In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 16‐1985
ERIC MAINS,
Plaintiff‐Appellant,
v.
CITIBANK, N.A., et al.,
Defendants‐Appellees.
____________________
Appeal from the United States District Court for the
Southern District of Indiana, New Albany Division.
No. 4:15‐cv‐00036‐SEB‐TAB — Sarah Evans Barker, Judge.
____________________
ARGUED NOVEMBER 2, 2016 — DECIDED MARCH 29, 2017
____________________
Before WOOD, Chief Judge, and POSNER and WILLIAMS, Cir‐
cuit Judges.
WOOD, Chief Judge. Eric Mains has been battling the im‐
pending foreclosure of his home for quite some time. Most re‐
cently, he brought an action in federal court raising various
state and federal law theories, related primarily to alleged
fraudulent activity by the defendants. But the state courts re‐
solved these matters long before he turned to the federal
2 No. 16‐1985
court. Mindful of our limited jurisdiction and the need to re‐
spect the finality of state‐court judgments, we affirm the dis‐
trict court’s dismissal of this case.
I
Mains executed a mortgage on his home with Washington
Mutual (“WAMU”) in December 2006 and made timely pay‐
ments for a little more than two years. WAMU failed in Sep‐
tember 2008, and the Federal Deposit Insurance Corporation
(“FDIC”) became its receiver. Chase Bank (“Chase”) pur‐
chased WAMU’s loans and loan commitments, including
Mains’s mortgage and note. Mains received notice in May
2009 that Chase was the servicer of his loan. (Chase would
later assign the mortgage and note to Citibank in 2010.)
Around the time of WAMU’s demise, Mains began falling
behind on his mortgage payments. He requested loan modi‐
fications from Chase three times in early 2009 and discontin‐
ued his mortgage payments altogether in March of that year.
Chase’s law firm, Nelson & Frankenberger, P.C. (“Nelson”),
sent Mains a default and acceleration notice in June 2009. On
April 20, 2010, Citibank (by now the holder of the paper) filed
a mortgage foreclosure action in the Circuit Court of Clark
County, Indiana. Citibank filed a motion for summary judg‐
ment in August 2010, but it withdrew that motion in Novem‐
ber 2010 because it was under investigation for its alleged im‐
proper foreclosure practices. On February 11, 2013, Citibank
re‐filed its motion, and the state court granted summary judg‐
ment for Citibank on May 3, 2013. Mains appealed on Septem‐
ber 12, 2013, contending that Citibank was not the proper
party to foreclose on the loan and that it had committed fraud
because it was not the real party in interest, yet it instructed
its employees fraudulently to sign documents. The Indiana
No. 16‐1985 3
Court of Appeals affirmed the trial court’s order, and the In‐
diana Supreme Court denied Mains’s motion for transfer on
January 22, 2015.
Mains then turned to the federal courts, filing a rambling,
90‐page complaint on March 20, 2015. He alleged that he had
discovered new evidence of fraud that he could not have pre‐
sented to the state court—specifically, the existence of previ‐
ously undisclosed consent judgments, parties in interest, and
evidence of robo‐signing. He also claimed to have rescinded
his mortgage on February 27, 2015. In addition to Chase and
Citibank, the complaint named a host of others: Cynthia Riley,
a former employee of WAMU; Black Knight Financial In‐
foserv (“Black Knight”), a computer software and form pro‐
vider for Chase; Nelson & Frankenberger, Citibank’s counsel;
Bose McKinney, Citibank’s appellate counsel in the Indiana
foreclosure judgment; and Wyatt, Tarrant & Combs (“Wy‐
att”), Chase’s non‐litigation counsel. The federal complaint al‐
leged violations of a number of federal statutes: the Real Es‐
tate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601–
2617; the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1631–
1651, and “Regulation Z,” 12 C.F.R. § 226; the Fair Debt Col‐
lection Practices Act (“FDCPA”), 15 U.S.C. § 1692–1692p; and
the Racketeer Influenced and Corrupt Organizations Act
(“RICO”), 18 U.S.C. §§ 1961–1968. Mains also brought claims
under Indiana Code § 32‐30‐10.5 (relating to foreclosure pre‐
vention agreements), and state tort law for negligent or inten‐
tional infliction of emotional distress, negligent misrepresen‐
tation, common law fraud, and negligence.
