Cooley v. WACHOVIA MORTGAGE CORPORATION et al

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re : Chapter 13
ROBERT R. COOLEY :
Debtor : Case No. 06-11586 (JKF)
______________________________
ROBERT R. COOLEY :
Plaintiff :
v. :
WACHOVIA MORTGAGE COMPANY, : Adversary No. 06-0279
CHASE MANHATTAN MORTGAGE
CORPORATION, and :
FIRST FINANCIAL MORTGAGE GROUP,
INCORPORATED :
Defendants :
______________________________
MEMORANDUM OPINION
BY: JEAN K. FITZSIMON
United States Bankruptcy Judge
Chase Manhattan Mortgage Company and W achovia Bank, N.A. , as
Trustee and successor in interest to First Financial Mortgage Group, Inc., moved
to dismiss the complaint filed by debtor/plaintiff, Robert R. Cooley, in the above-
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 1 of 27

Incorporated by reference into the Motion is the Memorandum of Law of1
Chase Manhattan Mortgage Corporation and W achovia Bank, N.A., as Trustee,
as Successor in Interest to First Financial Mortgage Group, Inc., in Support of
Motion to Dismiss Complaint of Robert R. Cooley.
2
captioned proceeding. The Complaint contains two counts. Count I asserts a1
claim for rescission and related damages under the Truth-in-Lending Act (“TILA”),
15 U.S.C. §§1601 et seq.; Count II alleges a claim for damages under the Real
Estate Settlement Practices Act (“RESPA”), 12 U.S.C. §§ 2601 et seq.
The major thrust of the Motion is that Debtor’s claims should be dismissed
based on the Rooker-Feldman doctrine because a mortgage foreclosure
judgment was entered against him in state court. This particular argument for
dismissal with regard to rescission claims recently was presented to and
addressed by three other bankruptcy judges in this district with regard to
rescission claims. See Madera v. Ameriquest Mortgage Co. (In re Madera),
___ B.R. ___, 2007 WL 521323, at *4-*6 (Bankr. E.D. Pa. Feb. 8, 2007)
(Sigmund, J) (TILA); Randall v. Bank One National Association (In re Randall),
___ B.R. ___, 2006 W L 3833919, at *2-*10 (Bankr. E.D. Pa. Nov. 1, 2006) (Fox,
J.) (TILA); Faust v. Deutsche Bank National Trust Company (In re Faust), 353
B.R. 94, 100 (Bankr. E.D. Pa. 2006) (Raslavich, J.) (the Unfair Trade Practices
and Consumer Protection Law, 73 P.S. §201-1 et seq.). All three judges applied
the Rooker-Feldman doctrine in favor of the mortgagee defendants in their cases.
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 2 of 27

State courts have concurrent jurisdiction with the federal court over TILA2
rescission claims. See R.G. Financial Corp. v. Vergara-Nunez, 446 F.3d 178,
184 (1st Cir. 2006) (recognizing that “state courts possess concurrent jurisdiction
over TILA claims[.]”); Gandy v. The Peoples Bank and Trust Co., 224 B.R. 340,
344 (S.D. Miss. 1998) (“Under the TILA, federal and state courts have concurrent
jurisdiction.”); Stokes v. Twin City Motors, Inc., 490 F. Supp. 742, 744 (E.D. Ark.
1980) (holding that concurrent jurisdiction of TILA claims is vested by the Act in
state courts of competent jurisdiction.”); see also 15 U.S.C. §1640(e) (granting
jurisdiction to any federal district courts and any court of competent jurisdiction).
Consequently, this Court’s dismissal of Debtor’s TILA rescission claim does not
necessarily prevent Debtor from pursuing his claim; it only requires him to pursue
it in state court.
3
Judge Raslavich issued his published decision in Faust shortly after my
hearing on the Motion. In light of Judge Raslavich’s decision, Debtor requested
permission for the parties herein to file supplemental memoranda on the Rooker-
Feldman doctrine. This Court granted the request and the parties filed their
supplemental memoranda. Consequently, in rendering our decision, the Court
has the benefit of the parties’ additional views on this issue.
For the reasons set forth below, the Motion shall be granted in part. Count I
of the Complaint shall be dismissed based on the Rooker-Feldman doctrine.2
The Motion shall be denied as to Count II since it states a claim upon which relief
may be granted.
BACKGROUND
On October 20, 2003, Debtor obtained a loan from First Financial to
refinance the outstanding mortgage secured by his residence. See Complaint ¶5.
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 3 of 27

