abstention—factors 1, 4, 7, and 10
heavily so. It thought that factors 2 and 9 pointed against ab‐
stention, and that factors 5 and 8 were neutral. We largely
agree with that assessment, as we now explain.
   1. The first inquiry is whether the state court has assumed
      jurisdiction over the property at issue. It is relevant
      only if there is property at issue in both the federal and
      the state proceedings, but that is not the case here.
      While the state foreclosure action concerns property
      rights, the Loughrans’ federal suit concerns fraud and
16                                                     No. 19‐3530

        misconduct. This consideration is thus largely beside
        the point.
     2. The convenience (or lack thereof) of the federal forum
        does not support abstention. The state and federal
        courts here are in close geographical proximity to one
        another and equally convenient.
     3. The interest in avoiding piecemeal litigation supports
        the stay. As the district court noted, the state action will
        likely “dispose of a majority of the factual and legal is‐
        sues presented in this case” and so a stay would save
        judicial resources.
     4. The order in which the two courts obtained jurisdiction
        strongly favors the stay. The state foreclosure action
        began in 2011, and the Loughrans raised allegations of
        standing and fraud at various points between 2014 and
        January 2019. The Loughrans did not file their federal
        action until May 2019. Enough said.
     5. The source of the governing law neither favors nor dis‐
        favors abstention, because the federal action involves
        both federal‐ and state‐law claims.
     6. We next ask whether the federal rights of the plaintiﬀs
        will be adequately protected. As the district court
        noted, because it stayed rather than dismissed the ac‐
        tion, the Loughrans in principle could revive their fed‐
        eral case in the event that certain issues survived the
        resolution of the foreclosure action. See Freed, 756 F.3d
        at 1023. This is so even though the Loughrans may suf‐
        fer from a self‐inflicted wound stemming from their
        voluntary dismissal with prejudice of their state com‐
        plaint against Wells Fargo. The dismissal may aﬀect
No. 19‐3530                                                   17

      the state court’s ability to address that claim, but the
      Loughrans have no one but themselves to thank for
      that. See Lumen, 780 F.2d at 696.
   7. The relative progress of the two proceedings also sup‐
      ports the stay. At the time of the district court’s order,
      the state‐court proceedings were well advanced, while
      the federal action had not progressed beyond the mo‐
      tion‐to‐dismiss stage.
   8. The presence or absence of concurrent jurisdiction
      does not push the needle either way.
   9. Next we look at the availability of removal. The district
      court thought that this weighed against abstention be‐
      cause the Loughrans, Illinois citizens being sued in Il‐
      linois, could not have removed the foreclosure action
      to federal court. See 28 U.S.C. § 1441(b)(2). That much
      is true, but the conclusion is wrong. The unavailability
      of removal favors a stay, because the purpose of this
      factor is to prevent litigants from circumventing the re‐
      moval statute. See Freed, 756 F.3d at 1023.
   10. Finally, there is the vexatious or contrived nature of the
       federal claims. This too favors the stay. Recall that the
       Loughrans tried to have the judge in their state foreclo‐
       sure proceeding removed for cause. Only after the
       judge denied that motion did the Loughrans file the
       federal action. Their complaint frankly reports their
       dissatisfaction with the state‐court proceedings; it as‐
       serts that the state proceedings are unfair and the state
       judge “does not have the time or resources to ade‐
       quately apprise himself of the specifics of the foreclo‐
       sure case.” Other actions also signaled forum‐
18                                                    No. 19‐3530

