Larry W. Rader v. Ally Financial, Inc.

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted January 16, 2025*
Decided January 23, 2025
Before
DIANE S. SYKES, Chief Judge
MICHAEL B. BRENNAN, Circuit Judge
CANDACE JACKSON-AKIWUMI, Circuit Judge
No. 24-2546
LARRY W. RADER,
Plaintiff-Appellant,
v.
ALLY FINANCIAL, INC.,
Defendant-Appellee.
Appeal from the United States District
Court for the Western District of
Wisconsin.
No. 23-cv-668-jdp
James D. Peterson,
Chief Judge.
O R D E R
In 2021, a subsidiary of Ally Financial, Inc., prevailed in a replevin action in
Wisconsin state court and repossessed a car from Larry Rader. Rader then sued Ally in
* We have agreed to decide the case without oral argument because the briefs and
record adequately present the facts and legal arguments, and oral argument would not
significantly aid the court. F ED. R. A PP . P. 34(a)(2)(C).
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with F ED. R. APP . P. 32.1

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federal court, seeking damages for illegal repossession and fraudulent conduct. The
district judge dismissed the case because the state court judgment barred federal
jurisdiction over any claim seeking compensation for the loss of the car, and the
complaint did not otherwise state a claim for relief. Although Rader argues on appeal
that the district court had jurisdiction over his claim for the value of the car, he does not
challenge the dismissal on the merits, and we therefore affirm.
In 2019, Rader, a Wisconsin citizen, purchased a Toyota Corolla, financed with a
loan secured by that car. The security interest was assigned to Ally, an out-of-state
corporation. Rader failed to make payments on his loan, and therefore, in 2021, Ally
filed a replevin action in Wisconsin state court to recover the car. Because Rader did not
substantiate his argument that Ally had no security interest, the Wisconsin circuit court
granted Ally’s motion for judgment on the pleadings and determined that Ally had the
right to repossess and sell the car. Ally Cap. Corp. v. Rader, No. 21-SC-487 (Wis. Cir. Ct.
May 10, 2021). This judgment was affirmed on appeal. Ally Cap. Corp. v. Rader, No.
2021AP840, 2022 WL 17098324 (Wis. Ct. App. Nov. 22, 2022), review denied, 2023 WI 31
(Wis. Feb. 21, 2023).
Rader then filed this suit in September 2023. He alleged that Ally’s repossession
was illegal because the dealership did not assign its security interest to Ally and
because the Ally subsidiary that brought the state action lacked standing. Rader sued
for damages, purportedly under 42 U.S.C. § 1983 and 18 U.S.C. § 1341, the federal mail
fraud statute.† He also alleged a fraudulent “embezzlement” scheme, invoking the
Consumer Financial Protection Act, 12 U.S.C. §§ 5481–5603; the Wisconsin Consumer
Act, WIS . S TAT. §§ 421.101–429.303; and, potentially, state common law. He also claimed
that Ally had appeared in state court without counsel and thus engaged in the
unauthorized practice of law. See W IS . S TAT. § 757.30.
On October 27, the deadline for Ally’s responsive pleading, Rader moved for a
default judgment under the belief that the deadline was October 19. The same day, Ally
filed its motion to dismiss and supporting brief and mailed them to Rader. The district
court removed the filings from the docket and notified Ally that it had improperly filed
its brief as an attachment; Ally properly refiled its materials the same day, October 30.
In its motion to dismiss, Ally argued that the complaint violated Rule 8(a) of the Federal
† In his complaint, Rader cites 28 U.S.C. § 1341, but because that statute concerns
federal court jurisdiction over state tax law, while 18 U.S.C. § 1341 concerns fraud, we
follow the district judge in construing the claim as raised under Title 18.