The district court found that Mains’s claims would effec‐
tively nullify the state‐court judgment if resolved in his favor,
and dismissed for lack of subject matter jurisdiction under the
4 No. 16‐1985
Rooker‐Feldman doctrine. See Rooker v. Fidelity Trust Co., 263
U.S. 413 (1923); District of Columbia Court of Appeals v. Feldman,
460 U.S. 462 (1983). We agree with that court that Mains is, in
effect, asking us to overturn the state court’s judgment—an
action we have no jurisdiction to take. The district court indi‐
cated that its dismissal was with prejudice. Because it rests on
a limitation on the federal court’s jurisdiction, however, we
modify it (with minor exceptions described below) to be with‐
out prejudice.
II
The crux of Mains’s argument on appeal is that the district
court erred in dismissing his claims pursuant to Rooker‐Feld‐
man because he discovered evidence of fraud that was not
known to the state court, and it would be unfair in light of that
to hold him to the state court’s judgment.
The Rooker‐Feldman doctrine prevents lower federal courts
from exercising jurisdiction over cases brought by state‐court
losers challenging state‐court judgments rendered before the
district court proceedings commenced. ExxonMobil Corp. v.
Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). It ensures that
lower federal courts do not exercise appellate authority over
state courts. Claims that directly seek to set aside a state‐court
judgment are de facto appeals that trigger the doctrine. Sykes
v. Cook Cnty. Cir. Ct. Prob. Div., 837 F.3d 736, 742 (7th Cir. 2016).
But even federal claims that were not raised in state court, or
that do not on their face require review of a state court’s deci‐
sion, may be subject to Rooker‐Feldman if those claims are
closely enough related to a state‐court judgment. Id.
Another way of expressing the same point is to ask
whether the federal plaintiff is alleging that his injury was
No. 16‐1985 5
caused by the state‐court judgment. Richardson v. Koch Law
Firm, P.C., 768 F.3d 732, 733 (7th Cir. 2014). If the claim alleges
an injury independent of the state‐court judgment that the
state court failed to remedy, Rooker‐Feldman does not apply.
Sykes, 837 F.3d at 742. “In other words, [for Rooker‐Feldman to
apply] there must be no way for the injury complained of by
a plaintiff to be separated from a state court judgment.” Id.
Rooker‐Feldman thus applies where the plaintiff seeks relief
that is tantamount to vacating the state judgment. Taylor v.
Fannie Mae, 374 F.3d 529, 533 (7th Cir. 2004). But if the suit
does not seek to vacate the judgment of the state court and
instead seeks damages for independently unlawful conduct,
it is not barred by Rooker‐Feldman. Johnson v. Pushpin Holdings,
LLC, 748 F.3d 769, 773 (7th Cir. 2014).
Even if Rooker‐Feldman does not bar a claim, when there is
a prior state‐court judgment that appears to cover the same
transaction or the same issues as the later federal case, the
possibility exists that res judicata may apply. In Indiana, as is
commonly the case, res judicata is an affirmative defense.
When the earlier judgment was rendered by a state court, the
Full Faith and Credit Statute, 28 U.S.C. § 1738, “requires [fed‐
eral] courts to give a state court judgment the same preclusive
effect it would have in state court.” Long v. Shorebank Dev.
Corp., 182 F.3d 548, 560 (7th Cir. 1999). In this case, we look to
Indiana law to ascertain the preclusive effect of the earlier
state‐court judgment.
Indiana, like most states, recognizes both claim preclusion
and issue preclusion. Becker v. State, 992 N.E.2d 697, 700 (Ind.