As exhibits to Defendants’ Memorandum, W achovia and Chase attached3
copies of the following items from W achovia’s mortgage foreclosure action
against Debtor: (i) docket report [Exhibit “A”]; (ii) Notice of the Judgment by
Default [Exhibit “B”]; and (iii) the Assessment of Damages and Entry of Judgment
[Exhibit “C”]. Plaintiff has not objected to my consideration of these exhibits. In
any event, I may consider them in conjunction with the Motion because they are
matters of public record. See infra text at 6-7.
4
The loan was secured by a mortgage on Debtor’s residence. Id. ¶¶3, 10-16.
W achovia is the current holder of this mortgage and loan. Id. ¶¶4, 10.
On October 1, 2004, W achovia filed a mortgage foreclosure action in the
state court, captioned Wachovia Bank, N.A. v. Cooley, No. 04-07858. See
Exhibit “A” to Defendants’ Memorandum. On January 21, 2005, the State Court3
entered a default judgment against Debtor in the amount of $160,760.18. See
Exhibits A & B to Defendants’ Memorandum.
On April 19, 2006, Debtor filed the above-captioned bankruptcy case under
Chapter 13 of the Bankruptcy Code. On May 5, 2006, Chase filed a proof of
claim on behalf of W achovia. Chase listed the principal balance owed on the
secured claim as $140,892.50 and the arrearage, as of the date upon which
Debtor filed his petition, as $51,963.65. See Exhibit F to the Complaint.
On May 22, 2006, Debtor commenced the instant adversary proceeding by
filing the Complaint against W achovia, Chase and First Financial Mortgage
Group (the original lender on the loan). See Complaint ¶¶ 4-5. Count I of the
Complaint asserts a claim against defendants for rescission and related damages
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 4 of 27

Wachovia and Chase also argue that Count I is precluded under res4
judicata and collateral estoppel principles. It is unnecessary for this Court to
resolve these issues because we conclude, based on the Rooker-Feldman
doctrine, that we do not have subject matter jurisdiction over Debtor’s claim for
rescission in Count I.
5
under TILA. Count II asserts a claim for damages, solely against Chase, for
failing to respond to Debtor’s alleged “qualified written request” (“QW R”) for
information regarding the loan as required by RESPA.
In the Complaint, Debtor alleges, among other things, that:
(i) The loan papers contained inaccurate
disclosures and material non-disclosures in
violation of TILA entitling him to rescind the
loan, see Complaint ¶¶ 6-7, 13-16;
(ii) Debtor’s counsel forwarded a letter to
W achovia and Chase on or about May 1,
2006, rescinding the loan under TILA,
see id. ¶8; and
(iii) The rescission letter constituted a QWR
under RESPA requesting information
regarding the loan, see id.
In the Complaint, Debtor made no mention of, or reference to, the foreclosure
action or judgment.
On June 22, 2006, Chase and W achovia filed their Motion, arguing that:
(i) Counts I (TILA) and II (RESPA) should be
dismissed for lack of subject matter
jurisdiction based on the Rooker-Feldman
doctrine;4
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 5 of 27

Rule 12 is incorporated herein pursuant to Fed.R.Bank.P. 7012.5
6
(ii) Debtor’s claim for rescission in Count I is
precluded by collateral estoppel; and
(iii) Count II should be dismissed because
Chase responded to Debtor’s alleged
QW R.
See Memorandum.
DISCUSSION
I. STANDARD OF REVIEW
In the Motion, defendants seek to have the Complaint dismissed pursuant
to Rule 12 of the Federal Rules of Civil Procedure based on lack of subject matter
jurisdiction and failure to state a claim upon which relief can be granted. See
Fed.R.Civ.P. 12(b)(1) & (b)(6). Courts distinguish between “facial” and “factual”5
attacks on subject matter jurisdiction. United States v. Pennsylvania
Shipbuilding Co., 473 F.3d 506, 514 (3d Cir. 2007). Courts review a “facial”
attack based on the parties’ pleadings but may look beyond the pleadings and
consider affidavits and other evidence submitted by the parties in determining
whether jurisdiction exists when ruling upon a “factual” attack. Taylor v. W hyy,
Inc., 2006 W L 2711748, at *2 (E.D. Pa. Sept. 20, 2006). This court shall treat the
Motion as raising a “facial” attack. In ruling on defendants’ motion to dismiss for
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 6 of 27

W hile this Court treats the Motion as asserting a facial attack on6
jurisdiction, we would rule in the same way if we treated the Motion as raising a
factual attack. Debtor has not contended that the exhibits attached to the Motion
are inaccurate or denied the existence of the foreclosure judgment.
Consequently, in ruling on a factual attack, we would accept as undisputed the
fact that W achovia obtained the foreclosure judgment against Debtor on January
21, 2005. See Randall, supra, 2006 W L 3833919, at *2 n.2 (treating the
defendant’s motion to dismiss for lack of jurisdiction as a factual attack and
accepting as “uncontroverted” the fact that a default judgment in mortgage
foreclosure was entered against the debtor).
7
lack of subject matter jurisdiction, we shall accept the allegations of the Complaint
as true and view them in the light most favorable to the Debtor. Peregrine
Surgical, Ltd. V. Synergetics, USA, Inc., 2006 W L 3857492, at *2 (E.D. Pa.
Dec. 29, 2006). We may also consider the exhibits incorporated by reference into
defendants’ Motion since they are matters of public record. Id. As noted above,6
Debtor has not objected to our consideration of these exhibits.
In ruling upon the defendants’ request for dismissal pursuant to 12(b)(6),
the Court shall consider the same material mentioned above. See Jean
Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 256 n.5 (3d Cir.
2006) (quoting Southern Cross Overseas Agencies,Inc. v. W ah Kwong Shipping
Group, Ltd., 181 F.3d 410, 426 (3d Cir. 1999)) (to resolve a motion to dismiss, “a
court may properly look at public records, including judicial proceedings, in
addition to the allegations of the complaint.”); Crisomia v. Parkway Mortgage, Inc.
(In re Crisomia), 2002 W L 31202722, at *2 n.8 (Bankr. E.D. Pa. Sept. 13, 2002)
(observing that court documents which are a matter of public record “are proper
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 7 of 27

