Cynthia M. Lundeen ( 2024 )

NOT RECOMMENDED FOR PUBLICATION
File Name: 24b0005n.06
BANKRUPTCY APPELLATE PANEL
OF THE SIXTH CIRCUIT
┐
IN RE: CYNTHIA M. LUNDEEN,
│
Debtor. │
___________________________________________ │
> No. 24-8005
CYNTHIA M. LUNDEEN aka Cynthia Marek Lundeen, │
│
Debtor-Appellant, │
│
│
v. │
│
│
WELLS FARGO BANK, N.A., │
Creditor -Appellee. │
┘
Appeal from the United States Bankruptcy Court for the Northern District of Ohio at Cleveland.
No. 23-11595—Jessica E. Price Smith, Bankruptcy Judge.
Decided and Filed: August 28, 2024
Before: BAUKNIGHT, CROOM, and STOUT, Bankruptcy Appellate Panel Judges.
_________________
COUNSEL
ON BRIEF: J.C. Ratliff, RATLIFF LAW OFFICE, Marion, Ohio, for Appellant. Matthew J.
Richardson, MANLEY DEAS KOCHALSKI LLC, Columbus, Ohio, for Appellee.
No. 24-8005 In re Lundeen Page 2
_________________
OPINION
_________________
SUZANNE H. BAUKNIGHT, Bankruptcy Appellate Panel Judge.
Through this appeal, Debtor Cynthia Lundeen (“Debtor”) challenges the denial of her
motion seeking reconsideration of the order granting stay relief to Wells Fargo Bank, N.A.
(“Wells Fargo”) by the United States Bankruptcy Court for the Northern District of Ohio.
Because the Panel finds that the bankruptcy court did not abuse its discretion when it granted
stay relief to Wells Fargo and denied Debtor’s request for reconsideration of that order, we
affirm the bankruptcy court.
ISSUES ON APPEAL
Debtor has stated the issues on appeal as follows:1
I. Wells [Fargo] is not entitled to adequate protection for various reasons.
II. The federal first-to-file doctrine was not honored by the lower court.
III. The underlying state court foreclosure judgment is a nullity and void.
JURISDICTION AND STANDARD OF REVIEW
The Panel has jurisdiction to hear appeals “from final judgments, orders, and decrees”
issued by a bankruptcy court pursuant to 28 U.S.C. § 158(a)(1). “Orders in bankruptcy cases
qualify as ‘final’ when they definitively dispose of discrete disputes within the overarching
bankruptcy case.” Ritzen Grp., Inc. v. Jackson Masonry, LLC, 589 U.S. 35, 37 (2020) (citing
Bullard v. Blue Hills Bank, 575 U.S. 496, 501 (2015)). An order that adjudicates a creditor’s
motion for stay relief is “a final, appealable order when the bankruptcy court unreservedly grants
or denies relief.” Id. at 38. Because the United States District Court for the Northern District of
1
Rather than recite verbatim the nearly four pages of improper argument identified as the “Statement of
Issues” in the Appellant’s Designation of the Record on Appeal, Statement of the Issues, and Transcript Orders
(“Designation on Appeal”), the Panel recites the Statement of Issues contained in Appellant’s Principal Brief. The
Panel notes that the text of Debtor’s first and third identified issues is identical to Debtor’s argument in her brief for
those issues. (Compare Appellant’s Designation of the R. on Appeal, Statement of the Issues, and Tr. Orders at 2-3,
BAP Case 23-8005, ECF No. 11, with Appellant’s Principal Br. at 12-15, BAP Case 23-8005, ECF No. 17.)
No. 24-8005 In re Lundeen Page 3
Ohio has authorized appeals to the Panel and no party has filed to have the appeal heard by a
district court, this appeal is properly before the Panel. Through her appeal of the bankruptcy
court’s denial of her motion seeking reconsideration of a motion seeking stay relief, Debtor also
appeals the underlying order granting relief from the automatic stay on its merits. Fed. R. Bankr.
P. 8003(a)(4).
An appellate court reviews the trial court’s denial of a motion seeking reconsideration of
an order or judgment under Federal Rule of Civil Procedure 59(e) for an abuse of discretion.
Tchankpa v. Ascena Retail Grp., Inc., 951 F.3d 805, 811 (6th Cir. 2020) (citations omitted); see
also GenCorp, Inc. v. Am. Int’l Underwriters, 178 F.3d 804, 833 (6th Cir. 1999) (“[A]s a general
matter, the appeal from the denial of a Rule 59(e) motion is treated as an appeal from the
underlying judgment itself.”). The bankruptcy court’s grant of a motion for stay relief also is
reviewed for an abuse of discretion. Trident Assocs. Ltd. P’ship v. Metro. Life Ins. Co. (In re
Trident Assocs. Ltd. P’ship), 52 F.3d 127, 130 (6th Cir. 1995); In re Martin, 542 B.R. 199, 201
(B.A.P. 6th Cir. 2015). “‘An abuse of discretion occurs only when the [trial] court relies upon
clearly erroneous findings of fact or when it improperly applies the law or uses an erroneous
legal standard.’ ‘The question is not how the reviewing court would have ruled, but rather
whether a reasonable person could agree with the bankruptcy court’s decision; if reasonable
persons could differ as to the issue, then there is no abuse of discretion.’” In re Murray Energy
Holdings Co., 640 B.R. 558, 561 (B.A.P. 6th Cir. 2022) (quoting In re Appalachian Fuels, LLC,
493 B.R. 1, 6 (B.A.P. 6th Cir. 2013) (citations omitted)).
FACTS2
Debtor’s state court efforts to defeat Wells Fargo’s foreclosure attempts on Debtor’s
residence since 2016 were summarized by the district court’s order that dismissed Debtor’s
claims in the District Court Action:
2
The Panel has gleaned the facts from the documents identified by Debtor in the Designation on Appeal
and any document referenced therein. Also, because Debtor attached as exhibits to the Motion for a Stay of
Execution and to Set Bond filed before this Panel on March 1, 2024, the full dockets as of February 10, 2024, the
Panel takes judicial notice of all referenced documents of record in In re Lundeen, Case No. 23-11595-jps (Bankr.
N.D. Ohio) (“Bankruptcy Case”) and Lundeen v. Wells Fargo, Case No. 1:23-cv-00918-BMB (N.D. Ohio) (“District
Court Action”). See Fed. R. Evid. 201.
No. 24-8005 In re Lundeen Page 4
On January 8, 2016, Defendant Wells Fargo filed a foreclosure complaint
against Lundeen [in Ohio state court], seeking the balance due on a promissory
note and to foreclose on a mortgage. Following Wells Fargo’s third amended
complaint, Lundeen filed a motion to dismiss the case, claiming Wells Fargo did
not have standing to bring the foreclosure action because she had signed the note
and mortgage with World Savings Bank, and Wells Fargo had not alleged in the
third amended complaint that it was a successor to the note and mortgage by
merger or a name change. The state trial court denied the motion. Thereafter,
Wells Fargo filed a motion for summary judgment, which the trial court
granted.[3] See Wells Fargo, N.A. v. Lundeen, No. 107184, 2020-Ohio-28 (Ohio
Ct. App. Jan. 9, 2020).
