Jerome Davis v. CitiMortgage, Inc.

U.S. Court of Appeals for the Seventh Circuit December 10, 2021

Opinion

In the

United States Court of Appeals For the Seventh Circuit ____________________ Nos. 21-1084 and 21-1101 CITIMORTGAGE, INC., Plaintiff-Appellee, v.

JEROME M. DAVIS and LYNNE TERNIOR-DAVIS, Defendants-Appellants. ____________________

Appeals from the United States District Court for the Northern District of Illinois, Western Division. No. 3:19-cv-50299 — Iain D. Johnston, Judge. ____________________ No. 21-1446 JEROME M. DAVIS, Plaintiff-Appellant, v.

CITIMORTGAGE, INC., Defendant-Appellee. ____________________

Appeal from the United States District Court for the Northern District of Illinois, Western Division. No. 3:19-cv-50277 — Iain D. Johnston, Judge. ____________________ 2 Nos. 21-1084, et al.

SUBMITTED SEPTEMBER 22, 2021 — DECIDED DECEMBER 10, 2021 ____________________

Before SYKES, Chief Judge, and FLAUM and BRENNAN, Cir- cuit Judges. BRENNAN, Circuit Judge. For several years, CitiMortgage, Inc., has ȱȱȱȱȱĴȱ ȱJerome M. Davis and Lynne Ternoir-Davis over a mortgage the couple took out on their residence in 2005. After the Davises defaulted on the ȱȱęȱȱ¢ǰȱ ȱȱȱȱȬ ¢ȱǰȱ the bankruptcy court later held did not extend to the debt Davis ȱǯȱ Rather than appeal that ǰȱȱȱĴȱȱ ¢ȱĴȱat court’s ruling—ęǰ ¢ȱĴȱȱ remove CitiMortgage’s foreclosure action to federal court, and second, ¢ȱęȱȱȱȱȱCitiMortgage. Da- vis lost in each of those proceedingsǰȱȱȱ ȱ ȱĴ¢ȱȱȱ ȱȱȱ the foreclosure proceeding. ȱȱȱ ȱǯȱȱ e lack jurisdiction ȱ ȱthe remand order, and Davis ȱ ȱȱȬ ments challenging ȱĴ¢ȱȱȱȱ . We also ȱ ȱȱȱȂȱdismissal of Davis’s suit against CitiMortgage. I This dispute ȱȱ Ǳȱ(1) an adversary proceeding in bankruptc¢ȱȱȱ ȱJerome Davis chal- lenged CitiMortgage’s debt and security interest; (2) CitiMort- gage’s foreclosure action against the Davises; and (3) Davis’s suit against CitiMortgage alleging, among other things, unfair Nos. 21-1084, et al. 3

debt collection practices. Only the Ĵȱ ȱactions are before us. 1. Davis’s bankruptcy and adversary proceeding. In 2005, the Davises ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱȱ Amro Mortgage Group, Inc. After defaulting on the mort- gage, Davis 1 entered bankruptcy in 2011. CitiMortgage, the successor in interest to ABN Amro Mortgage Group due to a mergerǰȱęȱȱȱȱclaim in the amount of $478,238.90, secured by the Davis’s residence. Davis’s Chapter 13 bank- ¢ȱȱ ȱȱȱŘŖŗŘȱand incorporated an agree- ȱ ȱȱȱȱȱȱȱ¢ȱ on Davis making monthly mortgage payments to CitiMort- gageǰȱȱ ȱȱ¢ȱȱȱa post-petition arrearage of $23,402.24 and a pre-petition arrearage of $78,640.90. According to the agreement, if Davis defaulted on the ¢ȱȱǰȱȱȱ¢ȱ ȱt, and CitiMortgage could foreclose on the residence. In 2014, after Davis defaulted on the payments, CitiMort- gage e ȱȱȱȱȱęed the bankruptcy court that the stay had terminated. Davis then challenged CitiMortgage’s debt and security interest by ęing an adver- sary proceeding, ȱȱ¢ȱęȱ¢ǰȱŘśŖȱȱ entries, and scores of hearings. While that ȱ ȱ pending, Davis completed the Chapter 13 plan and received a bankruptcy discharge in 2018. Ȃȱ¢ȱȱȱȱŘŖŗşȱ ȱȱ bankruptcy court granted CitiMortgage’s motion to dismiss.

1 Jerome Davis is a party in all the underlying suits. Lynne Ternoir- Davis is a party only in the foreclosure proceeding. Both individuals executed ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ collectively as “Davis.” 4 Nos. 21-1084, et al.

