Flanders v. Lawrence (In Re Flanders)

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT August 5, 2016
_________________________________
Elisabeth A. Shumaker
Clerk of Court
In re: GARY WOODROW
FLANDERS, individually and as
officer, director, shareholder
Canyon Quarry Co., Farmer &
Merchants Bank, Great Northern
Land Co., MetroBank, N.A.,
Debtor.
------------------------------
GARY WOODROW FLANDERS,
Plaintiff - Appellant,
No. 15-1327
v. (BAP No. 14-055-CO)
(Bankruptcy Appellate Panel)
EVELYN JANE LAWRENCE;
DANIEL A. WEST; MOYE WHITE
LLP; JAMES T. BURGHARDT,
Defendants - Appellees.
_________________________________
ORDER AND JUDGMENT *
_________________________________
*
The parties have not asked for oral argument, and we conclude that
oral argument would not materially aid our consideration of the appeal. See
Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). Thus, we have decided the
appeal based on the briefs.
Our order and judgment does not constitute binding precedent, except
under the doctrines of law of the case, res judicata, and collateral estoppel.
It may be cited, however, for its persuasive value under Fed. R. App. P.
32.1 and 10th Cir. R. 32.1.
Before BRISCOE, BACHARACH, and McHUGH, Circuit Judges.
_________________________________
This case grew out of two other cases. One was in state court, where
Mr. Gary Flanders and his wife, Ms. Evelyn Lawrence, divorced. The other
case was in bankruptcy court, where Mr. Flanders was discharged from his
pre-petition debts. In the present action, Mr. Flanders sues Ms. Lawrence
and her attorneys, alleging that the state court erroneously divided marital
assets.
The bankruptcy court granted summary judgment to Ms. Lawrence
and her attorneys, concluding that the Rooker-Feldman doctrine precluded
jurisdiction over some of the claims, that other claims were subject to issue
preclusion, and that Mr. Flanders either lacked standing to pursue, or
simply lost on, the rest of his claims. The Tenth Circuit Bankruptcy
Appellate Panel affirmed, and Mr. Flanders appeals. We conclude that each
claim fails based on the Rooker-Feldman doctrine, issue preclusion, or lack
of standing. 1
I. The Bankruptcy and Divorce Proceedings
Mr. Flanders filed for bankruptcy in 1998. Two years later, divorce
proceedings began in Colorado state court. The bankruptcy trustee then
1
The defendants also asserted laches as a defense. Given our
disposition, however, we decline to reach that issue.
2
filed an adversary proceeding to assert fraudulent-transfer claims against
Mr. Flanders, Ms. Lawrence, and a number of entities that Ms. Lawrence
owned or controlled, including the Great Northern Transportation
Company. In 2001, the trustee entered into a settlement agreement with
Ms. Lawrence and her entities, releasing the bankruptcy estates “from any
and all claims and causes of action that have been made or could have been
made in the Adversary Proceeding, whether known or unknown, from the
beginning of the world, to the date of [the] Release.” R. at 341.
Mr. Flanders received a Chapter 7 discharge in 2002. This discharge
(1) “void[ed] any judgment at any time obtained, to the extent that such
judgment [was] a determination of the personal liability of [Mr. Flanders]
with respect to any debt discharged,” and (2) “operate[d] as an injunction
against the commencement or continuation of an action, the employment of
process, or an act, to collect, recover or offset any such debt as a personal
liability of [Mr. Flanders].” 11 U.S.C. § 524(a)(1)–(2).
In 2007, it became apparent that Mr. Flanders’s bankruptcy estate
would enjoy a surplus of roughly $231,000. The expectation of a surplus
led the federal district court to ask the state court to determine how much
of the bankruptcy surplus would have been considered marital property.
Mr. Flanders argued in state court that the settlement agreement and
bankruptcy discharge had precluded any award to Ms. Lawrence from the
3
bankruptcy surplus. The state court disagreed, finding that the surplus
constituted marital property. The state court ultimately awarded judgment
to Ms. Lawrence for $563,822.
Mr. Flanders appealed. The Colorado Court of Appeals affirmed on
most grounds but vacated and remanded for further findings on one issue
not relevant to the matters now before this court. The Colorado Supreme
Court denied Mr. Flanders’s petition for a writ of certiorari.
Mr. Flanders then filed an adversary proceeding in his bankruptcy
case. There he asserted eleven claims against Ms. Lawrence, her divorce
attorney (Daniel West), her bankruptcy attorney (James Burghardt), and
her bankruptcy attorney’s law firm (Moye White LLP). In these claims, Mr.