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No. 24-2546 Page 3
Rules of Civil Procedure and that all claims were barred by claim preclusion. Ally
simultaneously moved to strike Rader’s motion for default judgment.
The judge rejected Rader’s motion for default judgment. After correcting Rader’s
mistake about the deadline, the judge acknowledged that Ally’s responsive motion was
ultimately docketed after the deadline, but he concluded that Ally had not willfully
disregarded the litigation and had otherwise been timely, so default judgment was
inappropriate.
Next, the judge sua sponte raised the issue of subject matter jurisdiction. The
judge explained that some of the damages claimed for the allegedly unlawful
repossession would offset the remedy granted by the state court, and therefore the
Rooker-Feldman doctrine barred that portion of the claim. The Rooker-Feldman doctrine
prevents district courts from exercising jurisdiction over claims by parties who seek
redress in federal court for an injury caused by a state-court judgment through reversal
of that judgment. Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 291 (2005).
The judge acknowledged our recent holding that the Rooker-Feldman doctrine rarely bars
claims for damages. See Gilbank v. Wood Cnty. Dep’t of Human Servs., 111 F.4th 754, 792
(7th Cir. 2024) (en banc) (holding on damage claims set forth in Part I of opinion by
Kirsch, J.), petition for cert. filed, No. 24-470 (Oct. 28, 2024). But the judge cited an
“exception” that applies when the requested damages would clearly offset or nullify the
state judgment. See id. at 795.
Because Rader sought other damages as well, the judge concluded that the
Rooker-Feldman doctrine did not bar the entire action and went on to assess whether the
complaint stated a claim. The judge concluded that the Consumer Financial Protection
Act, 12 U.S.C. §§ 5481–5603; the federal criminal mail fraud statute, 18 U.S.C. § 1341;
and Wisconsin’s unauthorized practice of law statute, W IS . S TAT. § 757.30, provide no
private rights of action, so Rader failed to state any claim under those laws. And
because he concluded that Rader could not amend the complaint to state a plausible
claim, the judge dismissed the case with prejudice.
On appeal, Rader challenges the rejection of his motion for default judgment and
the application of the Rooker-Feldman doctrine. Beginning with the former, we review
denials of default judgment for abuse of discretion. See Edelman v. Belco Title & Escrow,
LLC, 754 F.3d 389, 395 (7th Cir. 2014). First, we note that Rader’s motion was not
preceded by a clerk’s entry of default. See F ED. R. C IV. P. 55(a), (b)(2); VLM Food Trading
Int’l, Inc. v. Ill. Trading Co., 811 F.3d 247, 255 (7th Cir. 2016). And we agree with the
district judge that Rader held Ally to the wrong deadline and that default judgment

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would be inappropriate because Ally was diligent and promptly addressed its filing
error.
As to Rader’s argument that the Rooker-Feldman doctrine does not apply to his
claims, we need not decide. The district judge determined that the Rooker-Feldman
doctrine barred the court from exercising jurisdiction only insofar as Rader sought
damages plainly corresponding to the value of the car. Because there is no question that
the replevin judgment caused Rader’s alleged injury here, at issue is whether he is
attempting to “reverse” the state court judgment through federal litigation. Typically, a
claim for damages cannot undo or reverse a state-court judgment. See Gilbank, 111 F.4th
at 792. But it might do so if the plaintiff seeks money damages that would offset (and
therefore nullify) the relief granted by the state court. See id. at 795. In this case, the state
court granted Ally the right to sell the car, and Rader asks for damages from Ally for
the sale price; thus, this could be the atypical situation in which Rooker-Feldman
precludes jurisdiction over this aspect of his suit for damages.
Either way, however, Rader sought other damages, so Rooker-Feldman did not
deprive the district court of jurisdiction entirely. The district judge disposed of the
balance of the complaint by concluding that Rader sought relief under statutes that do
not provide a private right of action: 12 U.S.C. §§ 5481–5603, 18 U.S.C. § 1341, and W IS .
S TAT. § 757.30. Rader does not argue on appeal that he had the right to sue under these
laws, and the judge correctly explained why he cannot. To the extent that the complaint
invoked other grounds for relief, we add that his complaint contains no allegations of
state action—Ally is not a public entity—and so his constitutional claim under § 1983
also fails. See Scott v. Univ. of Chi. Med. Ctr., 107 F.4th 752, 757 (7th Cir. 2024). If Rader
intended his complaint to raise any other claims, such as common-law fraud, he does
not argue on appeal that the district judge overlooked any such claims, so we do not
further parse the complaint.
AFFIRMED

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