       shopping. The district court was entitled to infer from
       the Loughrans’ litigation strategy to date that the fed‐
       eral suit is another in a long line of delay tactics meant
       to buy time before foreclosure.
    Looking more broadly at the stay, it is plain that the
Loughrans have been engaged in what we have called “reac‐
tive litigation.” Lumen, 780 F.2d at 693 (cleaned up). These
suits, “filed by one who is a defendant in a prior proceeding
based upon the same factual controversy,” are usually “moti‐
vated by a desire to delay the progress” of the initial proceed‐
ing; “to impose travel burdens on one’s adversary; to take ad‐
vantage of procedural opportunities only available in one fo‐
rum; to obtain the supposed advantages of being a plaintiﬀ;
to avoid perceived prejudice in the initial forum; or to benefit
perceived prejudice in the second forum.” Id. at 693–94.
    The Loughrans respond only that they have not yet suf‐
fered any adverse rulings in the foreclosure action, and so
they cannot be accused of forum shopping. But a court’s de‐
termination that a litigant is motivated by forum shopping
does not require a formal adverse ruling.
    In sum, the district court did not abuse its discretion in
staying the proceedings before it, in deference to the ongoing
state‐court litigation. At its core, the Loughrans’ federal suit
accuses the parties involved in their foreclosure action of en‐
gaging in misconduct during state‐court proceedings. Put
bluntly, they are asking the federal judiciary to monitor and
discipline how parties conduct themselves in state court. This
is a task that extends beyond our role. See Harold v. Steel, 773
F.3d 884, 885–87 (7th Cir. 2014); cf. D.C. Court of Appeals v. Feld‐
man, 460 U.S. 462, 476 (1983); Rooker v. Fid. Trust Co., 263 U.S.
413, 416 (1923). If there has been an abuse of process or
No. 19‐3530                                                   19

misconduct in state court—and we see no evidence of either—
the proper place to turn is the state court itself, which pos‐
sesses the authority to order sanctions or other penalties as
appropriate. That the state court in this case declined to order
sanctions is not a reason for the federal judiciary to intervene.

                               IV
   In addition to contesting the district court’s Colorado River
analysis, the Loughrans raise an argument in the alternative.
Even if we think abstention appropriate, they say, we should
reverse and order a remand because the district court errone‐
ously denied the Loughrans leave to amend their complaint.
    We see no such error. This was a matter within the district
court’s discretion. The Loughrans asked to amend only in a
single sentence at the close of their response to the defend‐
ants’ motion to stay or dismiss. That sentence furnished none
of the necessary details, such as how the amended complaint
would be diﬀerent or which defects it would cure. See Chaidez
v. Ford Motor Co., 937 F.3d 998, 1008 (7th Cir. 2019). Under
these circumstances, the district court’s denial was not an
abuse of discretion.

                               V
    This leaves one final matter for us to address. In its open‐
ing brief, Wells Fargo informed us that the Loughrans had
filed for Chapter 13 bankruptcy shortly after the district court
issued its stay order. The bankruptcy petition had the eﬀect
of automatically staying the state foreclosure proceedings.
See 11 U.S.C. § 362(a). A few days before oral argument, Wells
Fargo informed us that the Loughrans’ bankruptcy case had
20                                                   No. 19‐3530

been dismissed and the automatic stay lifted. See FED. R. APP.
P. 28(j).
   The Loughrans responded with a motion for sanctions and
motion to strike Wells Fargo’s letter on the ground that it was
an inappropriate use of Rule 28(j). That rule, the Loughrans
contend, is for citations to legal authority only, not for inform‐
ing the court about developments in related litigation. The
Loughrans also accused Wells Fargo of raising the bankruptcy
dismissal to “unduly prejudice” them and “mislead and im‐
properly influence the Court just days before oral argument.”
    The Loughrans are making a mountain out of a molehill:
any citation error Wells Fargo may have committed was
harmless. See FED. R. CIV. P. 61. Once formal briefing in an ap‐
peal has concluded, parties are not prohibited from informing
the court of important developments in related court proceed‐
ings (about which we may take judicial notice), so long as
those developments have “a direct relation to the matters at
issue.” United States v. Hope, 906 F.2d 254, 260–61 n.1 (7th Cir.
1990) (internal quotation omitted). Here, because the bank‐
ruptcy petition’s automatic stay of the state foreclosure action
might have aﬀected our analysis, Wells Fargo’s letter was not
improper.
   The judgment of the district court is AFFIRMED, and the
Loughrans’ motion to strike and motion for sanctions are
DENIED.