                           RECOMMENDED FOR FULL-TEXT PUBLICATION
                                     File Name: 17b0006p.06

                      BANKRUPTCY APPELLATE PANEL
                                  OF THE SIXTH CIRCUIT



 IN RE: LINDA S. ISAACS,                                 ┐
                                      Debtor.            │
 ___________________________________________             │
                                                         │
 LINDA S. ISAACS,                                        >       No. 16-8041
                                                         │
                                   Plaintiff-Appellee,   │
                                                         │
        v.                                               │
                                                         │
                                                         │
                                                         │
 DBI-ASG COINVESTER FUND III, LLC,                       │
                              Defendant-Appellant.       │
                                                         ┘

                         Appeal from the United States Bankruptcy Court
                         for the Western District of Kentucky at Paducah.
                 No. 14-50679; Adv. No. 14-05021—Thomas H. Fulton, Judge.

                                  Argued: February 7, 2017

                               Decided and Filed: July 3, 2017

             Before: HUMPHREY, PRESTON and WISE, Bankruptcy Appellate Panel Judges.

                                     _________________

                                         COUNSEL

ARGUED: Gregory A. Stout, REISENFELD & ASSOCIATES, LLC, LPA, Cincinnati, Ohio,
for Appellant. Marcus H. Herbert, Paducah, Kentucky, for Appellee. ON BRIEF: Gregory A.
Stout, REISENFELD & ASSOCIATES, LLC, LPA, Cincinnati, Ohio, for Appellant. Marcus H.
Herbert, Paducah, Kentucky, for Appellee.

     HUMPHREY, J., filed the opinion of the Bankruptcy Appellate Panel in which
PRESTON, C.J., joined. WISE, J. (pp. 21–23), filed a separate opinion concurring in the result.
 No. 16-8041                                   In re Isaacs                                         Page 2




                                                OPINION


          GUY R. HUMPHREY, Bankruptcy Appellate Panel Judge. The record below evidences
that a stay violation occurred during a previous bankruptcy case, apparently without Appellee
Debtor Linda Isaacs’ knowledge, ten years prior to her current bankruptcy filing. Between the
two bankruptcy cases, a state court adjudicated the scope of Isaacs’ discharge, finding a
mortgage lien valid and enforceable. The state court scheduled a foreclosure sale, prompting
Isaacs to file a second bankruptcy case and a complaint against Appellant Creditor DBI-ASG
Coinvester Fund III, LLC, seeking relief from the subject mortgage under 11 U.S.C. § 544(a)(1)
and (a)(3).1 The parties filed cross-motions for summary judgment. Construing the mortgage’s
language, the bankruptcy court held that the mortgage lien did not attach to Isaacs’ real property
because the initial mortgagee did not record its mortgage until after Isaacs and her husband filed
their prior bankruptcy case and while the automatic stay was in effect. The bankruptcy court thus
found that the debt associated with the mortgage was unsecured when the first petition was filed
and was discharged in the prior case. As a result, the bankruptcy court held that Isaacs could
avoid the mortgagee’s lien in this proceeding. The bankruptcy court also declared void ab initio
the state court foreclosure judgment finding the mortgage to be valid, concluding that it
impermissibly modified the chapter 7 discharge order.

          For the reasons stated below, the Panel REVERSES the bankruptcy court’s judgment
and REMANDS this case to the bankruptcy court for dismissal. While the entire Panel agrees
that the bankruptcy court’s judgment should be reversed for a lack of subject matter jurisdiction
on the basis of the Rooker-Feldman doctrine, the reasoning of the majority and the concurrence
differ.

          The majority reasons that the Rooker-Feldman doctrine precluded the bankruptcy court
from avoiding the state court foreclosure judgment because the mortgage was enforceable
against the Isaacses’ interests on the chapter 7 petition date. Since unavoided pre-petition liens
          1
         Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C.
§§ 101–1532.
 No. 16-8041                               In re Isaacs                                   Page 3


pass through bankruptcy unaffected, the state court foreclosure judgment could not violate the
chapter 7 discharge. The concurrence reasons that Rooker-Feldman should be applied without an
analysis of the enforceability of the mortgage on the chapter 7 petition date because the
foreclosure was solely an in rem action, and the discharge provided by § 524 only precludes in
personam collection efforts.

                                       ISSUE ON APPEAL

       Although the mortgagee raised a number of issues on appeal, this opinion focuses on a
single, and ultimately dispositive issue: whether the bankruptcy court lacked subject matter
jurisdiction to consider the claims in Isaacs’ complaint owing to the Rooker-Feldman doctrine.

                      JURISDICTION AND STANDARD OF REVIEW

       The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this
appeal. DBI-ASG Coinvester Fund III, LLC (the “Mortgagee”) initially took this appeal to the
United States District Court for the Western District of Kentucky. On October 4, 2016, in
accordance with 28 U.S.C. § 158(b)(6), that court issued General Order No. 2016-05 to authorize
this Panel to hear and determine appeals from the United States Bankruptcy Court for that
district. The General Order also transferred all then-pending appeals from that district’s
bankruptcy court to this Panel. Upon transfer, no party filed a timely election to “opt out” and
have the district court hear this appeal. 28 U.S.C. § 158(c)(1).

       Under 28 U.S.C. § 158(a)(1), this Panel has jurisdiction to hear appeals “from final
judgments, orders, and decrees” issued by the bankruptcy court. An order is final for purposes of
appeal if it “ends the litigation on the merits and leaves nothing for the court to do but execute
the judgment.” Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S. Ct. 1494,
1497 (1989) (citation and quotation marks omitted). A bankruptcy court’s grant of summary
judgment resolving an adversary proceeding on its merits is a final, appealable order. Lyon v.
Eiseman (In re Forbes), 372 B.R. 321, 325 (B.A.P. 6th Cir. 2007). The order before the Panel
grants a summary judgment to Isaacs and fully disposes of the adversary proceeding, making it a
final order. Geberegeorgis v. Gammarino (In re Geberegeorgis), 310 B.R. 61, 63 (B.A.P. 6th
 No. 16-8041                                     In re Isaacs                                           Page 4


Cir. 2004) (“[A]n order that concludes a particular adversarial matter within the larger case
should be deemed final and reviewable in a bankruptcy setting.”) (citations omitted).

        A bankruptcy court’s legal conclusions are reviewed de novo. Grant, Konvalinka
& Harrison, PC v. Banks (In re McKenzie), 716 F.3d 404, 411 (6th Cir. 2013). “De novo means
that the appellate court determines the law independently of the trial court’s determination.”
Treinish v. Norwest Bank Minn., N.A. (In re Periandri), 266 B.R. 651, 653 (B.A.P. 6th Cir.
2001) (citation omitted). Appellate courts review challenges to subject matter jurisdiction based
on the Rooker-Feldman doctrine de novo. McCormick v. Braverman, 451 F.3d 382, 389 (6th Cir.
2006). Contract interpretation is a matter of law, which is reviewed de novo. Bender v. Newell
Window Furnishings, Inc., 681 F.3d 253, 259 (6th Cir. 2012).

