Kamilewicz v. Bank Of Boston Corporation

92 F.3d 506 (7th Cir. 1996)

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Nature of the Case

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Facts

Ps had mortgages serviced by BancBoston (D). Ps were among an estimated 715,000 members of a class in a nationwide class action filed in the circuit court for Mobile County, Alabama. The suit challenged the manner in which D calculated the amount of surplus each member of the class was required to maintain in their escrow accounts. Deposits to the escrow accounts were paid as part of the class members' monthly mortgage payments. That money was used to pay for taxes and or insurance if required. Any surplus belonged to the mortgagor. As is the case with most service companies such as D the longer they hold your money the more they make. The class took umbrage with D’s actions in this regard. In October 1993, the Alabama court granted partial summary judgment in favor of the plaintiff class. Counsel for the class prepared a notice of a proposed settlement of the suit. The notice stated that the settlement was 'fair, reasonable, adequate, and in the best interests of the class' and that the attorney fees sought were 'reasonable' and would 'not exceed one-third of the economic benefit' to the class. D objected to the notice because some class members would suffer an out-of-pocket loss as a result of the lawsuit. D had in fact proposed a settlement that would have had to pay $500,000 in attorney fees out of D's own funds, and the entire amount of the escrow refund would have gone to the class members. For some unknown reason, the Alabama court approved the proposed notice and held a fairness hearing on January 10 and 11, 1994. The court approved the settlement under which the class members received one-time interest payments ranging from $ 0.00 to $ 8.76. The court also found the attorney fees reasonable. The fee award was a percentage of the escrow accounts, or, the complaint in the present case asserts, in excess of $ 14 million but more probably $8.5 million. The accounting was done and as with Ps, their refund was a pittance but their attorney fee was far more. The $2.19 refund cost Ps $91.33. Ps filed the present federal class action Ds and the plaintiffs' attorneys in the Alabama action. Ps alleged violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962, and of the Civil Rights Act, 42 U.S.C. § 1983, as well as claims of common law fraud, negligent misrepresentation, attorney malpractice, breach of fiduciary duty, and conversion. The Alabama court reaffirmed the order of settlement. The District Court in Ps' case entered an order dismissing the federal case for lack of subject matter jurisdiction. The judge found that Ps' case was a collateral attack on a state court judgment which would require that he consider issues 'inextricably intertwined' with the state court case. Ps appealed. Ps argue that the judgment of the Alabama court is null and void because the court did not have personal jurisdiction over them and that the special protections required for class actions--notice, adequate representation, etc.--were not complied with. Ps claim the Alabama court order cannot be a basis for the Rooker-Feldman bar because there was no personal jurisdiction over them, and furthermore that fraud claims are somehow outside the Rooker-Feldman bar.