Henrichs v. Valley View Development ( 2007 )


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  •                   FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    JOHN HENRICHS; ANNE HENRICHS,           
    Plaintiffs-Appellants,
    v.
    VALLEY VIEW DEVELOPMENT, a
    California corporation; FEDERAL               No. 04-56470
    DEPOSIT INSURANCE CORPORATION, a
    Federal corporation; TIMCOR                    D.C. No.
    CV-04-04225-CAS
    EXCHANGE CORPORATION, dba
    Timcor Financial Corporation;                  OPINION
    MARC GELMAN, an individual;
    MICHAEL BLAHA, an individual;
    GRANADA PLAZA ASSOCIATES LTD.,
    a California limited partnership,
    Defendants-Appellees.
    
    Appeal from the United States District Court
    for the Central District of California
    Christina A. Snyder, District Judge, Presiding
    Argued and Submitted
    September 12, 2006—Pasadena, California
    Filed January 16, 2007
    Before: J. Clifford Wallace, M. Margaret McKeown, and
    Kim McLane Wardlaw, Circuit Judges.
    Opinion by Judge McKeown
    597
    HENRICHS v. VALLEY VIEW DEVELOPMENT             601
    COUNSEL
    Richard Blasco, Hunt, Ortman, Blasco, Palffy & Rossell, Pas-
    adena, California, and F. Glenn Nichols, Law Offices of F.
    Glenn Nichols, Pasadena, California, for the appellants.
    Barry R. Edwards, Spiegelman & Edwards, Beverly Hills,
    California, for appellees Valley View Development and Marc
    Gelman.
    Kathleen V. Gunning and Mary Riche, Federal Deposit Insur-
    ance Corporation, Washington, DC, and Michael H. Bierman,
    Luce Forward Hamilton & Scripps, LLP, Los Angeles, Cali-
    fornia, for appellee Federal Deposit Insurance Corporation.
    Peter L. Weinberger and A. Douglas Mastroianni, Peter L.
    Weinberger & Associates, Los Angeles, California, for appel-
    lees Michael Blaha and Granada Plaza Associates, Ltd.
    OPINION
    McKEOWN, Circuit Judge:
    This appeal stems from a quiet title action that began in Los
    Angeles Superior Court but was resuscitated in federal court
    after the California courts ruled against appellants John and
    Anne Henrichs (“Henrichs”) on all issues. We consider
    whether the district court had subject matter jurisdiction over
    Henrichs’ claims arising from a California state court judg-
    ment rendered against him. After a series of real estate trans-
    actions among Henrichs, Valley View Development (“Valley
    View”), Marc Gelman, Michael Blaha, and Granada Plaza
    Associates (“GPA”) turned sour, Valley View filed a claim to
    quiet title in Los Angeles County Superior Court. Henrichs
    cross-claimed, alleging breach of contract and indemnifica-
    tion claims. The Superior Court, the California Court of
    602         HENRICHS v. VALLEY VIEW DEVELOPMENT
    Appeal, and the California Supreme Court all held in favor of
    Valley View and denied Henrichs relief on all claims.
    Having extinguished all avenues for relief in the California
    courts, Henrichs filed suit in the United States District Court
    for the Central District of California. The district court held
    that it lacked jurisdiction under the Rooker-Feldman doctrine
    to review the state court judgment and Henrichs’ associated
    claims and consequently dismissed the action. We now
    affirm, albeit on slightly different grounds. At issue is
    whether Henrichs’ claims are barred by the Rooker-Feldman
    doctrine which, in general terms, prevents “a party losing in
    state court . . . from seeking what in substance would be
    appellate review of the state judgment in a United States dis-
    trict court.” Johnson v. De Grandy, 
    512 U.S. 997
    , 1005-06
    (1994) (citing District of Columbia Court of Appeals v. Feld-
    man, 
    460 U.S. 462
    , 482 (1983), Rooker v. Fidelity Trust Co.,
    
    263 U.S. 413
    , 416 (1923)). Looking at each claim individu-
    ally, as we must do, we conclude that two claims are barred
    by Rooker-Feldman, one claim fails on mootness grounds,
    and another based upon res judicata.