                              FACTS AND PROCEDURAL HISTORY

        The facts of this case, though not in dispute, are unusual. Linda Isaacs (“Isaacs”) and her
spouse, Michael Isaacs, (collectively the “Isaacses”) executed a Home Equity Line of Credit
Agreement in February 2003. The parties stipulated that “[t]he agreement, or note, was secured
by a second mortgage to GMAC Mortgage Corporation encumbering the property commonly
described at 494 Hwy 819, Princeton, KY within Lyon County.” (the “Property”) (Stipulation of
Facts at 1, ECF No. 68.)2 The second mortgage states: “The lien of this Mortgage will attach on
the date this Mortgage is recorded.” (Stipulation of Facts, Exhibit C (“Mortgage”), ECF No. 68-
3.)

        The Isaacses filed a joint chapter 7 bankruptcy petition in March 2004; their petition
listed their debt owed to GMAC related to the Mortgage as secured debt. Apparently unknown to
the Isaacses, however, GMAC did not record the Mortgage until June 2004, three months after
they filed bankruptcy and while the chapter 7 case was pending. At no time did GMAC seek an
order to modify, lift or annul the automatic stay. Nor did any party seek to avoid the Mortgage
during the pendency of the chapter 7 case. Subsequently, the Isaacses obtained a discharge, and
the chapter 7 case was closed in August 2004.


        2
        Unless otherwise noted, all cites to the record are found in the electronic docket of Isaacs v. RoundPoint
Mortgage Servicing Corp., Adv. Case No. 14-05021 (Bankr. W.D. Ky.).
 No. 16-8041                                     In re Isaacs                                           Page 5


        In August 2005, the Isaacses moved to reopen their chapter 7 case to avoid two judicial
liens on the Property, alleging that its value was less than the total of the mortgages on the
Property (including the Mortgage). The bankruptcy court reopened the case, avoided the two
judgment liens, and closed the case again in January 2006.

        GMAC transferred its interest in the Mortgage to RoundPoint Mortgaging Service
Corporation (“RoundPoint”) after the chapter 7 case closed. More than ten years after Isaacses’
first bankruptcy filing, RoundPoint filed a foreclosure proceeding in April 2014 against the
Isaacses in the Lyon County (Kentucky) Circuit Court and, by default, obtained a Judgment and
Order of Sale, and then an Amended Judgment and Order of Sale, in August 2014 (the
“Judgment”). The Judgment recites that the state court “finds that plaintiff’s promissory note is
secured by a certain mortgage of which the plaintiff is the holder, which mortgage constitutes a
valid second mortgage upon the real estate owned by the defendants . . . .” (Stipulation of Facts,
Exhibit I at 2, ECF No. 68-11.)

        No party appealed the Judgment. Instead, in September 2014, immediately prior to the
scheduled sale date, Isaacs (without her husband) filed a chapter 13 petition. Isaacs’ chapter 13
plan filed with her petition states that the lien at issue “shall be avoided pursuant to 11 U.S.C.
§ 522(f), or other applicable sections of the Bankruptcy Code,” but does not specify whether she
or the chapter 13 Trustee would pursue the lien avoidance. (Chapter 13 Plan at 3, Case No. 14-
50679, ECF No. 2.) In early October 2014, Isaacs filed a complaint to initiate this adversary
proceeding and requested relief under § 544(a)(1) and (a)(3), alleging that she had “derivative
standing” to pursue the claims. (Compl. to Avoid Unperfected Mortgage Lien Pursuant to
11 U.S.C. § § 544(a)(1) and (a)(3) (“Complaint”) at 3, ECF No. 1.)3

        On cross-motions for summary judgment, the bankruptcy court found that GMAC was an
unsecured creditor in the first chapter 7 case. Construing the Mortgage, the bankruptcy court
concluded that certain language in that instrument provided that the mortgagee’s lien would not

        3
          Isaacs originally named RoundPoint (as the successor-in-interest to GMAC on the Mortgage) and
Wingspan Portfolio Advisors, LLC (as RoundPoint’s assignee and loan servicer) as the defendants in the adversary
proceeding. After both defendants filed answers to the Complaint, the bankruptcy court entered an agreed order
dismissing RoundPoint, and granted the Mortgagee’s motion to be substituted as “the proper party-Defendant in this
cause of action” in place of Wingspan. (ECF Nos. 27, 48.)
 No. 16-8041                                 In re Isaacs                                  Page 6


be effective until the Mortgage was recorded. As a result, the court found that GMAC did not
obtain a security interest in the Property before the Isaacses filed their chapter 7 petition as
GMAC did not record its mortgage by then. The bankruptcy court therefore agreed with Isaacs
that the chapter 7 discharge order discharged the Mortgagee’s debt related to the Mortgage, and
stated: “[t]he fact that [the Mortgagee’s predecessor-in-interest] was able to obtain the Circuit
Court default judgment against Isaacs has no bearing on the validity of the discharge order.”
(Mem.-Op. at 15–16, ECF No. 77).

        In sum, the bankruptcy court held:

        [T]he debt in question was unsecured by virtue of GMAC’s failure to record the
        Second Mortgage prior to [Isaacs]’s petition and [] it was discharged at the time
        [Isaacs] concluded her 2004 Chapter 7 case. The Circuit Court judgment served as
        an improper modification of this Court’s discharge order, and, as a result, the
        Rooker-Feldman doctrine does not apply. This Court, therefore, grants summary
        judgment in favor of [Isaacs] and finds the Circuit Court judgment void ab initio
        as it relates to the debt in question.

(Id. at 2.)