The Rooker-Feldman doctrine acquired its name from two Supreme7
Court cases, Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923) and District of
Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1982).
8
for judicial notice.”). As required on a motion to dismiss, the allegations of the
Complaint shall be accepted as true and viewed in the light most favorable to the
Debtor. Buck v. The Hampton Township School District, 452 F.3d 256, 260 (3d
Cir. 2006). The request for dismissal shall be granted only if there is no
reasonable reading upon which Debtor would be entitled to relief. Stanley v.
International Brotherhood of Electrical W orkers, FLO-CIO CLC, 2006 W L
30980128, at *1 (3d Cir. Nov. 1, 2006); Taliaferro v. Darby Township Zoning
Board, 458 F.3d 181, 188 (3d Cir. 2006).
II. WHETHER COUNTS I AND II ARE BARRED
BY THE ROOKER-FELDMAN DOCTRINE
Pursuant to 28 U.S.C. §1257, the Supreme Court of the United States is
the only federal court vested with jurisdiction over appeals from final state court
judgments. Lance v. Dennis, 126 S. Ct. 1198, 1200 (2006). Lower federal courts
are precluded under the Rooker-Feldman doctrine from “exercising appellate
jurisdiction over final state-court judgments.” Id. at 1200-01; see also Knapper v.7
Bankers Trust Co. (In re Knapper), 407 F.3d 573, 580 (3d Cir. 2005) (reasoning
that the purpose of Rooker-Feldman doctrine is to prevent “‘inferior’ federal courts
from sitting as appellate courts for state court judgments.”).
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 8 of 27

In the state court action, SABIC sought a declaratory judgment that8
royalty charges which it received did not violate its joint venture agreements with
the Joint Ventures. 364 F.3d at 103. In the federal action, Exxon and the Joint
Ventures sought the “converse declaratory judgment” that SABIC had
overcharged the Joint Ventures in violation of the joint venture agreements. Id.
9
A. THE SCOPE OF THE ROOKER-FELDMAN DOCTRINE
In Exxon Mobil Corporation v. Saudi Basic Industries Corporation, 544 U.S.
280, 282 (2005), the Supreme Court addressed the scope of the Rooker-Feldman
doctrine and reversed the Third Circuit which had held that the doctrine barred
the plaintiff’s federal action. See Exxon Mobil Corporation v. Saudi Basic
Industries Corporation, 364 F.3d 102 (2004). At issue in Exxon was a dispute
over royalties between the plaintiff, Saudi Basic Industries Corp. (“SABIC”), and
the defendants, which were Exxon Mobil and two joint venture entities (the “Joint
Ventures”) formed by SABIC and Exxon. Id. at 103.
The legal saga which led to the Supreme Court’s decision in Exxon began
when SABIC sued the Joint Ventures in state court. Id. Exxon and the Joint
Ventures responded to the state court action by filing a countersuit in federal
court. Id. The Joint Ventures answered SABIC’s state court complaint and8
asserted, as counterclaims, the same claims they had filed in their federal action.
Id. SABIC moved to dismiss the federal action on the ground of sovereign
immunity, but the district court denied its motion. Id. SABIC appealed to the
Third Circuit. Id. While SABIC’s appeal to the Third Circuit was pending, a trial
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 9 of 27

10
verdict was rendered in the Joint Venture’s favor in the state court action. Id.
SABIC appealed the verdict to the state appellate court. Id.
In the Joint Ventures’ federal action, the Third Circuit sua sponte raised the
issue of whether subject matter jurisdiction was lacking under the Rooker-
Feldman doctrine. Id. at 104. In its decision, the Third Circuit explained that:
“a claim is barred by Rooker-Feldman under two
circumstances: first, if the claim was ‘actually litigated’ in
state court prior to the filing of the federal action or
second, if the claim is ‘inextricably intertwined with [the]
state adjudication.’”
id. (quoting Desi’s Pizza, Inc. V. City of W ilkes-Barre, 321 F.3d 411, 419 (3d Cir.
2003) (quoting Parkview Assoc. Partnership v. City of Lebanan, 225 F.3d 321,
325 (3d Cir. 2000))). The Third Circuit concluded that both circumstances were
present in the federal lawsuit. Id. at 104-06. In so concluding, the Third Circuit
opined that: (i) the “actually litigated” requirement was met because Exxon’s
claims in its federal lawsuit were identical to the claims upon which the verdict in
state court was based; and (ii) the “inextricably intertwined” requirement was met
because, by Exxon’s own admission, it sought to maintain its federal lawsuit “as
an ‘insurance policy’ in order to relitigate the overcharge issue if SABIC
prevail[ed] in its efforts to overturn the state court verdict in favor of Exxon.” Id. at
106. The Third Circuit reasoned that, if SABIC prevailed in its appeal in state
court, Exxon’s “federal action would squarely be seeking to invalidate a final
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 10 of 27

