In an opinion issued on Sept. 20 by the United States Bankruptcy Court for the District of New Mexico, Judge David T. Thuma held that the Rooker-Feldman doctrine does not prevent a bankruptcy court from determining whether the automatic stay applies to pending state court litigation. See In re Shook, Case No. 24-10724-t7 (Bankr. N.M. Sept. 20, 2024) [ECF No. 54].
The Rooker-Feldman doctrine bars federal courts, other than the Supreme Court, from reviewing state court orders or judgments. See Rooker v. Fid. Trust Co., 263 U.S. 413 (1923) and D.C. Ct. App. v. Feldman, 460 U.S. 462 (1983).
The doctrine applies to bankruptcy courts. See, e.g., In re Wilson, 116 F.3d 87, 90 (9th Cir. 2000) (“The bankruptcy court is also prohibited from reviewing the state court’s judgment by the Rooker-Feldman doctrine, which prohibits lower federal courts from sitting as effective courts of appeal for state court judgments.”). In general terms, the doctrine holds that federal courts may not sit as courts of appeal for state court orders and judgments the losing party is unhappy with.
Before the court was a motion for reconsideration, a prior ruling that two orders entered in state court litigation violated the stay and were void, even though the state court found that the stay did not apply.
In re Shook, [ECF No. 54], pp. 7-8, in denying the motion, the court stated:
While the court respects and follows the Rooker-Feldman doctrine, it does not apply here. It is universally acknowledged that Rooker-Feldman does not prevent a bankruptcy court from determining whether the automatic stay applies to pending state court litigation.
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Thus, while state courts may determine their jurisdiction by deciding whether the automatic stay applies to an action before them, if the state court errs in finding that the automatic stay does not apply, the bankruptcy court is not bound by the error.
Other courts, however, have applied the Rooker–Feldman doctrine and found no exceptions for the bankruptcy court to review a state court's determination of the applicability of the automatic stay because state courts have concurrent jurisdiction. See, e.g., In re Singleton, 230 B.R. 533 (6th Cir. BAP 1999) (state court determination that bankruptcy order staying sale of debtor’s personal property did not apply to other property of the debtor was not subject to collateral attack by a federal court because no exception to Rooker–Feldman applied); In re Siskin, 258 B.R. 554 (Bankr.E.D.N.Y.2001) (same); In re Glass, 240 B.R. 782 (Bankr.M.D.Fla.1999) (same).
Nevertheless, the Shook decision does appear to present the modern (if not majority) rule on this issue.
