Kline v. Deutsche Bank National Trust Company et al

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	KAREN MARIE KLINE, 	No. 13-05-12174 MS
(Closed)
Debtor.
KAREN MARIE KLINE,
Plaintiff,
v. 	Adversary No. 09-1035 J
DEUTSCHE BANK NATIONAL TRUST COMPANY and
RICHARD LEVERICK,
Defendants.
MEMORANDUM OPINION
THIS MATTER is before the Court on the following cross-motions for summary
judgment: 1) Defendants’ Motion for Summary Judgment with Supporting Affidavits
(“Defendants’ Motion for Summary Judgment”)(Docket No. 205)1 ; and 2) Plaintiff’s 2nd Motion
for Summary Judgment and Memorandum and Affidavits in Support, as amended by the
Clarification of Plaintiff’s Second Motion for Summary Judgment and Memorandum and
Affidavits in Support (together, “Plaintiff’s 2 nd Motion for Summary Judgment”)(Docket Nos.
209 and 210).2 Plaintiff filed this adversary proceeding in March of 2009 seeking damages
against Defendants under 11 U.S.C. § 362(k) based on an alleged willful violation of the
automatic stay arising from certain actions that occurred in 2005 in connection with a foreclosure
1Plaintiff filed a response to Defendants’ Motion for Summary Judgment (See Objection to Defendants’ Motion for
Summary Judgment – Docket No. 216), and Defendant filed a reply (See Defendants’ Reply in Support of Their
Motion for Summary Judgment with Supporting Memorandum and Affidavits (Doc. No. 205) - Docket No. 223).
2Defendants filed a response to Plaintiff’s 2 nd Motion for Summary Judgment (See Defendants’ Response and
Objections to Plaintiff’s Second Motion for Summary Judgment and Memorandum and Affidavits in Support
(“Defendants’ Response”)(Doc. No. 209 – Docket No. 217), Plaintiff filed a reply (See Plaintiff’s Reply to
Defendants’ Objections to Plaintiff’s 2nd Motion for Summary Judgment – Docket No. 220) and an addendum to her
reply (See Addendum to Plaintiff’s Reply to Defendants’ Objections to Plaintiff’s 2nd Motion for Summary
Judgment – Docket No. 224).
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 1 of 17

2
action filed in the First Judicial District Court, State of New Mexico, County of Santa Fe as Case
No. D-101-CV-2005-00515 (the “State Court Foreclosure Action”). 	Plaintiff initially claimed
in this adversary proceeding that Defendants’ post-petition service of an amended complaint in
connection with the State Court Foreclosure Action constituted a willful violation of the
automatic stay. 	Plaintiff no longer contends that service of the amended complaint constituted
a willful violation of the automatic stay that would support a claim for damages under 11 U.S.C.
§ 362(k)(1).3 Rather, Plaintiff asserts that by failing to take affirmative steps to stop the
foreclosure proceeding after learning of Plaintiff’s bankruptcy, Defendants’ acted willfully in
violation of the automatic stay. 	Plaintiff seeks actual and punitive damages under 11 U.S.C. §
362(k)(1).
After consideration of the cross-motions for summary judgment, supporting memoranda,
affidavits, and exhibits, and being otherwise sufficiently informed, the Court finds that the facts
not subject to material dispute establish that the Defendants’ failure to stop the foreclosure
proceeding following the termination of the automatic stay does not constitute a willful violation
of the automatic stay under 11 U.S.C. § 362(k)(1) as a matter of law. 	Summary judgment will,
therefore, be granted in favor of Defendants.
SUMMARY JUDGMENT STANDARDS
It is appropriate for the Court to grant summary judgment when the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any
show that there is no genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law. Fed.R.Civ.P. 56(c), made applicable to adversary proceedings by
Fed.R.Bankr.P. 7056. In considering a motion for summary judgment, the Court must “‘examine
3See Plaintiff’s 2 nd Motion for Summary Judgment, p. 31. (requesting “this Honorable Court find not that the service
of the Amended Complaint was a willful violation of the automatic stay . . .”).
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 2 of 17

