Introduction

In this Second Circuit summary order, the court affirmed the dismissal of a federal suit brought by Joseph and Susan Ceccarelli against Morgan Stanley Private Bank, N.A., arising out of a New York state mortgage foreclosure. The case sits at the intersection of two recurrent doctrines in post-foreclosure litigation: the Rooker-Feldman jurisdictional bar and New York’s transactional approach to res judicata (claim preclusion). It also touches on whether Truth in Lending Act (TILA) damages claims can proceed in federal court after an adverse foreclosure judgment.

After losing in state court on their challenge to Morgan Stanley’s standing to foreclose and after the Appellate Division affirmed, the Ceccarellis filed a federal action seeking (1) relief from the foreclosure judgment and a preliminary injunction halting the sale, and (2) statutory damages under TILA based on alleged misinformation about ownership of the note. The Southern District of New York dismissed, invoking Rooker-Feldman to bar the attack on the state judgment, and res judicata (and timeliness) to bar the TILA damages claim; it also denied a preliminary injunction and reconsideration.

The Second Circuit affirms most of the district court’s rulings, but modifies the judgment to ensure claims dismissed for lack of subject-matter jurisdiction are dismissed without prejudice. Although issued as a nonprecedential summary order, the decision offers clear guidance about how federal courts should parse post-foreclosure federal claims, distinguish jurisdictional bars from preclusion, and implement the proper form of dismissal.

Summary of the Opinion

• Rooker-Feldman applies to the plaintiffs’ request to vacate or otherwise undo the New York foreclosure judgment; the federal courts lack jurisdiction over what would be a de facto appeal of a state judgment (Rooker; Feldman; Hunter; Hoblock).
• Rooker-Feldman does not bar the TILA damages claim to the extent it seeks compensation for Morgan Stanley’s alleged conduct rather than reversal of the state judgment (Hoblock; Vossbrinck). However, that TILA claim is barred by New York res judicata because it arises from the same transaction as the defenses and issues litigated in the foreclosure action (Applied Card Systems; Simmons; Henry Modell).
• The district court properly denied the preliminary injunction and the motion for reconsideration given the dismissal of the underlying claims (Grand River; Shrader; Van Buskirk).
• The Second Circuit modifies the judgment to specify that the Rooker-Feldman dismissals are without prejudice, as required for jurisdictional dismissals (Green; Adams).
• Claims against unidentified Doe defendants were not addressed on appeal and are deemed abandoned.

