Court Opinion

ID: 2737651
Source: CourtListenerOpinion
Date Created: 2014-09-26 21:01:18.171085+00
Date Added: 2024-06-11T12:08:02.982424
License: Public Domain

In the

      United States Court of Appeals
                      For the Seventh Circuit
                           ____________________  

No.  12-­‐‑3868  
SCOTT  IAN  RICHARDSON,  
                                                                Plaintiff-­‐‑Appellant,  
                                           v.  

THE  KOCH  LAW  FIRM,  P.C.,  
                                                               Defendant-­‐‑Appellee.  
                           ____________________  

            Appeal  from  the  United  States  District  Court  for  the  
            Southern  District  of  Indiana,  Indianapolis  Division.  
       No.  1:12-­‐‑cv-­‐‑00631-­‐‑JMS-­‐‑TAB  —  Jane  Magnus-­‐‑Stinson,  Judge.  
                           ____________________  

 ARGUED  SEPTEMBER  22,  2014  —  DECIDED  SEPTEMBER  26,  2014  
                 ____________________  

   Before   WOOD,   Chief   Judge,   and   EASTERBROOK   and   SYKES,  
Circuit  Judges.  
    EASTERBROOK,  Circuit  Judge.  Scott  Richardson  incurred  an  
educational  debt  in  1988  but  did  not  pay.  Indiana  University,  
the  creditor,  filed  suit  in  May  1998,  in  state  court,  and  a  trial  
was   scheduled   for   September   7,   2000.   Richardson   filed   a  
bankruptcy  petition  on  September  1  but  did  not  tell  the  state  
court,  the  University,  or  The  Koch  Law  Firm,  P.C.,  its  coun-­‐‑
sel.  Nor  did  he  appear  for  trial.  The  state  judge  entered  a  de-­‐‑
2                                                                  No.  12-­‐‑3868  

fault  judgment,  which  the  Law  Firm  tried  unsuccessfully  to  
collect.  Now  Richardson  says  that  the  Law  Firm  should  pay  
him   for   violating   two   sections   of   the   Fair   Debt   Collection  
Practices  Act,  15  U.S.C.  §§  1692e,  1692f,  by  trying  to  enforce  a  
judgment  that  had  been  entered  in  violation  of  the  automatic  
stay  under  the  Bankruptcy  Code,  11  U.S.C.  §362.  
    After   learning   about   the   bankruptcy,   the   Law   Firm  
stopped  trying  to  collect  the  judgment.  The  bankruptcy  end-­‐‑
ed  in  June  2001,  and  the  Law  Firm  went  back  to  work,  rely-­‐‑
ing   on   11   U.S.C.   §523(a)(8),   which   makes   most   educational  
debts   nondischargeable.   Richardson   filed   a   second   bank-­‐‑
ruptcy  proceeding  in  January  2002.  It  lasted  until  April  2007.  
Once   again   the   Law   Firm   desisted   during   the   bankruptcy’s  
duration   and   tried   to   collect   after   its   end.   Those   post-­‐‑2007  
efforts  form  the  basis  of  Richardson’s  current  claim.  
     The  district  court  treated  this  suit  as  a  collateral  attack  on  
the  state  court’s  judgment  and  dismissed  it  for  want  of  juris-­‐‑
diction,  invoking  the  Rooker-­‐‑Feldman  doctrine.  2012  U.S.  Dist.  
LEXIS   167064   (S.D.   Ind.   Nov.   26,   2012).   See   Rooker   v.   Fidelity  
Trust  Co.,  263  U.S.  413  (1923),  and  District  of  Columbia  Court  of  
Appeals  v.  Feldman,  460  U.S.  462  (1983).  These  decisions  hold  
that  the  Supreme  Court  of  the  United  States  is  the  only  fed-­‐‑
eral  court  that  may  review  judgments  entered  by  state  courts  
in  civil  litigation.  The  Rooker-­‐‑Feldman  doctrine  applies  when  
the   state   court’s   judgment   is   the   source   of   the   injury   of  
which   plaintiffs   complain   in   federal   court.   See   Exxon   Mobil  
Corp.  v.  Saudi  Basic  Industries  Corp.,  544  U.S.  280,  293  (2005);  
GASH   Associates   v.   Rosemont,   995   F.2d   726,   728   (7th   Cir.  
1993).  Richardson  maintained  that  the  source  of  his  injury  is  
the   Law   Firm’s   effort   to   collect   the   judgment,   not   the   judg-­‐‑
ment’s  bare  existence,  but  the  district  judge  saw  this  as  a  se-­‐‑
No.  12-­‐‑3868                                                                    3  