                                         DISCUSSION

        A. Standing

        The parties devoted significant attention in their briefs and at oral argument to the
Mortgagee’s position that Isaacs lacked derivative standing to pursue claims against the
Mortgagee under § 544(a)(1) and (a)(3) without receiving the chapter 13’s Trustee’s prior
approval. “Generally, standing determinations require a two-tiered analysis.” Official Comm. of
Unsecured Creditors of Grand Eagle Cos. v. Asea Brown Boveri, Inc. (In re Grand Eagle Cos.),
310 B.R. 79, 83–84 n.3 (Bankr. N.D. Ohio 2004) (citing Official Comm. of Unsecured Creditors
of America’s Hobby Ctr. v. Hudson United Bank (In re America’s Hobby Ctr.), 223 B.R. 275,
279 (Bankr. S.D.N.Y. 1998)). “‘The court must first determine whether the plaintiff has standing
under the Constitution and then under certain judicially-engrafted prudential principles,
including whether the plaintiff’s claims fall within the zone of interests to be protected or
regulated by the statute in question.’” Id. (quoting In re America’s Hobby Ctr., 223 B.R. at 279)).
 No. 16-8041                                In re Isaacs                                     Page 7


       Statutory standing is not jurisdictional; as the Supreme Court has explained, “‘the
absence of a valid (as opposed to arguable) cause of action does not implicate subject-matter
jurisdiction, i.e., the court’s statutory or constitutional power to adjudicate the case.’” Lexmark
Intern., Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1387 n.4 (2014) (internal
quotation marks and citations omitted). In a slightly different context, a bankruptcy court
explained: “[d]erivative standing, unlike Article III standing, is not truly a jurisdictional concept,
but rather a merits question concerning the circumstances under which the Code permits a
creditor to file an adversary proceeding on behalf of a debtor in bankruptcy.” Spradlin v.
Williams (In re Alma Energy, LLC), No. 09-7005, 2014 Bankr. LEXIS 4463, at *28 (Bankr. E.D.
Ky. Oct. 21, 2014) (citations omitted).

       The Mortgagee does not contest Isaacs’ constitutional standing to proceed with the claims
in her Complaint; rather, the Mortgagee challenges Isaacs’ statutory standing to pursue claims
under § 544(a)(1) and (a)(3). As a result, the Panel must address the Mortgagee’s challenge to
the bankruptcy court’s subject matter jurisdiction over the adversary proceeding based on the
Rooker-Feldman doctrine before considering the Mortgagee’s objection to Isaacs’ claim of
derivative standing.

       B. Jurisdiction under the Rooker-Feldman Doctrine and Its Exception

       “[E]very federal appellate court has a special obligation to ‘satisfy itself not only of its
own jurisdiction, but also that of the lower courts in a cause under review’. . . .” Bender v.
Williamsport Area Sch. Dist., 475 U.S. 534, 541, 106 S. Ct. 1326, 1331 (1986) (quoting Mitchell
v. Maurer, 293 U.S. 237, 244, 55 S. Ct. 162, 165 (1934)). When a court lacks jurisdiction, the
appellate court has “jurisdiction on appeal, not of the merits but merely for the purpose of
correcting the error of the lower court in entertaining the suit.” United States v. Corrick, 298 U.S.
435, 440, 56 S. Ct. 829, 832 (1936). This Panel is in the circumstance contemplated in Corrick.

       The Rooker-Feldman doctrine derives from two opinions issued by the Supreme Court of
the United States, Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S. Ct. 149 (1923), and District
of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S. Ct. 1303 (1983). The doctrine
bars lower federal courts from exercising appellate jurisdiction over final state-court judgments.
 No. 16-8041                                In re Isaacs                                      Page 8


McCormick v. Braverman, 451 F.3d 382, 391–92 (6th Cir. 2006). The doctrine prohibits “cases
brought by state-court losers complaining of injuries caused by state-court judgments rendered
before the district court proceedings commenced and inviting district court review and rejection
of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125
S. Ct. 1517, 1522–23 (2005).

       The Sixth Circuit Court of Appeals has explained that “what the Rooker-Feldman
doctrine primarily bars are claims that seek ‘relief from injury “caused by” the state court
judgment.’” Hamilton v. Herr (In re Hamilton), 540 F.3d 367, 372 (6th Cir. 2008) (quoting 18B
Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure
§ 4469.1 at 11 (2d ed. Supp. 2008)). “[T]he [Rooker-Feldman] doctrine is confined to those
cases . . . when a plaintiff asserts before a federal district court that a state court judgment itself
was unconstitutional or in violation of federal law.” McCormick, 451 F.3d at 395. As the Seventh
Circuit Court of Appeals has stated:

       The Rooker-Feldman doctrine asks: is the federal plaintiff seeking to set aside a
       state judgment, or does he present some independent claim, albeit one that denies
       a legal conclusion that a state court has reached in a case to which he was a party?
       If the former, then the district court lacks jurisdiction; if the latter, then there is
       jurisdiction and state law determines whether the defendant prevails under
       principles of preclusion.

GASH Assocs. v. Village of Rosemont, Ill., 995 F.2d 726, 728 (7th Cir. 1993).

       It may appear fairly clear; however, the Rooker-Feldman doctrine frequently raises
thorny issues concerning the extent of federal and state court jurisdiction over particular matters
and comity between the federal and state courts. A particularly thorny issue arises from the
discharge provided by § 524(a) to bankruptcy debtors. The relationship between the discharge
and subsequent state court proceedings has been litigated frequently. These difficult issues are
described in The Bankruptcy Hegemon: Section 524(a) and Its Effect on State and Federal
 No. 16-8041                                           In re Isaacs                                            Page 9


Comity.4 That article aptly analyzes the differing approaches taken by the Ninth, Eighth, Sixth,
and Second Circuits in this area.5

         The relief demanded in the Complaint establishes that Isaacs asked the bankruptcy court
to serve in an appellate capacity over the state court’s Judgment:

         [Isaacs] prays that this Honorable Court enter an Order declaring the second
         mortgage held by [Creditor] . . . to be avoided pursuant to 11 U.S.C. §§544(a)(1)
         and (a)(3) and no longer a claim against the real estate property referenced
         therein.
         [Isaacs] prays that this Court order that the Amended Judgment and Order of Sale
         entered August 22, 2014 by the Lyon County Circuit Court be vacated because it
         was barred by the statute of limitations.6
         [Isaacs] further prays that the Order foreclosing the second mortgage entered by
         the Lyon County Circuit Court . . . to be an unenforceable order [sic] due to the
         avoidance of the underlying mortgage by this Court.

(Complaint at 4.) The Judgment held that the Mortgage constituted a valid and enforceable lien
(i.e., the opposite conclusion sought in the Complaint’s first requested remedy); thus, all three of
Isaacs’ requests for relief from the bankruptcy court impermissibly call for federal appellate
review of and relief from the state court’s Judgment.