Flanders alleged that (1) the state court’s orders had been void ab initio,
(2) the state court had made erroneous factual findings and legal
conclusions, and (3) the defendants had acted in contempt of the discharge
injunction and in breach of the settlement and release agreements by
asserting pre-petition claims in state court. In the background section of
4
the second amended complaint, Mr. Flanders also alleged violation of the
bankruptcy court’s automatic stay.
The bankruptcy court ruled that the Rooker-Feldman doctrine
prevented rejection of the state court’s factual findings, but not
Mr. Flanders’s request for a finding of contempt or sanctions for willfully
violating the discharge injunction. Ultimately, however, the bankruptcy
court determined that those claims were subject to issue preclusion because
they required the parties to relitigate the effect of the discharge.
In addition, the bankruptcy court addressed Mr. Flanders’s arguments
that the state court’s findings had been void ab initio. In part, Mr. Flanders
argued that the state court had violated the automatic stay and the
discharge injunction. According to the bankruptcy court, both of these
arguments were invalid, but for different reasons. Reliance on the
discharge injunction was impermissible because of issue preclusion;
reliance on the automatic stay was impermissible because Mr. Flanders
lacked standing to assert the claim.
The Bankruptcy Appellate Panel affirmed. It concluded that the
Rooker-Feldman doctrine did not apply because none of Mr. Flanders’s
claims asked the bankruptcy court to review the state-court judgments. The
Bankruptcy Appellate Panel then affirmed based on issue preclusion and
lack of standing.
5
II. Standard of Review
We review the bankruptcy court’s decision rather than the
Bankruptcy Appellate Panel’s. Alderete v. Educ. Credit Mgmt. Corp. (In re
Alderete), 412 F.3d 1200, 1204 (10th Cir. 2005). In reviewing the
bankruptcy court’s grant of summary judgment, we apply the de novo
standard. Spears v. St. Paul Ins. Co. (In re Ben Kennedy & Assocs.),
40 F.3d 318, 319 (10th Cir. 1994). Under this standard, we view the
evidence favorably to Mr. Flanders. Gen. Elec. Capital Corp. v. Manager
of Revenue & Exofficio Treasurer (In re W. Pac. Airlines, Inc.), 273 F.3d
1288, 1291 (10th Cir. 2001). 2
III. Mr. Flanders has forfeited his argument that the bankruptcy
court used the wrong version of the bankruptcy code.
According to Mr. Flanders, the bankruptcy court erred by using the
current version of 11 U.S.C. § 523 rather than the version that had been in
effect when his bankruptcy petition was filed. Mr. Flanders claims that if
the earlier statutory version had been used, the bankruptcy court would
have concluded that his debt to Great Northern Transportation Co. had
been discharged and that the bankruptcy court had enjoyed exclusive
jurisdiction over dischargeability.
2
Because Mr. Flanders proceeds pro se, we liberally construe his
filings but do not act as his advocate. See Yang v. Archuleta, 525 F.3d 925,
927 n.1 (10th Cir. 2008).
6
Prior to this appeal, Mr. Flanders had not questioned the bankruptcy
court’s or the Bankruptcy Appellate Panel’s reliance on the current
statutory version. Thus, we consider this argument forfeited. See Foster v.
Hill (In re Foster), 188 F.3d 1259, 1264 n.5 (10th Cir. 1999) (holding that
an appeal point was forfeited because the litigant failed to make the same
argument when appealing from the bankruptcy court to the district court).
Mr. Flanders points out that
 he raised other challenges to the state court’s jurisdiction and
 in his adversary complaint, he mentioned one of the relevant
statutes, referred to Ms. Lawrence’s obligation to file a § 523
complaint, and asked the bankruptcy court to resolve his claims
using applicable bankruptcy law.
But these steps were insufficient to avoid forfeiture, for they did not alert
the bankruptcy court to the need to consider the prior version of the
statute. 3
Mr. Flanders contends that the issue is jurisdictional, requiring
consideration notwithstanding a forfeiture. See, e.g., Daigle v. Shell Oil
Co., 972 F.2d 1527, 1539 (10th Cir. 1992). We reject this contention. In
3
Ordinarily we can consider forfeited arguments under the plain-error
standard. Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1128 (10th Cir.
2011). But Mr. Flanders has not argued plain error. As a result, we decline
to consider whether use of the current statutory version would constitute
plain error. See id. at 1130-31 (stating that the failure to argue for plain
error “surely marks the end of the road” for an argument that had been
forfeited).
7
our view, the jurisdictional nature of the underlying argument does not
insulate the issue from forfeiture, for this exception is confined to
forfeited jurisdictional arguments made during the pendency of the action
in which jurisdiction is at issue. Here, Mr. Flanders brings a collateral
attack on the jurisdiction of a different court. See Ins. Corp. of Ir. v.
Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 n.9 (1982) (“A
party that has had an opportunity to litigate the question of subject-matter
jurisdiction may not . . . reopen that question in a collateral attack upon an
adverse judgment.”). Thus, the jurisdictional nature of the issue does not
preclude a forfeiture.
IV. The Rooker-Feldman doctrine bars Mr. Flanders’s claims that
allege injury caused by the state court’s rulings.
The defendants argue that the Rooker-Feldman doctrine precludes
consideration of Mr. Flanders’s claims. We agree with respect to the
claims that seek invalidation of the state court’s rulings.
A. Mr. Flanders did not waive his arguments on the Rooker-
Feldman doctrine.
In their dispositive motion, the defendants argued that relief is
precluded by the Rooker-Feldman doctrine. The Bankruptcy Appellate
Panel did not agree, and Mr. Flanders did not discuss the Rooker-Feldman
doctrine in his opening brief. In responding to that brief, however, the
defendants argued that
8
 the Rooker-Feldman doctrine presents an alternative ground for
dismissal and
 Mr. Flanders waived the issue by declining to address the
Rooker-Feldman issue in his opening brief.
We do not regard the issue as waived. “When an appellee raises in its
answer brief an alternative ground for affirmance, the appellant is entitled
to respond in its reply brief.” United States v. Brown, 348 F.3d 1200, 1213
(10th Cir. 2003). But even if the issue had been waived, we could address
it sua sponte. The Rooker-Feldman doctrine involves subject-matter
jurisdiction, which the court can raise on its own. See PJ ex rel. Jensen v.
Wagner, 603 F.3d 1182, 1193 (10th Cir. 2010) (stating that the Rooker-
Feldman doctrine involves subject-matter jurisdiction); Gonzales v. Thaler,
__ U.S. __, 132 S. Ct. 641, 648 (2012) (sua sponte consideration of
requirements that involve subject-matter jurisdiction).
B. The Rooker-Feldman doctrine precludes jurisdiction of Mr.
Flanders’s claims that seek invalidation of the state court’s
rulings.
Under the Rooker-Feldman doctrine, one cannot complain in federal
court of an injury caused by a judgment rendered in state court. Exxon
9
Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). 4 Some
of Mr. Flanders’s claims involve this sort of complaint.
The Rooker-Feldman doctrine does not bar an independent claim
even if the claim had already been rejected in state court. Id. at 293. In
that situation, the outcome is governed by state-law preclusion principles
rather than the Rooker-Feldman doctrine. Id.
In the second amended complaint, Mr. Flanders identified eleven
claims. But as Mr. Flanders stated in the introduction to the complaint, all
involved “a collateral attack on a state court judgment.” R. at 801 (“This
adversary proceeding constitutes a collateral attack on two State Court
judgments that are void by law ab initio.” (footnote omitted)).
Ordinarily, collateral attacks on a state-court judgment are barred by
the Rooker-Feldman doctrine. Erlandson v. Northglenn Mun. Ct., 528 F.3d
4
The Rooker-Feldman doctrine applies only if the state-court
proceedings became final before the federal proceedings began. Exxon
Mobil Corp., 544 U.S. at 284. The bankruptcy court concluded that because
the Colorado Supreme Court had denied review on the issues relevant to
Mr. Flanders’s adversary case, the state-court proceedings had become
final for Rooker-Feldman purposes even though the action was remanded
on an unrelated matter of state law. Mr. Flanders does not question the
finality of the state-court proceedings, and we agree with the bankruptcy
court’s conclusion that there was sufficient finality for Rooker-
Feldman purposes. See Guttman v. Khalsa, 446 F.3d 1027, 1032 n.2
(10th Cir. 2006) (defining finality to include when the state courts have
finally resolved all federal questions and only state-law or factual
questions remain).
10
785, 789 (10th Cir. 2008). Nonetheless, we independently consider each
claim against the backdrop of the Rooker-Feldman doctrine. 5
Though Mr. Flanders has identified eleven discrete claims, they
overlap in substance. Eight of the claims (1-4, 6-7, and 10-11) are based on
alleged violations of the bankruptcy discharge. And two of the claims (8-9)
involve contempt and sanctions. Two other claims (1 and 4) are based, at
least in part, on alleged breaches of the settlement agreement.
1. The Rooker-Feldman doctrine precludes consideration of the
claims to invalidate the state-court rulings by invoking the
bankruptcy discharge, but does not preclude consideration
of other claims.
