NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted August 14, 2008*
Decided August 15, 2008
Before
RICHARD D. CUDAHY, Circuit Judge
DANIEL A. MANION, Circuit Judge
JOHN DANIEL TINDER, Circuit Judge
No. 08‐1172
STEVEN D. DYE, Sr., and PATRICIA L. Appeal from the United States District
DYE, Court for the Eastern District of
Plaintiffs‐Appellants, Wisconsin.
v. No. 07 C 430
AMERIQUEST MORTGAGE Rudolph T. Randa,
COMPANY and AUSSPRUNG & Chief Judge.
ASSOCIATES APPRAISALS, LTD.,
Defendants‐Appellees.
O R D E R
Steven and Patricia Dye refinanced their home with Ameriquest Mortgage Company
and, after making two scheduled monthly payments, defaulted on the loan. Ameriquest
responded by obtaining a judgment of foreclosure in Wisconsin state court. The Dyes then
sought bankruptcy protection in the Eastern District of Wisconsin and instituted an
adversary proceeding against Ameriquest and Aussprung & Associates Appraisals, Ltd. ,
the company that Ameriquest had hired to appraise the Dyes’ home. The bankruptcy court
*
After examining the briefs and the record, we have concluded that oral argument is
unnecessary. Thus, the appeal is submitted on the briefs and the record. See FED. R. APP. P.
34(a)(2).
No. 08‐1172 Page 2
granted summary judgment in favor of Ameriquest and Aussprung. The parties cross‐
appealed to the district court, which affirmed the bankruptcy court’s dismissal of the Dyes’
adversary action on both the merits and on Rooker‐Feldman grounds. We affirm on the
alternative grounds offered by the district court: claim preclusion and limitations.
The material facts in this case are not in dispute. In November 2002 Ameriquest
solicited the Dyes to refinance their home. The Dyes agreed, and Ameriquest hired
Aussprung to appraise the Dye’s property. Aussprung valued the Dye’s property at
$245,000. Ameriquest informed the Dyes of the appraisal, and on December 24, 2002, the
Dyes entered into a loan agreement with Ameriquest. Under that agreement Ameriquest
loaned the Dyes $220,500, and the Dyes were required to make monthly loan payments of
$1,695.46 for thirty years beginning in February 2003. At closing Ameriquest notified the
Dyes of their right to rescind within three days, as required by 15 U.S.C. § 1635(a), and gave
them a document called “Truth In Lending Disclosure,” which disclosed the rate, finance
charge, amount financed, total of payments, and payment schedule for the loan. The Dyes
also received a written guarantee that, according to Ameriquest’s “best practices,” they
would be able to cancel the loan within seven days after closing.
The Dyes made only the first two payments on their loan, and consequently in
September 2003, Ameriquest initiated a foreclosure action in Wisconsin state court. The
Dyes counterclaimed, alleging that Ameriquest used an inflated appraisal to gain a higher
interest rate and closing costs, and delayed the closing date by one month. The state court
entered a judgment of foreclosure in June 2004 and dismissed the Dyes’ counterclaims for
failure to state a claim under Wisconsin law. The Court of Appeals of Wisconsin affirmed.
The Dyes petitioned for bankruptcy in October 2005, and shortly thereafter they
commenced an adversary proceeding against Ameriquest and Aussprung. The Dyes
alleged that Ameriquest violated the Truth in Lending Act (TILA) by submitting confusing
disclosures regarding the time period for rescinding the loan agreement and maintained
that they are entitled to rescind the loan. They asked the court to void Ameriquest’s interest
in their home and also sought damages. Against Aussprung the Dyes claimed that the
appraiser was negligent for failing to appraise their home accurately.
The parties all moved for summary judgment. The bankruptcy court granted
Ameriquest’s motion on the ground that even if the three‐year statute of repose for TILA
applied, 15 U.S.C. § 1635(a), the Dyes did not attempt to rescind the loan agreement until
January 31, 2006, over three years after the closing of the loan, and that equitable tolling
should not apply. The parties cross‐appealed to the district court. The district court
concluded that Rooker‐Feldman barred federal jurisdiction because, in its view, the Dyes’
alleged injuries arose from the foreclosure action, and that, alternatively, the Dyes’ claims
No. 08‐1172 Page 3
were barred by claim preclusion and TILA’s three‐year statute of repose. Finally, the court
concluded that since the Dyes had stipulated that their negligence claim against Aussprung
would be dismissed for lack of jurisdiction if the TILA claims were dismissed, the question
whether the Dyes stated a negligence claim against Aussprung was moot.
The Dyes’ arguments on appeal are hard to discern, but it appears that the Dyes
believe that the Rooker‐Feldman doctrine and claim preclusion should not apply because the
Dyes never brought their TILA claims in state court. We review de novo the district court’s
decisions that it lacked subject matter jurisdiction and that the Dyes’ claims were barred by
the defenses of claim preclusion and time limitations. In re Globe Bldg. Materials, Inc., 463
F.3d 631, 632 (7th Cir. 2006); Brokaw v. Weaver, 305 F.3d 660, 664 (7th Cir. 2002).