         However, the bankruptcy court held that the Rooker-Feldman doctrine did not apply
based on the Sixth Circuit’s decision in Hamilton. In Hamilton, the Sixth Circuit recognized an
exception to the Rooker-Feldman doctrine as applied to bankruptcy discharge orders. In that
case, the debtor and his wife obtained a loan during their marriage and both signed a promissory
note. After their divorce, the debtor’s father paid the note and then sued the debtor’s ex-wife to


         4
             Benjamin Margulis, 31 Cardozo L. Rev. 905 (January, 2010).
         5
           The author of the article notes that the “Eighth Circuit gives great deference to state courts,” Cf. Ferren v.
Searcy Winnelson Co. (In re Ferren), 203 F.3d 559, 560 (8th Cir. 2000), “while the Ninth Circuit grants almost no
such deference,” citing Gruntz v. County of Los Angeles (In re Gruntz), 202 F.3d 1074 (9th Cir. 2000). Id. at 927. He
also concludes that the Sixth Circuit “has quietly shifted from a relatively pro-state stance to a position exemplified
by its recent holding in Hamilton [540 F.3d 367 (6th Cir. 2008)], where it adopted the approach pioneered by the
Ninth Circuit’s Bankruptcy Appellate Panel in the Pavelich decision [229 B.R. 777 (B.A.P. 9th Cir. 1999)]. And the
Second Circuit courts are somewhere in the middle, rejecting the Pavelich/Hamilton approach and granting state
courts concurrent jurisdiction pursuant to § 1334(b)” [citing In re Candidus, 327 B.R. 112 (Bankr. E.D.N.Y. 2005)].
Id at 938.
         6
             The applicability of a statute of limitations is not an issue on appeal.
 No. 16-8041                               In re Isaacs                                   Page 10


recover the sums paid. While the father’s lawsuit was pending, the debtor filed a chapter 7
petition and listed his ex-wife as a creditor. The bankruptcy court held that the debt owed to his
ex-wife was dischargeable and entered a discharge order.

       Months later, the ex-wife filed a third-party complaint against the debtor in the state court
lawsuit with the debtor’s father, seeking indemnification from the debtor for any liability she had
to the debtor’s father. The debtor did not raise his discharge as a defense and the state court
issued a money judgment against the debtor in his ex-wife’s favor. The debtor then filed a
complaint in bankruptcy court to enjoin his ex-wife’s efforts to collect on her state court
judgment. The bankruptcy court dismissed the lawsuit under the Rooker-Feldman doctrine, but
the district court reversed, concluding that the state-court judgment impermissibly modified the
debtor’s discharge order. The Sixth Circuit Court of Appeals agreed with the district court,
holding that, while state courts have jurisdiction to construe a bankruptcy court’s discharge
order, they do not have jurisdiction to do so incorrectly and thereby modify a discharge order.
Hamilton, 540 F.3d at 375. The state court judgment modified the discharge order because it
imposed a money judgment against the debtor even though the discharge order already relieved
him of personal liability for that debt. A judgment that modifies a discharge order is void ab
initio, and the Rooker-Feldman doctrine does not bar federal court jurisdiction over a complaint
that seeks relief from such a state-court judgment. Id. at 369, 376. Accordingly, under Hamilton,
upon proper motion, bankruptcy courts are charged with determining whether a judgment of a
state court has modified the debtor’s discharge.

       In its opinion in the instant case, the bankruptcy court considered the Hamilton exception
along with the Mortgage, the chapter 7 discharge order, and the state court’s Judgment. The court
construed the terms of the Mortgage and found that it never attached to or liened the Property.
Since the Mortgage never attached, the underlying debt was unsecured, and was discharged
through the chapter 7 discharge order. The bankruptcy court concluded that, in its view, the
Judgment impermissibly modified the discharge order by finding the Mortgage valid and—post-
discharge—securing a discharged unsecured debt.

       The bankruptcy court found that Isaacs’ case was fundamentally similar to Hamilton—
the debtor obtained a discharge of her debt to the Mortgagee and later a state court re-imposed
 No. 16-8041                                       In re Isaacs                                           Page 11


personal liability upon her by enforcing a mortgage that could have attached only to a discharged
debt and therefore was an act to collect on that discharged debt. Thus, the bankruptcy court
found that the state court violated and modified Isaacs’ discharge because the debt involved was
unsecured at the petition date. The Mortgage was ineffective to lien Isaacs’ interests in the
Property post-petition because the underlying debt had been discharged. The bankruptcy court
found that only through the post-discharge foreclosure action did the debt become secured, in
violation of § 524(a)(2). Thus, crucial to the bankruptcy court’s conclusion that a violation of the
discharge injunction had occurred was its determination that the Mortgage did not encumber the
Isaacses’ interests in the Property at the petition date or when the foreclosure action was
commenced.

         However, the unusual facts of this case do not lend themselves to a straight-forward
application of Hamilton. In Hamilton, the bankruptcy court discharged the debtor’s personal
liability for that debt. Then, the state court found the debtor personally liable for that same debt,
which acted as a modification of the discharge order. In this case, the chapter 7 discharge
relieved the Isaacses’ personal liability for the debt in question. However, the foreclosure action
only sought in rem relief. The Mortgagee did not pursue judgment against the Isaacses for
personal liability on the debt. So, to decide whether the Hamilton exception applies at this stage
of the analysis, the question this Panel would need to determine is, can an in rem action ever
violate § 524(a) or serve to modify a discharge order? The parties did not argue that issue in
either their briefs or oral argument.

         The majority is satisfied that rarely would an in rem action serve to modify a discharge
injunction.7 However, we need not determine that an in rem action could never modify the
discharge,8 because we are satisfied that the Judgment does not.9


         7
          As previously noted, the facts in this case were unusual, pitting the Isaacses’ discharge against the later
foreclosure proceeding on the Mortgage which was recorded during the pendency of the chapter 7 case and which
the bankruptcy court found only became effective against the Isaacses’s interest at recordation.
         8
          There is authority from which one can conclude that post-discharge in rem conduct may violate § 524(a)
and the debtor’s discharge. See Jarrett v. Ohio (In re Jarrett), 293 B.R. 127, 133 (Bankr. N.D. Ohio 2002)
(discharge violated if creditor post-discharge renews its prepetition lien as to property acquired post-discharge); In
re Emelity, 251 B.R. 151 (Bankr. S.D. Cal. 2000) (post-discharge community property divorce settlement, which
debtor listed in his bankruptcy schedules after parties filed for divorce but prior to the division of community
 No. 16-8041                                       In re Isaacs                                            Page 12


         If the Mortgage became effective as to the Isaacses prior to the chapter 7 petition date,
the state court had jurisdiction to determine its validity since neither the discharge order nor the
automatic stay would be implicated because, absent avoidance by the bankruptcy court, a valid
lien survives and rides through bankruptcy. Dewsnup v. Timm, 502 U.S. 410, 417–18, 112 S. Ct.
773, 778(1992); Johnson v. Home State Bank, 501 U.S. 78, 84, 111 S. Ct. 2150, 2154 (1991).
However, both the automatic stay and the discharge order could have been implicated if the
Mortgage did not become effective as a lien against the Isaacses’ interests in the Property until
after the chapter 7 petition date. Therefore, the date the Mortgage became effective as a lien
against the Isaacses’ interests in the Property is of vital importance to whether the Hamilton
exception to the Rooker-Feldman doctrine applies in this case.