Lundeen appealed the state trial court’s decision, alleging that the trial
court erred in granting summary judgment to Wells Fargo because she was never
served with the third amended complaint and the note and mortgage were not
properly authenticated. Id. The Eighth District Court of Appeals [for Ohio]
affirmed the judgment, concluding that Lundeen waived any issue with service
because she had not previously raised the issue and proper service can be
presumed in this case. Id. at * 7-10. The state court of appeals also found no
error regarding Wells Fargo’s affidavit authenticating the documents attached to
its motion for summary judgment. Id. at *13-14. Lundeen asked the [state
court]to reconsider its decision en banc, and the [state court] declined to do so.
See Wells Fargo, N.A., No. 107184 (Ohio Ct. App. filed June 15, 2020). Lundeen
then appealed the Eighth District Court of Appeals’ decision to the Ohio Supreme
Court, which declined jurisdiction. See Wells Fargo, N.A. v. Lundeen, No. 2020-
0932, 2020-Ohio-4811 (Ohio 2020).
Lundeen additionally filed a direct action seeking a writ of prohibition in
the Eighth District Court of Appeals [of Ohio] to prevent the enforcement of the
foreclosure judgment, which was dismissed. See State ex rel. Lundeen v.
Burnside, No. 107657, 2018-Ohio-4122 (Ohio Ct. App. October 5, 2018). She
filed another direct action, once again seeking a writ of prohibition in the Eight
[sic] District Court of Appeals, which was also dismissed. See Lundeen v.
Turner, No. 109240, 2020-Ohio-274 (Ohio Ct. App. Jan. 24, 2020). In May 2021,
the Ohio Supreme Court denied relief in Lundeen’s direct appeal. See Lundeen v.
Turner, No. 2020-0356, 172 N.E.3d 150 (Ohio 2021). And in May 2022, the
Ohio Supreme Court affirmed the court of appeals’ denial of Lundeen’s motion
for relief from judgment. See Lundeen v. Turner, No. 2021-1032, 194 N.E.3d 349(Ohio 2022).
3
The suit was captioned Wells Fargo Bank, N.A. v. Cynthia Lundeen, et al., Case No. CV-16-856890
(“State Court Action”) and filed in the Court of Common Pleas for Cuyahoga County, Ohio. The judgment is dated
April 13, 2018 (“Foreclosure Judgment”).
No. 24-8005 In re Lundeen Page 5
(Mem. Op. & Order (“District Court Dismissal Order”) at 1-2, Case No. 1:23-cv-00918-BMB
(N.D. Ohio July 28, 2023), ECF No. 11.)
Dissatisfied with her repeated losses in state court, Debtor, pro se, filed the District Court
Action on May 4, 2023, seeking injunctive relief to prevent Wells Fargo from executing on the
Foreclosure Judgment, which she argued was void because she had not waived personal
jurisdiction, she had not participated in the State Court Action, and Wells Fargo had “violated
‘the doctrine of equitable estoppel otherwise known as fraud on the court.’” (Id. at 3; Order at 1,
Case No. 1:23-cv-00918-BMB (N.D. Ohio Mar. 4, 2024), ECF No. 17.) In the District Court
Dismissal Order, the district court granted Wells Fargo’s motion to dismiss, applying the
Rooker-Feldman doctrine and res judicata. Specifically, the district court held that it “lack[ed]
subject matter jurisdiction over [Debtor’s] complaint” and her request for the court “to review
the state court’s decisions in the foreclosure action and to declare the foreclosure judgment
void.” (District Court Dismissal Order at 5-6, Case No. 1:23-cv-00918-BMB (N.D. Ohio July
28, 2023), ECF No. 11.) Such a request, the district court found, “is precisely the kind of
challenge to a state court decision that is barred by the Rooker-Feldman doctrine.” (Id. at 6.)
The district court also referenced 28 U.S.C. § 2283, which precludes federal injunctions to stay
state court proceedings (including foreclosures) unless doing so is expressly authorized by an
Act of Congress or is necessary to aid in effectuating a federal judgment. Because the
Foreclosure Judgment was “a final judgment rendered upon the merits,” the district court found
that Debtor’s challenge to the validity of the Foreclosure Judgment was barred by res judicata,
which encompassed both issue and claim preclusion under Ohio law. (Id. at 6-7.) Finally,
finding that “to the extent [Debtor] argue[d] that her claim regarding the alleged lack of service
ha[d] not been previously adjudicated, this claim could have been litigated in the prior state
action,” the district court held that the Foreclosure Judgment was entitled to full faith and credit
so that Debtor was barred from relitigating in the district court. (Id. at 8.) “Immediately after
filing its Order,” the district court “issued a final judgment entry” as docket entry number 12.
(Order at 1-2, Case No. 1:23-cv-00918-BMB (N.D. Ohio Mar. 4, 2024), ECF No. 17; Judgment
Entry, Case No. 1:23-cv-00918-BMB (N.D. Ohio July 28, 2023), ECF No. 12.)
No. 24-8005 In re Lundeen Page 6
Twenty-eight days after entry of the District Court’s Dismissal Order and Judgment
Entry, Debtor filed a Motion for Leave to Amend Under Rules 15(a)(2) and 59(e) (“Rule 15
Motion”). When the district court took no action on the motion, Debtor filed a motion to place
the Rule 15 Motion on the docket. On March 4, 2024, the district court entered its order denying
both of Debtor’s motions.
Meanwhile, on May 12, 2023, eight days after filing the District Court Action, Debtor,
again acting pro se,4 filed a Voluntary Chapter 13 Petition commencing the Bankruptcy Case.
Debtor scheduled Wells Fargo as holding a disputed unliquidated claim of approximately
$499,473.61 ($364,579.25 plus 3.913% interest per annum from December 16, 2013) for account
number ending in 6218, marking the “nature of lien” as “other” with a caveat that “a financial
institution other than Wells Fargo Bank NA originated the note and mortgage; it is disputed that
Wells Fargo Bank N.A. has standing to make a claim.” (Pet. at 11, Case No. 23-11595-jps
(Bankr. N.D. Ohio May 12, 2023), ECF No. 1.) Debtor also scheduled a disputed unliquidated
debt for account number ending in 0001 in the amount of $72,467.18, also marking the “nature
of lien” as “other” with a caveat that “a financial institution other than Wells Fargo Bank, N.A.
originated the home equity line of credit, which it solicitated [sic] me to accept; It is disputed that
Wells Fargo Bank, N.A. has standing to make a claim.” (Id.)
On September 22, 2023, approximately two months after the District Court Action was
dismissed, Wells Fargo filed in the Bankruptcy Case a Motion for Relief From Stay and
Codebtor Stay (First Mortgage) (“Motion for Stay Relief”), seeking stay relief under 11 U.S.C.
§ 362(d)5 and the codebtor stay of 11 U.S.C. § 1301.6 As stated in the Motion for Stay Relief,
4
Counsel for Debtor entered an appearance in the Bankruptcy Case on July 17, 2023. Counsel for Debtor
in the Bankruptcy Case and in this appeal filed his notice of appearance in the District Court Action on November 9,
2023, thus first appearing in the District Court Action on the same day as the hearing in the Bankruptcy Case on
Wells Fargo’s Motion for Stay Relief, during which Wells Fargo argued that Debtor’s Rule 15 Motion in the District
Court Action would sit dormant because the District Court Action had been fully adjudicated without a timely
appeal.