3
the factual record and reasonable inferences therefrom in the light most favorable to the party
opposing summary judgment.’” Wolf v. Prudential Inc. Co. of America, 50 F.3d 793, 796 (10th
Cir. 1995)(quoting Applied Genetics Int’l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241
(10th Cir. 1990)). Cross motions for summary judgment raise an inference that summary
judgment may be appropriate. In re Baines, 337 B.R. 392 , 396 (Bankr.D.N.M. 2006).
Nevertheless, before a Court may grant summary judgment, the Court must satisfy itself that the
requesting party has independently satisfied the requirements of Rule 56(c). See Harris v.
Beneficial Oklahoma, Inc., (In re Harris), 209 B.R. 990, 998 (10th Cir. BAP 1997); see also,
Renfro v. City of Emporia, 948 F.2d 1529, 1534 (10 th Cir. 1991)(stating that a cross motion for
summary judgment does not relieve the court of its obligation to determine if a genuine issue of
material fact exists). “[A] party opposing a properly supported motion for summary judgment
may not rest on mere allegation or denials of his pleading, but must set forth specific facts
showing that there is a genuine issue for trial” through affidavits or other supporting evidence.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
FACTS NOT SUBJECT TO GENUINE DISPUTE
The following facts are not subject to genuine dispute:
1. 	Deutsche Bank filed the State Court Foreclosure Action on March 9, 2005 to
foreclose its interest in certain real property located at 729 W. Manhattan Avenue #3, Santa Fe,
New Mexico (the “Property”).
2. 	Deutsche Bank served the original complaint in the State Court Foreclosure
Action on March 18, 2005.
3. 	Deutsche Bank filed an Amended Complaint (“Amended Complaint”) in the State
Court Foreclosure Action on March 16, 2005, before service of the original complaint.
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 3 of 17

4
4. 	Plaintiff filed a voluntary petition under Chapter 13 of the Bankruptcy Code, 11
U.S.C. §§ 101 et. seq, on March 21, 2005 commencing bankruptcy case No. 13-05-12174 (the
“Chapter 13 Bankruptcy Case”).
5. 	Plaintiff listed the Property on Schedule A of her schedules filed in the Chapter 13
Bankruptcy Case.
6. 	Neither Deutsche Bank nor Richard Leverick were listed as creditors in the
Plaintiff’s schedules, and neither was included on the mailing list generated by the Clerk of
Court for the Chapter 13 Case when the Chapter 13 Bankruptcy Case was filed.
7. 	A Certificate of Service filed of record in the Chapter 13 Bankruptcy Case reflects
service on March 25, 2005 of the Notice of Chapter 13 Bankruptcy Case (“Notice”), which gave
notice of the commencement of the Chapter 13 Bankruptcy Case to Ocwen Federal Bank. 	The
Certificate of Service does not reflect service of the Notice on Deutsche Bank or Richard
Leverick.
8. 	Deutsche Bank served the Amended Complaint on Plaintiff on March 29, 2005.
9. 	Ocwen Federal Bank notified Defendant Richard Leverick by e-mail on April 11,
2005 that Plaintiff had filed the Chapter 13 Bankruptcy Case.
10. 	“Ocwen Federal Bank FSB, loan servicing agent for Deutsche Bank” filed a
Motion for Relief from Stay in the Chapter 13 Bankruptcy Case on June 1, 2005.
11. 	A Default Order Granting Relief from the Stay was entered in the Chapter 13
Bankruptcy Case on July 1, 2005.
12. 	On July 13, 2005, the Chapter 13 Bankruptcy Case was dismissed.
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 4 of 17

5
13. 	Between the time Defendants learned of the Chapter 13 Case and dismissal of the
Chapter 13 case, Deutsche Bank took no action in the State Court Foreclosure Action to
prosecute its claims against Plaintiff.
14. 	Deutsche Bank did not re-serve the Amended Complaint on Plaintiff after
Plaintiff’s Chapter 13 case was dismissed.
15. 	On August 5, 2005, Deutsche Bank filed a Memorandum in Support of Motion
for Summary Judgment in the State Court Foreclosure Action.
16. 	Plaintiff filed an answer in the State Court Foreclosure Action in October of 2005.
17. 	The Certificate as to the State of the Record and Non-Appearance filed in the
State Court Action on August 5, 2005 reflected that Plaintiff was served on March 29, 2005.
(See Plaintiff’s Exhibit 12).4
18. 	A Summary Judgment, Stipulated Judgment and Default Judgment (“Judgment
for Foreclosure”) was entered in the State Court Foreclosure Action on December 15, 2005.
(See Plaintiff’s Exhibit 16; Defendants’ Exhibit A-1).
19. 	At a hearing in the State Court Foreclosure Action held March 8, 2006 on
Defendants’ request to approve the foreclosure sale, Plaintiff asserted, among other things, that
Defendants were required to re-serve her with the Amended Complaint and that she was not in
default. See Plaintiff’s Exhibit 35a - Partial Transcript of hearing held March 8, 2006, p. 10,
lines 11 – 17; p. 18, lines 7 – 17. 	Defendants asserted that it was unnecessary to serve Plaintiff
with the Amended Complaint. Id. at p. 11, lines 19 – 25, p. 12, lines 17 – 24.
20. 	At the conclusion of the hearing in the State Court Foreclosure Action held March
8, 2006, Judge Michael Vigil approved the entry of the Order Approving the Foreclosure Sale.
4 It is unclear from the Certificate as to the State of the Record and Non-Appearance whether it refers to service of
the original complaint or the Amended Complaint.
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 5 of 17

