When Rooker-Feldman Stops and Younger Begins:
Seventh Circuit Clarifies Federal-State Jurisdictional Boundaries in Durga Property Holdings, Inc. v. City of Effingham

Introduction

The United States Court of Appeals for the Seventh Circuit has handed down an opinion of practical importance for litigants who seek federal redress while simultaneously battling foreclosure proceedings in state court. In Durga Property Holdings, Inc. v. City of Effingham, Illinois, No. 24-3177 (June 13, 2025), the court dissected two powerful jurisdictional doctrines— the Rooker-Feldman doctrine and the Younger abstention doctrine—and clarified:

1. A state-court foreclosure judgment accompanied by an order of sale is not “final” for Rooker-Feldman purposes until the sale is judicially confirmed or the appellate process is complete; and
2. Even where Rooker-Feldman does not apply, federal courts must abstain under Younger when parallel foreclosure enforcement proceedings remain pending and provide an adequate forum for constitutional objections; dismissals on this ground must be without prejudice.

The opinion, though designated “nonprecedential,” squarely addresses a recurring scenario: property owners using 42 U.S.C. § 1983 to halt or undo state foreclosure actions. The court’s reasoning will influence district courts throughout the circuit—and perhaps beyond—when confronted with similar jurisdictional puzzles.

Background in Brief

• Parties: Durga Property Holdings, Inc. (mall owner) versus the City of Effingham, Illinois.
• Underlying dispute: City-initiated state litigation (2019) to compel safety repairs; Durga’s alleged non-compliance led to City-performed repairs, municipal liens, and ultimately a foreclosure action (2020-2024).
• Federal action: On July 24, 2024—six days before the state court entered the foreclosure judgment—Durga filed a § 1983 suit claiming violations of the Fifth and Fourteenth Amendments and the Contracts Clause, and sought a preliminary injunction.
• District-court ruling: Dismissed for lack of jurisdiction under Rooker-Feldman and denied the injunction as moot.
• Seventh Circuit disposition: Affirmed dismissal but (i) rejected Rooker-Feldman, (ii) invoked Younger abstention instead, and (iii) modified the dismissal to be without prejudice.

Summary of the Judgment

Delivering the opinion per curiam, the Seventh Circuit held:

1. Rooker-Feldman Inapplicable. Because Illinois foreclosure proceedings are not final until after the sale is confirmed—and the sale here was stayed pending appeal—the state judgment lacked the finality prerequisite for Rooker-Feldman.
2. Younger Abstention Compels Dismissal. Durga’s federal claims would directly interfere with ongoing state enforcement of municipal liens, satisfying the four-part Younger test (judicial nature, important state interest, adequate opportunity, no extraordinary circumstances).
3. Procedural Correction. Abstention-based dismissals address subject-matter jurisdiction and must be without prejudice; the panel modified the district court’s “with prejudice” order accordingly.

Detailed Analysis

A. Precedents Cited and Their Influence

1. Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923) & D.C. Court of Appeals v. Feldman, 460 U.S. 462 (1983)
   These cases bar lower federal courts from reviewing final state-court judgments. The district court relied on them, but the Seventh Circuit refined the doctrine’s scope by stressing finality.
2. Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (2005)
   Reinforced that Rooker-Feldman is “narrow” and does not apply where concurrent federal litigation begins before the state judgment becomes final. The panel drew directly from Exxon to conclude Durga filed first.
3. Romspen Mortgage Ltd. Partnership v. BGC Holdings LLC, 20 F.4th 359 (7th Cir. 2021)
   Clarifies under Illinois law that foreclosure is not final until sale confirmation. This case supplied the doctrinal hook for the finality analysis.
4. Younger v. Harris, 401 U.S. 37 (1971)
   Established the discretion of federal courts to abstain from interfering with certain ongoing state proceedings. Subsequent decisions (Pennzoil v. Texaco, FreeEats.com v. Indiana, J.B. v. Woodard) refined the doctrine’s civil-enforcement reach; the panel used them to build the abstention framework.
5. Procedural-Effect Precedents
   American Trial Lawyers Ass’n v. New Jersey Supreme Court, 409 U.S. 467 (1973) and Courthouse News Service v. Brown, 908 F.3d 1063 (7th Cir. 2018) were pivotal for the holding that abstention dismissals are without prejudice.

B. Court’s Legal Reasoning

1. Step 1 – Parsing the Injury and Causation Element of Rooker-Feldman.
   The court accepted that Durga’s alleged constitutional injuries ultimately stem from the foreclosure. Yet, because the foreclosure sale lacked confirmation, the “state-court loser” factor was missing. The court emphasized a chronological, not substantive, barrier.
2. Step 2 – Emphasis on Illinois Foreclosure Procedure.
   Relying on Romspen, the panel underscored that in Illinois a foreclosure order and sale directive is interlocutory until sale confirmation. Thus, state-court proceedings were ongoing.
3. Step 3 – Invoking Younger’s Four-Factor Test.
   • Judicial proceeding? Yes—foreclosure appeal pending.
   • Important state interest? Yes—enforcing building-safety measures and liens.
   • Adequate opportunity? Yes—state courts can hear constitutional challenges.
   • Extraordinary circumstances? None alleged.
   Satisfying all four, abstention was compelled.
4. Step 4 – Remedy Adjustment.
   Because abstention concerns jurisdictional prudence, dismissal must be without prejudice, leaving Durga free to return if state proceedings end without adequate relief.

C. Potential Impact on Future Litigation

• Foreclosure-Related § 1983 Cases. Plaintiffs cannot use pre-confirmation federal suits to circumvent ongoing state enforcement; district courts will likely screen such suits through Younger rather than Rooker-Feldman.
• Finality Clarification. The decision reinforces that in Illinois (and by analogy in other states with similar confirmation requirements) a foreclosure judgment is not final until confirmation, affecting res judicata, removal, and appellate timing questions.
• Procedural Precision. District courts must label jurisdictional/abstention dismissals “without prejudice,” reducing the risk of erroneous claim-preclusion arguments later.
• Strategic Guidance for Litigants. Property owners should assert constitutional defenses directly in state foreclosure actions or risk Younger dismissal; municipalities can rely on the decision to fend off premature federal interference.

Complex Concepts Simplified

Rooker-Feldman Doctrine

A jurisdictional rule prohibiting lower federal courts from acting as appellate bodies over final state-court judgments. Think of it as “federal trial courts can’t undo state appellate courts.”

Younger Abstention

Even when federal courts have jurisdiction, they may defer to ongoing state proceedings that implicate important state interests, provided the state forum is adequate and free of harassment or bad faith.

Finality in Foreclosure

In Illinois, a foreclosure is only complete when (1) the property is sold and (2) the court confirms the sale; until then, the judgment is “in flux.”

Dismissal Without Prejudice

The plaintiff’s claim is dismissed, but the door remains open to return to federal court once jurisdictional obstacles disappear.

Conclusion

The Seventh Circuit’s decision in Durga Property Holdings delineates the jurisdictional boundary lines with precision: Rooker-Feldman does not arise until a state foreclosure is genuinely final, but while that state process is ongoing, Younger abstention obliges federal courts to stand aside. The ruling not only guides lower courts on which doctrine to apply and when, but also underscores the importance of labeling dismissals correctly—protecting litigants from unintended claim preclusion. Practitioners eyeing simultaneous federal relief must now incorporate this roadmap: confront constitutional issues head-on in state foreclosure proceedings or wait until those proceedings truly end before turning to the federal forum.