5
The opening paragraph of the Motion for Stay Relief references “Bankruptcy Code §§ 361, 362, and 363,
and other sections of Title 11 of the United States Code, under Federal Rules of Bankruptcy Procedure 4001, and
under Local Bankruptcy Rule 4001-1” in making the request “for an order conditioning, modifying or dissolving the
automatic stay imposed by Bankruptcy Code § 362 and the codebtor stay imposed by 11 U.S.C. § 1301 with
respect to James E. Lundeen.” (Mot. For Stay Relief at 1, Case No. 23-11595-jps (Bankr. N.D. Ohio Sept. 22,
2023), ECF No. 55 (emphasis in original)). Wells Fargo’s opening paragraph lists §§ 361 and 363 but makes no
No. 24-8005 In re Lundeen Page 7
Debtor, individually, obtained a loan from World Savings Bank, FSB, in June 2005, for
$445,000.00 through an Adjustable Rate Mortgage Note, which was secured by an Open-End
Mortgage granting a lien against real property owned by Debtor and, allegedly, her spouse,
James L. Lundeen, at 2380 Overlook Road, Cleveland Heights, Ohio (“Overlook Road
Property”). Wells Fargo alleged that according to county tax records, Overlook Road Property
had a value of $552,500.00. The Motion for Stay Relief recited a total debt of $818,797.13 as of
September 7, 2023.7 Wells Fargo, as servicer and owner of the loan obligation by transfers from
World Savings Bank, FSB, to Wachovia Mortgage, FSB, to Wells Fargo, sought stay relief for
the following reasons:
Debtor has failed to provide adequate protection for the lien held by the Creditor
for the reasons stated in the boxes checked below.
....
Debtor has failed to make periodic payments to Creditor since the
commencement of this bankruptcy case and is due for the June 5, 2023, June
19, 2023, July 3, 2023, July 17, 2023, July 31, 2023, August 14, 2023, and
August 28, 2023 payments, which unpaid payments are in the aggregate
amount of $17,617.67 less a post-petition suspense of $0.00 to total $17,617.67
through September 7, 2023. The total provided in this paragraph cannot be
relied upon as a post-petition reinstatement question.
other reference to or argument under those sections, and the bankruptcy court clearly granted stay relief for cause
under § 362(d).
6
The Panel also notes that although Debtor complains about the inclusion of relief from the co-debtor stay
in the Stay Relief Order, Debtor has not raised, and has no standing to appeal, that portion of the Stay Relief Order.
See Williams v. Levi (In re Williams), 323 B.R. 691, 699 (B.A.P. 9th Cir. 2005) (noting that the codebtor was not a
party to the appeal and the debtor had no apparent standing to appeal on the codebtor’s behalf). On August 2, 2024,
Debtor filed Appellant’s Motion to Take Judicial Notice Pursuant to Federal Evidence Rule 201, asking the Panel to
take judicial notice of a journal entry from the Cuyahoga County Court of Common Pleas that dismissed with
prejudice James Lundeen, the alleged codebtor. Because the journal entry has no bearing on this appeal, which does
not include the question of codebtor stay relief, the Panel will deny Debtor’s motion.
7
As evidenced by Exhibit D to the Motion for Stay Relief, the total debt included principal of $364,579.25,
interest of $127,512.21, late fees of $389.83, and an escrow advance of $325,385.84. (Exhibit D to Mot. for Stay
Relief at 30-34, Case No. 23-11595-jps (Bankr. N.D. Ohio Sept. 22, 2023), ECF No. 55-1.) Of that total,
$610,741.69 were pre-petition arrearages, and $17,617.67 were post-petition arrearages from Debtor’s failure to
make seven payments of $2,516.81. (Id.) Wells Fargo attached as exhibits to the Motion for Stay Relief copies of
the Adjustable Rate Mortgage Note; the Open-End Mortgage; Articles of Combination reflecting a merger between
World Savings Bank, FSB and World Savings and Loan Association; and the Stay Relief Worksheet. (Exhibits A-D
to Mot. for Stay Relief, Case No. 23-11595-jps (Bankr. N.D. Ohio Sept. 22, 2023), ECF No. 55-1.)
No. 24-8005 In re Lundeen Page 8
(Mot. For Stay Relief at ¶ 14, Case No. 23-11595-jps (Bankr. N.D. Ohio Sept. 22, 2023), ECF
No. 55 (emphases in original)).
In Debtor’s opposition to the Motion for Stay Relief (“Opposition to Stay Relief”)), she
advanced the following four arguments:
A. First to File Doctrine of Federal Comity8 . . . ;
B. Wells Fargo’s Motion to Lift the Co-debtor Stay as to James E. Lundeen is a
nullity, is Barred by the Doctrine of Res Judicata, inter alia, and is
Emblematic of the Fact that Wells Fargo does not know or understand what
assets it may or may not have purchased, inherited or otherwise acquired from
defunct Wachovia Savings Bank, FSB, which in turn had purchased, inherited
or otherwise acquired from defunct World Savings Bank, FS9 . . . ;
C. Wells Fargo relies on unauthenticated exhibits, inadmissible as evidence
pursuant to Evid.R. [sic] 803(b) and Evid.R. [sic] 902(11), inter alia10 . . . ;
and
[D.] Adverse Inference.11
(Debtor’s Mem. in Opp’n to Mot. for Stay Relief at 2, 4, 10, Case No. 23-11595-jps (Bankr.
N.D. Ohio Oct. 13, 2023), ECF No. 66.) Debtor also attached seven exhibits to her Opposition
to Stay Relief: (1) a Journal Entry from the Court of Common Pleas of Cuyahoga County, Ohio,
dated January 8, 2018, reflecting that James Lundeen was dismissed from the State Court Action
because his dower interest in the Overlook Road Property was terminated when he and Debtor
divorced; (2) a Reuters Business News online article dated October 12, 2017, entitled “Ohio
extends ban on Wells Fargo business by six months”; (3) a Reuters Investment Trusts online
article dated December 14, 2010, entitled “Wells Fargo to settle lawsuit over pick-a-payment
loans”; (4) an article dated June 6, 2018, from The Motley Fool entitled “Why Wells Fargo is
8
Debtor argued that the bankruptcy court was required to abstain from granting the Motion for Stay Relief
while the District Court Action was pending under the “first-to-file” rule. (Debtor’s Mem. in Opp’n to Mot. for Stay
Relief at 1-4, Case No. 23-11595-jps (Bankr. N.D. Ohio Oct. 13, 2023), ECF No. 66.)
9
Debtor argued that Mr. Lundeen, Debtor’s former spouse, was dismissed from the State Court Action and,
therefore, was without dower rights, and it was “a nullity” to ask for codebtor relief. (Id. at 2, 4.)
10
Debtor argued that the security documents on which Wells Fargo relied in the Motion for Stay Relief
were not authenticated and, therefore, inadmissible under Federal Rule of Evidence 803(6). (Id. at 4-9.)
11
Debtor argued that the bankruptcy court should infer against Wells Fargo for not relying on the
Foreclosure Judgment and, instead, using “business records” in support of its Motion for Stay Relief. (Id. at 10.)