We address federal jurisdiction first. The Rooker‐Feldman doctrine provides that only
the Supreme Court of the United States has jurisdiction to review a state court judgment.
Brokaw, 305 F.3d at 664; see also D.C. Court of Appeals v. Feldman, 460 U.S. 462, 482 (1983);
Rooker v. Fidelity Trust Co., 263 U.S. 413, 416 (1923). If a federal plaintiff seeks to set aside a
state court judgment, the doctrine precludes jurisdiction over that challenge as well as any
claims that are “inextricably intertwined” with that state court judgment. Taylor v. Fed. Nat’l
Mortgage Ass’n, 374 F.3d 529, 532‐33 (7th Cir. 2004). If, however, the plaintiff is presenting
an independent claim, federal courts can exercise jurisdiction. Id.
We think that the district court applied the Rooker‐Feldman doctrine too broadly. The
Dyes do not simply claim that they were injured by the foreclosure judgment. They claim
that the defendants injured them six months earlier—at the time of the closing of their
mortgage—by, as the Dyes allege, confusing them with disclosures that did not comply
with TILA and using an inflated appraisal. Because the Dyes’ alleged injury was complete
before the state court litigation even commenced, Rooker‐Feldman is not at play. See Long v.
Shorebank, 182 F.3d 548, 556 (7th Cir. 1999) (Rooker‐Feldman inapplicable to injuries that
precede the state court judgment). This is true even though the Dyes “deny the correctness
of the [foreclosure] order in pursuing these claims.” Id. Thus, this case is unlike Taylor, 374
F.3d at 529, on which the district court relied, where the homeowner alleged that, during the
litigation itself, the defendant committed a fraud on the state court.
We turn now to whether claim preclusion bars the Dyes’ claims against Ameriquest.
Under the Full Faith and Credit Act, 28 U.S.C. § 1738, we apply the Wisconsin law of claim
preclusion, see In re Dollie’s Playhouse, Inc., 481 F.3d 998, 1000 (7th Cir. 2007). That law bars
relitigation of a claim brought in an earlier suit if there was: (1) a final judgment on the
merits; (2) identity of the parties or privies; and (3) identity of the claims between the two
suits. Kruckenberg v. Harvey, 694 N.W.2d 879, 885 (Wis. 2005). In this case, the first and
second prongs apply to the Dyes’ claims against Ameriquest because the state court
No. 08‐1172 Page 4
proceedings resulted in a final judgment of foreclosure, and the Dyes and Ameriquest were
both parties to that action. Thus we need only consider whether there is an identity
between the claims in state court and federal court.
Under Wisconsin law’s “transactional approach,” a claim covers “all or any part of
the transaction, or series of connected transactions, out of which the action arose.”
Kruckenberg, 694 N.W.2d at 886. The transactional approach focuses on the similarity of the
facts in the two lawsuits rather than their legal theories See Levin v. Bd. of Regents of the Univ.
of Wis. Sys., 668 N.W.2d 779, 782 (Wis. Ct. App. 2003) (citing Northern States Power Co. v.
Bugher, 525 N.W.2d 723, 729 (Wis. 1995)). When the claims in the two suits are based on the
same transaction, and the other two prongs are satisfied, claim preclusion bars any
challenge that was or even could have been brought in the earlier action. Levin v. Bd. of
Regents of the Univ. of Wis. Sys. , 668 N.W.2d 779, 782 (Wis. Ct. App. 2003) (citing Northern
States Power Co. v. Bugher , 525 N.W.2d 723, 729 (Wis. 1995)).
We agree with the district court that the Dyes’ claims against Ameriquest in the
bankruptcy court arise from the same transaction as in the state court foreclosure action and
are barred by claim preclusion. The Dyes’ claims under TILA arise from the same
commercial event—the home loan—that was the basis of the foreclosure action. TILA
claims may be brought in either state or federal court, see 15 U.S.C. § 1640(e), and nothing
prevented the Dyes from challenging during the foreclosure action the disclosures that
Ameriquest provided to them or attempting at that time to rescind the loan on that basis.
Accordingly the Dyes’ suit is subject to claim preclusion.
Furthermore, apart from claim preclusion, the Dyes’ claims are time‐barred. The
Dyes did not file their adversary action until January 31, 2006, more than three years after
they closed their loan on December 24, 2002. See 15 U.S.C. § 1635(f); see also Beach v.Ocwen
Fed. Bank, 523 U.S. 410, 411‐12 (1998). In Beach, the Supreme Court held that “§ 1635(f)
completely extinguishes the right of rescission at the end of the 3‐year period.” Although
the Dyes argued in bankruptcy court that the three‐year period should be tolled based on
class action litigation against Ameriquest, they did not raise this argument on appeal.
Consequently they have failed to show that the doctrine of legal tolling is applicable. See
FED. R. APP. P. 28(a)(9).
As to the Dyes’ negligence claim against Aussprung, once the district court decided
that the federal claims were unavailable, it properly declined to exercise supplemental
jurisdiction over that claim. See Neff v. Capital Acquisitions & Mgmt. Co., 352 F.3d 1118, 1122
(7th Cir. 2003).
AFFIRMED