Analysis

Precedents Cited and Their Influence

• Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923), and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983): These foundational cases establish that federal district courts lack authority to review state-court judgments. The panel invokes them, through the modern four-part test, to bar the plaintiffs’ request to vacate the foreclosure judgment.
• Hunter v. McMahon, 75 F.4th 62 (2d Cir. 2023), and Hoblock v. Albany County Board of Elections, 422 F.3d 77 (2d Cir. 2005): Hunter articulates the four-part Rooker-Feldman test; Hoblock clarifies that the doctrine does not apply to injuries not “produced by” the state judgment. Guided by these, the court separates the jurisdictionally barred attack on the foreclosure judgment from the TILA damages claim premised on pre-judgment conduct.
• Vossbrinck v. Accredited Home Lenders, Inc., 773 F.3d 423, 428 n.2 (2d Cir. 2014): The panel relies on Vossbrinck’s distinction between requests to void a state judgment (barred) and independent damages claims against parties (not barred by Rooker-Feldman) to permit consideration of the TILA claim, subject to preclusion.
• O’Connor v. Pierson, 568 F.3d 64 (2d Cir. 2009), and Migra v. Warren City School District Board of Education, 465 U.S. 75 (1984): These authorities require federal courts to apply the state’s preclusion law to prior state judgments. The panel therefore applies New York res judicata.
• People ex rel. Spitzer v. Applied Card Systems, Inc., 894 N.E.2d 1 (N.Y. 2008), and Simmons v. Trans Express Inc., 170 N.E.3d 733 (N.Y. 2021): These cases expound New York’s transactional approach to claim preclusion, barring subsequent claims arising from the same transaction even if they advance new legal theories or remedies. They support the holding that the TILA claim is precluded.
• Henry Modell & Co. v. Minister, Elders & Deacons of Reformed Protestant Church of the City of New York, 502 N.E.2d 978 (N.Y. 1986): Even without a compulsory counterclaim rule, a party cannot withhold a theory in an initial case and later bring a second action inconsistent with the first judgment. The panel uses this to reject the plaintiffs’ argument that non-compulsory counterclaim rules saved their TILA claim.
• Ciraldo v. JP Morgan Chase Bank, N.A., 34 N.Y.S.3d 113 (App. Div. 2016), and Methal v. City of New York, 855 N.Y.S.2d 588 (App. Div. 2008): These establish that a foreclosure judgment of sale and a summary judgment order are decisions on the merits with preclusive effect—crucial to the panel’s res judicata analysis.
• Green v. Department of Education of City of New York, 16 F.4th 1070 (2d Cir. 2021), and United States v. Adams, 955 F.3d 238 (2d Cir. 2020): Green requires that jurisdictional dismissals be without prejudice; Adams confirms the appellate court’s authority to modify the judgment under 28 U.S.C. § 2106. The panel uses these to “affirm as modified.”
• Standards of review and ancillary authorities: Fink v. Time Warner Cable, 714 F.3d 739 (2d Cir. 2013) (de novo review of dismissal); Brown Media Corp. v. K&L Gates, LLP, 854 F.3d 150 (2d Cir. 2017) (de novo review of res judicata); Grand River Enterprises Six Nations, Ltd. v. Pryor, 481 F.3d 60 (2d Cir. 2007) (preliminary injunction standard); Van Buskirk v. United Group of Companies, Inc., 935 F.3d 49 (2d Cir. 2019) (reconsideration); Shrader v. CSX Transportation, Inc., 70 F.3d 255 (2d Cir. 1995) (reconsideration).

Legal Reasoning

A. Rooker-Feldman bars the federal “appeal” of a state foreclosure judgment

The court applies the four-part test for Rooker-Feldman (Hunter/Hoblock). All elements are met: (1) the Ceccarellis lost in state court; (2) they complained of injury caused by the foreclosure judgment; (3) their federal suit invited review and rejection of that judgment; and (4) the state judgment predated the federal action. That ends the federal court’s jurisdiction to grant relief that would undermine or vacate the foreclosure judgment. The district court properly dismissed those claims for lack of subject-matter jurisdiction.

B. TILA damages claim survives Rooker-Feldman but is precluded by New York res judicata

Distinguishing between injury “produced by” the state judgment and injury caused by a private party’s conduct (Hoblock), the panel concludes the TILA damages claim is not barred by Rooker-Feldman. The claim seeks compensation for alleged misinformation and refusal to identify the note’s owner, not a reversal of the state judgment (Vossbrinck, n.2).

Nevertheless, applying New York’s transactional approach to res judicata (Applied Card Systems; Simmons), the court finds the TILA claim arises from the same transaction as the state foreclosure action: the question of who owned the note and had standing—issues the Ceccarellis litigated in the foreclosure case, resulting in a judgment on the merits (Ciraldo; Methal). Under New York law, once a claim is brought to final conclusion, all other claims arising out of the same transaction are barred, even if they present different legal theories or seek different remedies (Simmons). The argument that New York lacks a compulsory counterclaim rule fails because Henry Modell teaches that parties cannot preserve a new theory for a second action to contradict a final judgment.

The panel therefore affirms dismissal of the TILA damages claim on res judicata grounds and does not need to reach the district court’s alternative timeliness ruling.

C. Preliminary injunction and reconsideration

With the underlying claims dismissed, the request for a preliminary injunction to halt the foreclosure sale is moot, and denial is reviewed for abuse of discretion (Grand River). Likewise, the reconsideration motion sought to reargue issues already resolved and did not present controlling matters overlooked (Shrader; Van Buskirk). The panel finds no abuse of discretion.