         Under the Code, a security interest in property and the underlying debt it secures are not
the same. A chapter 7 discharge order “discharges the debtor from all debts that arose before the
date of the order for relief under this chapter. . . .” 11 U.S.C. § 727(b) (emphasis added). Such a
discharge “operates as an injunction against . . . an act, to collect, recover or offset any such debt
as a personal liability of the debtor, whether or not discharge of such debt is waived.” 11 U.S.C.
§ 524(a)(2) (emphasis added). As the Supreme Court has explained, “a bankruptcy discharge
extinguishes only one mode of enforcing a claim—namely, an action against the debtor in
personam—while leaving intact another—namely, an action against the debtor in rem.” Home


property, was a pre-petition debt discharged in the chapter 7 bankruptcy and spouse's resulting lien set aside as being
in violation of discharge injunction.); and In re Breul, 533 B.R. 782 (Bankr. C.D. Cal. 2015) (defendant violated
discharge injunction by recording lien against debtor's property after filing of bankruptcy and by lien's continued
existence after discharge). In addition, bankruptcy courts have issued orders voiding certificates of judgment filed
against debtors who do not own real property at the time that their bankruptcy is filed to preclude the judgment lien
creditor from later enforcing that certificate of judgment against the debtor’s after-acquired real property. The
premise upon which such orders are entered is to protect the debtor’s fresh start and discharge under § 524(a). See In
re Novell, 198 B.R. 697 (Bankr. W.D. Ky. 1996); and In re Blakely, Case No. 13-50069, 2013 Bankr. LEXIS 5474
(Bankr. E.D. Ky. Mar. 27, 2013).
         9
           This is the primary difference between the majority and the concurrence. The concurrence reasons that an
in rem proceeding could never impair or modify a debtor’s discharge because a discharge only affects the personal
liability of a debtor and, therefore, the Rooker-Feldman doctrine would always bar a bankruptcy court’s review of a
state court foreclosure or other in rem judgment. But the Panel does not need to reach that issue because the
bankruptcy court erroneously concluded that the Mortgage was invalid. Because the Mortgage was a valid
prepetition unavoided lien on the Property, it passed through the bankruptcy unaffected by the discharge. Therefore,
the foreclosure judgment could not have violated the discharge order and the Hamilton exception does not apply. In
short, the foreclosure judgment was a proper exercise of the state court’s authority in an in rem proceeding and
further review of that judgment is barred by Rooker-Feldman.
 No. 16-8041                                 In re Isaacs                                  Page 13


State Bank, 501 U.S. at 84. In other words, while § 524(a)(2) precludes the assessment of
personal liability against a debtor for a discharged debt, a chapter 7 discharge, by itself, does not
avoid prepetition security interests or liens.

       The distinction between personal liability and in rem liability is crucial with regard to the
scope and effect of a discharge order:

               Although the Supreme Court has used the word “extinguish” in discussing
       the effect of a discharge, a careful reading confirms that what a discharge
       extinguishes is not the creditor’s claim, but the Debtor’s “personal liability” on
       the claim—the Code’s definition of a “debt.” See 11 U.S.C. § 101(12) (defining
       “debt” as “liability on a claim”). The words “claim” and “debt” may be “co-
       extensive,” Johnson, 501 U.S. at 184, but neither the high court (in Johnson) nor
       the Code (in the various discharge provisions) speaks in terms of discharging
       “claims,” only “debtors” and “debts.” In other words, the claim may survive the
       discharge to some extent, but the debt —the “liability on a claim”— does not.

In re Livensparger, Case No. 12-10361, 2015 Bankr. LEXIS 1427, at *9 (Bankr. W.D. Mich.
Apr. 17, 2015). Therefore, a discharge accomplishes two things: “[i]t voids judgments and it
enjoins collection of claims as a personal obligation of the debtor.” Id. at *10. Post-discharge in
rem actions enforcing valid liens against the debtor’s property do not violate the discharge
injunction. In re Black, Case No. 09-78266, 2014 Bankr. LEXIS 682, at *7 (Bankr. E.D. Mich.
Feb. 14, 2014).

       In sum, if the lien evidenced by the Mortgage was effective against the Isaacses prior to
the chapter 7 petition date, and was not avoided in the course of that bankruptcy case, then the
Mortgage would still exist as an in rem obligation of the Isaacses even after the discharge order
relieved them of their personal liability on the underlying indebtedness. Since no personal
liability would be implicated, no modification of the discharge order would be implicated
through enforcement of that lien, and the Hamilton exception to the Rooker-Feldman doctrine
would not apply.

       C. The Mortgage Was Binding as to the Isaacses at the Time of the Filing of the
          Chapter 7 Bankruptcy Case

       To determine whether the Mortgage was binding as to the Isaacses as of the chapter 7
petition date, we turn to the Mortgage and Kentucky law applicable to mortgages. The
 No. 16-8041                                 In re Isaacs                                   Page 14


bankruptcy court’s conclusion that the Mortgage “must be construed” to provide that
“attachment” of the mortgage lien to the Property was only to occur at the time of recording
contradicts the Mortgage and Kentucky mortgage law. While it is true that the lien did not
become effective as to third parties until the recording of the Mortgage, that conclusion is not
supportable as to the Isaacses’ interests.

          The bankruptcy court concluded, based on the language in the “Priority of Advances”
section, that “it must be construed that at the time of execution, the parties did not intend
immediate attachment but intended attachment to occur at the time the [] Mortgage was
recorded.” (Mem.-Op. at 7, ECF No. 77.) As a result, the bankruptcy court held, the Judgment
revived and secured a discharged debt, as opposed to merely enforcing existing valid in rem
rights.

          Contrary to the bankruptcy court’s conclusion, the Mortgage expressed the intent that it
was binding as to the Isaacses as of the time they signed the Mortgage. A mortgage is a contract
between a mortgagor (borrower) and a mortgagee (lender) and is subject to normal rules of
contract interpretation. First Commonwealth Bank of Prestonsburg v. West, 55 S.W.3d 829, 835
(Ky. Ct. App. 2000). “‘Generally, the interpretation of a contract, including determining whether
a contract is ambiguous, is a question of law for the courts and is subject to de novo review.’” 3D
Enters. Contr. Corp. v. Louisville & Jefferson Cty. Metro. Sewer Dist., 174 S.W.3d 440, 448
(Ky. 2005) (quoting Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 385 (Ky. Ct.
App. 2002)) “However, once a court determines that a contract is ambiguous, areas of dispute
concerning the extrinsic evidence are factual issues and construction of the contract become[s]
subject to resolution by the fact-finder.” Cantrell, 94 S.W.3d at 384.