    BACKGROUND
    I.    FACTUAL BACKGROUND
    Although the intricacies of Henrichs’ claims are not before
    us, the chronology of events, which includes various convo-
    luted transactions, is helpful to understanding the relationship
    between the state and federal court actions. Henrichs’ series
    of lawsuits arise from a dispute relating to two plots of land
    in Granada Hills, California. In 1990, defendant Valley View
    owned property in Granada Hills that included two subdivi-
    sions, the Balboa lot and the Chatsworth lot. The GPA entity
    was formed to purchase only the Chatsworth lot from Valley
    View. John Henrichs, Michael Blaha, and Marc Gelman, Val-
    ley View’s president and owner, were the original limited
    partners in GPA.
    HENRICHS v. VALLEY VIEW DEVELOPMENT             603
    At that time, the final tract map separating the Balboa and
    Chatsworth lots had not been recorded. GPA and Valley View
    expected this approval would take significant time, and with-
    out a final tract map, the Chatsworth lot could not be sold sep-
    arately from the Balboa lot. As a result, GPA purchased both
    lots from Valley View.
    The parties signed an agreement (the “Ground Lease”) in
    which Valley View leased the Balboa lot for one dollar per
    year for 99 years from GPA and Valley View received an
    option to purchase the lot back from GPA for one dollar when
    the final tract map was recorded. The Ground Lease provided
    that if Valley View exercised the purchase option, GPA
    would convey the Balboa lot to Valley View in fee simple,
    free of all liens and encumbrances.
    GPA obtained a construction loan of almost $4 million
    from Capital Bank of California to finance construction on the
    Chatsworth lot. The loan agreement stated that the entire
    property — both lots — was collateral for the loan.
    The final tract map was ultimately recorded in January
    1992, and Valley View exercised the option in the Ground
    Lease to buy back the Balboa lot. Valley View believed that
    it had received title free and clear of any liens, including the
    pledge of collateral in the loan from Capital Bank.
    In June 1993, the Federal Deposit Insurance Corporation
    (“FDIC”) acquired the loan when it was appointed receiver of
    Capital Bank. GPA defaulted on the loan in 1994.
    Following the default, GPA, Gelman, and Blaha agreed that
    GPA would pay the FDIC $300,000, and in exchange, the
    FDIC would cancel or assign the loan and the accompanying
    deed. The agreement (the “FDIC Settlement Agreement”)
    contained an indemnification clause and a proviso that bound
    all parties to the agreement and their representatives and suc-
    cessors. GPA decided that the FDIC should assign the loan
    604          HENRICHS v. VALLEY VIEW DEVELOPMENT
    and accompanying deed, which occurred through a separate
    agreement (the “Assignment Agreement”) in approximately
    the following shares: 22% to Henrichs, 12% to Randy Car-
    penter, and 66% to Blaha Construction and Development.
    II.    PROCEEDINGS IN STATE COURT
    In 1996, Gelman obtained a preliminary title report that
    reflected a lien on the Balboa lot. Valley View then demanded
    that the assignees of the note — Henrichs, Carpenter, and
    Blaha Construction and Development — reconvey the deed to
    Valley View to eliminate the lien. When the assignees refused
    to reconvey, Valley View filed a state court action to quiet
    title to the Balboa lot. Henrichs filed a cross-complaint alleg-
    ing causes of action for indemnification under the FDIC Set-
    tlement Agreement and breach of contract by GPA, Gelman,
    and Blaha for failing to indemnify Henrichs.
    The Los Angeles County Superior Court held that Valley
    View owned the Balboa lot free and clear of any encumbrance
    based on the Capital Bank loan and rejected Henrichs’ claims
    for breach of contract and indemnification. The California
    Court of Appeal affirmed, and the California Supreme Court
    denied review.
    During the pendency of the proceedings in the state courts,
    Valley View sold the Balboa lot for $550,000. Valley View
    placed these funds in a trust account with Timcor Exchange
    Corporation (“Timcor”) pending the outcome of the state
    court action.
    III.   PROCEEDINGS IN THE DISTRICT COURT
    Following his loss in state court, Henrichs filed a suit in
    federal court. The complaint asserted four claims: 1) a
    request for a declaratory judgment voiding the state court
    judgment awarding the Balboa lot to Valley View in fee sim-
    ple and removing the lien on the property; 2) breach of the
    HENRICHS v. VALLEY VIEW DEVELOPMENT                   605
    Assignment Agreement by the FDIC; 3) a claim for indemni-
    fication against GPA, Gelman, and Blaha for damages and
    legal expenses incurred by the state court litigation; and 4) a
    request for an injunction barring Timcor from giving Valley
    View the proceeds from the Balboa lot’s sale because, accord-
    ing to Henrichs, Valley View was not entitled to those profits.