11
judgment of the state court, the very situation contemplated by Rooker-Feldman’s
‘inextricably intertwined’ bar.” Id.
According to the Supreme Court, it granted certiorari of the Third Circuit’s
decision in Exxon to “resolve conflict among the Courts of Appeals over the
scope of the Rooker-Feldman doctrine.” Exxon, supra, 544 U.S. at 290. The
Supreme Court specifically noted that some lower courts were extending the
contours of the Rooker-Feldman doctrine beyond those which it intended. Id. at
283. The Supreme Court decided, in particular, that the Third Circuit had
“misperceived the narrow ground occupied by Rooker-Feldman” and, therefore,
erred in dismissing Exxon’s federal action for lack of subject matter jurisdiction.
Id. at 284.
The Supreme Court cautioned that the Rooker-Feldman doctrine is
confined to “cases brought by state-court losers complaining of injuries caused by
state-court judgments rendered before the district court proceedings commenced
and inviting district court review and rejection of those judgments.” See id. at
284. It specifically instructed that 28 U.S.C. §1257 does not “stop a district court
from exercising subject-matter jurisdiction simply because a party attempts to
litigate in federal court a matter previously litigated in state court.” Id. at 293. It
also further explained that “[i]f a federal plaintiff ‘present[s] some independent
claim, albeit one that denies a legal conclusion that a state court has reached in a
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 11 of 27

It is clear from the statutory provisions of TILA that the right of rescission9
may continue after the commencement of a foreclosure action. For example,
§1635(i)(1) of TILA specifically recognizes that the right to rescission continues
(continued...)
12
case to which he was a party . . . , then there is jurisdiction and state law
determines whether the defendant prevails under principles of preclusion.’” Id.
(quoting GASH Associates v. Rosemont, 995 F.2d 726, 728 (7th Cir. 1993)).
Arguably, Debtor’s claim for rescission is independent from the foreclosure
action and judgment and, therefore, not barred by the Rooker-Feldman doctrine.
His asserted right to rescission is based on TILA. In Apaydin v. Citibank Federal
Savings Bank (In re Apaydin), 201 B.R. 716 (Bankr. E.D. Pa. 1996), Judge
Stephen Raslavich noted that the right of rescission under TILA is independent of
the mortgage upon which a foreclosure judgment is based. He did so in the
context of rejecting a defendant’s argument that, once a foreclosure judgment is
entered, the mortgage merges into the judgment and the right of rescission
disappears. Judge Raslavich stated, in relevant part:
The right of rescission does not emanate from plaintiffs’
mortgage such that it disappears after the mortgage is
merged with the judgment. Rather, plaintiffs’ rescission
right arises from TILA and the regulations promulgated
thereunder. 15 U.S.C. § 1635; 12 C.F.R. §226.23 ...
This right continues to exist based on TILA, which,
unlike the terms of the plaintiffs’ mortgage is unaffected
by the entry of the judgment.
201 B.R. 716, 721-22.9
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 12 of 27

(...continued)9
after the “initiation of any judicial or nonjudical foreclosure process on the primary
dwelling of an obligor[.]” 15 U.S.C. §1635(i)(1). See also 12 C.F.R.
§226.23(h)(1). In addition, §1635(i)(2), provides that, once a foreclosure action
has been instituted, a lower tolerance level applies in determining whether a TILA
violation has occurred. See 15 U.S.C. §1635(i)(2). See also 12 C.F.R.
§226.23(h)(2).
Under TILA, an obligor’s right to rescind does not expire until “three10
years after the date of consummation of the transaction or upon the sale of the
property, which occurs first[.]” 15 U.S.C. §1635(f). In Beach v. Ocwen Federal
Bank, 523 U.S. 410, 417 (1998), wherein the Supreme Court held that there is no
right to rescission under TILA after the three year period in §1635(f) has expired,
the Supreme Court opined that the terms used in §1635(f) to address the right’s
duration are “so straightforward as to render any limitation on the time for seeking
a remedy superfluous.”
13
Judge Raslavich observed that, “[a]ccording to TILA itself,” the right to
rescission terminates only after the passage of three years or the sale of the
property, whichever occurs first. Apaydin, 201 B.R. at 722. Discussing this point10
with respect to the defendant’s argument on merger, Judge Raslavich stated:
The TILA statute and regulations are, in fact, clear and
unambiguous on this point. [The defendant] is in effect,
asking the Court to ingraft a third termination point upon
the statute based on the doctrine of merger. This Court,
however, will apply the statute as written and hold that
[the Debtor’s] right to rescind for an improperly disclosed
transaction is not impaired by the entry of a foreclosure
judgment.
201 B.R. at 722. But see R.G. Financial Corp. V. Vergara-Nunez, 446 F.3d 178,
187-88 (1st Cir. 2006) (ruling that principles of res judicata “may hasten the
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 13 of 27