No. 24-8005 In re Lundeen Page 9
Leaving the Midwest Behind”; (5) an article dated June 6, 2018, from www.news8000.com
entitled “Wells Fargo selling all branches in Michigan, Indiana, Ohio”; (6) an article dated
January 11, 2023, from Forbes entitled “Wells Fargo Is Backing Out Of The Mortgage Market –
What Does It Mean For Homebuyers?”; and (7) an article dated December 20, 2022, from the
Consumer Financial Protection Bureau entitled “CFPB Orders Wells Fargo to Pay $3.7 Billion
for Widespread Mismanagement of Auto Loans, Mortgages, and Deposit Accounts.” (Id. at Exs.
1-7.)
The bankruptcy court held a hearing on November 9, 2023, on several matters, including
the Motion for Stay Relief and Opposition to Stay Relief. As reflected in the transcript of the
hearing, Wells Fargo sought stay relief under § 362(d) based on Debtor’s failure to make
payments, and its counsel gave the following synopsis of the parties’ actions to that point:
Debtor hasn’t made any payments. Debtor has acknowledged the intent is to not
make any payments. At this point, there will be no payments forthcoming. The
equity issue, there’s a lack of equity there. And you could also argue that this
property is not necessary for an effective reorganization, as Debtor has not
provided any treatment in her plan, but has filed multiple plans at this point that
do not include treatment.
Debtor didn’t dispute any of those issues in the response. In fact, as I stated
Debtor freely acknowledges she’s not making any payments, as she still continues
to dispute the debt to Wells Fargo. At this point, you know, continued efforts of
this Debtor to delay foreclosure that’s been pending since 2016. The Debtor
wants to hang her hat on her [District Court Action]. But as been provided to the
Court, that case was dismissed. That docket terminated July 28, and the order that
the court entered was very clear. That was dismissed with no leave to amend. So
that was the end of that case. Debtor did not timely appeal. So at the moment,
the motion for leave that Debtor filed in that case was filed after the case was
dismissed. That’s going to sit there until the end of time. The court will not rule
on that because that case was terminated.
So at the moment, the note and mortgage are valued as ruled on by a Cuyahoga
County Court of Common Pleas in Case CV-856890 back in 2018, and the Eighth
Appellate District confirmed that judgment in 2020. So at the moment, the only
rulings out there are all in favor of Wells Fargo’s validity of the note and the
mortgage and the validity of the lien.
So at the moment, Debtor has no stand, no basis, really, at this point, to deny the
existence of the note and the mortgage and the existence of the debt.
No. 24-8005 In re Lundeen Page 10
And in fact, if we look back into 2019 in the Debtor’s prior case, this Court
granted Wells Fargo’s relief from stay in that case for the very same reason.
Nothing’s happened. Nothing has changed since then. In fact, the only difference
was that Debtor’s appeal has failed since then, and her [District Court Action] has
been dismissed. So Debtor has not progressed any further than in 2019.
So there’s significant prejudice to my client and harm if they’re not granted relief
at this point and allowed to continue with their state court remedies.
(Tr. of Nov. 9, 2023 Hr’g at 3:12-5:11, Case No. 23-11595-jps (Bankr. N.D. Ohio Dec. 6, 2023),
ECF. No. 107.)
In response, Debtor’s counsel disagreed with the argument advanced by Wells Fargo and
asked for a stay of the bankruptcy court’s decision on the Motion for Stay Relief based on the
following:
There was a motion filed August 25 pursuant to 59(e) in the [District Court
Action] asking to be allowed to amend. I think it is an appropriate motion
pursuant to 59(e). There was no reply done by Wells Fargo to that motion. That
motion is still pending. There were still some claims in there that weren’t
adjudicated. As a result, that is still a good pending motion, and we have not
heard from the Northern District Court.
(Id. at 5:15-5:23.) When asked by the bankruptcy court specifically for Debtor’s stance
regarding lack of equity, failure to make post-petition payments, and the underlying State Court
Action, Debtor’s counsel stated the following:
Your Honor, we are claiming that the judgment that they’ve obtained is invalid
based on numerous problems with it, which included unauthenticated exhibits,
lack of authenticated documents, inadmissible evidence, use of secondary
evidence. And as a result, we have asked to amend, and we feel it is a good
motion under 59(a)[.]
(Id. at 6:9-6:15.)
The bankruptcy court then ruled from the bench and granted the Motion for Stay Relief
“for cause,” stating, “To the extent that you have issues with respect to [the] underlying
judgment, this will go back to the state court for their remedies, and you can address those
there.” (Id. at 6:18-6:21.) The Order Granting Motion for Relief From Stay And Codebtor Stay
No. 24-8005 In re Lundeen Page 11
(First Mortgage) (Docket No. 55) (“Stay Relief Order”) memorializing the bench decision was
entered on November 22, 2023.
Debtor moved to modify the Stay Relief Order on November 27, 2023 (“Motion to
Modify”), asking the bankruptcy court to reconsider and (1) stay ruling on the Motion for Stay
Relief pending the outcome of the District Court Action, “including all appeals, including
certiorari to the U.S. Supreme Court,” and (2) deny the Motion for Stay Relief to the extent it
sought relief from the codebtor stay. (Mot. to Modify at 1, Case No. 23-11595-jps (Bankr. N.D.
Ohio Nov. 27, 2023), ECF No. 93.) Debtor also submitted a proposed order to “replace” the
Stay Relief Order that, inter alia, stayed adjudication of the Motion for Stay Relief pending all
appeals in the District Court Action and stated that Wells Fargo’s documents “tendered in
support of its motion to lift the automatic stay constitute double hearsay and are not trustworthy
as acquiesced by Wells’ decision not to refute Lundeen’s arguments.” (Proposed Order at 1, 2,
Case No. 23-11595-jps (Bankr. N.D. Ohio Nov. 29, 2023), ECF No. 95.) On December 1, 2023,
Debtor re-filed the Motion to Modify (“Motion for Reconsideration”) because of the need to cure
a filing deficiency, as noted by the bankruptcy court on November 30, 2023. For the first time,
Debtor attached as an exhibit to the Motion for Reconsideration an affidavit averring that her
name is on the deed to and she owns the Overlook Road Property, that she has lived there for
31 years, and that she “would be irreparably harmed” if Wells Fargo sold the Overlook Road
Property.12 (Aff. of Cynthia M. Lundeen at ¶¶ 1, 3-5, Case No. 23-11595-jps (Bankr. N.D. Ohio
Dec. 1, 2023), ECF No. 101-1.)
The bankruptcy court held a hearing on the Motion for Reconsideration (and Debtor’s
request to stay execution) on January 11, 2024. At the hearing, Debtor argued that she was
entitled to stay execution of the Stay Relief Order in exchange for posting a $1,000.00 bond. She
also asked that any enforcement of Wells Fargo’s nonbankruptcy rights be stayed until after the
court heard and adjudicated Debtor’s objection to Wells Fargo’s claim number 6. Debtor offered
several arguments in support of this argument: (1) Wells Fargo did not have an enforceable
12
Debtor also included in her Affidavit the following legal conclusion: “No court has performed the
required de novo analysis of the threshold issue which resulted in the summary judgment of foreclosure in question
of April 13, 2018, being void ab initio.” (Aff. of Cynthia M. Lundeen at ¶ 6, Case No. 23-11595-jps (Bankr. N.D.