    The district court held that the Rooker-Feldman doctrine
    barred all claims and dismissed the action for lack of subject
    matter jurisdiction.
    ANALYSIS
    We affirm the dismissal of Henrichs’ claims.1 We conclude
    that the Rooker-Feldman doctrine bars the claim for declara-
    tory relief. The claim against the FDIC is moot. The doctrine
    of res judicata precludes the claim for indemnity against GPA,
    Gelman, and Blaha. Additionally, both Rooker-Feldman and
    the Anti-Injunction Act bar the claim for injunctive relief.
    [1] Before delving into a claim-by-claim analysis, we
    briefly outline the contours of the Rooker-Feldman doctrine.
    The Rooker-Feldman doctrine provides that federal district
    courts lack jurisdiction to exercise appellate review over final
    state court judgments. 
    Rooker, 263 U.S. at 415-16
    ; 
    Feldman, 460 U.S. at 482
    86; Exxon Mobil Corp. v. Saudi Basic Indus.
    Corp., 
    544 U.S. 280
    , 283-84 (2005). Essentially, the doctrine
    bars “state-court losers complaining of injuries caused by
    state-court judgments rendered before the district court pro-
    ceedings commenced” from asking district courts to review
    and reject those judgments. 
    Id. at 284.
    Absent express statu-
    tory authorization, only the Supreme Court has jurisdiction to
    reverse or modify a state court judgment. The clearest case for
    dismissal based on the Rooker-Feldman doctrine occurs when
    1
    Subject matter jurisdiction is a question of law reviewed de novo.
    Sahni v. Am. Diversified Partners, 
    83 F.3d 1054
    , 1057 (9th Cir. 1996) (as
    amended). We may affirm the dismissal on any ground supported by the
    record. Preminger v. Principi, 
    422 F.3d 815
    , 820 (9th Cir. 2005).
    606         HENRICHS v. VALLEY VIEW DEVELOPMENT
    “a federal plaintiff asserts as a legal wrong an allegedly erro-
    neous decision by a state court, and seeks relief from a state
    court judgment based on that decision . . . .” Noel v. Hall, 
    341 F.3d 1148
    , 1164 (9th Cir. 2003).
    [2] Rooker-Feldman does not override or supplant issue
    and claim preclusion doctrines. Exxon 
    Mobil, 544 U.S. at 284
    .
    The doctrine applies when the federal plaintiff’s claim arises
    from the state court judgment, not simply when a party fails
    to obtain relief in state court. 
    Noel, 341 F.3d at 1164-65
    (cit-
    ing GASH Assocs. v. Village of Rosemont, 
    995 F.2d 726
    , 729
    (7th Cir. 1993)). Preclusion, not Rooker-Feldman, applies
    when “ ‘a federal plaintiff complains of an injury that was not
    caused by the state court, but which the state court has previ-
    ously failed to rectify.’ ” 
    Noel, 341 F.3d at 1165
    (quoting Jen-
    sen v. Foley, 
    295 F.3d 745
    , 747-78 (7th Cir. 2002)).
    I.    DECLARATORY RELIEF CLAIM
    [3] Henrichs argues that the state court exceeded its juris-
    diction when it entered judgment against him. The request for
    relief is unambiguous. Henrichs asked the district court to
    “declare the State Court Judgment void, and enter judgment
    in favor of the Henrichs.” Such a claim is squarely barred by
    Rooker-Feldman; a request to declare the state court judgment
    void seeks redress from an injury caused by the state court
    itself. See 
    Noel, 341 F.3d at 1164-65
    .
    Henrichs attempts to circumvent the jurisdictional bar by
    arguing that there was exclusive federal jurisdiction over all
    of his claims and thus the state court litigation was improper.
    To be sure, a state court judgment entered in a case that falls
    within the federal courts’ exclusive jurisdiction may be collat-
    erally attacked in a district court. In re Gruntz, 
    202 F.3d 1074
    ,
    1079 (9th Cir. 2000). The difficulty with Henrichs’ argument
    is that there was no exclusive federal jurisdiction over the
    claims.
