Jerome Davis v. CitiMortgage, Inc.

• Court: Court of Appeals for the Seventh Circuit
• Decided: December 10, 2021
• Docket: 21-1446
• Status: Published

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 No. 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 been locked in a legal battle with Jerome M. Davis and Lynne Ternoir-Davis over a mortgage the couple took out on their residence in 2005. After the Davises defaulted on the loan and filed for bankruptcy, Jerome Davis received a bank- ruptcy discharge, which the bankruptcy court later held did not extend to the debt Davis owed CitiMortgage. Rather than appeal that decision, Davis has attempted to collaterally attack that court’s ruling—first, by attempting to remove CitiMortgage’s foreclosure action to federal court, and second, by filing a separate suit against CitiMortgage. Da- vis lost in each of those proceedings, and CitiMortgage was awarded attorney fees and costs when the court remanded the foreclosure proceeding. Davis appeals these two decisions. But we lack jurisdiction to review the remand order, and Davis has waived his argu- ments challenging the attorney fees and costs award. We also agree with the district court’s dismissal of Davis’s suit against CitiMortgage. I This dispute encompasses three lawsuits: (1) an adversary proceeding in bankruptcy court in which Jerome 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 No. 21-1084, et al. 3

debt collection practices. Only the latter two actions are before us. 1. Davis’s bankruptcy and adversary proceeding. In 2005, the Davises executed a mortgage on their residence with ABN 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 merger, filed a proof of claim in the amount of $478,238.90, secured by the Davis’s residence. Davis’s Chapter 13 bank- ruptcy plan was approved in 2012 and incorporated an agree- ment between the parties that conditioned the automatic stay on Davis making monthly mortgage payments to CitiMort- gage, along with scheduled payments to cure a 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 payments to CitiMortgage, the automatic stay would lift, and CitiMortgage could foreclose on the residence. In 2014, after Davis defaulted on the payments, CitiMort- gage withdrew its proof of claim and notified the bankruptcy court that the stay had terminated. Davis then challenged CitiMortgage’s debt and security interest by filing an adver- sary proceeding, which spanned nearly five years, 250 docket entries, and scores of hearings. While that proceeding was pending, Davis completed the Chapter 13 plan and received a bankruptcy discharge in 2018. Davis’s adversary proceeding concluded in 2019 when the 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 the mortgage at issue. For ease of reference, we refer to them collectively as “Davis.” 4 No. 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 the debt owed CitiMortgage: [T]he dispute between CitiMortgage, Inc. and the Debtor does not implicate his discharge. … To the extent that CitiMortgage, Inc.'s claim was treated by the plan, such claim is non-discharge- able as a cured long-term debt. 11 U.S.C. § 1328(a)(1). To the extent that the withdrawal 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 U.S.C. § 1328(a). Either way, the Debtor's dis- charge is not implicated. Id. at *5. Because the mortgage issue was “a two-party dispute under state law which does not implicate bankruptcy rights,” id., the court granted CitiMortgage’s motion to dismiss. This was not the first time the bankruptcy court had told Davis that a discharge did not affect the debt owed CitiMort- gage. In 2016, after Davis’s bankruptcy case had been errone- ously closed, the court reopened it and stated “[t]he debt owed CitiMortgage 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 declared that the debt “was not subject to discharge—either because it was a long-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. No. 21-1084, et al. 5

or in the alternative it was not a debt provided for by the con- firmed Chapter 13 plan.” 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 Following the dismis- sal, CitiMortgage filed a foreclosure complaint against Davis in Illinois state court. Davis attempted to remove the foreclo- sure action to bankruptcy court, arguing removal was justi- fied because CitiMortgage was seeking a personal deficiency judgment against him, which allegedly contravened Davis’s bankruptcy discharge. In response, CitiMortgage moved to remand, claiming there was no federal jurisdiction on the face of its foreclosure pleading. The bankruptcy court instructed Davis to respond to CitiMortgage’s remand motion and show why the court had jurisdiction. But Davis—a licensed attorney who represented himself and his wife in all underlying proceedings on review before our court, as well as in this appeal—failed to respond. Because Davis had no basis to assert federal question jurisdic- tion, the removal was unreasonable, so CitiMortgage was awarded attorney fees and costs under 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- olating the bankruptcy discharge when the court “has held, on numerous occasions, that the debt owed to [CitiMortgage] is not subject to discharge in Mr. Davis’ now-closed

