Court Opinion

ID: 3040433
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:02:57.859955+00
Date Added: 2024-06-11T07:37:59.750418
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

JOHN HENRICHS; ANNE HENRICHS,           
               Plaintiffs-Appellants,
                 v.
VALLEY VIEW DEVELOPMENT, a
California corporation; FEDERAL               No. 04-56470
DEPOSIT INSURANCE CORPORATION, a
Federal corporation; TIMCOR                    D.C. No.
                                            CV-04-04225-CAS
EXCHANGE CORPORATION, dba
Timcor Financial Corporation;                  OPINION
MARC GELMAN, an individual;
MICHAEL BLAHA, an individual;
GRANADA PLAZA ASSOCIATES LTD.,
a California limited partnership,
              Defendants-Appellees.
                                        
       Appeal from the United States District Court
           for the Central District of California
       Christina A. Snyder, District Judge, Presiding

                  Argued and Submitted
         September 12, 2006—Pasadena, California

                   Filed January 16, 2007

  Before: J. Clifford Wallace, M. Margaret McKeown, and
           Kim McLane Wardlaw, Circuit Judges.

                Opinion by Judge McKeown

                              597
            HENRICHS v. VALLEY VIEW DEVELOPMENT             601
                         COUNSEL

Richard Blasco, Hunt, Ortman, Blasco, Palffy & Rossell, Pas-
adena, California, and F. Glenn Nichols, Law Offices of F.
Glenn Nichols, Pasadena, California, for the appellants.

Barry R. Edwards, Spiegelman & Edwards, Beverly Hills,
California, for appellees Valley View Development and Marc
Gelman.

Kathleen V. Gunning and Mary Riche, Federal Deposit Insur-
ance Corporation, Washington, DC, and Michael H. Bierman,
Luce Forward Hamilton & Scripps, LLP, Los Angeles, Cali-
fornia, for appellee Federal Deposit Insurance Corporation.

Peter L. Weinberger and A. Douglas Mastroianni, Peter L.
Weinberger & Associates, Los Angeles, California, for appel-
lees Michael Blaha and Granada Plaza Associates, Ltd.

                          OPINION

McKEOWN, Circuit Judge:

   This appeal stems from a quiet title action that began in Los
Angeles Superior Court but was resuscitated in federal court
after the California courts ruled against appellants John and
Anne Henrichs (“Henrichs”) on all issues. We consider
whether the district court had subject matter jurisdiction over
Henrichs’ claims arising from a California state court judg-
ment rendered against him. After a series of real estate trans-
actions among Henrichs, Valley View Development (“Valley
View”), Marc Gelman, Michael Blaha, and Granada Plaza
Associates (“GPA”) turned sour, Valley View filed a claim to
quiet title in Los Angeles County Superior Court. Henrichs
cross-claimed, alleging breach of contract and indemnifica-
tion claims. The Superior Court, the California Court of
602         HENRICHS v. VALLEY VIEW DEVELOPMENT
Appeal, and the California Supreme Court all held in favor of
Valley View and denied Henrichs relief on all claims.

   Having extinguished all avenues for relief in the California
courts, Henrichs filed suit in the United States District Court
for the Central District of California. The district court held
that it lacked jurisdiction under the Rooker-Feldman doctrine
to review the state court judgment and Henrichs’ associated
claims and consequently dismissed the action. We now
affirm, albeit on slightly different grounds. At issue is
whether Henrichs’ claims are barred by the Rooker-Feldman
doctrine which, in general terms, prevents “a party losing in
state court . . . from seeking what in substance would be
appellate review of the state judgment in a United States dis-
trict court.” Johnson v. De Grandy, 512 U.S. 997, 1005-06
(1994) (citing District of Columbia Court of Appeals v. Feld-
man, 460 U.S. 462, 482 (1983), Rooker v. Fidelity Trust Co.,
263 U.S. 413, 416 (1923)). Looking at each claim individu-
ally, as we must do, we conclude that two claims are barred
by Rooker-Feldman, one claim fails on mootness grounds,
and another based upon res judicata.