    HENRICHS v. VALLEY VIEW DEVELOPMENT               607
    [4] Henrichs grounds the exclusive jurisdiction argument
    on the Financial Institutions Reform, Recovery and Enforce-
    ment Act of 1989 (“FIRREA”), Pub. L. No. 101-73, 103 Stat.
    183 (1989) (codified at various sections of Title 12). He relies
    on two provisions of the Act, which establishes the powers
    and responsibilities of the FDIC. 
    Id. The first
    provision states
    that no court may grant equitable relief against the FDIC
    except as provided by FIRREA. 12 U.S.C. § 1821(j). The sec-
    ond provision states that individuals seeking to make claims
    that affect assets acquired by the FDIC in its capacity as a
    conservator or receiver must exhaust the FDIC’s administra-
    tive claims process before seeking judicial review. 12 U.S.C.
    § 1821(d)(13)(D). See Henderson v. Bank of New England,
    
    986 F.2d 319
    , 320-21 (9th Cir. 1993). Henrichs posits that the
    claims affect FDIC interests because the FDIC was the
    receiver of the assets of Capital Bank, and the FDIC in turn
    assigned the note to Henrichs.
    [5] The jurisdictional bars to state court litigation set out in
    FIRREA are not applicable here. Section 1821(j) does not
    apply because the FDIC was not a party to the state court liti-
    gation. It was Henrichs, not the FDIC, who was ordered to
    reconvey the note and deed referencing the Balboa lot.
    [6] Nor does § 1821(d)(13)(D) confer exclusive federal
    jurisdiction in this case. If, by citing this provision, Henrichs
    means to imply that the statute bars the state court’s adjudica-
    tion of the dispute with Valley View, he is mistaken — the
    requirement to exhaust administrative remedies applies only
    in an action against the FDIC as receiver. 18 U.S.C.
    § 1821(d)(13)(D); see also McCarthy v. FDIC, 
    348 F.3d 1075
    , 1080-81 (9th Cir. 2003) (holding that the exhaustion
    requirement applies to those who “challenge conduct by the
    FDIC as receiver”). At the time of the state court litigation,
    the FDIC had no interest in the note because it had already
    assigned the note. Although Henrichs attempts to paper over
    this fact by claiming that he stepped into the shoes of the
    FDIC for the purposes of the state court litigation, the statute
    608         HENRICHS v. VALLEY VIEW DEVELOPMENT
    does not reach assignees of assets once owned by the FDIC.
    Therefore, because the FDIC was neither a party to the state
    court lawsuit nor did it retain an interest in the previously-
    assigned note, FIRREA does not confer exclusive federal
    jurisdiction over Henrichs’ claims.
    II.    BREACH OF CONTRACT CLAIM
    Henrichs next asserts a claim for damages against the FDIC
    stemming from the FDIC’s alleged breach of the FDIC Settle-
    ment Agreement. Although this claim is not necessarily
    barred by Rooker-Feldman, it is moot. We — and the district
    court — have no jurisdiction over moot claims. United States
    v. Geophysical Corp. of Alaska, 
    732 F.2d 693
    , 698 (9th Cir.
    1984) (as amended).
    [7] To satisfy Article III’s case or controversy requirement,
    Henrichs “must have suffered some actual injury that can be
    redressed by a favorable judicial decision.” See FDIC v. Koo-
    yomjian, 
    220 F.3d 10
    , 15 (1st Cir. 2000) (holding that a claim
    against a failed bank was moot when the FDIC had deter-
    mined there were no assets with which to satisfy the claim)
    (emphasis omitted). Henrichs may look only to the assets of
    the Capital Bank receivership to satisfy any breach of contract
    claim. See First Ind. Fed. Sav. Bank v. FDIC, 
    964 F.2d 503
    ,
    507 (5th Cir. 1992). The receivership distributed all of the
    failed bank’s assets and was terminated in January 2001, fully
    three years before Henrichs raised the claim. No assets remain
    in the receivership to satisfy a late-filed claim, thus rendering
    the claim moot. See Maher v. FDIC, 
    441 F.3d 522
    , 525-26
    (7th Cir. 2006); 
    Kooyomjian, 220 F.3d at 15
    ; Adams v. Reso-
    lution Tr. Corp., 
    927 F.2d 348
    , 354 (8th Cir. 1991) (holding
    that where the Federal Savings and Loan Insurance Corpora-
    tion would never possess any assets to satisfy the plaintiff’s
    claim, the claim was moot).