6
See Plaintiff’s Exhibit 35a - Partial Transcript of hearing held March 8, 2006, p. 20. See also
Order Approving Special Master’s Report and Confirming Foreclosure Sale – Plaintiff’s Exhibit
36.
21. 	At a hearing in the State Court Foreclosure Action on May 9, 2006, the state court
considered Plaintiff’s motion to set aside the Judgment for Foreclosure. 	At the hearing Plaintiff
again argued that she was not properly served with the Amended Complaint, that service of the
Amended Complaint was void because made in violation of the bankruptcy stay, and that
Defendants were required to re-serve her with the Amended Complaint. 	See Exhibit A to
Defendants’ Response and Objections to Plaintiff’s Second Motion for Summary judgment and
Memorandum and Affidavits in Support (Doc. No. 209)(“Defendants’ Response”) - Doc. 217
(Transcript from Hearing before the Honorable Michael E. Vigil on May 9, 2006 (“May 9, 2006
Transcript”) p. 	5, lines 6 – 8; p.6, line 23; pp. 9 – 10; p. 11, lines 19 – 24; p. 12; [Plaintiff’s]
Objection to Defendants’ Motion for Summary Judgment (“Plaintiff’s Response”), ¶ 19 –
Docket 216 (“At the May 9, 2006 hearing Kline raised the issue of the Certificate as to the State
of the Record being used to foreclose by default when the Certificate showed the Amended
Complaint served on March 29, 2005, but did not show the existence of the automatic stay.”);
Plaintiff’s Exhibit 36b.
22. 	The state court denied Plaintiff’s motion to set aside the Judgment for Foreclosure
finding that Defendants’ service of the original complaint in the State Court Action on March 18,
2005 was valid service, and that Plaintiff failed to raise a meritorious defense to the foreclosure
action. 	See May 9, 2006 Transcript, p. 27, lines 22 – 25; p. 28, lines 1 – 6; p. 31, lines 18 – 23;
p. 33, lines 17 – 19, 22 – 23; 	Plaintiff’s Response, ¶ 20 (“At the May 9, 2006 hearing Judge
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 6 of 17

7
Vigil had the Certificate as to the State of the Record changed so that the Amended Complaint
served during the stay would no longer be the basis of Kline’s ‘default’ . . .”).
23. 	The state court held a hearing to consider Plaintiff’s motions to reconsider the
Order Approving Foreclosure Sale under Rule 59 and Rule 60, Fed.R.Civ.P. on June 20, 2006.
The state court entered orders denying Plaintiff’s motions for reconsideration the same date. See
Defendants’ Motion for Summary Judgment, Exhibit C - Affidavit of Richard Leverick, ¶ 21.
24. 	An Order Correcting the Certificate as to the State of the Record was entered in
the State Court Foreclosure Action on June 20, 2006 reflecting that Plaintiff was first served on
March 18, 2005 with the summons and complaint filed in the State Court Foreclosure Action.
See Defendants’ Motion for Summary Judgment, Exhibit C-1. 5
25. 	Plaintiff filed an appeal from the orders entered on June 20, 2006 in the State
Court Foreclosure Action. See Certified copy of Memorandum Opinion entered in the Court of
Appeal of the State of New Mexico on May 14, 2008 - Exhibit F to Defendants’ Response
(Docket No. 217).
26. 	Plaintiff did not prevail on appeal. Id.
5 Plaintiff complains that Defendants’ Exhibit C-1 is not a certified copy of the Order Correcting Certificate as to the
State of the Record filed in the State Court Foreclosure Action. However, documents offered in support of a motion
for summary judgment can be authenticated by an affidavit that meets the requirements of Rule 56(e), Fed.R.Civ.P.,
made applicable to adversary proceedings by Rule 7056, Fed.R.Bankr.P. See Harris v. Beneficial Oklahoma, Inc.
(In re Harris), 209 B.R. 990, 996 (10 th Cir. BAP 1997)(stating that “‘[i]n order for documents not yet part of the
court record to be considered by a court in support of or in opposition to a summary judgment motion they must
meet a two-prong test: (1) the document must be attached to and authenticated by an affidavit which conforms to
Rule 56(e); and (2) the affiant must be a competent witness through whom the document can be received into
evidence . . . ’”)(quoting 11 James Wm. Moore et al., Moore’s Federal Practice §§ 56.10[4][c][i] & 56.14[2][c] (3d
ed. 1997)(footnotes omitted)). Exhibit C-1 was attached to the Affidavit of Richard Leverick, the attorney who
represented Deutsche Bank National Trust in the State Court Foreclosure Action, and, as authenticated by a person
through whom the document can be admitted into evidence, is sufficient for purposes of summary judgment.
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 7 of 17