                         BACKGROUND

I.    FACTUAL BACKGROUND

   Although the intricacies of Henrichs’ claims are not before
us, the chronology of events, which includes various convo-
luted transactions, is helpful to understanding the relationship
between the state and federal court actions. Henrichs’ series
of lawsuits arise from a dispute relating to two plots of land
in Granada Hills, California. In 1990, defendant Valley View
owned property in Granada Hills that included two subdivi-
sions, the Balboa lot and the Chatsworth lot. The GPA entity
was formed to purchase only the Chatsworth lot from Valley
View. John Henrichs, Michael Blaha, and Marc Gelman, Val-
ley View’s president and owner, were the original limited
partners in GPA.
            HENRICHS v. VALLEY VIEW DEVELOPMENT             603
   At that time, the final tract map separating the Balboa and
Chatsworth lots had not been recorded. GPA and Valley View
expected this approval would take significant time, and with-
out a final tract map, the Chatsworth lot could not be sold sep-
arately from the Balboa lot. As a result, GPA purchased both
lots from Valley View.

   The parties signed an agreement (the “Ground Lease”) in
which Valley View leased the Balboa lot for one dollar per
year for 99 years from GPA and Valley View received an
option to purchase the lot back from GPA for one dollar when
the final tract map was recorded. The Ground Lease provided
that if Valley View exercised the purchase option, GPA
would convey the Balboa lot to Valley View in fee simple,
free of all liens and encumbrances.

   GPA obtained a construction loan of almost $4 million
from Capital Bank of California to finance construction on the
Chatsworth lot. The loan agreement stated that the entire
property — both lots — was collateral for the loan.

   The final tract map was ultimately recorded in January
1992, and Valley View exercised the option in the Ground
Lease to buy back the Balboa lot. Valley View believed that
it had received title free and clear of any liens, including the
pledge of collateral in the loan from Capital Bank.

  In June 1993, the Federal Deposit Insurance Corporation
(“FDIC”) acquired the loan when it was appointed receiver of
Capital Bank. GPA defaulted on the loan in 1994.

   Following the default, GPA, Gelman, and Blaha agreed that
GPA would pay the FDIC $300,000, and in exchange, the
FDIC would cancel or assign the loan and the accompanying
deed. The agreement (the “FDIC Settlement Agreement”)
contained an indemnification clause and a proviso that bound
all parties to the agreement and their representatives and suc-
cessors. GPA decided that the FDIC should assign the loan
604          HENRICHS v. VALLEY VIEW DEVELOPMENT
and accompanying deed, which occurred through a separate
agreement (the “Assignment Agreement”) in approximately
the following shares: 22% to Henrichs, 12% to Randy Car-
penter, and 66% to Blaha Construction and Development.

II.    PROCEEDINGS IN STATE COURT

    In 1996, Gelman obtained a preliminary title report that
reflected a lien on the Balboa lot. Valley View then demanded
that the assignees of the note — Henrichs, Carpenter, and
Blaha Construction and Development — reconvey the deed to
Valley View to eliminate the lien. When the assignees refused
to reconvey, Valley View filed a state court action to quiet
title to the Balboa lot. Henrichs filed a cross-complaint alleg-
ing causes of action for indemnification under the FDIC Set-
tlement Agreement and breach of contract by GPA, Gelman,
and Blaha for failing to indemnify Henrichs.

   The Los Angeles County Superior Court held that Valley
View owned the Balboa lot free and clear of any encumbrance
based on the Capital Bank loan and rejected Henrichs’ claims
for breach of contract and indemnification. The California
Court of Appeal affirmed, and the California Supreme Court
denied review.

   During the pendency of the proceedings in the state courts,
Valley View sold the Balboa lot for $550,000. Valley View
placed these funds in a trust account with Timcor Exchange
Corporation (“Timcor”) pending the outcome of the state
court action.