In eight of the claims, Mr. Flanders alleges that the state court
deprived him of the value of his bankruptcy discharge. This contention
5
Some courts have found an exception to Rooker-Feldman when a
state court wrongly construes a bankruptcy court’s discharge order. See,
e.g., Hamilton v. Herr (In re Hamilton), 540 F.3d 367, 373-75 (6th Cir.
2008) (holding that “a state court judgment that modifies a discharge in
bankruptcy is void ab initio and the Rooker-Feldman doctrine would not
bar federal court jurisdiction”); Pavelich v. McCormick, Barstow,
Sheppard, Wayte & Carruth LLP (In re Pavelich), 229 B.R. 777, 783-84
(B.A.P. 9th Cir. 1999) (substantially the same); cf. Ellis v. Consol. Diesel
Elec. Corp., 894 F.2d 371, 372 (10th Cir. 1990) (recognizing “that any
action taken in violation of the [automatic bankruptcy] stay is void and
without effect”). Other courts, however, have declined to recognize such
an exception. See, e.g., Ferren v. Searcy Winnelson Co. (In re Ferren),
203 F.3d 559, 559-60 (8th Cir. 2000); In re Candidus, 327 B.R. 112, 119
(Bankr. E.D.N.Y. 2005); In re Toussaint, 259 B.R. 96, 102-03 (Bankr.
E.D.N.C. 2000). We follow our precedents, which have not recognized
such an exception.
11
grows out of the state court’s characterization of Great Northern
Transportation Co. as a marital asset to be awarded to Ms. Lawrence.
Before the divorce or the beginning of bankruptcy proceedings, Mr.
Flanders and Ms. Lawrence signed promissory notes to Great Northern in
exchange for roughly $2 million.
But the bankruptcy court discharged Mr. Flanders’s debt under his
promissory note.
12
The state court did not question the discharge. 6 But in valuing Great
Northern as a marital asset, the state court considered Mr. Flanders’s
failure to pay on his promissory note to Great Northern.
According to Mr. Flanders, the state court’s valuation of Great
Northern effectively nullified any benefit from the bankruptcy discharge.
6
The state court characterized the Great Northern debt as “an account
receivable from Ms. Lawrence.” R. at 361. This statement reflects
recognition of Mr. Flanders’s discharge as encompassing his personal
liability on the Great Northern note. Thus, the state court implicitly
concluded that Mr. Flanders’s liability on the Great Northern note had been
discharged in bankruptcy.
13
The state court assessed ownership of Great Northern as a liability, in part
because Mr. Flanders had not paid on his promissory note. Based on this
valuation of Great Northern, the state court allegedly required Mr.
Flanders to pay his ex-wife more than he would otherwise have had to pay.
To determine the applicability of the Rooker-Feldman doctrine, we
focus on the relief sought by Mr. Flanders. See PJ ex rel. Jensen v.
Wagner, 603 F.3d 1182, 1193 (10th Cir. 2010) (“[O]ur recent Rooker-
Feldman jurisprudence has emphasized the relief sought by federal-court
plaintiffs.”). In the second amended complaint, Mr. Flanders asked the
bankruptcy court to grant declaratory relief nullifying the state court’s
orders. For example, Mr. Flanders’s eleventh claim for relief requested an
order declaring that
 “the State Court’s Orders recorded February 10, 2009 and June
22, 2009, offsetting the $2 Million Commercial Promissory
Note owed by Lawrence to [Great Northern Transportation Co.]
against the value of [Great Northern], and correspondingly,
against the valuation of the Marital Estate, constitutes an
attempt to collect and recover one half of that amount ($1
Million) from Flanders, and is a violation of the Discharge
Order of September 4, 2002, and the State Court orders to the
contrary are void ab initio in these regards”;
 “the State Court’s decision to delete or omit $3,148,843.84 of
accrued interest, owed by Lawrence to [Great Northern], from
the valuation of [Great Northern], and correspondingly, from
the valuation of the Marital Estate, constitutes an attempt to
collect and recover by offset a discharged pre-petition debt of
Flanders, and the State Court’s orders to the contrary are void
ab initio in these regards”;
14
 “the State Courts [sic] Order of February 7, 2007, is void ab
initio, as Lawrence’s pre-petition claim to those funds was lost
by her failure to assert such a claim in the bankruptcy, and thus
any such claim was discharged by this Court’s Discharge Order
of September 4, 2002”; and
 “the State Court’s Orders recorded February 10, 2009 and June
22, 2009, claiming the Net Equity assets remaining at the end
of the bankruptcy case, specifically the [Great Northern Land
Co.] stock, [Canyon Quarry Co.] stock, and 6 burial lots,
constitute a pre-petition claim, and are void ab initio in these
regards, as those assets are not marital property, but rather, are
Flanders’ post-petition, after-acquired assets acquired from the
Net Equity of the Bankruptcy Estate.”