8
DISCUSSION
A. Defendants’ Actions Following the Termination of the Automatic Stay Do Not Constitute
a Willful Violation of the Automatic Stay under 11 U.S.C. § 362(k)6
Pursuant to 11 U.S.C. § 362(k), a debtor damaged by a creditor’s willful violation of the
automatic stay is entitled to recover damages. 	That section provides, in relevant part:
an individual injured by any willful violation of a stay provided by this section shall
recover actual damages, including costs and attorneys’ fees, and, in appropriate
circumstances, may recover punitive damages.
11 U.S.C. § 362(k)(1).
A debtor who alleges a willful violation of the automatic stay and seeks damages under 11
U.S.C. § 362(k) bears the burden of proving, by a preponderance of the evidence, that the
creditor willfully acted in violation of the automatic stay and that the debtor suffered damages as
a result of such action.7
It is undisputed that Defendants served Plaintiff with the Amended Complaint in the State
Court Foreclosure Action after the date Plaintiff filed her Chapter 13 bankruptcy case, but before
Defendants had knowledge of Plaintiff’s pending bankruptcy case. Service of the Amended
6 Plaintiff has abandoned her claim for damages for willful violation of the automatic stay based on Defendants’
post-petition service of the Amended Complaint. See Plaintiff’s 2 nd Motion for Summary Judgment, p.1 (“Plaintiff
asks the Court to hold Defendants . . . liable . . . for willful violation of the automatic stay when Defendants did not
remedy their technical violation after learning of Plaintiff’s Chapter 13.”). Defendants did not receive notice of
Plaintiff’s bankruptcy until after service of the Amended Complaint. This intentional act constitutes a “technical”
violation of the automatic stay that does not support a claim for damages under 11 U.S.C. § 362(k)(1). See Kline v.
Tiedemann (In re Kline), 424 B.R. 516, 523 (Bankr.D.N.M. 2010)(“Actions taken without notice or knowledge on
the part of a creditor of the commencement or pendency of the bankruptcy case nevertheless violate the stay, but the
violation is merely ‘technical’ and no damages are to be awarded.”)(citing In re McMullen, 386 F.3d 320, 330 (1 st
Cir. 2004)(remaining additional citations omitted).
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”), effective October
17, 2005, changed 11 U.S.C. § 362(h) to 11 U.S.C. § 362(k). Service of the Amended Complaint occurred when
former 11 U.S.C. § 362(h) was in effect. The ongoing activity Plaintiff complains of occurred after BAPCPA’s
effective date. 	The applicable language of the statute did not change after the enactment of BAPCPA.
7 See Kline, 424 B.R. at 524 (“A debtor alleging a [willful] violation of the automatic stay has the burden to
demonstrate, by a preponderance of the evidence, that a violation of the automatic stay has occurred, that the
violation was willfully committed and that the debtor suffered damage as a result of the violation.”)(citing In re
Johnson, 501 F.3d 1163, 1172 (10 th Cir. 2007)).
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 8 of 17

9
Complaint constituted a technical violation of the automatic stay.8 Plaintiff asserts that
Defendants failed to remedy their technical violation of the automatic stay by failing to re-serve
the Amended Complaint following the termination of the automatic stay and by relying on
service of the Amended Complaint to obtain the Judgment for Foreclosure. 	Plaintiff argues that
such actions constitute a willful violation of the automatic stay.
It is correct that a technical violation of the automatic stay can become willful when a
creditor refuses to remedy the violation after receiving notice of the automatic stay.9 For
example, in Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210 (9th Cir. 2010), a case relied upon
by Plaintiff, the Ninth Circuit affirmed the bankruptcy court’s determination that the creditor’s
failure to immediately dismiss its state court collection action after learning of the debtor’s
bankruptcy constituted a willful violation of the automatic stay, stating:
[a] party violating the automatic stay, through continuing a collection action in a non-
bankruptcy forum, must automatically dismiss or stay such proceeding or risk possible
sanctions for willful violations pursuant to §362(h).
Eskanos, 309 F.3d at 1214.
The Ninth Circuit reasoned in part that because the scope of the protections provided by
the automatic stay is very broad, and because 11 U.S.C. § 362(a)(1)10 expressly prohibits the
8 See Kline, 424 B.R. at 523 n. 13 (explaining that “‘[t]echnical violation of the automatic stay’ as used by this Court
means a stay violation committed without notice or knowledge of the bankruptcy case in which the stay was
violated.”); McMullen, 386 F.3d at 330 (“Absent such knowledge [of the bankruptcy case] on the part of a creditor,
however, the violation is merely ‘technical,’ . . .”).
9 See, e.g., Johnson, 501 F.3d at 1172 (refusal to return a vehicle repossessed in violation of the stay after learning of
the bankruptcy constituted a willful stay violation); In re Scroggin, 364 B.R. 772 (10 th Cir. BAP 2007)(creditor’s
failure to cease garnishing debtor’s wages after receiving notice of the bankruptcy constituted a willful violation of
the automatic stay); Diviney v. Nationsbank of Texas, N.A. (In re Diviney), 225 B.R. 762, 776 (10 th Cir. BAP
1998)(creditor’s failure to remedy the violation after receiving notice of the stay by refusing to return car to the
debtors and instead selling the car constituted a willful violation of the automatic stay); Brown v. Joe Addison, Inc.
(In re Brown), 210 B.R. 878 (Bankr.S.D.Ga. 1997)(finding that creditor had a duty to return vehicle that was
repossessed post-petition without knowledge of the bankruptcy).
10 Section 362(a)(1) provides, in relevant part:
. . . a petition filed under section 301 . . . of this title . . . operates as a stay, applicable to all entities, of –
(1) the commencement or continuation, including the issuance or employment of process, of a
judicial, administrative, or other action or proceeding against the debtor that was or could
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 9 of 17