          The review of a contract “must begin with an examination of the plain language of the
instrument.” Kentucky Shakespeare Fest., Inc. v. Dunaway, 490 S.W.3d 691, 694 (Ky. 2016).
“The cardinal rule in the interpretation of contracts is to ascertain the intention of the parties and
to give effect to that intention. The intention of the parties is to be ascertained from the words
employed taking into consideration the whole context of the agreement.” Jones v. Riddell,
5 S.W.2d 1077, 1078 (Ky. 1928). “Any contract or agreement must be construed as a whole,
giving effect to all parts and every word in it if possible.” City of Louisa v. Newland, 705 S.W.2d
 No. 16-8041                                      In re Isaacs                                            Page 15


916, 919 (Ky. 1986). “Words are best known by the company they keep—by the context in
which they appear . . . .” Howard v. Mercer Transp. Co., 566 F. App’x 459, 461 (6th Cir. 2014)
(citing Riddell, 5 S.W.2d at 1078).

        Upon review of the plain language of the entire agreement, the Panel must determine
whether the Mortgage is ambiguous. “When no ambiguity exists in the contract, we look only as
far as the four corners of the document to determine the parties’ intentions.” 3D Enter. Contr.
Corp., 174 S.W.3d at 448. ‘“A contract is ambiguous if a reasonable person would find it
susceptible to different or inconsistent interpretations.’” Hazard Coal Corp. v. Knight,
325 S.W.3d 290, 298 (Ky. 2010) (quoting Cantrell Supply, 94 S.W.3d at 385). “While nothing
can be added to or taken from a written contract by parol evidence, it is the rule that ambiguities
may be explained by parol evidence.” Stubblefield v. Farmer, 165 S.W.2d 556, 557 (Ky. 1942).

        The Mortgage contains two provisions pertaining to the date on which the mortgage lien,
securing a line of credit, would be effective. The “Description of Security” section suggests that
the Mortgage is effective on signing: “By signing this Mortgage, we hereby mortgage, grant and
convey . . . subject to the terms of this Mortgage . . . the ‘Property’.” (Mortgage at 1, ECF No.
68-3.) The Mortgage’s “Priority of Advances” section, however, states: “[t]he lien of this
Mortgage will attach on the date this Mortgage is recorded.” (Id. at 2.)10 When viewed in
isolation, these two terms of the Mortgage seemingly conflict regarding the parties’ intent with
respect to the date on which the mortgage lien would be effective. The “Description of Security”
section suggests that the Mortgage is effective on signing “subject to the terms of this
Mortgage.” (Id. at 1.)11 But the “Priority of Advances” section states: “[t]he lien of this
Mortgage will attach on the date this Mortgage is recorded.” (Id. at 2.) The phrase “subject to the
terms of this Mortgage” may not harmonize these conflicting terms if the Mortgage never would
be effective on signing if effectiveness of the lien of the Mortgage as to the Isaacses depended on
recordation.

        10
           The Mortgage states “[t]he headings in the Mortgage are not to be used to interpret or define its
provisions.” (Mortgage at 7.) Although this analysis refers to the titles of the different sections, they are used as
sign-posts only.
        11
          “By signing this Mortgage, we hereby mortgage, grant and convey . . . subject to the terms of this
Mortgage . . . the ‘Property’.” (Mortgage at 1.)
 No. 16-8041                                In re Isaacs                                     Page 16


       Analyzing those two provisions of the Mortgage within the context of the entire
instrument and under Kentucky law, the majority concludes that the Mortgage was effective to
lien the Isaacses’ interests in the Property as of the signing of the Mortgage by the Isaacses.
While the bankruptcy court understandably gave “[s]pecific terms . . . greater weight than
general language” in citing the language in the Mortgage’s “Priority of Advances” section,
(Mem.-Op. at 6), specificity is but one consideration when resolving ambiguity. Context is
another. Creating a security interest in real property implicates the relationship between borrower
and lender. Establishing the priority of a security interest in real property concerns the rank of
one creditor’s security interest among multiple creditors with a lien on the same property, and
not the relationship between borrower and lender. It is logical that the earlier provision
describing the creation of the security interest expressed the intention that the Mortgage was
effective as to the Isaacses upon signing. It is also logical that the later provision contained in the
“Priority of Advances” section of the Mortgage devoted to the relationship among the Isaacses’
creditors expressed the intention that the lien of the Mortgage became effective as to third party
creditors upon recordation.

       The rest of the language in the Mortgage’s “Priority of Advances” section also fits with
this construction of the Mortgage. The first line of the “Priority of Advances” section states
“[t]his is a Line of Credit Mortgage.” (Mortgage at 2.) A Kentucky statute provides the default
rules pertaining to the priority of the lien for a line of credit mortgage, and describes the defining
characteristic for such an instrument: “the lien of the mortgage . . . shall be superior to any liens
. . . created or arising after recordation of the mortgage” even if the lender advances funds with
“notice of a subsequently created lien.” Ky. Rev. Stat. § 382.385(3). In addition, the last sentence
of the Mortgage’s “Priority of Advances” section states that the lien created would not be
extinguished even if no money has been advanced “as of the date of this Mortgage.” (Mortgage
at 2.) Being a line of credit mortgage, the Mortgage anticipated the advancement of funds to the
Isaacses, with the Mortgage being effective as to third parties acquiring liens against the property
upon recordation, even if no funds were advanced as of the time of the signing of the Mortgage
and even as to funds advanced subsequent to the perfection of the later liens. It would be
anomalous and enigmatic, if, after negotiating with the Isaacses to obtain a mortgage to secure
the line of credit, the Mortgagee advanced funds under its line of credit before the Mortgage was
 No. 16-8041                               In re Isaacs                                   Page 17


recorded knowing that it didn’t have a lien to secure the advances. Thus, the language within the
“Priority of Advances” section of the Mortgage controls the perfection of the Mortgage lien as to
third-party lienors, while the language within the “Description of Security” section of the
Mortgage establishes the effectiveness of the lien of the Mortgage as to the Isaacses.

       In addition, consistent with the terms of the Mortgage, Kentucky law governing
mortgages establishes that the Mortgage was binding as to the Isaacses as of the time that they
signed it. In holding that the Mortgage did not attach as to the Isaacses’ interests before the
chapter 7 bankruptcy petition was filed, the bankruptcy court did not acknowledge that the
Mortgage satisfies the requirements under Kentucky law for the creation of a mortgage lien as
between the mortgagors, the Isaacses, and the Mortgagee’s predecessor:

       The statute of frauds requires that a mortgage “be in writing and signed by the
       party to be charged therewith, or by his [or her] authorized agent.” KRS 371.010;
       Roberts’ Trustee v. Terry, 161 Ky. 397, 170 S.W. 965 (Ky.1914). The Borrower
       must be identified in the document as the borrower/mortgagor to be legally
       bound, (Goodrum’s Guardian v. Kelsey, 224 Ky. 349, 50 S.W.2d 932 (Ky. 1932))
       and the amount of the debt must be recited or sufficient information given to
       permit further inquiry by interested parties. See Peoples Bank v. Morgan County
       Nat’l Bank, 266 Ky. 308, 98 S.W.2d 936 (Ky. 1936). The mortgage must be
       delivered and accepted. Ward v. Small’s Adm’r., 90 Ky. 198, 13 S.W. 1070 (Ky.
       1890). The parties must also have the intent to create a lien against the property in
       favor of the Lender as security for the Borrower’s debt. The property to be
       mortgaged must be described, with sufficient definiteness to allow an interested
       party to locate the land secured by the mortgage. See, e.g., Louisville Joint Stock
       Land Bank v. McNeely, 267 Ky. 425, 102 S.W.2d 389 (Ky. 1937).