R. at 824-25 (footnote & boldface omitted).
These requests trigger the Rooker-Feldman doctrine, for they depend
on a finding that the state court erred and entail relief from the erroneous
orders. See Mann v. Boatright, 477 F.3d 1140, 1147 (10th Cir. 2007)
(holding that a claim for a declaratory judgment, which sought
nullification of a probate court’s orders, is “precisely the type[] of claim[]
encompassed by the Rooker-Feldman doctrine”); Ebel v. Ebel (In re Ebel),
139 F. App’x 26 (10th Cir. 2005). 7
7
Though our opinion in In re Ebel is not precedential, it is instructive.
There a couple divorced and the husband filed bankruptcy. 139 F. App’x at
27-28. While the bankruptcy proceedings remained pending, the state court
divided the marital property. Id. at 28. The divorcing husband objected and
asked the federal court to vacate the state court’s division of property,
contending that it had been based on a void stipulation and had involved a
denial of due process. Id. at 28. We held that this contention was
(continued)
15
Other requests do not facially require relief from the state court’s
orders. For example, Mr. Flanders sought
 restitution from Ms. Lawrence for benefits she had obtained in
state court by asserting claims that had been discharged in
bankruptcy court,
 issuance of contempt and sanctions for pursuing claims
discharged in bankruptcy court, and
 injunctions against further collection efforts based on claims
discharged in bankruptcy court.
Id. at 821-25. These requests are inconsistent with the state court’s orders,
as discussed below. But that inconsistency does not trigger the Rooker-
Feldman doctrine. See Campbell v. City of Spencer, 682 F.3d 1278, 1283
(10th Cir. 2012) (stating that a federal claim is not precluded by the
Rooker-Feldman doctrine solely because the claim requests relief
inconsistent with a state-court judgment).
We gave a similar example in Bolden v. City of Topeka, 441 F.3d
1129 (10th Cir. 2006):
To illustrate, say a father was deprived of custody of his child
by a state-court judgment. If he files suit in federal court,
seeking to invalidate the state-court judgment on the ground
that the state-court proceedings deprived him of due process or
that the judgment was otherwise contrary to federal law, his
suit would be barred by Rooker-Feldman; the suit usurps the
Supreme Court’s exclusive appellate jurisdiction because it
unreviewable because the husband’s challenge to the state court’s division
of property fell under the Rooker-Feldman doctrine. Id. at 29.
16
seeks to set aside the judgment based on a review of the prior
proceedings. If, however, the father simply brought suit in
federal court seeking custody of his child, without raising any
complaint about the state-court proceedings, Rooker-Feldman
cannot be invoked; his federal claim would have been the same
even in the absence of the state-court judgment. A myriad of
doctrines, including res judicata, would almost certainly bar the
suit. But because he is not seeking to overturn a state-court
judgment, Rooker-Feldman is inapplicable, regardless of
whether a favorable judgment in federal court would be
inconsistent with that judgment and would “deny a legal
conclusion that the state court has reached.”
441 F.3d at 1145 (brackets omitted) (quoting Exxon Mobil, 544 U.S.
at 293).
Our case involves a state court’s division of property in a divorce
rather than an award of child custody. But the principle is equally
applicable. While some of Mr. Flanders’s claims are for relief from the
state court’s orders themselves, other claims could theoretically proceed
independently of the state court’s orders. All of these claims are
inconsistent with the divorce court’s orders, but the Rooker-Feldman
doctrine bars only those claims seeking relief from those orders, like the
claims seeking relief from the child-custody orders in the Bolden
illustration. See Loubser v. Thacker, 440 F.3d 439, 441-42 (7th Cir. 2006)
(holding that the Rooker-Feldman doctrine did not preclude a claim for
damages based on wrongdoing that had led to an erroneous judgment in a
divorce proceeding).
17
2. The Rooker-Feldman doctrine precludes consideration of the
claims that seek to invalidate the state-court rulings based
on a breach of the settlement agreement.
Similarly, the Rooker-Feldman doctrine precludes consideration of
some, but not all, of the claims involving alleged breaches of the
settlement agreement. In the bankruptcy proceedings, Ms. Lawrence settled
litigation against the trustee. In the present suit, Mr. Flanders claims that
the defendants breached the settlement agreement and that the state court
allowed the breaches to take place. As a result, Mr. Flanders seeks
remedies directed at both the defendants and the state court.