10
continuation of judicial actions, Eskanos & Adler’s delay in dismissing the state court collection
action constituted a willful stay violation. 	Id. at 1214. 	The Ninth Circuit rejected Eskanos &
Adler’s argument that some further collection efforts were required in order to violate 11 U.S.C.
§ 362(a)(1), noting that “[a] debtor enjoys little satisfaction from a creditor’s honest words that it
files a collection action in state court but refrains from persisting in the collection action until
bankruptcy proceedings sort itself out.” Id.
Eskanos is distinguishable from the instant case in one crucial respect: in Eskanos the
creditor commenced the state court collection action after the debtor filed bankruptcy. 	Here,
Defendants filed the State Court Foreclosure Action before Plaintiff filed her bankruptcy case.
Defendants also served Plaintiff with the original complaint in the State Court Foreclosure
Action pre-petition. 	Defendants served the Amended Complaint in technical violation of the
automatic stay, but took no further action in the State Court Foreclosure Action until after the
termination of the automatic stay. The Court finds that Defendants’ actions do not constitute a
continuing willful violation of the automatic stay under 11 U.S.C. § 362(k) as a matter of law.
The facts not subject to genuine dispute in this case are somewhat similar to the facts in
In re Long, 2009 WL 981134 (Bankr.D.Mont. Jan. 9, 2009). 	In Long, the creditor commenced
an action against the debtor in state court to collect on a defaulted business loan approximately
six months before the debtor filed his bankruptcy petition. Long, 2009 WL 981134 at *1. 	There
was no evidence that the creditor contacted the debtor post-petition to demand payment or that
the creditor took any further action in the state court collection action while the stay was in place.
Id. at *2. The creditor did not dismiss the state court action after receiving notice of the
bankruptcy. Id. 	The Long court rejected the debtor’s argument that the creditor had an
have been commenced before the commencement of the case under this title, or to recover a
claim against the debtor that arose before the commencement of the case under this title.
11 U.S.C. § 362(a)(1).
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 10 of 17

11
affirmative duty to dismiss the pending state court action upon learning of the debtor’s
bankruptcy case, and concluded that because the creditor initiated the state court action pre-
petition and took no action post-petition in furtherance of its claim such that the state court action
was stayed, the debtor could not sustain a claim for willful violation of the automatic stay. Id. at
*5 and *6.
Plaintiff contends that Defendants improperly obtained the Judgment for Foreclosure
based on the post-petition service of the Amended Complaint, which was void. 11 She reasons
further that Defendants’ failure to re-serve her with the Amended Complaint following the
dismissal of her Chapter 13 bankruptcy case and the continuation of their foreclosure efforts
constitutes a willful stay violation. 	One of the Ninth Circuit’s concerns in Eskanos was the
potential risk of default by a debtor if a creditor fails to dismiss a pending state court action
commenced in violation of the stay.12 The Judgment for Foreclosure was entered against
Plaintiff in the State Court Foreclosure Action by default after termination of the stay.
However, the facts not subject to genuine dispute establish that the Judgment for Foreclosure
was premised on service of the original complaint before the stay went into effect, not the
Amended Complaint. 	The state court refused to set aside the Judgment for Foreclosure and
ordered that the Certificate as to the State of the Record be corrected to reflect service of the
original complaint on Plaintiff on March 18, 2005. 	As discussed below, the correctness of the
state court’s ruling is not something this Court can now consider. 	Defendants stayed their
11 Actions taken in violation of the automatic stay are void. Ellis v. Consol. Diesel Elec. Corp., 894 F.2d 371, 372
(10 th Cir. 1990)(“It is well established that any action taken in violation of the automatic stay is void and without
effect.”)(citation omitted). See also, In re Gagliardi, 290 B.R. 808, 814 (Bankr.D.Colo. 2003)(noting that “[a]ctions
taken in violation of the automatic stay are void and of no force or effect, even when there is no actual notice of the
existence of the stay.”)(citing In re Calder, 907 F.3d 953, 956 (10 th Cir. 1990)(remaining citations omitted).
12Eskanos, 309 F.3d at 1214 (observing that “[a]ctive state filings exist as more than placeholders—the risk of
default judgment looms over the debtor throughout.”). See also Long, 2009 WL 981134 at *5 (finding that the risk
of default noted in Eskanos was not at issue because Mr. Long had filed an answer in the state court action and had
opposed the creditor’s motion for summary judgment in the state court action).
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 11 of 17