2 Kentucky Real Estate Law and Practice § 12.22 (UK/CLE, 4th ed. 2013) (alteration in
original); see also 3A Kentucky Practice Series, Real Estate Transactions § 22:28 (April 2016
update) (“The minimum requirements of form in Kentucky for a mortgage to be considered
valid, it must: 1. state the amount of the indebtedness; 2. be in writing; 3. be executed by the
mortgagors and delivered to the mortgagee; and 4. value must be given (i.e., the loan made). At
this point, a mortgage will be considered valid between the parties to the instrument.” (citations
omitted)). A review of the Mortgage reflects that these requirements are satisfied.

       Under Kentucky law, an unrecorded mortgage is valid between the parties to the
Mortgage. Johnson v. Williams (In re Williams), 490 B.R. 236, 239 (Bankr. W.D. Ky. 2013)
 No. 16-8041                                        In re Isaacs                                              Page 18


(citing Armstrong & Taylor v. Reynolds, 1874 W.L. 6773 (Ky. 1874); and Eastern Const. Co. v.
Carson Const. Co.'s Trustee, 47 S.W.2d 69–70 (Ky. 1932). Thus, a lapse in recording of a
mortgage impacts the priority of claims against the property, but does not void the lien between
the mortgagor and the mortgagee. Williams, 490 B.R. at 249 (citing E.S. Bonnie & Co. v. Perry's
Trustee, 78 S.W. 208 (Ky. 1904)). Accordingly, consistent with the terms of the Mortgage,
Kentucky law establishes that the Mortgage was binding between the Isaacses and the Mortgagee
at the time that it was signed.

         D. Because the Mortgage was a Valid, Prepetition Lien As of the Time of the
            Chapter 7 Filing, the Mortgagee’s Later Pursuit of the Foreclosure Solely on an
            In Rem Basis Did Not Violate or Modify Isaacs’ Chapter 7 Discharge and
            Rooker- Feldman Precludes the Bankruptcy Court’s Exercise of Jurisdiction
            Over the Foreclosure Proceeding

         For the reasons stated, we disagree with the bankruptcy court’s interpretation of the
Mortgage denying effectiveness of the lien of the Mortgage as to the Isaacses until recordation.
The Mortgage is not ambiguous, and provides that the parties to the Mortgage created a
mortgage lien as of the date they executed the instrument.12 Because the instrument was
executed before the chapter 7 petition date, the lien was valid before, during, and after the
pendency of the chapter 7 bankruptcy case as to the Isaacses. Because the state court Judgment
only foreclosed on a valid, pre-petition lien, there was no modification of the discharge order and
the Hamilton exception does not apply and the Rooker-Feldman doctrine bars the bankruptcy
court from any further jurisdiction to review the state court Judgment.

         Finally, we wish to allay concerns raised by the concurring opinion. The concurrence
would reverse the bankruptcy court solely on the basis that the judgment arose out of an in rem
action and is concerned that the majority’s analysis will open the floodgates to bankruptcy

         12
            Even if the Panel found the Mortgage to be ambiguous, the undisputed facts in the record outside the
Mortgage’s four corners establish that the parties intended the Mortgage to bind the parties as of the time of its
execution. To that end, a year after signing the Mortgage, the Isaacses listed the line of credit as a secured debt in the
chapter 7 case. They reopened their chapter 7 case to strip judgment liens owing in part to the Mortgage. In addition,
Isaacs stipulated in this adversary proceeding that “[t]he agreement, or note, was secured by a second mortgage to
GMAC . . . encumbering the [P]roperty . . . .” (Stipulation of Facts at 1, ECF No. 68.) And, in her brief to this Panel,
Isaacs advised that she did not know of the argument that the Mortgage was not binding until it was recorded until
after she filed this adversary proceeding—over eleven years after signing the Mortgage. These undisputed facts and
representations confirm that Isaacs intended to create a mortgage lien when she signed the Mortgage.
 No. 16-8041                                In re Isaacs                                    Page 19


courts’ review of state court foreclosure and other in rem judgments. Respectfully, as explained
below, these concerns are unwarranted. Moreover, Rooker-Feldman cannot be applied in the
discharge context solely on the basis of the nature of the state court proceeding.

       First, for the reasons explained, it is not necessary to decide whether an in rem
proceeding could ever violate § 524(a) and the debtor’s discharge. However, without deciding
that issue, there is authority which supports the conclusion that under very limited circumstances,
an in rem proceeding could violate the debtor’s discharge by affecting the debtor’s discharged
personal liability. Thus, it is not appropriate to decide that substantive issue in order to limit our
review solely to the nature of the state court proceeding.

       Second, there will be no floodwaters because the majority’s analysis was only required
by the unusual facts of this case. This decision will not result in the nullification of the Rooker-
Feldman doctrine. The doctrine is applicable under many other circumstances in bankruptcy
besides the discharge, such as dischargeability proceedings. This decision has very little impact
on foreclosure proceedings. In the typical real estate foreclosure, either the state court judgment
has been rendered pre-petition and Rooker-Feldman will apply, or the secured creditor will seek
relief from the bankruptcy court to pursue the foreclosure. Rarely will there be a situation such as
this in which the mortgage is recorded after a bankruptcy is filed, the mortgage is not avoided by
the bankruptcy trustee during the case, and a foreclosure is filed on that mortgage subsequent to
the closing of the first bankruptcy case with a second bankruptcy case filed to attack the
intervening foreclosure judgment.

       Third, the majority’s analysis is consistent with Hamilton, which requires the Panel to
decide whether the bankruptcy court was correct to determine whether the foreclosure judgment
impaired Isaacs’ discharge. Hamilton concluded that a state court can construe the extent of a
debtor’s discharge only if the state court is correct, which at times will necessitate a bankruptcy
court to review a state court judgment.

       In sum, while we agree that Rooker-Feldman precluded the bankruptcy court’s avoidance
of the foreclosure judgment, we do so on the more narrow basis that the bankruptcy court erred
in finding the Mortgage unenforceable under Kentucky law.
 No. 16-8041                               In re Isaacs                           Page 20


                                         CONCLUSION

       For the foregoing reasons, the Panel VACATES the bankruptcy court’s judgment and
REMANDS this case with instructions to DISMISS the adversary proceeding for lack of subject
matter jurisdiction to hear the claims asserted in Isaacs’ Complaint.
 No. 16-8041                               In re Isaacs                                   Page 21




                                       CONCURRENCE


       TRACEY N. WISE, Bankruptcy Appellate Panel Judge, concurring in the judgment.