III.   PROCEEDINGS IN THE DISTRICT COURT

   Following his loss in state court, Henrichs filed a suit in
federal court. The complaint asserted four claims: 1) a
request for a declaratory judgment voiding the state court
judgment awarding the Balboa lot to Valley View in fee sim-
ple and removing the lien on the property; 2) breach of the
              HENRICHS v. VALLEY VIEW DEVELOPMENT                   605
Assignment Agreement by the FDIC; 3) a claim for indemni-
fication against GPA, Gelman, and Blaha for damages and
legal expenses incurred by the state court litigation; and 4) a
request for an injunction barring Timcor from giving Valley
View the proceeds from the Balboa lot’s sale because, accord-
ing to Henrichs, Valley View was not entitled to those profits.
The district court held that the Rooker-Feldman doctrine
barred all claims and dismissed the action for lack of subject
matter jurisdiction.

                              ANALYSIS

   We affirm the dismissal of Henrichs’ claims.1 We conclude
that the Rooker-Feldman doctrine bars the claim for declara-
tory relief. The claim against the FDIC is moot. The doctrine
of res judicata precludes the claim for indemnity against GPA,
Gelman, and Blaha. Additionally, both Rooker-Feldman and
the Anti-Injunction Act bar the claim for injunctive relief.

   [1] Before delving into a claim-by-claim analysis, we
briefly outline the contours of the Rooker-Feldman doctrine.
The Rooker-Feldman doctrine provides that federal district
courts lack jurisdiction to exercise appellate review over final
state court judgments. Rooker, 263 U.S. at 415-16; Feldman,
460 U.S. at 482 86; Exxon Mobil Corp. v. Saudi Basic Indus.
Corp., 544 U.S. 280, 283-84 (2005). Essentially, the doctrine
bars “state-court losers complaining of injuries caused by
state-court judgments rendered before the district court pro-
ceedings commenced” from asking district courts to review
and reject those judgments. Id. at 284. Absent express statu-
tory authorization, only the Supreme Court has jurisdiction to
reverse or modify a state court judgment. The clearest case for
dismissal based on the Rooker-Feldman doctrine occurs when
  1
   Subject matter jurisdiction is a question of law reviewed de novo.
Sahni v. Am. Diversified Partners, 83 F.3d 1054, 1057 (9th Cir. 1996) (as
amended). We may affirm the dismissal on any ground supported by the
record. Preminger v. Principi, 422 F.3d 815, 820 (9th Cir. 2005).
606         HENRICHS v. VALLEY VIEW DEVELOPMENT
“a federal plaintiff asserts as a legal wrong an allegedly erro-
neous decision by a state court, and seeks relief from a state
court judgment based on that decision . . . .” Noel v. Hall, 341
F.3d 1148, 1164 (9th Cir. 2003).

   [2] Rooker-Feldman does not override or supplant issue
and claim preclusion doctrines. Exxon Mobil, 544 U.S. at 284.
The doctrine applies when the federal plaintiff’s claim arises
from the state court judgment, not simply when a party fails
to obtain relief in state court. Noel, 341 F.3d at 1164-65 (cit-
ing GASH Assocs. v. Village of Rosemont, 995 F.2d 726, 729
(7th Cir. 1993)). Preclusion, not Rooker-Feldman, applies
when “ ‘a federal plaintiff complains of an injury that was not
caused by the state court, but which the state court has previ-
ously failed to rectify.’ ” Noel, 341 F.3d at 1165 (quoting Jen-
sen v. Foley, 295 F.3d 745, 747-78 (7th Cir. 2002)).

I.    DECLARATORY RELIEF CLAIM

   [3] Henrichs argues that the state court exceeded its juris-
diction when it entered judgment against him. The request for
relief is unambiguous. Henrichs asked the district court to
“declare the State Court Judgment void, and enter judgment
in favor of the Henrichs.” Such a claim is squarely barred by
Rooker-Feldman; a request to declare the state court judgment
void seeks redress from an injury caused by the state court
itself. See Noel, 341 F.3d at 1164-65.