14
demise of a debtor’s TILA based right of rescission.”); Albano v. Norwest
Financial Hawaii, Inc., 244 F.3d 1061, 1064 n.2 (9th Cir. 2001) (holding that the
fact that TILA has a limited three year life “merely sets out the right’s maximum
life span” and “does not affect procedural or substantive requirements that might
end its existence even earlier.”).
The view that a mortgagor’s right to rescission under TILA survives the
entry of a foreclosure judgment is consistent with the language of §1635(b) of
TILA. This section provides that when a mortgagor exercises his right to
rescission, any “security interest” given by him, “including any such interest
arising by operation of law, becomes void[.]” 15 U.S.C. § 1635(b) (underlining
added). Under Pennsylvania law, a mortgage merges into a foreclosure
judgment but a mortgagee’s security interest continues to exist after the entry of
the foreclosure judgment. See First National Fidelity Corp. v. Perry, 945 F.2d 61,
64 (3d Cir. 1991) (recognizing the principle that a mortgagee’s security interest
continues to exist after the entry of a foreclosure judgment and the merger of the
parties’ contractual agreement into such judgment). Congress’ use of the term
“security interest” instead of the term “mortgage” in §1635(b) lends support to the
contention that a mortgagee’s right to rescission is independent of a foreclosure
judgment entered against him.
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 14 of 27

In Lance v. Dennis, supra, which the Supreme Court decided after11
Exxon, the Supreme Court emphatically explained that “Rooker-Feldman is not
simply preclusion by another name.” 126 S. Ct. at 1202. Commenting further on
this point, the Supreme Court stated:
Congress has directed federal courts to look principally
to state law in deciding what effect to give state-court
judgments. Incorporation of preclusion principles into
Rooker-Feldman risks turning that limited doctrine into a
uniform federal rule governing the preclusive effect of
state-court judgments, contrary to the Full Faith and
Credit Act.
Id. at 1202-03 (italics in original).
15
However, we need not resolve the issue of whether Debtor’s claim is
independent of W achovia’s foreclosure judgment. Since Exxon, the Third Circuit
has issued numerous decisions on the Rooker-Feldman doctrine. As discussed
below, the Third Circuit’s application of the Rooker-Feldman does not hinge on
the “independent claim” analysis.
B. THIRD CIRCUIT DECISIONS ON THE
ROOKER-FELDMAN DOCTRINE AFTER EXXON
The Third Circuit decided Knapper, supra, dealing with the Rooker-Feldman
doctrine two months after the Supreme Court’s opinion Exxon. In Knapper, the11
debtor sought to have two pre-petition sheriff’s sales vacated on the ground that
“the state court lacked personal jurisdiction over her.” Knapper, supra, 407 F.3d
at 581. The debtor claimed that she was denied due process because she was
never properly served in the foreclosure actions which ultimately led to the
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 15 of 27

16
sheriffs’ sales. Id. at 578. The Third Circuit held that the debtor’s claim was
barred by the Rooker-Feldman doctrine. In so ruling, the Third Circuit opined that
a federal claim is barred by the Rooker-Feldman doctrine in two circumstances,
namely:
(1) if the claim was actually litigated in state
court prior to the filing of the federal action;
or
(2) if the claim is inextricably intertwined with
the state adjudication.
Knapper, supra, 407 F.3d at 580. W ith regard to the second circumstance listed
above, the Third Circuit instructed that:
[a] federal claim is inextricably intertwined with an issue
adjudicated by a state court when: (1) the federal court
must determine that the state court judgment was
erroneously entered in order to grant the requested
relief; or (2) the federal court must take an action that
would negate the state court’s judgment. . . . In other
words, Rooker-Feldman does not allow a plaintiff to
seek relief that, if granted, would prevent a state court
from enforcing its orders.
Knapper, 407 F.3d at 581 (quoting W alker v. Horn, 385 F.3d 321, 330 (3d Cir.
2004) (citations, internal quotations and ellipses omitted) (emphasis added)).
The Third Circuit espoused these same principles more recently, albeit in a
slightly different way, when it held in Barnes v. Domitrovich, 2006 W L 1602545, at
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 16 of 27

While Barnes is not binding authority because it is “not precedential,” it12
is “persuasive authority.” Prudential Property and Casualty Insurance Company v.
Jefferson, 185 F. Supp.2d 495, 499 n.1 (W .D. Pa. 2002). See also Capilli v.
W hitesell Construction Co., 2006 W L 1722354, at *4 n.3 (D.N.J. June 21, 2006)
(noting that decision of Third Circuit, while “not precedential” is still “highly
persuasive in that it is a recent decision of a higher court.”). In Barnes, the
debtor’s parental rights were terminated in state court. On appeal in state court,
the Pennsylvania Superior Court affirmed the trial court’s decision. Barnes filed
his complaint in federal court pursuant to 42 U.S.C. § 1983 seeking injunctive and
monetary damages. The Third Circuit held that Barnes’ claims were barred by
the Rooker-Feldman doctrine.
17
*1 (3d Cir. June 7, 2006) (not precedential), that the Rooker-Feldman doctrine12
“bars lower federal courts from exercising jurisdiction over a case that is the
functional equivalent of an appeal from a state court judgment” and that a case is
the “functional equivalent” of an appeal from a state court judgment in the
following two situations:
(1) when the claim was actually litigated before the
state court; or
(2) when the claim is inextricably intertwined with the
state adjudication.
Id. In Barnes, the Third Circuit explained that a “federal claim is inextricably
intertwined with an issue adjudicated in state court when a federal court must
determine that the state court judgment was erroneously entered to grant the
requested relief or the federal court must take action that would negate the state
court’s judgment,” id. (quoting W alker v. Horn, 385 F.3d 321, 330 (3d Cir. 2004));
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 17 of 27