Some of these remedies were targeted to Ms. Lawrence based on her
alleged breach of the settlement agreement, such as a declaratory judgment
stating that
 “Lawrence’s claim to $231,789.70 of surplus cash, part of the
Net Equity in the Bankruptcy Estate, and or against Flanders,
was a pre-petition claim that had been released by the
Settlement Agreement and the Mutual Release”;
 “Lawrence’s $1 Million pre-petition contribution claim against
Flanders toward her $2 Million Promissory Note obligation to
[Great Northern Transportation Co.], which was accomplished
by an offset against Flanders’ share of the Marital Estate, is a
claim that had been released under both the Settlement
Agreement and the Mutual Release”;
 “Lawrence’s $1,574,421.91 pre-petition contribution claim
against Flanders for half of the accrued interest on the Note
through June 22, 2009, which was accomplished by deleting the
accrued interest on the Note from the valuation of [Great
Northern Transportation Co.], functioned as an offset against
18
Flanders’ share of the Marital Estate, and is a pre-petition
claim that had been released under . . . the Settlement
Agreement and the Mutual Release”; and
 “Lawrence’s claim to 1000 shares of Great Northern Land
Company stock, 1000 shares of Canyon Quarry Company stock,
and 6 of 8 burial plots at the Evergreen Cemetery as marital
assets are pre-petition claims that had been released under both
the Settlement Agreement and the Mutual Release.”
R. at 165-66 (footnote & boldface omitted).
Though relief to Mr. Flanders would conflict with the state court’s
rulings, this conflict is not enough to trigger the Rooker-Feldman doctrine.
See p. 16, above. These claims are akin to a claimant’s federal action for
child custody after being rebuffed in state court. In Bolden, we explained
that these claims would fall outside of the Rooker-Feldman doctrine. See
pp. 16-17, above. The same is true of Mr. Flanders’s claims involving
breach of the settlement agreement after being rebuffed in state court.
But these are not all of Mr. Flanders’s claims. In others, Mr.
Flanders asks the bankruptcy court to overturn the state court’s rulings.
For example, Mr. Flanders asks for a declaratory judgment providing that
 the state court lacked “jurisdiction to make any determination
as to ‘the performance or interpretation of the Settlement
Agreement’” and
 “the State Court’s orders recorded February 10, 2009 and June
22, 2009, claiming the Net Equity assets remaining at the end
of the bankruptcy case, specifically the [Great Northern Land
Co.] and [Canyon Quarry Co.] stock, and 6 burial lots,
constitute a pre-petition claim and are void ab initio in those
19
regards, as those assets are not marital property, but rather, are
Flanders’ post-petition, after-acquired assets acquired from the
Net Equity of the Bankruptcy Estate.”
R. at 825.
Through these claims, Mr. Flanders seeks invalidation of the state
court’s orders. These claims are akin to a request for a federal court to
invalidate a child-custody order, which we said in Bolden would trigger the
Rooker-Feldman doctrine. See pp. 16-17, above. Under this doctrine, we
cannot entertain Mr. Flanders’s request for invalidation of the state court’s
orders.
* * *
These conclusions leave some claims for violation of the automatic
stay and discharge order, breach of the settlement agreement, contempt,
and sanctions.
V. Issue preclusion forecloses relief on Mr. Flanders’s remaining
claims, which involve violation of the discharge order, breach of
the settlement agreement, contempt, and sanctions.
Mr. Flanders claims that the defendants violated the discharge order,
breached the settlement agreement, and acted in a way that was
contemptuous and sanctionable. We conclude that these claims are barred
by issue preclusion because their success would require the parties to
relitigate issues that the state court already decided.
20
To determine the preclusive effect of a state-court judgment in a later
federal action, we look to the preclusion law of the forum state. Marrese v.
Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380 (1985). Colorado is
the forum state; and under Colorado law,
[i]ssue preclusion bars relitigation of an issue if: (1) the issue
sought to be precluded is identical to an issue actually
determined in the prior proceeding; (2) the party against whom
estoppel is asserted has been a party to or is in privity with a
party to the prior proceeding; (3) there is a final judgment on
the merits in the prior proceeding; and (4) the party against
whom the doctrine is asserted had a full and fair opportunity to
litigate the issue in the prior proceeding.
Sunny Acres Villa, Inc. v. Cooper, 25 P.3d 44, 47 (Colo. 2001).
The bankruptcy court correctly concluded that these requirements
were met with respect to two key issues:
1. whether the settlement agreement released Ms. Lawrence’s
claims to the property remaining after the conclusion of
Mr. Flanders’s bankruptcy case and
2. whether Mr. Flanders’s discharge prevented the state court
from considering his promissory note when valuing and
dividing the marital property.