   Henrichs attempts to circumvent the jurisdictional bar by
arguing that there was exclusive federal jurisdiction over all
of his claims and thus the state court litigation was improper.
To be sure, a state court judgment entered in a case that falls
within the federal courts’ exclusive jurisdiction may be collat-
erally attacked in a district court. In re Gruntz, 202 F.3d 1074,
1079 (9th Cir. 2000). The difficulty with Henrichs’ argument
is that there was no exclusive federal jurisdiction over the
claims.
             HENRICHS v. VALLEY VIEW DEVELOPMENT               607
   [4] Henrichs grounds the exclusive jurisdiction argument
on the Financial Institutions Reform, Recovery and Enforce-
ment Act of 1989 (“FIRREA”), Pub. L. No. 101-73, 103 Stat.
183 (1989) (codified at various sections of Title 12). He relies
on two provisions of the Act, which establishes the powers
and responsibilities of the FDIC. Id. The first provision states
that no court may grant equitable relief against the FDIC
except as provided by FIRREA. 12 U.S.C. § 1821(j). The sec-
ond provision states that individuals seeking to make claims
that affect assets acquired by the FDIC in its capacity as a
conservator or receiver must exhaust the FDIC’s administra-
tive claims process before seeking judicial review. 12 U.S.C.
§ 1821(d)(13)(D). See Henderson v. Bank of New England,
986 F.2d 319, 320-21 (9th Cir. 1993). Henrichs posits that the
claims affect FDIC interests because the FDIC was the
receiver of the assets of Capital Bank, and the FDIC in turn
assigned the note to Henrichs.

   [5] The jurisdictional bars to state court litigation set out in
FIRREA are not applicable here. Section 1821(j) does not
apply because the FDIC was not a party to the state court liti-
gation. It was Henrichs, not the FDIC, who was ordered to
reconvey the note and deed referencing the Balboa lot.

   [6] Nor does § 1821(d)(13)(D) confer exclusive federal
jurisdiction in this case. If, by citing this provision, Henrichs
means to imply that the statute bars the state court’s adjudica-
tion of the dispute with Valley View, he is mistaken — the
requirement to exhaust administrative remedies applies only
in an action against the FDIC as receiver. 18 U.S.C.
§ 1821(d)(13)(D); see also McCarthy v. FDIC, 348 F.3d
1075, 1080-81 (9th Cir. 2003) (holding that the exhaustion
requirement applies to those who “challenge conduct by the
FDIC as receiver”). At the time of the state court litigation,
the FDIC had no interest in the note because it had already
assigned the note. Although Henrichs attempts to paper over
this fact by claiming that he stepped into the shoes of the
FDIC for the purposes of the state court litigation, the statute
608         HENRICHS v. VALLEY VIEW DEVELOPMENT
does not reach assignees of assets once owned by the FDIC.
Therefore, because the FDIC was neither a party to the state
court lawsuit nor did it retain an interest in the previously-
assigned note, FIRREA does not confer exclusive federal
jurisdiction over Henrichs’ claims.

II.    BREACH OF CONTRACT CLAIM

   Henrichs next asserts a claim for damages against the FDIC
stemming from the FDIC’s alleged breach of the FDIC Settle-
ment Agreement. Although this claim is not necessarily
barred by Rooker-Feldman, it is moot. We — and the district
court — have no jurisdiction over moot claims. United States
v. Geophysical Corp. of Alaska, 732 F.2d 693, 698 (9th Cir.
1984) (as amended).

   [7] To satisfy Article III’s case or controversy requirement,
Henrichs “must have suffered some actual injury that can be
redressed by a favorable judicial decision.” See FDIC v. Koo-
yomjian, 220 F.3d 10, 15 (1st Cir. 2000) (holding that a claim
against a failed bank was moot when the FDIC had deter-
mined there were no assets with which to satisfy the claim)
(emphasis omitted). Henrichs may look only to the assets of
the Capital Bank receivership to satisfy any breach of contract
claim. See First Ind. Fed. Sav. Bank v. FDIC, 964 F.2d 503,
507 (5th Cir. 1992). The receivership distributed all of the
failed bank’s assets and was terminated in January 2001, fully
three years before Henrichs raised the claim. No assets remain
in the receivership to satisfy a late-filed claim, thus rendering
the claim moot. See Maher v. FDIC, 441 F.3d 522, 525-26
(7th Cir. 2006); Kooyomjian, 220 F.3d at 15; Adams v. Reso-
lution Tr. Corp., 927 F.2d 348, 354 (8th Cir. 1991) (holding
that where the Federal Savings and Loan Insurance Corpora-
tion would never possess any assets to satisfy the plaintiff’s
claim, the claim was moot).