In Taliaferro, supra, plaintiffs were neighboring property owners who13
alleged that their property values would be diminished and their neighborhood
blighted by the Darby Township Zoning Hearing Board’s decision to grant a
variance which permitted the construction of a storage facility in a residential
zone. Taliaferro, 458 F.2d at 185. The Third Circuit reasoned that “a decision in
favor of [plaintiffs] on their due process claims [in district court] would not mean
that the [Zoning Hearing] Board abused its discretion in deciding that there was
substantial evidence to show that [the applicant] satisfied the criteria necessary to
obtain a zoning variance under Pennsylvania state law.” Id. at 193.
In Denston, supra, plaintiff was an inmate serving a thirty-year sentence14
(continued...)
18
see also Ayres-Fountain v. Eastern Savings Bank, 153 Fed. Appx. 91, 92-93 (3d
Cir. October 27, 2005) (not precedential) (ruling that plaintiff’s federal court
action seeking rescission of mortgage note and award of damages based on
fraud was barred by the Rooker-Feldman doctrine because relief in her favor
would “invalidate” the default judgment entered against her in a state foreclosure
action based on her default of the note and mortgage). See also Taliaferro v.
Darby Township Zoning Board, 458 F.3d 181, 192 (3d Cir. 2006) (“Under the
Rooker-Feldman doctrine, a district court is precluded from entertaining an action
if the relief requested effectively would reverse a state court decision or void its
ruling.”); Denston v. Chapman, 2006 W L 2868249, at *1 n.1 (3d Cir. Oct. 10,13
2006) (observing that, to the extent that the relief which the plaintiff requested
would require rejection of the state courts’ judgments, the federal court was
lacking jurisdiction over those claims).14
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 18 of 27

(...continued)14
for having attempted to murder of his wife. After his assault on his wife, his son
was placed in the custody of other people and the plaintiff’s parental rights were
terminated in state court. He subsequently filed his federal lawsuit pursuant to 42
U.S.C. §1983, alleging that his parental rights and rights to due process were
violated by the state court proceedings which terminated his parental rights.
In the same month in which it decided Denston, the Third Circuit applied
Rooker-Feldman in a different context and found it inapplicable. See Shallow v.
Rogers, 2006 W L 3051796 (3d Cir. October 27, 2006) (not precedential). In
Shallow, the Third Circuit held that the Rooker-Feldman doctrine did not apply to
a federal lawsuit commenced by a father who contended that his forced
psychological evaluation, which was ordered by the state court in the context of a
custody battle, violated his constitutional and civil rights. In the lawsuit, the father
named as defendants the state court judge who entered the order forcing the
father to undergo the evaluation, the attorney for his ex-wife and the court-
ordered psychologist for his children. While the Third Circuit noted that the
father’s complaint in the federal lawsuit arose out of his “ongoing custody battle”
with his ex-wife, it concluded that the father’s complaint did not complain of
injuries caused by the state court judgment regarding the custody battle.
Some Courts of Appeal disagree with the Third Circuit and hold, based15
on Exxon, that the phrase “inextricably intertwined” no longer has any
independent legal significance to application of the Rooker-Feldman doctrine.
These Courts of Appeal reason that the phrase “inextricably intertwined” is
“simply a descriptive label attached to claims that meet the requirements outlined
in Exxon[.]” Hoblock v. Albany County Board of Elections, 422 F.3d 77, 86-87 (2d
Cir. 2005); see also McCormick v. Braverman, 451 F.3d 382, 394-95 (6th Cir.
2006) (ruling that the phrase “inextricably intertwined”is merely a conclusion that
(continued...)
19
In the instant case, neither Debtor’s TILA claim nor his RESPA claim was
raised in the state court action. Accordingly, neither claim was “actually litigated”
in that action. Knapper, supra, 407 F.3d at 580. Therefore, Debtor’s claims in
the instant case can only be barred by the Rooker-Feldman doctrine if the claims
are “inextricably intertwined” with the state court adjudication.15
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 19 of 27