2013); Miller Brewing Co. v. Ind. Dept. of State Revenue, 903
N.E.2d 64, 68 (Ind. 2009). Indiana’s Supreme Court has said
that “[i]n general, issue preclusion bars subsequent litigation
6 No. 16‐1985
of the same fact or issue that was necessarily adjudicated in a
former suit.” Miller, 903 N.E.2d at 68. Indiana courts follow
federal precedents in applying issue preclusion (also com‐
monly referred to as collateral estoppel). Id. The courts ask
two questions: “(1) whether the party in the prior action had
a full and fair opportunity to litigate the issue and (2) whether
it is otherwise unfair to apply collateral estoppel given the
facts of the particular case.” Indianapolis Downs, LLC v. Herr,
834 N.E.2d 699, 705 (Ind. Ct. App. 2005).
In order for issue preclusion to apply under Indiana law,
the rendering court’s decision must be final. Indiana courts
rely on the American Law Institute’s Restatement (Second) of
Judgments, section 13, in making that determination. Miller,
903 N.E. 2d at 68; Johnson v. Anderson, 590 N.E.2d 1146, 1149
(Ind. Ct. App. 1992). As we put it in Haber v. Biomet, Inc., 578
F.3d 553, 556 (7th Cir. 2009), the Indiana courts use a holistic
analysis of finality; they focus “on the nature of the judgment
itself and specifically whether it is sufficiently firm and non‐
tentative.” Under Indiana law, a foreclosure judgment is an
immediately appealable final judgment for the purpose of
preclusion. See Bahar v. Tadros, 123 N.E.2d 189, 189–90 (Ind.
1954).
A
Reading through the verbiage of Mains’s filings, we are left
with the impression that the foundation of the present suit is
his allegation that the state court’s foreclosure judgment was
in error because it rested on a fraud perpetrated by the de‐
fendants. Mains wants the federal courts to redress that
wrong. That is precisely what Rooker‐Feldman prohibits, how‐
ever. If we were to delve into the question whether fraud
tainted the state court’s judgment, the only relief we could
No. 16‐1985 7
give would be to vacate that judgment. That would amount to
an exercise of de facto appellate jurisdiction, which is not per‐
missible. Mains’s remedies lie in the Indiana courts. Indiana
allows a party to file for relief from judgment based on newly
discovered evidence or on the fraud or misrepresentation of
an adverse party, either through a motion or through an inde‐
pendent action. See Ind. R. Trial P. 60(B). The state’s courts are
quite capable of protecting their own integrity.
Mains’s claim under RESPA, 12 U.S.C. §§ 2601–2617, is
somewhat more complex. He seeks an accounting of
payments to determine whether Chase improperly charged
late fees. In that connection, he asserts that the defendants
should not have proceeded to collect on the note before
conducting a proper accounting. That theory, too, is barred by
Rooker‐Feldman. In effect, it is just another way to try to undo
the state court’s foreclosure judgment. To the extent that
Mains may be arguing that he was charged improper late fees
some time in 2008 or 2009, long before the state court acted,
his claim would be independent of the state court’s judgment.
See Iqbal v. Patel, 780 F.3d 728, 730 (7th Cir. 2015). But that does
not help him, because the Indiana court has already
determined the amount due, inclusive of late fees, and we
must give preclusive effect to its decision on these issues. At
best, part of his RESPA claim is beyond our jurisdiction,
because of Rooker‐Feldman, and the remainder has been
definitively resolved by the state courts, and so must be
dismissed on the merits.
B
Mains also claims that Chase and Citibank violated TILA,
15 U.S.C. §§ 1631–1651, by misrepresenting payments due
and his obligations to them. He alleges that the defendants
8 No. 16‐1985
failed to respond to his February 2015 rescission, and that
they provided false information, mishandled payments, and
failed to disclose information prior to foreclosure because
Citibank was not the proper holder and servicer of the loan.
Again, these claims could be sustained only by disregarding
or effectively vacating the state judgment’s judgment of fore‐
closure. The state court determined the amounts due and
Mains’s obligation to pay them, and a lower federal court is
not empowered to second‐guess that decision. Insofar as
Mains alleges he had the right to rescind in 2015, he also runs
into Rooker‐Feldman. The existence of such a right is possible
only if the state court’s prior foreclosure judgment is set aside.