Ohio Dec. 1, 2023), ECF No. 101-1.)
No. 24-8005 In re Lundeen Page 12
claim; (2) the proposed “split plan”13 had not been confirmed; (3) the District Court Action
remained pending; and (4) the Chapter 13 Trustee did not participate in the stay relief hearing
and did not meet the burden imposed on trustees under § 363. In response, Wells Fargo argued
that (1) because the Motion for Stay Relief was filed under § 362, the Chapter 13 Trustee had no
input concerning whether Wells Fargo was adequately protected and § 363 was inapplicable;
(2) because the District Court Action was closed, only the Bankruptcy Case remained pending;
and (3) Wells Fargo had continually objected to confirmation of Debtor’s proposed amended
Chapter 13 plan. Finally, Wells Fargo argued that Debtor was “using [the bankruptcy case] as a
vehicle to hinder and delay Wells Fargo’s state court rights,” that both the state appellate court
and the district court had affirmed the validity of the Foreclosure Judgment, and that Debtor
should seek a bond in the state court, which should be set in the amount of the judgment under
Ohio law and significantly more than $1,000.00. (Tr. of Jan. 11, 2024 Hr’g at 4:19-21, 5:1-11,
7:15-24, Case No. 23-11595-jps (Bankr. N.D. Ohio Jan. 17, 2024), ECF No. 142.)
The bankruptcy court denied the Motion for Reconsideration after “review[ing] the
pleadings and listening to the arguments of counsel,” because there was no “good cause stated
for the motion.” (Id. at 6:19-23.) The bankruptcy court did not enter a formal order denying the
Motion for Reconsideration; however, docket entries dated January 11, 2024, reflect that the
motion was “DENIED” and the response by Wells Fargo was “SUSTAINED.” (Jan. 11, 2024
Docket Entries, Case No. 23-11595-jps (Bankr. N.D. Ohio).)
On January 24, 2024, Debtor timely filed her Notice of Appeal of the bankruptcy court’s
denial of the Motion for Reconsideration, and the appeal was docketed on February 7, 2024.
Neither party requested oral argument, and the Panel finds that the facts and legal arguments are
13
The “split plan” appears to have come into play during the confirmation hearing held on September 28,
2023, during which counsel for the Chapter 13 Trustee opposed Debtor’s motion to continue the confirmation
hearing pending the outcome of the District Court Action, arguing that the case needed to move forward and that if
the court were to grant Debtor’s request to suspend confirmation indefinitely, creditors would not be paid. Counsel
for the Chapter 13 Trustee then suggested what Debtor calls her “split plan”: that “worst case scenario, there’s
something in a confirmed plan, if we can have a feasible plan, that would basically hold whatever litigation there is
with Wells Fargo in abeyance. But the rest of the creditors can get paid out if there is a plan that is confirmable.”
(Tr. of Sept. 28, 2023 Hr’g at 4:21-5:1, Case No. 23-11595-jps (Bankr. N.D. Ohio Dec. 28, 2023), ECF No. 127.)
No. 24-8005 In re Lundeen Page 13
adequately presented in the briefs and record and that the decisional process would not be
significantly aided by oral argument.
DISCUSSION
For the reasons outlined herein, the Panel finds that the bankruptcy court did not abuse its
discretion in denying the Motion for Reconsideration or in granting the underlying Motion for
Stay Relief.
I. Relief from the Automatic Stay
The automatic stay, which is imposed under 11 U.S.C. § 362(a) as a matter of law when a
bankruptcy petition is filed, “gives the honest debtor an opportunity to protect his assets for a
period of time so that the resources might be marshalled to satisfy outstanding obligations.”
Laguna Assocs. Ltd. P’ship v. Aetna Cas. & Sur. Co. (In re Laguna Assocs. Ltd. P’ship), 30 F.3d
734, 737 (6th Cir. 1994). Creditors may seek relief from the automatic stay under 11 U.S.C.
§ 362(d) for a lack of equity in the property in question, when the property is not necessary for
an effective reorganization, and “for cause, including the lack of adequate protection of an
interest in property of such party in interest[.]” 11 U.S.C. § 362(d)(1). “The decision whether or
not to lift the automatic stay resides within the sound discretion of the bankruptcy court.” In re
Martin, 542 B.R. at 202. Because the Bankruptcy Code does not define “cause” under
§ 362(d)(1), “courts must determine whether discretionary relief is appropriate on a case-by-case
basis.” Laguna Assocs. Ltd. P’ship, 30 F.3d at 737. Although the party seeking stay relief bears
the burden of proving a lack of equity in the property, the party opposing relief bears the burden
of proof on all other issues. 11 U.S.C. § 362(g).
In support of the Motion for Stay Relief, Wells Fargo alleged and attached exhibits to
reflect that Debtor owned the Overlook Road Property, which she used as collateral for a
$445,000.00 mortgage from its predecessor in interest, World Savings Bank, FSB; that the
Cuyahoga County Auditor valued the Overlook Road Property at $552,500.00 on its tax records;
and that Debtor’s debt to Wells Fargo totaled $818,797.13, including seven post-petition
payments totaling $17,617.67, as of September 7, 2023. At the November 9, 2023 hearing on the
Motion for Stay Relief, even when the bankruptcy court expressly offered Debtor an opportunity
No. 24-8005 In re Lundeen Page 14
to refute Wells Fargo’s allegations, Debtor did not dispute that she was not making payments to
Wells Fargo for the Overlook Road Property, that there was no equity in the property,14 or that
there was an underlying state court action within which the parties could proceed. Instead,
Debtor’s counsel reiterated the claim that the Foreclosure Judgment was invalid and that it
should be set aside under Rule 59(e).
The bankruptcy court granted Wells Fargo stay relief “based on cause,” saying that the
motion stated cause “based on there being no equity, there being no post-petition payment, and
there being an underlying state court case which the creditor can proceed in.” (Tr. of Nov. 9,
2023 Hr’g at 6:3-6, Case No. 23-11595-jps (Bankr. N.D. Ohio Dec. 6, 2023), ECF No. 107.)
The court also made clear in the Stay Relief Order: “Movant has alleged that good cause for
granting the Motion exists” and that “[a] hearing on the Motion was held on November 9, 2023,
and the motion was granted for cause.” (Stay Relief Order at 1-2, Case No. 23-11595-jps
(Bankr. N.D. Ohio Nov. 22, 2023), ECF No. 85.)
A. Adequate Protection
Debtor argues before this Panel that the bankruptcy court erred in granting the Motion for
Stay Relief because the Chapter 13 Trustee did not request or require adequate protection
payments on Wells Fargo’s claim, did not meet her burden of evidence that adequate protection
payments were necessary under 11 U.S.C. § 363(p), and was not required by the court to present
any such evidence at the November 9 hearing.15 This argument, however, is misplaced.
14
For the first time, in her reply brief Debtor argues to this Panel that Wells Fargo never provided “credible
evidence of lack of equity.” (Appellant’s Reply Br. at 13, BAP No. 24-8005, ECF No. 21.) Debtor then proffers
evidence not in the record about the value of the Overlook Road Property. The new argument that Wells Fargo
failed to meet its burden to show a lack of equity in the Overlook Road Property is waived. See United States v.