12
collection efforts upon learning of Plaintiff’s bankruptcy case and did not resume their efforts
until after the stay terminated. 	Defendants did not have an affirmative duty to dismiss the State
Court Foreclosure Action they initiated pre-petition.
The other cases upon which Plaintiff relies are also either distinguishable or inapplicable.
In Soares v. Brockton Credit Union (In re Soares), 107 F.3d 969 (1st Cir. 1997), the creditor
obtained a judgment for foreclosure post-petition and obtained an order from the bankruptcy
court for retroactive relief from the automatic stay. 	The First Circuit reversed, finding that the
post-petition judgment obtained in violation of the automatic stay was void, and that there were
no compelling facts to justify retroactive relief from the automatic stay. Soares, 107 F.3d at 978.
In contrast, the Judgment for Foreclosure at issue in this case was entered well after the stay
terminated upon dismissal of Plaintiff’s Chapter 13 bankruptcy case. 	In In re Scroggin, 364
B.R. 772 (10th Cir. BAP 2007), a creditor who obtained a pre-petition order for garnishment of
the debtor’s wages failed to release the garnishment upon learning of the debtor’s bankruptcy.
The Tenth Circuit Bankruptcy Appellate Panel found that the creditor’s refusal to take
affirmative action to terminate the garnishment was a willful violation of the automatic stay.
Scroggins, 364 B.R. at 780. 	The debtor continued to have his wages garnished despite the
filing of his bankruptcy case because the creditor failed to take affirmative steps to stop the
garnishment.
Defendants in this case took no action to dismiss the State Court Foreclosure Action, but
they stayed their collection efforts upon learning of Plaintiff’s bankruptcy. 	Unlike a
garnishment action, where the debtor continues to have wages garnished while the automatic stay
is in effect until the garnishment is stopped, the defendant in a foreclosure action does not lose
his or her property until after the creditor obtains a judgment for foreclosure and completes the
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 12 of 17

13
foreclosure sale. Similarly, in In re Johnson, 501 F.3d 1163 (10th Cir. 2007), the creditor refused
to return a pickup truck that the creditor had repossessed post-petition. 	By retaining the vehicle,
the creditor willfully deprived the debtor of the property while the stay was in effect. Diviney v.
Nationsbank of Texas, N.A. (In re Diviney), 225 B.R. 762 (10 th Cir. BAP 1998) also involved a
creditor’s refusal to return a vehicle that the creditor repossessed in violation of the automatic
stay. 	Here, the Judgment for Foreclosure was entered after the termination of the automatic
stay. Finally, in Crysen/Montenay Energy Co. v. Esselen Associates, Inc. (In re
Crysen/Montenay Energy Co.), 902 F.2d 1098 (2nd Cir. 1990), the creditor sued to enforce a
cause of action that was property of the debtor’s bankruptcy estate in violation of the automatic
stay. Like Eskanos, the suit was commenced after the filing of the debtor’s bankruptcy case.
Based on the foregoing, the Court finds as a matter of law that Defendants’ actions do not
constitute a willful violation of the automatic stay. 	Defendants were not required to dismiss the
State Court Foreclosure proceeding they initiated pre-petition upon learning of Plaintiff’s
bankruptcy. 	And, as discussed below, Plaintiff cannot revisit the propriety of the Judgment for
Foreclosure through a claim for willful violation of the automatic stay.
B. The Rooker-Feldman Doctrine13 Bars Re-litigation of Issues Relating to the Service of
the Complaint and the Amended Complaint and the Propriety of the Entry of the
Judgment for Foreclosure and the Order Confirming the Foreclosure Sale in the State
Court Foreclosure Action
As determined in the Court’s prior Memorandum Opinion, neither res judicata nor collateral
estoppel bar Plaintiff from litigating the issue of whether the Defendants’ actions taken in the
State Court Foreclosure Action constituted a willful violation of the automatic stay under 11
13 The Rooker-Feldman doctrine was named after two United States Supreme Court cases that defined the scope of
the doctrine. See Dist. of Columbia Ct. of App. v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983)
and Rooker v. Fid. Trust Co. 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923). “The Rooker–Feldman doctrine
establishes, as a matter of subject-matter jurisdiction, that only the United States Supreme Court has appellate
authority to review a state-court decision.” Merrill Lynch Bus. Fin. Services, Inc. v. Nudell, 363 F.3d 1072, 1074-
75 (10 th Cir. 2004)(citations omitted).
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 13 of 17