Davis v. CitiMortgage, Inc. (In re Davis), Ch. 13 Case No. 11- 81785, Adv. No. 14-96129, 2019 WL 2108048 (Bankr. N.D. Ill. May 10, 2019).2 The court decided that Davis’s 2018 bank- ruptcy discharge did not cover ȱȱ ȱCitiMortgage: [T]ȱ ȱ ȱ ǰȱ ǯȱ ȱ the Debtor does not implicate his discharge. … To the extenȱȱǰȱ ǯȇȱȱ ȱ treated by the plan, such claim is non-discharge- able as a cured long-term debt. 11 U.S.C. § ŗřŘŞǻǼǻŗǼǯȱ ȱȱ¡ȱȱȱ ȱ of CitiMortgage, Inc.'s claim caused its claim to not be “provided for by the plan,” then on that account it is not subject to the discharge. 11 ǯǯǯȱ ȗȱ ŗřŘŞǻǼǯȱ ȱ ¢ǰȱ ȱ ȇȱ Ȭ charge is not implicated. Id. at *5. Because ȱȱȱ ȱȃȱ -party dispute ȱȱ ȱ ȱȱȱȱbankruptcy rights,” id., the court granted CitiMortgage’s motion to dismiss. Tȱ ȱȱȱęȱȱȱ¢ȱȱȱtold Davis that a ȱȱȱěȱȱȱ ȱȬ gage. In 2016, after Davis’s bankruptcy case had been errone- ously closed, the court reopened it and stated “[t]he debt ȱ appears to be such a debt that is not subject to discharge.” Then, in its 2018 opinion denying CitiMortgage’s motion for summary judgment in the adver- sary proceeding, the court decȱ ȱ ȱ ȱ ȃ ȱ ȱ subject to discharge—ȱȱȱ ȱȱ-term debt provided for under Section 1322(b)(5) of the Bankruptcy Code

2Neither party included this bankruptcy court decision in their sub- missions to this court. Nos. 21-1084, et al. 5

ȱȱȱȱȱ ȱȱȱȱȱȱ¢ȱȱȬ ęȱȱŗřȱ.” After the bankruptcy court dismissed the adversary pro- ceeding, Davis had 14 days to appeal the court’s decision un- der Federal Rule of Bankruptcy Procedure 8002. Davis did not appeal that decision. 2. CitiMortgage’s foreclosure action. 3 ȱȱȬ ǰȱȱęȱȱȱȱȱȱ in Illinois state court. ȱĴȱȱȱȱȬ sure action to bankruptcy court, arguing ȱ ȱȬ ęȱbecause ȱ ȱȱȱȱęiency judgment against ǰȱ ȱallegedly contravened Davis’s bankruptcy discharge. In response, CitiMortgage moved to ǰȱȱȱ ȱȱȱȱȱȱȱ of its foreclosure pleading. The bankruptcy court instructed Davis to respond to Ȃȱȱȱȱ ȱ ¢ȱȱȱȱ jurisdiction. But Davis—a licensed attorney ȱȱ ȱȱȱ ȱȱȱ¢ȱȱȱ ȱ before our court, ȱ ȱȱȱȱ—failed to respond. Because Davis had no basis to assert federal question jurisdic- ǰȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ 28 U.S.C. § 1447(c). Although lacking jurisdiction to reach the merits, the court found it unreasonable for Davis to accuse CitiMortgage of vi- ȱȱ¢ȱȱ ȱȱȱȃȱǰȱ ȱȱǰȱȱȱȱ ȱȱǽǾȱ is not subject to discharge in Mǯȱ Ȃȱ -closed

3 Ȃȱȱȱȱ ȱȱ—Nos. 21- 1084 and 21-1101—because Davis filed an amended notice of appeal in the district court. 6 Nos. 21-1084, et al.