Ninety–Three Firearms, 330 F.3d 414, 424 (6th Cir. 2003) (“This court has repeatedly held that it will not consider
arguments raised for the first time on appeal unless our failure to consider the issue will result in a plain miscarriage
of justice.”) No miscarriage of justice exists here because Debtor’s amended Schedule A/B, filed August 23, 2023,
scheduled the value of the Overlook Road Property at $700,000.00, which is less than the debt owed to Wells Fargo
according to Exhibit D to the Motion for Stay Relief.
15
Debtor correctly states that under § 363(p), the burden of proving adequate protection is borne by the
trustee seeking to use, sell, or lease property under § 363. Wells Fargo’s Motion for Stay Relief, however, is not an
action under § 363 and was not brought by the Chapter 13 Trustee. As such § 363(p) has no application, and it is
immaterial that the bankruptcy court did not make any inquiry from the Chapter 13 Trustee concerning stay relief
and that the Chapter 13 Trustee did not request or require adequate protection payments on Wells Fargo’s claims.
No. 24-8005 In re Lundeen Page 15
Debtor’s arguments concerning adequate protection ignore the language of § 362(d)(1)
and the bankruptcy court’s ruling as announced from the bench on November 9, 2023, and as
reflected in the Stay Relief Order. Although a lack of adequate protection may constitute cause
for stay relief under subsection (d)(1), cause is not limited to a lack of adequate protection. As
explained by one bankruptcy court:
“Cause” is not defined by the Bankruptcy Code. In re Bogdanovich, 292 F.3d
104, 110 (2d Cir. 2002). It may include lack of adequate protection as set forth in
the statute, but that is not the only basis for finding cause to grant relief from stay.
3 COLLIER ON BANKRUPTCY ¶ 362.07[3] (16th ed. 2013). Cause may exist in a
wide variety of circumstances, such as when nonbankruptcy litigation affecting
multiple parties was ready for trial when the bankruptcy stay was imposed, In re
Castlerock Properties, 781 F.2d 159 (9th Cir. 1986), or to allow an embezzlement
victim to pursue embezzled property held by a debtor. In re Newpower, 233 F.3d
922, 935 (6th Cir. 2000) (Batchelder, J., concurring, but writing for the court on
the issue of relief from stay). . . . “ ‘[C]ause’ is a broad and flexible concept
which permits a bankruptcy court, as a court of equity, to respond to inherently
fact-sensitive situations.” In re River Estates, Inc., 293 B.R. 429, 433 (Bankr.
N.D. Ohio 2003) (citation omitted). “In determining whether cause exists the
bankruptcy court should base its decision on the hardships imposed on the parties
with an eye towards the overall goals of the Bankruptcy Code.” In re Combs, 435
B.R. 467, 471 (Bankr. E.D. Mich. 2010) (quotation omitted).
In re Jeffers, 572 B.R. 681, 684 (Bankr. N.D. Ohio 2017).
In consideration of the entire record before the bankruptcy court, consisting of the Motion
for Stay Relief, the Opposition to Stay Relief, and the oral representations and arguments
advanced by counsel at the November 9 hearing, the bankruptcy court determined that cause
existed to grant stay relief to Wells Fargo “based upon there being no equity, there being no post-
petition payment, and there being an underlying state court case which the creditor can proceed
in.” (Tr. of Nov. 9, 2023 Hr’g at 6:3-6, Case No. 23-11595-jps (Bankr. N.D. Ohio Dec. 6, 2023),
ECF No. 107.) The Panel’s review of that same record leads to a conclusion that the bankruptcy
court did not abuse its discretion by granting the Motion for Stay Relief under § 362(d)(1) for
cause, including Debtor’s failure to make payments both pre- and post-petition and the
opportunity for both parties to litigate their state-court issues in state court. Thus, the bankruptcy
court did not abuse its discretion in denying the Motion for Stay Relief.
No. 24-8005 In re Lundeen Page 16
B. The First-to-File Doctrine
In the alternative to her § 363 argument, Debtor argues in her Appellant’s Principal Brief
that the bankruptcy court’s entry of the Stay Relief Order violated the first-to-file federal court
doctrine. Debtor asserts that the bankruptcy court violated this doctrine when issuing the Stay
Relief Order because the order was entered notwithstanding the fact that the District Court
Action “remained viable” because the District Court Dismissal Order was “non-final and non-
appealable.” (Appellant’s Principal Br. at 13, BAP Case No. 24-8005, ECF No. 17.) She asserts
that at the time of the Stay Relief Order, the district court had not ruled on every count in her
complaint16 and had not yet ruled on her motion to amend and reconsider dismissal of the
District Court Action. Debtor characterizes the bankruptcy court’s Stay Relief Order as a
usurpation of the district court’s Article III jurisdiction.
“The first-to-file rule is a prudential doctrine that grows out of the need to manage
overlapping litigation across multiple districts.” Baatz v. Columbia Gas Transmission, LLC, 814
F.3d 785, 789 (6th Cir. 2016) (citations and internal quotation marks omitted).
Under the first-to-file principle, “when actions involving nearly identical
parties and issues have been filed in two different district courts, the court in
which the first suit was filed should generally proceed to judgment.” Certified
Restoration Dry Cleaning Network, L.L.C. v. Tenke Corp., 511 F.3d 535, 551 (6th
Cir. 2007) (internal quotation marks omitted) (quoting Zide Sport Shop of Ohio,
Inc. v. Ed Tobergte Assocs., Inc., 16 F. App’x 433, 437 (6th Cir. 2001)). The rule
is a “well-established doctrine that encourages comity among federal courts of
equal rank.” Id. (quoting AmSouth Bank v. Dale, 386 F.3d 763, 791 n.8 (6th Cir.
2004)). It “is not a strict rule,” however, and “district courts have the discretion to
dispense with” it “where equity so demands.” Id. (first quoting AmSouth Bank,
386 F.3d at 791 n.8; and then quoting Zide Sport Shop, 16 F. App’x at 437).
Emps. Ret. Sys. of City of St. Louis v. Jones, No. 23-3512, 2024 WL 659984, at *6 (6th Cir. Feb.
16, 2024) (emphasis in original).
16
In March 2024, the district court disagreed with Debtor’s position, finding that her argument did “not
articulate[] how the text or substance of the [District Court Dismissal Order] indicate[d] that Count Two was not
dismissed.” (Order at 2, Case No. 1:23-cv-00918-BMB (N.D. Ohio Mar. 4, 2024), ECF No. 17.) Debtor notes that
the matter is now on appeal to the Sixth Circuit Court of Appeals after she appealed the district court’s order that
denied her motion to amend and reconsider the District Court Dismissal Order.