14
U.S.C. § 362(k)(1).14 Nor does the Rooker-Feldman doctrine bar a debtor’s independent claim
for willful violation of the automatic stay under 11 U.S.C. § 362(k).15 However, Plaintiff’s
arguments that Defendants should have stopped prosecuting or dismissed the State Court
Foreclosure Action are premised in large part on her arguments that the Defendants were
required to re-serve the Amended Complaint after the automatic stay terminated, and that
Defendants improperly relied on service of the Amended Complaint to obtain the Foreclosure
Judgment. 	But by asserting that Defendants were required to “undo” the Judgment for
Foreclosure entered in the State Court Foreclosure Action because they improperly relied on the
post-petition service of the Amended Complaint, Plaintiff is asking this Court to review the
decision of the state court that Deutsche Bank was entitled to judgment based on service of a
complaint before the stay went into effect. 	The Rooker-Feldman doctrine bars this type of
collateral attack on a state court judgment.
The Rooker-Feldman doctrine bars a lower federal court’s review of state court
decisions.16 The doctrine “prohibits federal suits that amount to appeals of state-court
14 See Memorandum Opinion (Docket No. 69), pp. 9 – 11.
15 See In re Martyak, 432 B.R. 25, 31 (Bankr.N.D.N.Y. 2010)(stating that “Rooker-Feldman does not bar a plaintiff
from presenting an independent claim” and finding, therefore, that “Rooker-Feldman does not apply to bar Debtor’s
cause of action under Code section 362.”); In re Steward, 338 B.R. 654, 663 (Bankr.D.N.J. 2006)(stating that the
determination of the applicability of the automatic stay does not violate the Rooker-Feldman doctrine). See also, In
re Mid-City Parking, Inc., 332 B.R. 798, 805 (Bankr.N.D.Ill. 2005)(explaining that “collateral challenges to a state
court’s automatic-stay determination are not forbidden by the Rooker-Feldman doctrine, because the bankruptcy
court is viewed as enforcing its own injunction pursuant to the Supremacy Clause rather than conducting
unauthorized appellate review of a state court order.”)(citing Gruntz v. County of Los Angeles (In re Gruntz), 202
F.3d 1074, 1083 (9 th Cir. 2000)). But cf. Siskin v. Complete Aircraft Services, Inc. (In re Siskin), 258 B.R. 554
(Bankr.E.D.N.Y. 2001)(determining that bankruptcy court was precluded under the Rooker-Feldman doctrine from
hearing debtor’s claim for alleged willful stay violation where prior state court judgment determined that debtor’s
imprisonment did not violate the automatic stay).
16 See Feldman, 460 U.S. at 483 n. 16, 103 S.Ct. 1303 (“‘lower federal courts possess no power whatever to sit in
direct review of state court decisions.’”)(citing Atlantic Coast Line R. Co. v. Engineers, 398 U.S. 281, 296, 90 S.Ct.
1739, 26 L.Ed.2d 234 (1970)); Kenmen Eng’g v. City of Union, 314 F.3d 468, 476 (10 th Cir. 2002)(“Rooker-
Feldman protects state-court judgments from impermissible appellate review by lower federal courts.”), abrogated
on other grounds by Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 125 S.Ct. 1517, 161 L.Ed.2d 454
(2005). In Exxon Mobil the Supreme Court clarified that the Rooker-Feldman doctrine “is confined to cases . . .
brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 14 of 17

