Appellants, Dr. Catherine G. Lin-Hendel and Dr. Rudolf H. Hendel, borrowed money from Bank of America in 2006 and 2017, securing the loans with a mortgage on their home in Summit, New Jersey. Bank of America later transferred its interest in these loans to Wilmington Trust and other entities. In 2018, Wilmington Trust initiated foreclosure proceedings in state court. During that litigation, the appellants argued that the foreclosure involved fraud and that the defendants were infringing on Dr. Lin-Hendel's patents. They sought to be discharged from their mortgage obligations by offering to forgive a portion of the debt in exchange for patent royalties. The state court entered summary judgment against the appellants in 2019. Following this, the appellants filed a federal lawsuit in 2019 against numerous defendants, including the mortgage servicer and attorneys, alleging fraud, conspiracy, and RICO violations. That suit was dismissed in 2020. After being evicted from their property, the appellants filed the current federal lawsuit in 2023, naming dozens of defendants including judges, lawyers, and financial institutions, alleging fraud, RICO violations, and assault on their property rights. The District Court dismissed the complaint with prejudice, leading to this appeal.
The Third Circuit reviewed the dismissal de novo, accepting the appellants' well-pleaded allegations as true but finding them legally insufficient. The court first noted that the appellants' appellate brief discussed only one defendant, Bank of America, in any detail. Under Third Circuit precedent, any issue or claim not addressed in an opening brief is deemed forfeited. Consequently, the court did not consider arguments regarding the other named defendants or other motions raised in the District Court. Regarding the claims against Bank of America, the court applied the Rooker-Feldman doctrine, which bars federal district courts from reviewing state court judgments. Since the appellants were complaining of injuries caused by the state court foreclosure judgment, the federal court lacked jurisdiction to review that judgment. Furthermore, the court rejected the appellants' central argument that they had recently uncovered evidence of fraud regarding the chain of title. The court held that these claims were barred by New Jersey's entire controversy doctrine, which requires parties to litigate all aspects of a controversy that could have been raised in prior proceedings. Because the appellants could have investigated and raised these fraud claims during the 2018 foreclosure proceedings, they were precluded from raising them now. Finally, the court found that the appellants' allegations of a sweeping international RICO conspiracy were conclusory and failed to state a plausible claim for relief under the standards set forth in Bell Atlantic Corp. v. Twombly.
The dismissal with prejudice ends the appellants' ability to pursue these specific claims in federal court. The decision reinforces the strict application of the Rooker-Feldman doctrine in mortgage foreclosure cases, preventing federal courts from acting as appellate bodies for state court foreclosure judgments. It also signals that pro se litigants must adhere to procedural rules regarding briefing and cannot raise new theories of fraud that were available during prior litigation. The appellants remain subject to the state court foreclosure judgment and the resulting eviction.
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