No. 24-8005 In re Lundeen Page 17
Courts consider the following when applying the first-to-file rule: “(1) the chronology of
events, (2) the similarity of the parties involved, and (3) the similarity of the issues or claims at
stake.” Baatz, 814 F.3d at 789. If the first three factors are satisfied, “the court must also
determine whether any equitable considerations, such as evidence of ‘inequitable conduct, bad
faith, anticipatory suits, [or] forum shopping,’ merit not applying the first-to-file rule in a
particular case.” Id. (quoting Certified Restoration Dry Cleaning Network, LLC, 511 F.3d at
551-52). “Courts have repeatedly warned that the first-to-file rule is not a mandate directing
wooden application of the rule without regard to extraordinary circumstances, inequitable
conduct, bad faith, or forum shopping. However, deviations from the rule should be the
exception, rather than the norm.” Id. at 792 (citations and quotation marks omitted). “Even
when those factors call for application of the rule, however, “[d]istrict courts have the discretion
to dispense with the first-to-file rule where equity so demands.” Heyman v. Lincoln Nat’l Life
Ins. Co., 781 F. App’x 463, 476 (6th Cir. 2019) (quoting Zide Sport Shop, 16 F. App’x at 437);
see also Baatz, 814 F.3d at 789 (stating that a court’s application of the first-to-file rule is
reviewed for an abuse of discretion).
Based on the equities and the facts presented, the Panel finds that the bankruptcy court
did not abuse its discretion when it granted the Motion for Stay Relief notwithstanding the
District Court Action. Assuming the first three Baatz factors were met, at the time the
bankruptcy court entered the Stay Relief Order in November 2023, the District Court Action had
been dismissed for nearly four months. Moreover, Debtor’s frustration with the bankruptcy
court’s handling of the Bankruptcy Case notwithstanding the purported pendency of the District
Court Action is a problem of Debtor’s own making. She filed the District Court Action on May
4, 2023, and her Bankruptcy Case on May 12, 2023, apparently as an attempt to use the
automatic stay to prevent Wells Fargo from executing on its Foreclosure Judgment.17 The Panel
finds no abuse of discretion by the bankruptcy court under Debtor’s first-to-file argument.
17
Although Debtor filed a motion for a temporary restraining order (“TRO”) in the District Court Action,
the district court had taken no action on the motion, and a sheriff’s sale was set for May 15, 2023. The sheriff’s sale
having been stayed by Debtor’s filing of her bankruptcy petition, Debtor withdrew her request for a TRO on May
17, 2023, stating that “[t]he exigency of the matter . . . has been reduced; the Sheriff’s sale previously scheduled for
May 15, 2023, being at this time cancelled . . . .” (Notice of Reduced Exigency, Which Does Not, However Obviate
the Need for a Permanent Inj. at 2, Case No. 1:23-cv-00918-BMB (N.D. Ohio May 17, 2023), ECF No. 7.)
No. 24-8005 In re Lundeen Page 18
C. Rooker-Feldman Doctrine & Bankruptcy Code § 105
Debtor argues that the bankruptcy court “should have used its powers under 11 U.S.C.
§ 105 to perform a de novo analysis of Lundeen’s claim of void judgment of foreclosure.”
(Appellant’s Principal Br. at 16, BAP Case No. 24-8005, ECF No. 17.) The Panel finds that the
bankruptcy court did not abuse its discretion by not addressing the validity of the Foreclosure
Judgment under § 105(a).
The Bankruptcy Code provides bankruptcy courts with an inherent equitable power to
“issue any order, process, or judgment that is necessary or appropriate to carry out the provision
of [the Code].” 11 U.S.C. § 105(a). Nevertheless, “[t]he equitable powers of section 105(a) may
only be used in furtherance of the goals of the Code.” Childress v. Middleton Arms, L.P. (In re
Middleton Arms, Ltd. P’ship), 934 F.2d 723, 725 (6th Cir. 1991). Accordingly, “bankruptcy
courts ‘cannot use equitable principles to disregard unambiguous statutory language.’” Id.(quoting Ray v. City Bank & Trust Co. (In re C-L Cartage Co., Inc.), 899 F.2d 1490, 1494 (6th
Cir. 1990)). As recognized by the Supreme Court, “whatever equitable powers remain in the
bankruptcy courts must and can only be exercised within the confines of the Bankruptcy Code.”
Norwest Bank Worthington v. Ahlers, 485 U.S. 197, 206 (1988).
Moreover, § 105 does not create subject matter jurisdiction where none exists. Because
only the Supreme Court is vested by 28 U.S.C. § 1257 with the jurisdiction to engage in an
appellate review over final judgments of a state court, the Rooker-Feldman doctrine bars all
other federal courts from doing so. VanderKodde v. Mary Jane M. Elliott, P.C., 951 F.3d 397,
402 (6th Cir. 2020) (quoting Berry v. Schmitt, 688 F.3d 290, 298 (6th Cir. 2012), and citing D.C.
Ct. App. v. Feldman, 460 U.S. 462 (1983); Rooker v. Fid. Tr. Co., 263 U.S. 413 (1923)). The
doctrine is limited in its scope and applies only 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” but
“does not otherwise override or supplant preclusion doctrine or augment the circumscribed
doctrines that allow federal courts to stay or dismiss proceedings in deference to state-court
actions.” Exxon Mobile Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005).
No. 24-8005 In re Lundeen Page 19
To determine whether a claim is barred by the Rooker-Feldman doctrine, courts focus on
“[the] source of the injury the plaintiff alleges in the federal complaint, [and i]f the source of the
plaintiff’s injury is the state-court judgment itself, then Rooker-Feldman applies.”
VanderKodde, 951 F.3d at 402 (quoting McCormick v. Braverman, 451 F.3d 382, 393 (6th Cir.
2006)). Only “[i]f there is some other source of injury, such as a third party’s action” does the
party “assert[] an independent claim.” Id. (quoting Lawrence v. Welch, 531 F.3d 364, 368-69
(6th Cir. 2008)). The federal court determines the source of injury by “look[ing] to the
allegations contained in the federal complaint and to the plaintiff’s request for relief.” Tubbs v.
Long, No. 22-5127, 2022 WL 13983800, at *3 (6th Cir. Oct. 24, 2022) (citing Berry, 688 F.3d at
299; Isaacs v. DBI-ASG Coinvestor Fund (In re Isaacs), 895 F.3d 904, 912 (6th Cir. 2018)).
The Rooker-Feldman Doctrine applies here because Debtor argues that the bankruptcy
court erred by failing to “use[] its powers under 11 U.S.C. § 105 to perform a de novo analysis of
[Debtor’s] claim of void judgment of foreclosure.” (Appellant’s Principal Br. at 16, BAP Case
24-8005, ECF No. 17.) As the district court explained in the District Court Dismissal Order,
Plaintiff asks this Court to review the state court’s decisions in the foreclosure
action and to declare the foreclosure judgment void. This action is precisely the
kind of challenge to a state court decision that is barred by the Rooker-Feldman
doctrine. Federal appellate review of state court judgments can only occur in the
United States Supreme Court.
(District Court Dismissal Order at 5-6, Case No. 1:23-cv-00918-BMB (N.D. Ohio July 28,
2023), ECF No. 11(citations omitted).)
Debtor argues in reply that Rooker-Feldman does not bar her challenge to the Foreclosure
Judgment because she has “consistently cited other sources of injury than the state court
decision, that the judgment is a nullity and void ab initio for failure of service of summons
resulting in absence of subject matter jurisdiction [of the state court] to render a substantive
order, and that Wells [Fargo] committed fraud on the Ohio state court system.” (Appellant’s
Reply Br. at 18, BAP Case No. 24-8005, ECF No. 21.)18 “[W]hen the litigant directly asks a
18
Debtor also raises in her reply brief that the Foreclosure Judgment “is not enforceable as [she] has timely
raised the affirmative defense of statute of limitations in her objections to Wells [Fargo’s] proof of claims.