bankruptcy case.” The court entered a separate, final order on ȱȱȱȱȱ ¢ȱŜǰȱŘŖŘŖǰȱ ȱȱȱ total of $6,500. Davis appealed the bankruptcy court’s remand order to the district court, but the ȱ ȱ Ĝǯȱ ȱ ȱ appeals the remand order to us. He ȱȱ ȱȱȱ Ĵ¢ȱ ȱ ȱ ȱ ȱȱ ǰȱ although he failed to ȱȱ¢ȱȂȱęȱȱȱ ȱ ȱǯȱ 3. Davis’s suit against CitiMortgage. In addition to CitiMort- gage’s foreclosure action, Davis sued CitiMortgage in federal district court, alleging violations of the Fair Debt Collection Practices Act, the Illinois Consumer Fraud and Deceptive Practices Act, and the 2018 bankruptcy discharge injunction. But as the district court noted, all three of Davis’s claims cen- ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ subject to his 2018 discharge. Because the bankruptcy court had held the opposite in Davis’s adversary proceeding, the district court took judicial notice of the decision in In re Davis and granted CitiMortgage’s motion to dismiss Davis’s suit ȱ ǯȱ ȱ ȱ ȱ ȱ ssal of his suit against CitiMortgage. II ȱȱǰȱ ȱȱȱIn re Davis, ȱ ȱȱȬ ruptcy court ruled that Davis’s 2018 bankruptcy discharge ȱȱȱȱȱ ȱ, is not on appeal before us. Davis had an opportunity to timely appeal the bankruptcy court’s decision, but he chose not to do so. Davis challenges the bankruptcy court’s remand of CitiMortgage’s foreclosure action. Before reaching the merits Nos. 21-1084, et al. 7

of his argument, ȱȱęȱȱ ȱ ȱȱȬ ǯȱ ȱȱȱȱinquiry. Title 28 U.S.C. § 1447(d) provides that “[a]n order remand- ȱȱȱȱȱȱȱȱ ȱȱ ȱȱȱȱ ȱȱȱȱ ǯȄ ȱ ȱȱeviously ǰȱȗȱŗŚŚŝǻǼȱȱ ȱȱȱȱȗȱŗŚŚŝǻǼǰȱȱ “[t]he reasons for remand that are enumerated in § 1447(c) in- ȱȱȱȱȱȱȱȱȱĴȱ jurisdiction.” Foster v. Hill, 497 F.3d 695, 697 (7th Cir. 2007); see Hernandez v. Brakegate, Ltd., 942 F.2d 1223, 1225 (7th Cir. 1991). ȱ ȱ ěȱ ȱ § 1447(d) is that “[i]n most removed ǰȱŘŞȱǯǯǯȱȗȱŗŚŚŝǻǼȱȱ ȱȱȱȱǯȄȱ ĵȱǯȱȱǯ, 910 F.3d 1010, 1013 n.1 (7th Cir. 2018). In addition to § 1447(d)’s general prohibition on our juris- diction over remand orders, 28 U.S.C. § 1452(b) adds an inde- pendent limitation on our ¢ȱȱ the “[r]emoval of claims related to bankruptcy cases.” This statute states that a remand order issued “on any equitable ground” “is not re- ȱ¢ȱȱȱ ȱ¢ȱȱȱȱȱ… or by the Supreme Court of the United States.” Our prior cases have interpreted this provision to mean that “a district court’s decision to remand a case or claim pursuant to § 1452(b) is ȱ¢ȱ ȱȱȱȱ‘any equitable ground’ in doing so.” Good v. Voest-Alpine Indus., Inc., 398 F.3d 918, 927 (7th Cir. 2005). But in the context of § 1452(b)ǰȱ ȱȱȬ mined that “the term ‘equitable’ means ‘appropriate.’” Id. (quoting Hernandez, 942 F.2d at 1226). For that reason, “this court has held that the limitations in section 1452(b) on appeal are identical to the limitations in section 1447.” Townsquare Media, Inc. v. Brill, 652 F.3d 767, 769 (7th Cir. 2011). Here, both § 1447(d) and § 1452(b) foreclose our ability to ȱ ȱ ȱ Ȃȱ Ĝȱ ȱ ȱ remand order. 8 Nos. 21-1084, et al.