(...continued)15
a claim “asserts an injury whose source is a state court judgment[.]”); Bolden v.
City of Topeka, Kansas, 441 F.3d 1129, 1141 (10th Cir. 2006) (agreeing with 4th
Circuit that the phrase “inextricably intertwined” merely “‘states a conclusion’” and
does not impose an independent legal requirement); Davani v. Va. Dept. of
Transportation, 434 F.3d 712, 719 (4th Cir. 2006) (concluding that after Exxon,
the phrase “inextricably intertwined” does not “create an additional legal test for
determining when claims challenging a state-court decision are barred, but
merely states a conclusion: if the state-court loser seeks redress in the federal
district court for an injury caused by the state-court decision, his federal claim is,
by definition, ‘inextricably intertwined’ with the state-court decision, and is
therefore outside of the jurisdiction of the federal court.”).
See Crutchfield v. Countrywide Home Loans, 389 F.3d 1144, 1148-4916
(10th Cir. 2004) (plaintiff’s action seeking a declaratory judgment that he had
validly rescinded his mortgage under TILA was barred by Rooker-Feldman
doctrine since the declaratory judgment, if granted, would “undo the effect of the
state court [foreclosure] judgment” that was previously entered against the
plaintiff); R-G Financial Corporation v Vergara-Nunez, 381 F. Supp.2d 1 (D.
Puerto Rico 2005) (concluding that right to rescind and counterclaim under TILA
were barred under the Rooker-Feldman doctrine because they were inextricably
intertwined with the state court foreclosure judgment), aff’d, 446 F.3d 178 (1st Cir.
2006); Smith v. Litton Loan Servicing, L.P., 2005 W L 289927, at *7-*8 (E.D. Pa.
Feb. 4, 2005) (ruling that Rooker-Feldman doctrine barred complaint seeking
rescission of mortgage and note since the complaint was filed after a judgment
for mortgage foreclosure was entered in state court); Thompson v. Ameriquest
Mortgage Company, 2003 W L 22012207, at *3 (S.D. Ill. Aug. 21, 2003) (holding
that court lacked subject matter jurisdiction based on the Rooker-Feldman
doctrine to hear plaintiff’s claims under TILA since “implicit in the [state court
judgement] was that court’s determination that the Mortgage was valid.”); Randall
v. Bank One National Association (In re Randall), supra, 2006 W L 3833919, at *8
(continued...)
20
C. THE “INEXTRICABLY INTERTWINED” REQUIREMENT
(1) Count I
Debtor’s claim for rescission under TILA clearly would render the state
court mortgage foreclosure judgment unenforceable. The conclusion that16
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 20 of 27

(...continued)16
(“Clearly, a determination by me that the 2000 loan transaction was validly
rescinded in April of 2003 would have the effect of reversing the state court
foreclosure judgment and rendering it unenforceable.”); accord Faust v. Deutsche
Bank National Trust Company (In re Faust), supra, 353 B.R. at 100 (ruling that
UDAP claim violated Rooker-Feldman because the rescission of the loan would
negate the state court judgment).
Chase and Wachovia also assert that, to the extent Debtor’s requested17
monetary damages in Count I are not dependent upon rescission, they are time
barred by the one-year statute of limitations for monetary damages under TILA. I
need not address this argument because, as framed, Count I seeks monetary
damages based solely on defendants’ alleged failure to rescind. See Complaint,
Count I, ¶16. See also W ilson v. Homeowners Loan Corp., 263 F. Supp. 2d
1212, 1218 (E.D. Mo. 2003) (“A failure to recognize a proper rescission,
whenever it is made or for whatever proper reason, is a separate TILA
violation[.]”). Consistent with this fact, Debtor states in his memorandum in
opposition to the motion that Count I “seeks to have the Debtor’s rescission of the
Loan [under the TILA”]) . . . declared valid and to obtain remedies therefor.”
Debtor’s Memorandum of Law in Opposition to the Motion of the Defendants to
Dismiss the Debtor’s Complaint at 2. Debtor’s request for damages based on the
(continued...)
21
Debtor’s claim for rescission would have the effect of undermining W achovia’s
foreclosure judgement is the death knell to his claim. Since granting rescission
would negate the foreclosure judgement, Debtor’s TILA claim for rescission in
Count I is “inextricably intertwined” with the state court adjudication. The claim is,
therefore, barred by the Rooker-Feldman doctrine.
In Count I, Debtor requests rescission and monetary damages related to
the alleged failure to rescind. Having determined that this Court lacks subject
matter jurisdiction to determine whether Debtor is entitled to rescission, we
cannot award damages based on defendants’ failure to rescind. Count I will,17
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 21 of 27

(...continued)17
failure to rescind is timely. Nevertheless, for the reasons stated above, Count II
shall be dismissed.
22
therefore, be dismissed in its entirety.
(2) Count II
In Count II, Debtor asserts his claim for damages under RESPA. See
Complaint, Count II. This claim seeks an award of monetary damages only. In
Pennsylvania, the purpose of a mortgage foreclosure action is solely to effect a
judicial sale of the mortgaged property. New York Guardian Mortgage Corp. v.
Dietzel, 362 Pa. Super. 426, 431, 524 A.2d 951, 953 (1987). It is not a judgment
for damages. Id. The Pennsylvania Supreme Court recently ruled that it is
impermissible to assert a set-off for monetary damages as a counterclaim in a
mortgage foreclosure action. Green Tree Consumer Discount Co. v. Newton,
909 A.2d 811, 815-16 (Pa. 2006). Since Debtor could not bring a counterclaim
under RESPA in the mortgage foreclosure action, an award of damages on
Debtor’s RESPA claim would not negate the foreclosure judgment.
Consequently, Count II is not inextricably intertwined with the foreclosure
judgment and is not barred by the Rooker-Feldman doctrine.
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 22 of 27