See R. at 900-02.
In the state-court proceedings, Mr. Flanders contended that the
settlement agreement precluded award of the bankruptcy surplus to Ms.
Lawrence. See id. at 348. The state court expressly rejected this
contention:
21
Mr. Frank [Mr. Flanders’s attorney in state court] argues that
the Settlement Agreement and Mutual Release between Ms.
Flanders and the Bankruptcy Trustee in 2001 operated to
release any claim she might have to the surplus. The Court has
carefully read and reviewed those documents and concludes
that they did not release any claim Ms. [Flanders] might have
to the surplus. Bankruptcy surpluses are returned to the debtor,
in this case Mr. Flanders. At the time the bankruptcy was filed
the parties were married thus the assets that went into the
Bankruptcy estate were marital property and any surplus
coming out is marital property. The Release specifically related
only to claims that could have been raised in the adversary
proceeding that had been filed against Ms. Flanders by the
Trustee. The adversary proceeding claims related to fourteen
different claims for relief including fraudulent conveyance
claims against both Mr. Flanders and Ms. Flanders. The Court
further concludes that a bankruptcy surplus does not exist with
certainty until the bankruptcy is completed and all creditors
and interest paid.
Id. The court repeated this holding in a subsequent order:
In addition [Mr. Flanders] argues that the Settlement
Agreement of March 23, 2001 and Mutual Release of April 30,
2001 that settled the bankruptcy adversary proceeding that
alleged fraudulent transfer claims against Mr. Flanders, Ms.
[Flanders] and their companies acted to discharge any
responsibility he might have for any debts. This Court
disagrees. The Bankruptcy court did not have jurisdiction over
the entire marital estate. Further it appears that most of the
remaining debt occurred after Mr. Flanders’ [sic] filed
bankruptcy in October 1998.
Id. at 357.
Mr. Flanders has repackaged the same contention through four
allegations in his second amended complaint:
22
1. The state court’s order “constituted a breach of the Settlement
Agreement and Mutual Release, for lack of Divorce Court
jurisdiction in this matter.”
2. The state court’s order was “void ab initio” because “the
Settlement Agreement of March 23, 2001 reserved jurisdiction
to the Federal Bankruptcy Court regarding matters of ‘the
performance or interpretation of the Settlement Agreement.’”
3. The assets awarded to Ms. Lawrence could not constitute
marital property because “the [bankruptcy court] approved both
the Settlement Agreement and the Mutual Release, releasing all
claims against the Bankruptcy Estate . . . .”
4. “The State Court, acting upon Lawrence’s claims, allegations,
and arguments, granted all 4 of Lawrence’s invalid claims, in
complete disregard of the Discharge Injunction, Settlement
Agreement and the Mutual Release, despite the fact that the
State Court approved each of these agreements, the result of
which produced State Court orders that were a nullity and void
ab initio.”
Id. at 810, 818, 820 (citation & emphasis omitted).
The same is true of Mr. Flanders’s claims involving the discharge
order. Here, too, Mr. Flanders argued in state court that Ms. Lawrence’s
claims would require violation of the bankruptcy court’s discharge order.
Id. at 357 (“Mr. Flanders has also argued that since all his debts were
discharged by the Bankruptcy Court, he is not responsible for any of the
remaining debt in the marriage.”). 8 The state court disagreed, reasoning
8
The record on appeal does not contain the parties’ filings in the state
district court. As a result, we must depend on the state district court’s
orders to ascertain what the parties argued.
23
that the bankruptcy court lacked jurisdiction over the entire marital estate.
Id.
Mr. Flanders renews the claim here, arguing that the state court’s
division of property “was . . . a violation of [the bankruptcy court’s]
Discharge Injunction.” Id. at 150; see also id. at 160 (alleging that the
state court’s division of property was “clearly an attempt to collect on a
discharged debt”). The issue here is identical to the one decided in state
court, triggering issue preclusion. 9
Mr. Flanders argues that issue preclusion does not apply because the
bankruptcy court had exclusive jurisdiction on the issue of
dischargeability. This argument is based on a misunderstanding of Mr.
Flanders’s claims and the state court’s orders. The state court did not
purport to decide whether any debts were dischargeable, for
dischargeability had already been determined in the bankruptcy
proceedings. The state court was called upon to interpret the effect of the
discharge on the marital division of property. Mr. Flanders does not
suggest that the bankruptcy court had exclusive jurisdiction to interpret the
effect of a discharge order. See State Fin. Co. v. Morrow, 216 F.2d 676,
679 (10th Cir. 1954) (“[T]he right to a discharge and the effect of a
9
Although identity of issues is only one of the four elements of issue
preclusion, there is no doubt that the other three elements are met here.