The bankruptcy court remanded CitiMortgage’s foreclosure proceeding under § 1447(c) because the court lacked subject Ĵȱȱȱȱǯȱȱȱǰȱ ȱȱ Ȭ out authority under § 1447(d) ȱ ȱ ȱ bankruptcy court’s remand order. Because a dismissal for lack of subject ĴȱȱȱȃǰȄȱ§ 1452(b) also precludes ȱ ǯȱ To avoid this conclusion, Davis argues that jurisdiction ex- ists under the Supreme Court’s decision in City of Waco v. United States Fidelity & Guaranty Co., 293 U.S. 140 (1934). 4 There, the district court issued “a single decree embodying three separate orders,” including an order dismissing one of the defendants and a remand order. Id. at 142–43. While the Court determined that the remand ordeȱ ȱȱǰȱ ȱȱȱȱȱȱȱȱ ȱ ȱ because it preceded the remand order “in logic and in fact.” Id. at 143. Davis contends that, by extension, his appeal of the ȱȱęȱ ȱWaco because he contests the bank- ruptcy court’s conclusion that his discharge did not cover the ȱ ȱ rather than disputing the court’s holding ȱȱȱȱĴȱǯȱ Davis’s invocation of Waco does not persuade. In rejecting a similar argument, the Court has expressly stated that “Waco ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ order separate ȱȱ ȱȱǯȄȱPowerex Corp. v. Reli- ant Energy Servs., Inc., 551 U.S. 224, 236 (2007); see also Lindner v. Union Pac. R.R. Co., 762 F.3d 568, 571 (7th Cir. 2014). Simi- larly, the bankruptcy court here did not issue an order sepa- ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ¢ȱ

4 Our research yielded that City of Waco has been cited by this circuit only seven times since the Court’s decision in 1934. Nos. 21-1084, et al. 9

ȱȱ ǯ ȱ ȱȱȱ the un- derlying purpose of Waco is to ensure that appealable issues ȱȱȱ , that rationale is equally absent from this case. Davis had every opportunity to timely appeal the court’s conclusion that his bankruptcy discharge did not cover the ȱ ȱǯȱYet, he chose not to. Davis cannot ȱȱȱȱȱȱȱ¢ȱȱȱ ȱ ǯ Even if our court had jurisdiction over the bankruptcy Ȃȱȱǰȱ ȱ ȱęȱȱȱ ȱthe right to object. ȱȱęȱȱmotion to remand the foreclosure proceeding, the bankruptcy court instructed ȱȱ ȱ ¢ȱȱȱȱ by October 25, ŘŖŗşǯȱȱ¢ȱȱȱ , but Davis failed to respond to the motion to remand. In briefs before this court, Davis admits ȱ ȱȱ ȱȱȱȱĴȱǯȱ So, ȱneed not entertain that objection. III ȱȱ¢ȱȱȱ¢ȱȂȱĴȬ ¢ȱȱȱȱ ȱȱȱȱȱȱ because he had a reasonable basis to contend that his bank- ¢ȱȱȱȱȱ ȱgage. In the bankruptcy court’s October 28, 2019 order remand- ing CitiMortgage’s foreclosure proceeding to state court, the bankruptcy court ȱ ȱ ȱ Ĵ¢ȱ ȱ and costs in an undetermined amount. On November 13, 2019, Davis appealed the bankruptcy court’s order, including ȱ ȱ ȱ ȱ ȱ Ĵ¢ȱ ǯȱ Ȭ gage then moved to dismiss. In addition to defending the re- mand order, CitiMortgage argued that the fees and costs ȱ ȱ ȱ Ĝ—both because Davis’s appeal of 10 Nos. 21-1084, et al.

ȱ ȱ ȱ , as ȱ ęȱ ȱ ȱ ȱ ȱȱȱȱ¢ȱȱȱȱȱȱȱȱȬ ǰȱȱȱȱ ȱ ȱȱsince Davis had no basis to assert federal jurisdiction justifying removal. In re- ǰȱȱęȱȱȱȱȱȱȱ of the remand order, but ȱneglected entirely the ĴȬ ney ȱȱȱ ǯȱ As our court has stated repeatedly, arguments that are un- ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ . Schomas v. Colvin, 732 F.3d 702, 708 (7th Cir. 2013) (per cu- riam); see ěȱǯȱȱ ǯȱǯ, 675 F.3d 709, 718 (7th Cir. 2012). Here, in the face of CitiMortgage’s contentions to the ¢ǰȱȱěȱȱȱȱȱȱȱ ȱ ¢ȱȱ¢ȱȂȱȱȱȱ ȱ ȱȬ proper. Davis’s position ȱ ȱĴ¢ȱȱ ȱ ȱ¢ȱǲȱȱ ȱot developed at all. So, ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ court. Ȃȱȱȱȱȱȱȱ ȱȱ ȱȱ an additional reason. In his statement of issues before the dis- trict court, Davis recognized that the basis for the attorney fees ȱagainst him ȱȱȃǽǾȱȱȱȱȬ sonable basis for asserting federal question jurisdiction.” But before our court, Davis asserts ȃǽǾȱȱȱȱȱ ȱ ȱ. . . that the bankruptcy court deemed [his] challenge to its ruling excepting [CitiMortgage]’s debt from discharge as objectively unreasonable.” ȱȱ ǰȱȱ ȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭ ruptcy court’s determination that his substantive claim—ra- ther than his inability to establish federal jurisdiction— ȱ unreasonable. “[R]aising an issue in general terms is not suf- ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Nos. 21-1084, et al. 11

