On Appeal from the United States District Court for the Eastern District of Pennsylvania, (D.C. No. 2-07-cv-01396), District Judge: Honorable James Knoll Gardner.
The opinion of the court was delivered by: Sloviter, Circuit Judge.
Submitted Under Third Circuit LAR 34.1(a) October 26, 2009
Before: SLOVITER, FUENTES, and HARDIMAN, Circuit Judges.
Appellants Deborah and Michael Madera (the Maderas) appeal the District Court's affirmance of the Bankruptcy Court's grant of summary judgment in favor of Appellees, Ameriquest Mortgage Company and AMC Mortgage Services, Incorporated ("Ameriquest" and "AMC," respectively). The Maderas challenge the Bankruptcy Court's sua sponte ruling that it lacked jurisdiction to review their rescission claims because of the Rooker-Feldman doctrine, its dismissal of their damages claim under the Truth in Lending Act ("TILA"), and its denial of the Maderas' motion for leave to amend their complaint, all of which were affirmed by the District Court.*fn1
The Maderas are co-owners of real property located in Warminster, Pennsylvania. In January 2005, they obtained a loan from Option One Mortgage Company, secured by a mortgage on that property (the "Option One loan"). They used this loan to pay off a prior mortgage and to help finance their son's college tuition. After making one payment on that mortgage, they defaulted.
In June 2005, less than six months later, they entered into another loan transaction, this time with Ameriquest (the "Ameriquest loan"), again secured by a mortgage on their home. They used the Ameriquest loan to repay the Option One loan.
The Maderas made only one payment under the Ameriquest loan before defaulting, and in March 2006, Deutsche Bank National Trust Company, as assignee of the loan, initiated foreclosure proceedings in the Court of Common Pleas of Bucks County. Although the Maderas contend that they filed a pro se Answer to the Complaint seeking foreclosure, the Court of Common Pleas entered a default foreclosure judgment against them in May 2006.*fn2
Deborah Madera then filed for Chapter 13 bankruptcy protection on July 19, 2006. Moreover, in August 2006, the Maderas instituted the first of two adversary actions in the Bankruptcy Court against Ameriquest (Madera I).
The Maderas raised four claims. As pertinent to this appeal, they alleged that Ameriquest failed to accurately disclose the terms of the Ameriquest loan as required under TILA, 15 U.S.C. § 1601, et seq., because, they argue, the title insurance charges were excessive and this overcharge should have been disclosed as a "finance charge." Based on TILA, they sought rescission of the Ameriquest loan as well as damages.*fn3
After discovery, Ameriquest filed its summary judgment motion, after which the Maderas filed a motion for leave to amend their complaint.*fn4 In November 2006, the Bankruptcy Court held a hearing on Ameriquest's summary judgment motion and the Maderas' motion to amend. At that hearing, the Bankruptcy Court orally denied the motion to amend. In February 2007, the Bankruptcy Court filed a Memorandum Opinion and Order granting Ameriquest's summary judgment motion and reiterating its denial of the Maderas' motion to amend.*fn5
The Bankruptcy Court reasoned that the Rooker-Feldman doctrine barred its jurisdiction over the Maderas' claims for rescission because rescinding the loan would invalidate the aforementioned foreclosure judgment entered by the Court of Common Pleas. In addition, the Bankruptcy Court dismissed the Maderas' TILA claim for damages regarding Ameriquest's failure to disclose title insurance fees, finding that the Maderas presented insufficient evidence to prove they were entitled to a lower rate because they had not shown that they obtained prior title insurance in connection with the Option One loan, or that Ameriquest knew or should have known of any such prior title ...