mantic   difference   only   and   wrote   that   a   claim   “inextricably  
intertwined”  with  a  state  court’s  judgment  remains  covered  
by  Rooker-­‐‑Feldman.  
    We   are   skeptical   about   the   wisdom   of   asking   whether  
something   is   “intertwined”   (“inextricably”   or   extricably)  
with   a   state   court’s   judgment.   Lower   courts   in   both   Saudi  
Basic  Industries  and  Lance  v.  Dennis,  546  U.S.  459  (2006),  add-­‐‑
ed  an  “inextricably  intertwined”  rider  to  the  Rooker-­‐‑Feldman  
doctrine  and  were  reversed  for  their  troubles.  Courts  should  
stick  with  the  doctrine  as  stated  in  Saudi  Basic  Industries.  But  
we   need   not   pursue   this   matter,   because   legal   activity   con-­‐‑
tinued  after  the  district  court’s  decision.  
     Richardson   asked   the   bankruptcy   court   to   reopen   the  
2000   bankruptcy   proceeding   and   declare   the   state   court’s  
judgment  “void.”  The  bankruptcy  judge  granted  the  motion  
to  reopen  and  stated  that  the  judgment  is  “invalid”  (though  
not   “void”)   but   did   not   enjoin   its   enforcement   or   award  
damages  under  11  U.S.C.  §362(k)(1).  See  497  B.R.  546  (Bankr.  
S.D.   Ind.   2013).   Instead   the   judge   concluded   that   any   claim  
for   damages   based   on   efforts   to   enforce   the   judgment   be-­‐‑
longs   to   a   trustee   in   bankruptcy,   for   the   benefit   of   Richard-­‐‑
son’s  creditors.  Observing  that  Richardson  had  failed  to  de-­‐‑
clare  any  monetary  claim  based  on  the  state-­‐‑court  judgment  
as  an  asset  in  the  2002  bankruptcy,  the  judge  concluded  that  
estoppel   prevents   Richardson   from   trying   to   collect   for   his  
own   benefit.   See   Cannon-­‐‑Stokes   v.   Potter,   453   F.3d   446   (7th  
Cir.  2006).  Richardson  did  not  appeal  to  a  district  judge.  
     After  the  bankruptcy  judge’s  decision,  Indiana  Universi-­‐‑
ty  asked  the  state  court  to  vacate  its  own  judgment.  On  Jan-­‐‑
uary   28,   2014,   the   state   court   obliged.   As   a   result,   the   basis  
4                                                                  No.  12-­‐‑3868  

for   the   district   court’s   dismissal   under   Rooker-­‐‑Feldman   no  
longer  exists.  
    Demonstrating  appalling  judgment,  neither  side  brought  
this  development  to  our  attention,  although  both  sides  filed  
their   appellate   briefs   after   the   state   court   vacated   its   judg-­‐‑
ment.   Because   that   step   affects   subject-­‐‑matter   jurisdiction,  
counsel   for   both   sides—Ruberry,   Stalmack   &   Garvey,   LLC,  
representing  the  Law  Firm,  and  Richardson,  a  member  of  the  
bar   representing   himself—had   an   ethical   duty   to   alert   the  
court.   Yet   until   the   judges   asked   pointed   questions   at   oral  
argument,   neither   side   was   forthcoming.   Richardson   even  
professed   not   to   know   the   status   of   the   state   judgment   to  
which  he  was  a  party.  That  assertion  is  hard  to  credit,  for  the  
state  court’s  order  shows  that  it  was  sent  to  Richardson.  But  
apportioning   blame   gets   us   nowhere.   What   matters   now   is  
that   the   rug   has   been   pulled   out   from   under   the   district  
court’s  decision.  
     In  addition  to  relying  on  a  state-­‐‑court  judgment  that,  by  
the   time   of   briefing,   no   longer   existed,   the   Law   Firm   asked  
us   to   affirm   on   the   bankruptcy   judge’s   ground—that   any  
claim   belongs   to   the   estate   in   bankruptcy   for   the   benefit   of  
Richardson’s   creditors,   not   to   Richardson   personally.   The  
Law   Firm   made   this   argument   to   the   district   court   too,   but  
the   court   did   not   reach   it   given   its   reliance   on   the   Rooker-­‐‑
Feldman  doctrine.  A  prevailing  party  is  entitled  to  defend  its  
judgment  on  any  ground  preserved  in  the  district  court.  See  
Massachusetts   Mutual   Life   Insurance   Co.   v.   Ludwig,   426   U.S.  
479   (1976).   Richardson   did   not   bother   to   file   a   reply   brief,  
and  it  became  apparent  at  oral  argument  that  he  is  unaware  
of  the  rule  stated  in  Ludwig—a  rule  that  Morley  Construction  
Co.   v.   Maryland   Casualty   Co.,   300   U.S.   185,   191   (1937),   called  
No.  12-­‐‑3868                                                                  5  

“inveterate   and   certain”.   Richardson   thus   forfeited   his   op-­‐‑
portunity  to  contest  this  issue.  
      Richardson  did  not  pay  his  debt  when  it  was  due  in  1988  
(and   still   has   not   done   so,   although   it   has   not   been   dis-­‐‑
charged);  he  did  not  alert  the  Law  Firm  (or  the  state  court)  to  
his   bankruptcy   petition   in   2000;   he   did   not   appear   for   trial;  
he   filed   a   motion   to   vacate   the   state   judgment   and   lost   be-­‐‑
cause   he   did   not   show   up   to   argue   when   it   was   scheduled  
for   presentation;   he   did   not   appeal   the   bankruptcy   court’s  
decision  of  August  2013;  he  did  not  file  a  reply  brief;  he  did  
not  tell  us  about  the  vacatur  of  the  state  court’s  judgment.  It  
is  hard  to  see  how  someone  so  deficient  in  the  defense  of  his  
own  interests  could  be  an  effective  advocate  for  the  interests  
of  clients.  And  it  turns  out  that  he  has  not  been;  Indiana  has  
suspended  Richardson  from  practice  at  least  three  times.  See  
In   re   Richardson,   875   N.E.2d   700   (Ind.   2007)   (suspension   for  
abandoning  clients;  recounting  earlier  discipline);  In  re  Rich-­‐‑
ardson,   792   N.E.2d   871   (Ind.   2003)   (suspension   for   lying   in  
discovery,   hiding   assets,   and   abuse   of   legal   process).   Rich-­‐‑
ardson   is   on   notice:   misfeasance   or   nonfeasance   in   federal  
litigation   will   lead   to   professional   discipline.   See   Fed.   R.  
App.  P.  46(c).  
    The   judgment   of   the   district   court   is   modified   to   be   on  
the  merits,  rather  than  for  lack  of  subject-­‐‑matter  jurisdiction,  
and  as  modified  is  affirmed.