Lesson. Federal courts generally won’t stay a sheriff’s sale ordered by an Indiana state court.
Case cite. Sims v. New Penn, 2015 U.S. Dist. LEXIS 85498 (N.D. Ind. 2015) (.pdf) .
Legal issue. Whether a federal district court should grant or deny a temporary restraining order (TRO) enjoining a sheriff’s sale decreed by an Indiana state court.
Vital facts. Lender/mortgagee sought and obtained, in state court, a judgment and decree of foreclosure in a residential/consumer case. In a subsequent federal court action, the plaintiffs, who lived in the house, sued the servicer of the mortgage upon which the prior foreclosure action was based. The plaintiffs’ complaint asserted a multitude of consumer finance-based claims. The underlying allegations in the plaintiffs’ federal court complaint are not particularly germane here, however. In a nutshell, the plaintiffs felt wronged by the servicer’s alleged unlawful refusal to permit them to assume the subject mortgage.
Procedural history. The plaintiffs sought a TRO barring an upcoming sheriff’s sale. The Sims opinion is the United States District Court’s ruling on the TRO request.
- One seeking a TRO must show that he or she is “reasonably likely to succeed on the merits, is suffering irreparable harm that outweighs any harm the [defendant] will suffer if the injunction is granted, there is no adequate remedy at law, and an injunction would not harm the public interest.”
- In Indiana, a sheriff’s sale only occurs following the entry of a judgment. Ind. Code 32-30-10-5; 32-30-10-8.
- The Rooker-Feldman doctrine, discussed on this blog many times, precludes federal courts from exercising jurisdiction over cases brought by “state-court losers complaining of injuries caused by state-court judgments….”
Holding. The Court concluded that the plaintiffs in Sims, to the extent they sought to enjoin the sheriff’s sale, were attempting to relitigate the merits of the prior foreclosure action and, as such, the Court lacked jurisdiction to do so. Stated another way, the plaintiffs were unlikely to succeed on the merits of their claim. For this and other reasons, “the standards for issuance of a [TRO were] not met….” The Court denied the TRO.
Policy/rationale. A TRO is an extreme remedy granted only under limited circumstances. I’m not saying that a TRO request should be denied in every conceivable circumstance, but it’s hard to imagine a scenario where a federal court would stop a sheriff’s sale ordered by a state court. Attempts to obtain such relief should be focused in the original, state court action through appeal or otherwise.