previously presented.” Puffer, 675 F.3d at 718. Because Davis’s argument against the ȱȱȱ ȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱǯȱ IV Finally, Davis challenges the district court’s dismissal of his suit agaȱǰȱ ȱed violations under the Federal Debt Collections Practice Act, the Illinois Con- sumer Fraud and Deceptive Practices Act, and of the 2018 bankruptcy discharge injunction. Yet, as the district court noted, and Davis does not dispute, all three of his claims ȱȱȱȱȱ ȱȱȱ ȱȱ ȱȱ¢ȱȱ¢ȱǯȱȱ ȱȱȬ lution of In re Davisǰȱ ȱhe did not appeal. Davis’s Ĵȱ to challenge the bankruptcy court’s holding at this stage con- ȱȱȱȱĴǯ To avoid this conclusion, Davis makes three arguments. First, he asserts the bankruptcy court’s dismissal of his adver- sary action in In re Davis ȱȱȱęȱȱȱtherefore ȱȱȱȱȱěǯȱ support, Davis points to ĵȱ oup, Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582 (2020)ǰȱȱ ȱȱCourt ¡ȱȱę¢ȱȱȱȬ ruptcy proceeding in that case based on certain factors. Id. at 588–89. Those factors include a proceeding commencing ȱ ȱęȱȱȱǰȱ ȱby procedural steps, and re- sulting in a dispositive decision based on the application of a legal standard. Without those factors here, Davis argues the bankruptcy court’s ȱ ȱ ȱ ȱ ęȱ ǯȱ But this overcomplicates the analysis. The ĵ ȱ ȱȱȱ ȱ ȱȱȱ ȱę, even though the un- derlying case remained pending. Here, there is no such 12 Nos. 21-1084, et al.

complexity. The bankruptcy court dismissed the adversary ǰȱȱȱȱȱȱǰȱȃǽǾȱęȱȱ of any adversary proceeding is appealable, as it is equivalent to a stand-ȱ ǯȄȱFifth Third Bank, Ind. v. Edgar Cnty. Bank & Tr., 482 F.3d 904, 905 (7th Cir. 2007). Second, Davis characterizes the bankruptcy court’s analy- sis regarding the scope of his bankruptcy discharge as dicta. But this mischaracterizes the court’s decision. The bankruptcy court dismissed the adversary proceeding because it had de- volved into a “ȱ -¢ȱ ȱ ȱ ȱ Ȅȱ ȱ “[did] not implicate bankruptcy rights.” This ȱ ȱ reached because Davis’s bankruptcy discharge did not impli- ȱȱȱ ȱǯȱȱȱǰȱȱȂȱ ¢ȱȱȱȱȱȱ¢ȱȱ ȱȱ to the court’s decision. Third, ȱȱȱ ȱied adequate notice and an opportunity to respond to the bankruptcy discharge issue because CitiMortgage did not ę a motion or objection chal- lenging his right to a discharge. But this argument overlooks ȱȱ ȱȱ ȱ¢ȱȱȱȱȱȱȬ charge before the court. In a 2016 brief asking to reopen the bankruptcy case, Davis stated his “pending adversary case ȱȱȱȱȱȂȱǱȱ ȱȱȬ cluded the debt asserted by CitiMortgage.” While the bank- ruptcy court agreed to reopen Davis’s bankruptcy case, the court made sure to note in its decision ȱȃǽǾȱȱ ȱ CitiMortgage appears to be such a debt that is not subject to discharge.” As a result, Davis has no basis to contend that he did not have constitutional¢ȱĜ notice that the bank- ¢ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ scope of his bankruptcy discharge in the adversary proceed- ing. What is more, if Davis believed that the decision in In re Nos. 21-1084, et al. 13

Davis had denied him due process, he had every right and op- ¢ȱȱȱȱ¢ȱȂȱęȱǯȱNev- ertheless, Davis did not appeal that ruling, and it is too late to ȱȱ ǯȱ * * * ȱȱǰȱ ȱDISMISS the appeal of the remand or- ǰȱȱ ȱAFFIRM the ȱȱȱ and the district Ȃȱ ȱ ȱ ȱ ȱ Ȃȱ suit against CitiMortgage.

Reference

Status: Published