Subsections (f)(1) and (f)(3) of §2605 provide, in pertinent part:18
(f) Damages and costs
W hoever fails to comply with any provision of this
section shall be liable to the borrower for each such
failure in the following amounts:
(1) Individuals:
In the case of any by an individual, an
amount equal to the sum of –
(A) any actual damages to the
borrower as a result of the
failure; and
(B) any additional damages, as
the court may allow, in the
case of a pattern or practice of
noncompliance with the
requirements of this section, in
an amount not to exceed
$1,000.
* * *
(continued...)
23
III. Whether Debtor’s Claim for Damages under
RESPA Must Be Dismissed Because a Response
Was Sent to Debtor’s “Qualified Written Request”
In Count II of the Complaint, Debtor asserts that Chase as the “servicer” of
Debtor’s loan (as opposed to W achovia who is the current owner of the loan)
failed to respond to Debtor’s qualified written request with “an acknowledgment of
receipt within 20 days of such request.” Complaint ¶18. He seeks damages and
costs against Chase under §§2605(f)(1) and (f)(3) of RESPA.18
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 23 of 27

(...continued)18
(3) Costs
In addition to the amounts under paragraph
(1) ..., in the case of any successful action
under this section, the costs of the action,
together with any attorney’s fees incurred in
connection with such action as the court
may determine to be reasonable under the
circumstances.
12 U.S.C. §2605(f)(1) & (f)(3).
Debtor admits in his Complaint that W achovia responded to his QWR19
(continued...)
24
Section 2605(e) of RESPA states, in pertinent part:
If any servicer of a federally related mortgage loan
receives a qualified written request from the borrower
(or an agent for the borrower) for information relating to
the servicing of such loan, the servicer shall provide a
written response acknowledging receipt of the
correspondence within 20 days[.]
12 U.S.C. §2605(e). On a motion to dismiss under Rule 12(b)(6), the Court is
required to accept the allegations of the Complaint as true and make all
reasonable inferences in favor of the Debtor. In the Complaint, Debtor alleges
that W achovia, the owner of the loan responded to his QW R, but that Chase, the
servicer of the loan, did not. Based on the language of the statute, Chase had
the obligation to ‘provide a written response acknowledging receipt of the
correspondence within 20 days.”12 U.S.C. §2605(e). Accepting the allegations of
the Complaint as true and viewing them in the light most favorable to the debtor,19
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 24 of 27

(...continued)19
and attaches as Exhibit “E” to the Complaint a copy of the response. See
Complaint ¶9. Exhibit “E” is a letter, dated May 8, 2006, from Angela M. Michael,
Esquire of McCabe, W eisberg & Conway, P.C. to Debtor’s counsel,
acknowledging receipt of the QW R and stating that a timely response would be
forthcoming. See Complaint, Exhibit “E.” Defendants assert in their
memorandum of law in opposition to the Motion that Ms. Michael’s letter was sent
on Chase’s behalf. See Memorandum of Law of Chase Manhattan Mortgage
Corporation and W achovia Bank, N.A., as Trustee, Successor in Interest to First
Financial Mortgage Group, Inc., in Support of Motion to Dismiss Complaint of
Robert R. Cooley at 15. However, the letter does not identify the party upon
whose behalf it was sent. Therefore, based on the standard for motions to
dismiss, this Court is bound to accept as true Debtor’s allegation that the letter
was sent on behalf of W achovia only and not Chase.
25
Count II states a claim that Chase violated its obligation under §2605(e).
Therefore, the Motion shall be denied as to Count II.
CONCLUSION
Based on the Third Circuit’s view of the Rooker-Feldman doctrine, this
Court lacks subject matter jurisdiction over Count I of the Complaint. Count I
shall be dismissed. However, defendants’ argument for dismissal of Count II
shall be denied. Under the standard for dismissal under Rule 12(b)(6), Count II
states a claim upon which relief may be granted.
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 25 of 27

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re : Chapter 13
ROBERT R. COOLEY :
Debtor : Case No. 06-11586 (JKF)
______________________________
ROBERT R. COOLEY :
Plaintiff :
v. :
WACHOVIA MORTGAGE COMPANY, : Adversary No. 06-0279
CHASE MANHATTAN MORTGAGE
CORPORATION, and :
FIRST FINANCIAL MORTGAGE GROUP,
INCORPORATED :
Defendants :
______________________________
ORDER
This 13th day of March, 2007, upon consideration of the Motion of Chase
Manhattan Mortgage Company and W achovia Bank, N.A. as Trustee and
Successor in Interest to First Financial Mortgage Group, Inc. To Dismiss
Complaint of Robert R. Cooley (“Motion”), and after a hearing with notice, and for
the reasons set forth in the accompanying Memorandum Opinion, it is hereby
ORDERED and DECREED that:
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 26 of 27

2
(1) The Motion is GRANTED IN PART.
(2) Count I is DISMISSED.
(3) The Motion is DENIED as to Count II.
______________________________
HONORABLE JEAN K. FITZSIMON
United States Bankruptcy Judge
Copies to:
Counsel for Plaintiff/Debtor
David A. Scholl, Esquire
6 St. Albans Avenue
Newtown Square, PA 19073
Counsel for Wachovia Bank, N.A. as Trustee
and Chase Manhattan Mortgage Corporation
Joseph Riga, Esquire
McDowell Riga
842 West Main Street, 2nd Floor
Bryn Mawr, Pennsylvania 19010
Chapter 13 Trustee
William C. Miller, Trustee
PO Box 40119
Philadelphia, PA 19106-0119
Case 06-00279-jkf Doc 16 Filed 03/13/07 Entered 03/13/07 13:40:10 Desc Main
Document Page 27 of 27