3 CitiMortgage’s foreclosure action has two case numbers—Nos. 21- 1084 and 21-1101—because Davis filed an amended notice of appeal in the district court. 6 No. 21-1084, et al.

bankruptcy case.” The court entered a separate, final order on the bill of costs on January 6, 2020, awarding CitiMortgage a total of $6,500. Davis appealed the bankruptcy court’s remand order to the district court, but the remand was affirmed. Davis now appeals the remand order to us. He also seeks review of the attorney fees and costs award to CitiMortgage, although he failed to appeal the bankruptcy court’s final order calculating the award amount. 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- ter on his contention that the debt owed CitiMortgage was 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 with prejudice. Davis now appeals the dismissal of his suit against CitiMortgage. II At the outset, we note that In re Davis, in which the bank- ruptcy court ruled that Davis’s 2018 bankruptcy discharge did not cover the debt owed CitiMortgage, 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 No. 21-1084, et al. 7

of his argument, we must first determine whether we have ju- risdiction. Two statutes aid our inquiry. Title 28 U.S.C. § 1447(d) provides that “[a]n order remand- ing a case to the State court from which it was removed is not reviewable on appeal or otherwise.” As we have previously held, § 1447(d) bars review of remands under § 1447(c), and “[t]he reasons for remand that are enumerated in § 1447(c) in- clude defects in removal procedure and lack of subject matter 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). The practical effect of § 1447(d) is that “[i]n most removed cases, 28 U.S.C. § 1447(d) prohibits review of a remand order.” Betzner v. Boeing Co., 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 ability to review the “[r]emoval of claims related to bankruptcy cases.” This statute states that a remand order issued “on any equitable ground” “is not re- viewable by appeal or otherwise by the court of appeals … 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 unreviewable only when it relies on ‘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), we have deter- 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 review the district court’s affirmance of the remand order. 8 No. 21-1084, et al.

The bankruptcy court remanded CitiMortgage’s foreclosure proceeding under § 1447(c) because the court lacked subject matter jurisdiction over the dispute. As a result, we are with- out authority under § 1447(d) to review the bankruptcy court’s remand order. Because a dismissal for lack of subject matter jurisdiction is “appropriate,” § 1452(b) also precludes our review. 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 order was not appealable, it nonetheless held that the order of dismissal was reviewable because it preceded the remand order “in logic and in fact.” Id. at 143. Davis contends that, by extension, his appeal of the remand order fits within Waco because he contests the bank- ruptcy court’s conclusion that his discharge did not cover the debt owed CitiMortgage rather than disputing the court’s holding that it lacked subject matter jurisdiction. Davis’s invocation of Waco does not persuade. In rejecting a similar argument, the Court has expressly stated that “Waco does not permit an appeal when there is no order separate from the unreviewable remand order.” Powerex 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- rate from the remand order, which this court is statutorily

4 Our research yielded that City of Waco has been cited by this circuit only seven times since the Court’s decision in 1934. No. 21-1084, et al. 9

barred from reviewing. And while Davis insists that the un- derlying purpose of Waco is to ensure that appealable issues do not evade review, 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 debt owed CitiMortgage. Yet, he chose not to. Davis cannot now complain that the scope of his bankruptcy discharge has evaded review. Even if our court had jurisdiction over the bankruptcy court’s remand order, we would find that Davis waived the right to object. When CitiMortgage filed its motion to remand the foreclosure proceeding, the bankruptcy court instructed Davis to show why the court had jurisdiction by October 25, 2019. That day came and went, but Davis failed to respond to the motion to remand. In briefs before this court, Davis admits that waiver of the right to establish subject matter jurisdiction. So, we need not entertain that objection. III Davis argues separately that the bankruptcy court’s attor- ney fees and costs award to CitiMortgage should be reversed because he had a reasonable basis to contend that his bank- ruptcy discharge covered the debt owed CitiMortgage. In the bankruptcy court’s October 28, 2019 order remand- ing CitiMortgage’s foreclosure proceeding to state court, the bankruptcy court also awarded CitiMortgage attorney fees and costs in an undetermined amount. On November 13, 2019, Davis appealed the bankruptcy court’s order, including the decision to award CitiMortgage attorney fees. CitiMort- gage then moved to dismiss. In addition to defending the re- mand order, CitiMortgage argued that the fees and costs award should be affirmed—both because Davis’s appeal of 10 No. 21-1084, et al.