If Mains is making the more modest procedural claim that
he was injured by one or more defendants’ failure to respond
to his “rescission” in a timely manner, we would affirm for a
different reason. It is clear from the pleadings that he executed
his mortgage in 2006, nearly nine years before his alleged re‐
scission. This is long past the maximum three‐year time limit
allowed by TILA for a rescission, see 15 U.S.C. § 1635(f). It also
assumes, counterfactually, that he still had a mortgage to re‐
scind as of February 2015. By then, he had exhausted all state
appeals of his foreclosure judgment, which resolved his obli‐
gations under the mortgage and substituted the court’s judg‐
ment for the note and lien. In short, even if aspects of the TILA
claim fall outside the scope of Rooker‐Feldman, it survives the
jurisdictional bar only to be dismissed on the merits.
C
Mains also alleges that he sustained injuries in the form of
attorney’s fees and clouding of title when he had to defend his
interests, and that a RICO conspiracy by the defendants mis‐
led the state trial court. These theories are also barred by
No. 16‐1985 9
Rooker‐Feldman, because they are dependent upon and inter‐
woven with the state‐court litigation. This part of the case is
similar to Harold v. Steel, in which we held that a plaintiff’s
FDCPA claims premised on false statements were barred by
Rooker‐Feldman. 773 F.3d 884, 886–87 (7th Cir. 2014). We
acknowledged in Harold that there are situations in which a
defendant’s violation of federal statutes during ongoing state‐
court litigation could cause a loss independent of the out‐
come, such as in the case in which a debt collector violates the
venue portion of the FDCPA statute and inflicts an injury by
forcing someone to travel to litigate. But in Harold, the claims
were barred because “[n]o injury occurred until the state
judge ruled against [Appellant]. The need to litigate was not
a loss independent of the state court’s decision; costs of litiga‐
tion were inevitable whether or not [Appellee] was telling the
truth about his client’s rights.” Id. The same is true here.
D
Next, Mains argues that the defendants violated the
FDCPA, 15 U.S.C. § 1692–1692p, by using false, deceptive, or
misleading representations or means to collect money and at‐
tempt to seize his property. He alleges that Chase and Wyatt
in particular ignored his rescission, stated their intent to fore‐
close, and tried to collect a debt that no longer existed due to
his rescission. But, as we noted above, Mains was no longer
able to rescind. In addition, the debt that they tried to collect
was the one authorized by the state foreclosure judgment.
Mains’s injury (if any) and his FDCPA claims against Chase
and Wyatt for their collection attempts after his “rescission”
are therefore not independent of nor extricable from the state‐
court judgment. The district court was correct to disallow
them under Rooker‐Feldman.
10 No. 16‐1985
Mains also alleges that Chase, Black Knight, Nelson, and
Bose McKinney violated the FDCPA prior to the state‐court
foreclosure judgment by trying to collect a debt that they
knew to be invalid because of “defective and falsified docu‐
ments.” These claims, though rather vague and muddled,
might generously be viewed as resting on conduct and injury
that predate the state litigation. Because the FDCPA may pro‐
vide relief that can be granted without setting aside a judg‐
ment of foreclosure, see Long, 182 F.3d at 555–56, they might
not be jurisdictionally foreclosed by Rooker‐Feldman.
But all of these claims do rest on the assertion that Chase
was not authorized to collect from Mains, whether for reasons
of technical defect or fraud. Yet the state court has already es‐
tablished that Chase was authorized to collect the debt, and
we must give preclusive effect to that judgment. Haber, 578
F.3d at 556. As we have said repeatedly, the proper place to
remedy any potential fraud in the state court’s judgment is the
state court. We must accept the state court’s resolution of the
issue, and dismissal on the merits would therefore be appro‐
priate if the federal courts had jurisdiction.
E
In the final analysis, all of Mains’s claims must be dis‐
missed—most under Rooker‐Feldman, and a few for issue pre‐
clusion. “[T]he right disposition, when the Rooker‐Feldman
doctrine applies, is an order under Fed. R. Civ. P. 12(b)(1) dis‐
missing the suit for lack of subject‐matter jurisdiction.” Fred‐
eriksen v. City of Lockport, 384 F.3d 437, 439 (7th Cir. 2004). Such
a dismissal cannot be with prejudice; “that’s a disposition on
the merits, which only a court with jurisdiction may render.”