15
judgments.” Bolden v. City of Topeka, Kansas, 441 F.3d 1129, 1139 (10th Cir.2006). 	In
applying the doctrine, the Tenth Circuit instructs the court to “focus on whether the lower federal
court, if it adjudicated plaintiff’s claims, would effectively act as an appellate court reviewing the
state court disposition.” Merrill Lynch Bus. Fin. Services, Inc. v. Nudell, 363 F.3d 1072,
1075(10 th Cir. 2004)(citations omitted). 	The Rooker-Feldman doctrine is limited to preclude
litigation of “‘claims actually decided by a state court and claims ‘inextricably intertwined’ with
a prior state- court judgment.’” Tal v. Hogan, 453 F.3d 1244, 1270 (10 th Cir. 2006)(quoting
Kenmen Eng’g, 314 F.3d at 473). 	A claim is “inextricably intertwined” when the alleged injury
resulted from the state court judgment itself. Nudell, 363 F.3d at 1075 (citing Kenmen Eng’g,
314 F.3d at 476). 17 In other words, if the state court judgment actually and proximately caused
the injury the plaintiff seeks to redress, the federal claim is inextricably intertwined with the state
court judgment and the Rooker-Feldman doctrine bars review of the plaintiff’s claim. Id.
Plaintiff asserts that she would not have lost her property through foreclosure if
Defendants had not violated the automatic stay by refusing to dismiss the State Court
Foreclosure Action or otherwise “undo” the Judgment for Foreclosure. Her assertion is based on
her contention that Deutsche Bank wrongfully obtained a default judgment after termination of
the stay based on the Amended Complaint served in violation of the stay. At several hearings in
the State Court Foreclosure Action, Plaintiff made the very same arguments she now asserts: 1)
that the Amended Complaint superseded the original complaint; 2) that service of the Amended
court proceedings commenced and inviting district court review and rejection of those judgments.” Exxon Mobil,
544 U.S. at 284, 125 S.Ct. at 1522.
17 See also, Reusser v. Wachovia Bank, N.A., 525 F.3d 855, 859 (9 th Cir. 2008)(explaining that claims are
“inextricably intertwined” with the state court decision when “‘the adjudication of the federal claims would undercut
the state ruling or require the district court to interpret the application of state laws or procedural rules.’”)(quoting
Bianchi v. Rylaarsdam, 334 F.3d 895, 898 (9th Cir. 2003)); Dockery v. Cullen & Dykman, 90 F.Supp.2d 233, 236
(E.D.N.Y. 2000), aff’d, 2 Fed.Appx. 78 (2 nd Cir. 2001)(stating that “[t]he issues raised in a plaintiff’s complaint are
inextricably intertwined with a state court judgment if the federal claim would succeed only if the state court
wrongly decided the issue.”)(citation omitted).
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 15 of 17

16
Complaint post-petition was void; 3) that Defendants were required to re-serve the Amended
Complaint; and 4) that because Defendants did not re-serve the Amended Complaint she could
not be held in default. Defendants countered that they were not required to re-serve Plaintiff
with the Amended Complaint and that they were, in fact, relying on service of the original
complaint in seeking judgment against Plaintiff by default. The state court judge considered
these arguments on the record in the hearing held in the State Court Foreclosure Action on May
9, 2006. By refusing to set aside the default judgment, the state court necessarily rejected
Plaintiff’s arguments.18 The state court granted a default judgment based on the complaint filed
before Plaintiff commenced her Chapter 13 Case without requiring Deutsche Bank to re-serve
the Amended Complaint.
The Plaintiff seeks redress from this Court based on damage to her caused by
enforcement of the Judgment for Foreclosure. To grant such redress, this Court would need to
decide whether the state court correctly applied state law by granting a default judgment based
on the complaint filed and served before Plaintiff commenced her Chapter 13 Case without
requiring Deutsche Bank to re-serve the Amended Complaint on the ground that it superceded
the original complaint. Such a review would require this Court to act as a de facto appellate
court to review the state court decision applying state law. The Rooker-Feldman doctrine bars
such review. In sum, because this part of Plaintiff’s claim for willful violation of the automatic
stay is premised on the injury she suffered as a result of the entry of the Judgment for
18 Though Plaintiff also raised these arguments on appeal, the Court of Appeals did not consider them because it
found that the Plaintiff failed to timely appeal from the entry of the default judgment.
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 16 of 17

17
Foreclosure rendered upon an alleged erroneous application of state law, such claim is
inextricably intertwined with the prior state court judgment and this Court cannot consider it.19
Based on the foregoing, the Court concludes based on the facts not subject to genuine
dispute that Defendants are entitled to summary judgment as a matter of law. 	Orders consistent
with this Memorandum Opinion will be entered. 	The trial now scheduled for September 13
through 15, 2011 will be vacated.
__________________________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
Date entered on docket: September 2, 2011
COPY TO:
Karen Marie Kline 	Richard M. Leverick
3255 Calle de Molina 	Attorney for Defendants
Santa Fe, NM 87507 	5120 San Francisco NE
Albuquerque, NM 87109
19 Cf. Dockery, 90 F.Supp. at 236 (finding that even if the plaintiff had not raised a claim for willful violation of the
automatic stay in the state court foreclosure proceeding, the Rooker-Feldman doctrine would bar the plaintiff from
seeking to overturn the state court foreclosure judgment in federal court.)(citation omitted).
Case 09-01035-j Doc 230 Filed 09/02/11 Entered 09/02/11 15:58:03 Page 17 of 17