the award was premature, as a final order calculating the award amount had not yet been entered at the time of the ap- peal, and because the award was proper since Davis had no basis to assert federal jurisdiction justifying removal. In re- sponse, Davis filed a memorandum that addressed the merits of the remand order, but which neglected entirely the attor- ney fees and costs award. As our court has stated repeatedly, arguments that are un- developed before a district court are waived on appeal. Schomas v. Colvin, 732 F.3d 702, 708 (7th Cir. 2013) (per cu- riam); see Puffer v. Allstate Ins. Co., 675 F.3d 709, 718 (7th Cir. 2012). Here, in the face of CitiMortgage’s contentions to the contrary, Davis offered no argument before the district court for why the bankruptcy court’s fees and costs award was im- proper. Davis’s position against awarding attorney fees was not merely underdeveloped; it was not developed at all. So, Davis has waived his right to appeal this issue before our court. Davis’s challenge to the fees and costs award is waived for an additional reason. In his statement of issues before the dis- trict court, Davis recognized that the basis for the attorney fees award against him was his “fail[ure] to establish a rea- sonable basis for asserting federal question jurisdiction.” But before our court, Davis asserts “[t]he sole basis for the award was . . . that the bankruptcy court deemed [his] challenge to its ruling excepting [CitiMortgage]’s debt from discharge as objectively unreasonable.” In other words, Davis now argues that the fees and costs award was predicated on the bank- ruptcy court’s determination that his substantive claim—ra- ther than his inability to establish federal jurisdiction—was unreasonable. “[R]aising an issue in general terms is not suf- ficient to preserve specific arguments that were not No. 21-1084, et al. 11

previously presented.” Puffer, 675 F.3d at 718. Because Davis’s argument against the fees and costs award before our court differs from his challenge to the award before the district court, we conclude that Davis has waived the argument he now advances before us. IV Finally, Davis challenges the district court’s dismissal of his suit against CitiMortgage, which claimed 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 hinge on the question of whether the debt owed CitiMortgage was covered by his bankruptcy discharge. That was the reso- lution of In re Davis, which he did not appeal. Davis’s attempt to challenge the bankruptcy court’s holding at this stage con- stitutes an impermissible collateral attack. 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 was not a final order and therefore should not be given preclusive effect. In support, Davis points to Ritzen Group, Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582 (2020), in which the Court examined the finality of the bank- ruptcy proceeding in that case based on certain factors. Id. at 588–89. Those factors include a proceeding commencing with the filing of a motion, followed by 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 dismissal was not a final order. But this overcomplicates the analysis. The Ritzen factors were used to determine whether an order was final, even though the un- derlying case remained pending. Here, there is no such 12 No. 21-1084, et al.

complexity. The bankruptcy court dismissed the adversary proceeding, and as our court has noted, “[a] final resolution of any adversary proceeding is appealable, as it is equivalent to a stand-alone lawsuit.” Fifth 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 “a two-party dispute under state law” that “[did] not implicate bankruptcy rights.” This conclusion was reached because Davis’s bankruptcy discharge did not impli- cate the debt owed CitiMortgage. For that reason, the court’s analysis on the scope of the bankruptcy discharge was central to the court’s decision. Third, Davis contends he was denied adequate notice and an opportunity to respond to the bankruptcy discharge issue because CitiMortgage did not file a motion or objection chal- lenging his right to a discharge. But this argument overlooks that it was Davis who originally placed the scope of his dis- charge before the court. In a 2016 brief asking to reopen the bankruptcy case, Davis stated his “pending adversary case will determine the scope of Debtor’s discharge: whether it in- 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 that “[t]he debt owed 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 constitutionally sufficient notice that the bank- ruptcy court could make findings or determinations on the scope of his bankruptcy discharge in the adversary proceed- ing. What is more, if Davis believed that the decision in In re No. 21-1084, et al. 13

Davis had denied him due process, he had every right and op- portunity to appeal the bankruptcy court’s final order. Nev- ertheless, Davis did not appeal that ruling, and it is too late to do so now. * * * For these reasons, we DISMISS the appeal of the remand or- der, and we AFFIRM the fees and costs award and the district court’s dismissal with prejudice of Davis’s suit against CitiMortgage.