Nicholas Malfitano Feb. 5, 2016, 11:29am


PHILADELPHIA – The U.S. District Court for the Eastern District of Pennsylvania has ruled an attempt by a Pittsburgh couple to charge a Philadelphia law firm with breach of contract is time-barred, through a doctrine essentially preventing federal court appeals of state court decisions.

Judge Berle M. Schiller concurred with defendants Phelan Hallinan Diamond & Jones and U.S. Bank National Association in citing the Rooker-Feldman doctrine as ensuring the claims brought by plaintiffs David and Kelly Schraven are barred from federal court.

In July 2006, the Schravens borrowed money from Chase Bank USA, N.A. and secured a loan with a $134,100.00 mortgage on their Pittsburgh property, a loan they later defaulted on. Phelan then filed a foreclosure action against the Schravens in the Allegheny County Court of Common Pleas in May 2009, but the Schravens did not defend against the litigation and a $141,660.32 default judgment was entered against them the following August. Later, the Schravens’ property was sold at sheriff’s sale in December 2014.

The Schravens attempted to strike the foreclosure judgement and set aside the sheriff’s sale, but failed. In the instant suit, the Schravens, on behalf of themselves and all others similarly situated, claim the defendants charged and collected attorneys’ fees, interest, and costs in these state court proceedings that “were not authorized by law or permitted by their mortgages.”

But according to the Court, the Rooker-Feldman doctrine effectively nullified all of the claims brought the Schravens.

“The Rooker-Feldman doctrine will apply if four requirements are met: (1) the federal plaintiff lost in state court; (2) the plaintiff complains of injuries caused by the state-court judgment; (3) those judgments were rendered before the federal lawsuit was filed; and (4) the plaintiff is inviting the district court to review and reject the state judgments,” Schiller said.

Schiller said the first and third requirements are moot because the state court rendered its judgments against the plaintiffs before they filed the instant lawsuit.

“The critical question here stems from the second requirement: What is the cause of plaintiffs’ alleged injury?” Schiller inquired.

Schiller stated the Schravens are not able to get around the fact that “a decision in their favor here would necessarily require this Court to decide that the state court got it wrong in granting relief in the underlying mortgage foreclosure action.”

Though the Schravens argued Rooker-Feldman did not apply due to the default judgment levied against them being a “non-judicial” one and their stated objection was only to what transpired after the entry of judgment, their case did not find favor with Schiller.

Schiller said, “There is no doubt that a judgment was entered against the Schravens and that judgment was not stricken or opened at the state court level. The Schravens are wrong to suggest that their alleged injury stems from what they term ‘the prothonotary’s limited, ministerial powers.’ Rather, any alleged injuries arise out of validly entered and enforceable judgments.”

Schiller explained it was not the defendants’ conduct post-judgment that is the cause of any injury, it is the amount of the judgment which the plaintiffs dispute. The federal judge added the plaintiffs were inviting the court to agree with their belief that certain fees and costs were charged against them, a circumstance expressly prohibited by the Rooker-Feldman doctrine.

“Plaintiffs claim that they were improperly charged fees and costs not authorized by their mortgage. A state court proceeding has already affirmed the fees and costs associated with the Schravens’ mortgage,” Schiller said.

“Therefore, this Court cannot agree with plaintiffs’ argument and award relief, without this Court holding that the state court got it wrong and never should have awarded these fees and costs. This the Court cannot do. Accordingly, defendants’ motions to dismiss are granted,” Schiller concluded.

The plaintiffs are represented by Michael P. Malakoff, in Pittsburgh.

The defendants are represented by Daniel S. Bernheim III of Wilentz Goldman & Spitzer plus Henry F. Reichner and Nipun J. Patel of Reed Smith, both in Philadelphia.

U.S. District Court for the Eastern District of Pennsylvania case 2:15-cv-03397

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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