(Appellant’s Reply Br. at 11, BAP Case No. 24-8005, ECF No. 21.) Debtor’s claims objection, however, is not
before this Panel, and Debtor has failed to raise any issue on appeal or any argument concerning the bankruptcy
No. 24-8005 In re Lundeen Page 20
federal district court to ‘declare a state-court order to be unconstitutional and enjoin its
enforcement,” the Rooker-Feldman doctrine applies and bars the federal court from reviewing
the underlying order. RLR Inv., LLC v. City of Pigeon Forge, 4 F.4th 380, 388 (6th Cir. 2021)
(citation omitted); see, e.g., Kerr v. Pollex, No. 22-3993, 2023 WL 8358798, at *3 (6th Cir. Aug.
11, 2023) (quoting Abbott v. Mich., 474 F.3d 324, 330 (6th Cir. 2007) (“When a litigant believes
that he did not have a reasonable opportunity to pursue an argument in the state courts, ‘the
proper course of action is to appeal the judgment through the state-court system and then to seek
review by writ of certiorari from the [United States] Supreme Court.’”)); Rose v. Oakland Cnty.
Mich. Treasurer, No. 21-2626, 2023 WL 2823972, at *8 (6th Cir. Apr. 7, 2023) (holding that a
claimant’s “request for the court to ‘strike down the foreclosure’ [was] a direct attack on the state
court foreclosure judgment” and barred by Rooker-Feldman, but her takings claim was
independent and not barred).
As noted by the district court, “[w]here federal relief can only be predicated upon a
conviction that the state court was wrong, it is difficult to conceive the federal proceeding as, in
substance, anything other than a prohibited appeal of the state-court judgment.” (District Court
Dismissal Order at 8, Case No. 1:23-cv-00918-BMB (N.D. Ohio July 28, 2023), ECF No. 11
(quoting Catz v. Chalker, 142 F.3d 179, 293 (6th Cir. 1998).) Simply, the heart of Debtor’s third
challenge to the Stay Relief Order is the supposed invalidity of the Foreclosure Judgment, but the
Rooker-Feldman doctrine bars the bankruptcy court and this Panel from reviewing the
Foreclosure Judgment. Accordingly, the Panel finds no error in the bankruptcy court’s failure to
utilize its equitable powers under § 105 to review the Foreclosure Judgment when adjudicating
the Motion for Stay Relief.
court’s denial of the Motion for Reconsideration while Debtor’s objection to Wells Fargo’s claim was pending.
Debtor includes other rebuttal arguments in her reply brief, including an argument that federal courts may review
state court judgments under Rule 60(d) (id. at 12); that the bankruptcy court failed to adequately explain its basis for
the Stay Relief Order (id. at 16-17); and that neither res judicata under Ohio law nor the Anti-injunction Act bar
federal independent action to review the Foreclosure Judgment (id. at 18-19). The Panel will not address these
rebuttal arguments because they were not raised in the statement of issues on appeal or in the opening brief. See
Sanborn v. Parker, 629 F.3d 554, 579 (6th Cir. 2010) (stating that “arguments made . . . for the first time in a reply
brief are waived”).
No. 24-8005 In re Lundeen Page 21
II. Reconsideration Under Federal Rule of Civil Procedure 59(e)
“Courts generally treat a motion for reconsideration as a motion to alter or amend the
judgment pursuant to Federal Rule of Civil Procedure 59(e) [which is applicable to bankruptcy
cases through Federal Rule of Bankruptcy Procedure 9023].” Hamerly v. Fifth Third Mortg. Co.
(In re J & M Salupo Dev. Co.), 388 B.R. 795, 805 (B.A.P. 6th Cir. 2008). Whether to grant or
deny a motion for reconsideration under Rule 59(e), which is an “extraordinary remedy and
should be granted sparingly because of the interests in finality and conservation of scarce judicial
resources,” falls “within the informed discretion of the court.” Id. (citations omitted); see York v.
Tate, 858 F.2d 322, 326 (6th Cir. 1988) (“[T]he purpose of Rule 59 is to allow the district court
to correct its own errors, sparing the parties and appellate courts the burden of unnecessary
appellate proceedings.” (citations omitted)). Accordingly, “[a] court may reconsider a previous
judgment under Rule 59(e) to accommodate an intervening change in controlling law, to account
for newly discovered evidence, to correct a clear error of law, or to prevent manifest injustice.”
Cusano v. Klein (In re Cusano), 431 B.R. 726, 734 (B.A.P. 6th Cir. 2010) (citations omitted).
“To constitute ‘newly discovered evidence,’ the evidence must have been previously
unavailable,” GenCorp., Inc. v. Am. Int’l Underwriters, 178 F.3d 804, 834 (6th Cir. 1999), and
“[m]anifest injustice is defined as ‘[a]n error in the trial court that is direct, obvious, and
observable, such as a defendant’s guilty plea that is involuntary or that is based on a plea
agreement that the prosecution rescinds.’” Bradley J. Delp Revocable Tr. v. MSJMR 2008
Irrevocable Tr., 665 F. App’x 514, 530 (6th Cir. 2016) (quoting BLACK’S LAW DICTIONARY 982
(8th ed. 2004)).
The party seeking reconsideration bears the “burden of demonstrating the existence of a
manifest error of fact or law.” In re J & M Salupo Dev. Co., 388 B.R. at 805. However, “[a]
motion under Rule 59(e) is not an opportunity to re-argue a case.” Sault Ste. Marie Tribe of
Chippewa Indians v. Engler, 146 F.3d 367, 374 (6th Cir. 1998); see also In re J & M Salupo
Dev. Co., 388 B.R. at 805 (“A motion under Rule 59(e) is not intended to provide the parties an
opportunity to relitigate previously-decided matters or present the case under new theories.”
(citation omitted)). Similarly, “[a] Rule 59(e) motion to alter or amend is not the proper vehicle
to raise arguments that should have been made before judgment.” Russell v. GTE Gov’t Sys.
No. 24-8005 In re Lundeen Page 22
Corp., 141 F. App’x 429, 434 (6th Cir. 2005). Thus, “[a] court does not abuse its discretion by
denying a Rule 60(b) [or Rule 59] motion that simply rehashes previously raised arguments.” In
re Murray Energy Holdings Co., 640 B.R. at 566.
Notably, Debtor raises no argument that the bankruptcy court abused its discretion in
denying the Motion for Reconsideration of the Stay Relief Order. Instead, her statement of
issues on appeal and her opening brief challenge only the underlying Stay Relief Order, which as
explained above, the Panel will affirm because it finds no abuse of discretion in the bankruptcy
court’s decision. Accordingly, the Panel also finds no abuse of discretion in the bankruptcy
court’s denial of the Motion for Reconsideration.
CONCLUSION
For the foregoing reasons, the bankruptcy court’s entry of the Stay Relief Order and its
denial of Debtor’s Motion for Reconsideration are AFFIRMED.