Id. at 438. A dismissal pursuant to Rooker‐Feldman must there‐
fore be without prejudice.
No. 16‐1985 11
Whether a complaint fails to state a claim, on the other
hand, is a decision on the merits, and thus a dismissal may be
either with or without prejudice. Reed v. Columbia St. Maryʹs
Hosp., 782 F.3d 331, 336 (7th Cir. 2015). Here, issue preclusion
prevents Mains from demonstrating a legal entitlement to re‐
lief, as his claims rely on issues that the state court has already
decided. While issue preclusion is normally an affirmative de‐
fense raised in a motion under Federal Rule of Civil Proce‐
dure 12(c) (judgment on the pleadings) or 56 (summary judg‐
ment), “[a] litigant may plead [himself] out of court by alleg‐
ing (and thus admitting) the elements of a defense … .” U.S.
Gypsum Co. v. Indiana Gas Co., 350 F.3d 623, 626 (7th Cir. 2003).
The defendants moved to dismiss in the district court on res
judicata and 12(b)(6) grounds. Even if they had not done so,
Mains has pleaded himself out of court on any FDCPA, TILA,
and RESPA claims over which the court may have had juris‐
diction. His complaint detailed the state‐court litigation, judg‐
ment, and appeals, and summarized the issues he raised to
the state court in opposing summary judgment. We may
therefore consider these arguments on appeal.
III
Although each of Mains’s federal claims is either barred by
Rooker‐Feldman or fails to state a claim, there is an additional
reason why his suit against defendant Cynthia Riley cannot
go forward. The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (“FIRREA”) divests courts of juris‐
diction over any claim involving an act or omission of a de‐
pository institution placed in receivership by the FDIC until
the claimant has exhausted his administrative remedies.
12 U.S.C. § 1821(d)(13)(D); Farnik v. FDIC, 707 F.3d 717, 720–
21 (7th Cir. 2013).
12 No. 16‐1985
Mains seems to allege that Riley, a former Vice President
of WAMU, fraudulently endorsed his note even though she
was not validly employed (by WAMU? as a Vice President?)
at the time of the alleged endorsement. Or perhaps a better
way to characterize the implication in his complaint is that Ri‐
ley did not endorse his note, and that her purported endorse‐
ment was a forgery. But Mains also alleges in his RICO claim
that Riley acted in her capacity as an employee of WAMU (or,
at least, with the appearance of such an employee), and that
WAMU then transferred the fraudulent note to the FDIC.
Any of Riley’s acts or omissions as an employee and agent
of WAMU taken before the FDIC receivership would be at‐
tributable to WAMU for purposes of liability, and FIRREA
bars a court from considering this claim against WAMU. In‐
sofar as Mains’s complaint alleges that Riley’s signature was a
“blatant forgery,” she is not even the proper party to sue, as
she would not have forged her own signature. The correct
party, we presume, would once again have been WAMU,
which supposedly was responsible for the note’s forgery and
transfer, but FIRREA blocks such an action in the absence of
administrative exhaustion.
IV
When a district court does not have subject‐matter juris‐
diction over federal claims, it cannot exercise supplemental
jurisdiction over any state claims under 28 U.S.C. § 1367. See
e.g., Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182,
1188 (2d Cir. 1996) (“[S]ince a court must have original juris‐
diction in order to exercise supplemental jurisdiction, a dis‐
missal pursuant to Rule 12(b)(1) precludes a district court
from exercising supplemental jurisdiction over related state
claims.”). Insofar as Rooker‐Feldman deprived the district court
No. 16‐1985 13
of jurisdiction over the federal claims, the state claims also
had to be dismissed without prejudice for lack of jurisdiction.
To the extent any of Mains’s theories fall outside the scope of
Rooker‐Feldman, supplemental jurisdiction is possible. None‐
theless, the federal claims were properly dismissed on the
merits at a very early stage, and so the district court properly
could relinquish its jurisdiction over the state claims.
We therefore modify the district court’s judgment to show
that most of Mains’s federal and state law claims are dis‐
missed without prejudice, and the remainder are dismissed
with prejudice. We AFFIRM the judgment as so modified.