       The Rooker-Feldman doctrine precluded the bankruptcy court from reviewing the merits
of the state court’s in rem judgment. This conclusion ends the analysis. As a result, I write
separately to concur with the majority’s result, but to respectfully disagree with its reasoning and
the scope of its opinion.

       Without subject matter jurisdiction, the majority engages in a merits analysis much like
the bankruptcy court’s analysis to which it assigned error. Reasoning that “the unusual facts of
this case do not lend themselves to a straight-forward application of” Hamilton v. Herr (In re
Hamilton), 540 F.3d 367 (6th Cir. 2008) (see supra p. 11), the majority misconstrues the
discharge injunction and the inquiry authorized by Hamilton. Bearing in mind Hamilton’s
admonition that state courts may construe the discharge injunction if they do it properly,
Hamilton’s application to these “unusual facts” must begin with a review of what the discharge
enjoins.

       In Hamilton, there was no dispute that the debt at issue was unsecured and that the
creditor obtained a judgment of personal liability against the debtor for a pre-petition debt
covered by his discharge order in violation of 11 U.S.C. § 524(a). But, as the majority recognizes
in passing, “there are only two things that a discharge actually does: it voids judgments and it
enjoins collection of claims as a personal obligation of the debtor.” In re Livensparger, Case No.
12-10361, 2015 Bankr. LEXIS 1427, at *10 (Bankr. W.D. Mich. Apr. 17, 2015). “Actions
against a debtor in rem do not violate the discharge injunction.” In re Black, Case No. 09-78266,
2014 Bankr. LEXIS 682, at *7 (Bankr. E.D. Mich. Feb. 14, 2014).

       The Judgment in the instant matter did not seek to impose personal liability against
Debtor Linda Isaacs for a discharged debt. Rather, the state court lawsuit sought to foreclose on a
mortgage lien on Debtor’s property, and a discharge under § 524 does not affect an in rem
judgment against a debtor’s property related to a pre-petition lien. Johnson v. Home State Bank,
 No. 16-8041                               In re Isaacs                                   Page 22


501 U.S. 78, 83 (1991) (“[T]he Code provides that a creditor’s right to foreclose on the mortgage
survives or passes through the bankruptcy. See 11 U.S.C. § 522(c)(2).”); cf. 4 Collier on
Bankruptcy ¶ 524.02[1] (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2011) (“[A] creditor
may enforce a prepetition judgment lien after the discharge, if the automatic stay is no longer in
effect and the lien has not been avoided, paid, or modified so as to preclude enforcement.”).

       The bankruptcy court held that the chapter 7 discharge order discharged the mortgage
debt at issue. It then made another determination regarding the attendant mortgage lien based on
this statement in the subject mortgage: “The lien of this Mortgage will attach on the date this
Mortgage is recorded.” (Mem-Op. at 4–7, ECF No. 77.) Relying on this language, the court
concluded:

       [T]he debt in question was unsecured by virtue of GMAC’s failure to record the
       Second Mortgage prior to Debtor’s petition and [ ] it was discharged at the time
       Debtor concluded her 2004 Chapter 7 case. The Circuit Court judgment served as
       an improper modification of this Court’s discharge order, and, as a result, the
       Rooker–Feldman doctrine does not apply. This Court, therefore, grants summary
       judgment in favor of Debtor and finds the Circuit Court judgment void ab initio as
       it relates to the debt in question.

(Id. at 2.) In reaching its conclusion, however, the bankruptcy court did not distinguish between
personal liability and an in rem action.

       The majority takes issue with the bankruptcy court’s conclusion regarding the validity of
the unavoided lien and finding of a discharge violation. To that end, the majority focuses
attention on matters outside its subject matter jurisdiction. The state court here, unlike the state
court in Hamilton, did not assess personal liability against Debtor in violation of the discharge
injunction—it merely addressed the validity of a lien, a state law determination made in all in
rem foreclosure actions. The majority’s reasoning suggests the bankruptcy courts can serve as an
appellate court over every foreclosure action under the rationale that an otherwise permissible in
rem action may violate the discharge injunction if the lien is deemed invalid. Under this
reasoning, the Hamilton exception swallows the Rooker-Feldman rule.

       Finally, while the procedural posture of the underlying action is unusual, what is not
unusual is that a creditor violated the automatic stay. The bankruptcy code provides remedies for
 No. 16-8041                                         In re Isaacs                                             Page 23


such violations. See 11 U.S.C. § 362(k). A debtor in this circumstance may pursue the available
remedy for a violation of the automatic stay, but may not seek federal appellate review of a state
court’s in rem judgment.1

         I concur with the majority’s ultimate holding that the bankruptcy court lacked subject
matter jurisdiction under the Rooker-Feldman doctrine. But I respectfully disagree that the
Hamilton exception authorized either the bankruptcy court or the majority to engage in a contract
interpretation analysis where the state court action adjudicated only in rem relief and not
personal liability against Debtor for a discharged debt.




         1
           Nor am I persuaded by the law or reasoning proffered by the majority to support the proposition that
“post-discharge in rem conduct may violate Code § 524(a) and the debtor’s discharge.” (See supra p. 11 n.8.) First, a
creditor’s action cannot be deemed in rem when the debtor owns no real property. See Jarrett v. Ohio (In re Jarrett),
293 B.R. 127 (Bankr. N.D. Ohio 2002); In re Novell, 198 B.R. 697 (Bankr. W.D. Ky. 1996); In re Blakely, Case No.
13-50069 2013 Bankr. LEXIS 5474 (Bankr. E.D. Ky. Mar. 27, 2013). Emelity addressed a lien awarded post-
petition in a domestic dispute. In re Emelity, 251 B.R. 151 (Bankr. S.D. Cal. 2000). None of these cases apply to a
consensual prepetition mortgage on real property and a post-petition action to enforce that mortgage. Finally, Breul
was procedurally a stay violation action—the precise remedy available to Mrs. Isaacs. In re Breul, 533 B.R. 782
(Bankr. C.D. Cal. 2015). The bankruptcy court did not “determine whether the foreclosure judgment impaired
Isaacs’ discharge” as the majority contends (see supra p. 19); rather, it revisited the state court’s determination of the
Mortgage’s validity.
        Simply stated, a bankruptcy court does not have subject matter jurisdiction to revisit a state court’s in rem
judgment concerning a lien’s validity under the auspices of a Hamilton exception. A bankruptcy court, however,
may entertain an avoidance action or a stay violation action in such circumstances.