    III.   INDEMNITY CLAIM
    In the third claim, Henrichs asserts that GPA, Gelman, and
    Blaha must indemnify him for his legal expenses because he
    HENRICHS v. VALLEY VIEW DEVELOPMENT                   609
    is a successor to the FDIC Settlement Agreement. In state
    court proceedings, Henrichs asserted an identical cause of
    action for indemnification based on the same FDIC Settle-
    ment Agreement and against the same three defendants. The
    Los Angeles County Superior Court denied relief, the Califor-
    nia Court of Appeal affirmed, and the California Supreme
    Court denied review.
    [8] Res judicata prevents the district court from addressing
    Henrichs’ indemnity claim. To determine the preclusive effect
    of a state court judgment, we look to state law. Sosa v.
    DIRECTV, Inc., 
    437 F.3d 923
    , 927 (9th Cir. 2006). In Califor-
    nia, “[r]es judicata, or claim preclusion, prevents relitigation
    of the same cause of action in a second suit between the same
    parties or parties in privity with them.” Mycogen Corp. v.
    Monsanto Co., 
    28 Cal. 4th 888
    , 896 (2002). For purposes of
    res judicata, Henrichs’ claim for indemnity has been finally
    determined by a court of competent jurisdiction and we may
    not revisit it now.2 See Rice v. Crow, 
    81 Cal. App. 4th 725
    ,
    736 (2000).
    IV.   INJUNCTION CLAIM
    In the final claim in district court, Henrichs seeks to enjoin
    Timcor from giving Valley View the proceeds from the sale
    of the Balboa lot. According to Henrichs, the state court judg-
    ment giving Valley View the lot in fee simple was void, so
    Valley View should not be able to appropriate profits from the
    lot’s sale.
    [9] Both the Rooker-Feldman doctrine and the Anti-
    Injunction Act, 28 U.S.C. § 2283, bar this claim. Rooker-
    2
    This claim is not barred by Rooker-Feldman because GPA, Gelman,
    and Blaha allegedly caused Henrichs’ injury when they failed to indem-
    nify Henrichs. Thus, the injury alleged in this claim does not arise from
    a state court judgment, but rather from the actions of an adverse party;
    hence, Rooker-Feldman does not apply.
    610         HENRICHS v. VALLEY VIEW DEVELOPMENT
    Feldman applies because the legal injuries Henrichs alleges
    arise from the state court’s purportedly erroneous judgment.
    As framed by Henrichs, Valley View and Timcor possess
    funds from the sale of the Balboa lot only because the state
    court erred in awarding Valley View and Timcor that lot in
    the first place. Without the state court judgment, Valley View
    and Timcor would not have caused injury to Henrichs at all.
    Granting the injunction would require the district court to
    determine that the state court’s decision was wrong and thus
    void. Cf. Exxon Mobil 
    Corp., 544 U.S. at 283-84
    (holding that
    district courts do not have jurisdiction over cases in which
    plaintiffs complain of injuries caused by state court judg-
    ments).
    [10] The requested relief also is barred by the Anti-
    Injunction Act, which precludes a federal court from granting
    “an injunction to stay proceedings in a State court except as
    expressly authorized by Act of Congress . . . .” 28 U.S.C.
    § 2283. The Act’s mandate extends not only to injunctions
    affecting pending proceedings, but also to injunctions against
    the execution or enforcement of state judgments. See Atl.
    Coast Line R.R. Co. v. Bd. of Locomotive Eng’rs, 
    398 U.S. 281
    , 287-88 (1970). An injunction may not be used to evade
    the dictates of the Act if the injunction effectively blocks a
    state court judgment. 
    Id. [11] The
    practical effect of the requested injunction would
    be to prevent Valley View from alienating the land in fee sim-
    ple, which was the purpose of the quiet title action at the out-
    set. To grant the relief would undo the effect of three
    California courts’ unbroken agreement on the resolution of
    the issues Valley View presented and would disregard the
    principle of abstention the statute seeks to uphold. 
    Id. at 284-
    88.
    CONCLUSION
    Because the district court lacked jurisdiction over three of
    the claims and a fourth claim is barred by res judicata, we
    HENRICHS v. VALLEY VIEW DEVELOPMENT        611
    affirm the district court’s dismissal of the action.
    AFFIRMED.