III.   INDEMNITY CLAIM

  In the third claim, Henrichs asserts that GPA, Gelman, and
Blaha must indemnify him for his legal expenses because he
              HENRICHS v. VALLEY VIEW DEVELOPMENT                   609
is a successor to the FDIC Settlement Agreement. In state
court proceedings, Henrichs asserted an identical cause of
action for indemnification based on the same FDIC Settle-
ment Agreement and against the same three defendants. The
Los Angeles County Superior Court denied relief, the Califor-
nia Court of Appeal affirmed, and the California Supreme
Court denied review.

   [8] Res judicata prevents the district court from addressing
Henrichs’ indemnity claim. To determine the preclusive effect
of a state court judgment, we look to state law. Sosa v.
DIRECTV, Inc., 437 F.3d 923, 927 (9th Cir. 2006). In Califor-
nia, “[r]es judicata, or claim preclusion, prevents relitigation
of the same cause of action in a second suit between the same
parties or parties in privity with them.” Mycogen Corp. v.
Monsanto Co., 28 Cal. 4th 888, 896 (2002). For purposes of
res judicata, Henrichs’ claim for indemnity has been finally
determined by a court of competent jurisdiction and we may
not revisit it now.2 See Rice v. Crow, 81 Cal. App. 4th 725,
736 (2000).

IV.   INJUNCTION CLAIM

   In the final claim in district court, Henrichs seeks to enjoin
Timcor from giving Valley View the proceeds from the sale
of the Balboa lot. According to Henrichs, the state court judg-
ment giving Valley View the lot in fee simple was void, so
Valley View should not be able to appropriate profits from the
lot’s sale.

   [9] Both the Rooker-Feldman doctrine and the Anti-
Injunction Act, 28 U.S.C. § 2283, bar this claim. Rooker-
  2
   This claim is not barred by Rooker-Feldman because GPA, Gelman,
and Blaha allegedly caused Henrichs’ injury when they failed to indem-
nify Henrichs. Thus, the injury alleged in this claim does not arise from
a state court judgment, but rather from the actions of an adverse party;
hence, Rooker-Feldman does not apply.
610         HENRICHS v. VALLEY VIEW DEVELOPMENT
Feldman applies because the legal injuries Henrichs alleges
arise from the state court’s purportedly erroneous judgment.
As framed by Henrichs, Valley View and Timcor possess
funds from the sale of the Balboa lot only because the state
court erred in awarding Valley View and Timcor that lot in
the first place. Without the state court judgment, Valley View
and Timcor would not have caused injury to Henrichs at all.
Granting the injunction would require the district court to
determine that the state court’s decision was wrong and thus
void. Cf. Exxon Mobil Corp., 544 U.S. at 283-84 (holding that
district courts do not have jurisdiction over cases in which
plaintiffs complain of injuries caused by state court judg-
ments).

   [10] The requested relief also is barred by the Anti-
Injunction Act, which precludes a federal court from granting
“an injunction to stay proceedings in a State court except as
expressly authorized by Act of Congress . . . .” 28 U.S.C.
§ 2283. The Act’s mandate extends not only to injunctions
affecting pending proceedings, but also to injunctions against
the execution or enforcement of state judgments. See Atl.
Coast Line R.R. Co. v. Bd. of Locomotive Eng’rs, 398 U.S.
281, 287-88 (1970). An injunction may not be used to evade
the dictates of the Act if the injunction effectively blocks a
state court judgment. Id.

   [11] The practical effect of the requested injunction would
be to prevent Valley View from alienating the land in fee sim-
ple, which was the purpose of the quiet title action at the out-
set. To grant the relief would undo the effect of three
California courts’ unbroken agreement on the resolution of
the issues Valley View presented and would disregard the
principle of abstention the statute seeks to uphold. Id. at 284-
88.

                         CONCLUSION

   Because the district court lacked jurisdiction over three of
the claims and a fourth claim is barred by res judicata, we
            HENRICHS v. VALLEY VIEW DEVELOPMENT        611
affirm the district court’s dismissal of the action.

  AFFIRMED.