24
discharge are entirely distinct propositions.” (internal quotation marks
omitted)). 10
When the state court set out to divide assets, Mr. Flanders argued
that the discharge order prevented any award to Ms. Lawrence. In
addressing Mr. Flanders’s argument, the state court had to interpret the
effect of the bankruptcy court’s discharge order. That interpretation is
entitled to issue-preclusive effect here even if the antecedent determination
of dischargeability had fallen within the bankruptcy court’s exclusive
jurisdiction. Thus, Mr. Flanders cannot relitigate the same argument here.
See Rally Hill Prods., Inc. v. Bursack (In re Bursack), 65 F.3d 51, 53 (6th
Cir. 1995) (stating that the bankruptcy court’s exclusive jurisdiction does
not alter the rule requiring preclusive effect to state-court judgments).
10
In his second amended complaint and his appellate briefs, Mr.
Flanders characterizes the state court’s orders as “void ab initio” because
they violated the discharge order. This characterization is incorrect. The
state court clearly had jurisdiction over the division of property between
Mr. Flanders and Ms. Lawrence. If Mr. Flanders is correct on his
underlying claims, the state court’s division of property might have been
erroneous, but that error would not render the orders void. See Union Joint
Stock Land Bank of Detroit v. Byerly, 310 U.S. 1, 7-8 (1940) (stating that
the district court’s erroneous application of a statute, which governed
administration of a bankruptcy estate, rendered the order voidable (rather
than void) and could not be attacked collaterally in a subsequent state-
court action); see also FDIC v. Shearson-American Express, Inc., 996 F.2d
493, 498 (1st Cir. 1993) (stating that even if a court had erred in finding
no violation of a bankruptcy court’s automatic stay, the finding would be
“entitled to respect” and invulnerable to collateral attack).
25
VI. Mr. Flanders forfeited his argument that the bankruptcy court
had erred in determining that he lacked standing to allege
violation of the automatic stay.
Mr. Flanders argues that the bankruptcy court erred in determining
that he lacked standing to assert that the state-court orders violated the
automatic stay. But he admits that he did not raise this issue before the
Bankruptcy Appellate Panel. As a result, this issue was not preserved. See
pp. 6-8, above. 11
VII. Disposition
The bankruptcy court and Bankruptcy Appellate Panel concluded that
the defendants were entitled to summary judgment. We too conclude that
Mr. Flanders’s claims fail as a matter of law, but summary judgment is not
the correct disposition for the claims invalidated based on the Rooker-
Feldman doctrine or lack of standing. These are defects precluding subject-
matter jurisdiction. See PJ ex rel. Jensen v. Wagner, 603 F.3d 1182, 1193
(10th Cir. 2010) (Rooker-Feldman doctrine); Cornhusker Cas. Co. v. Skaj,
786 F.3d 842, 851 (10th Cir. 2015) (standing). For such jurisdictional
defects, summary judgment is ordinarily improper. See 10A Charles Alan
11
Unlike the general exception to forfeiture for belated arguments that
a district court or this court lacks subject-matter jurisdiction, we generally
do not consider unpreserved arguments in favor of subject-matter
jurisdiction. United States ex rel. Ramseyer v. Century Healthcare Corp.,
90 F.3d 1514, 1518 n.2 (10th Cir. 1996).
26
Wright, Arthur R. Miller, Mary Kay Kane, Fed. Practice and Procedure,
§ 2713, at 235 (3d ed. 1998) (“In general, courts have ruled that summary
judgment is an inappropriate vehicle for raising a question concerning the
courts[’] subject-matter jurisdiction . . . .”), quoted with approval in
Shikles v. Sprint/United Mgt. Co., 426 F.3d 1304, 1317-18 (10th Cir.
2005). Instead, these claims should have been dismissed without prejudice.
See Garman v. Campbell Cty. Sch. Dist. No. 1, 630 F.3d 977, 985 (10th
Cir. 2010) (“[A] dismissal for lack of subject matter jurisdiction is without
prejudice and does not have a preclusive effect.”). Thus, we remand with
instructions to dismiss these claims without prejudice. See Shikles, 426
F.3d at 1318 (“When a district court correctly determines that it lacks
subject matter jurisdiction over a case, but incorrectly determines that the
lack of subject matter jurisdiction justifies the entry of summary judgment,
we have vacated the judgment and remanded the case to the district court
for entry of an order dismissing the case.”). In all other respects, we
affirm.
Entered for the Court
Robert E. Bacharach
Circuit Judge
27