D. The form of dismissal matters: without prejudice for jurisdictional dismissals

Because dismissals for lack of subject-matter jurisdiction must be without prejudice (Green), the Second Circuit exercises its authority under 28 U.S.C. § 2106 (Adams) to modify the judgment so that the Rooker-Feldman dismissals are expressly without prejudice. This technical correction preserves the distinction between jurisdictional and merits-based adjudications.

Impact

1. For litigants and counsel in foreclosure-related federal suits

• Do not rely on federal court to undo a state foreclosure judgment. Any attempt to vacate, enjoin, or otherwise nullify a state foreclosure is a de facto appeal barred by Rooker-Feldman.
• Damages claims premised on pre-judgment conduct (e.g., alleged misinformation about ownership) may clear the Rooker-Feldman hurdle but will often be barred by New York’s transactional res judicata if they arise from the same nucleus of facts adjudicated in the foreclosure action.
• Even though New York does not compel counterclaims, a party cannot withhold a theory in state court and later bring it in federal court when it would undercut the prior judgment (Henry Modell). Raise all transaction-related claims, defenses, and theories in the foreclosure action, or risk preclusion.
• Jurisdictional dismissals should not foreclose future litigation in an appropriate forum; if a court dismisses under Rooker-Feldman, it must be without prejudice (Green). But note that separate preclusion doctrines may still bar refiling.

2. For district courts

• Maintain the sequence: separate Rooker-Feldman (jurisdictional) issues from preclusion (merits-based defenses). If part of the complaint seeks to overturn a state judgment, dismiss those claims under Rule 12(b)(1) without prejudice; then assess any remaining claims for preclusion and timeliness.
• In mortgage cases, expect that TILA-based or fraud-based damages claims tied to note ownership and foreclosure standing will likely be part of the same transaction already litigated, triggering res judicata under New York law.

3. Doctrinal clarity

• The order reinforces the bounds of Rooker-Feldman: it is narrow and jurisdictional, focused on de facto appeals. Not all post-foreclosure claims are barred jurisdictionally; some survive only to be dismissed on preclusion grounds. This disciplined approach prevents conflating jurisdiction with merits.
• It emphasizes New York’s broad transactional view of claim preclusion, capturing different legal theories and remedies arising from the same factual matrix.
• It underscores a procedural point sometimes overlooked: jurisdictional dismissals must be without prejudice, a detail with practical consequences for litigants considering state-court remedies.

Complex Concepts Simplified

• Rooker-Feldman: A rule that federal trial courts cannot act as appellate courts for state-court losers. If your federal claim asks the court to undo or reject a state judgment, the federal court lacks jurisdiction.
• “Produced by” the state judgment: If the harm you complain about was caused by the state court’s judgment itself (e.g., the order of foreclosure), Rooker-Feldman applies. If the harm stems from a party’s conduct (e.g., alleged misstatements), it may not.
• Res judicata (claim preclusion): Once a case reaches a final decision, you cannot sue later on any other claim arising from the same transaction—even if you use a new legal theory or seek different remedies.
• New York’s transactional approach: New York asks whether the later claim arises out of the same set of facts as the earlier case, considering time, space, origin, and motivation, and whether it would have formed a convenient unit at trial.
• Non-compulsory counterclaims in New York: You are not required to bring counterclaims, but you cannot bring a later lawsuit that contradicts a final judgment by repackaging foregone theories as new claims.
• Without prejudice vs. with prejudice: A dismissal “without prejudice” does not resolve the merits and leaves room to bring the claim in a proper forum; “with prejudice” ends the claim on the merits and bars relitigation.
• TILA damages claims after foreclosure: Seeking money damages for alleged pre-judgment misstatements may avoid the Rooker-Feldman bar, but those claims can still be blocked by res judicata if they arise from the same transaction litigated in foreclosure.
• Standards of review: De novo for dismissals and application of Rooker-Feldman/res judicata; abuse of discretion for preliminary injunctions and reconsideration rulings.

Conclusion

The Second Circuit’s summary order in Ceccarelli v. Morgan Stanley draws a sharp, useful line between jurisdiction and preclusion in post-foreclosure federal litigation. First, Rooker-Feldman strips federal jurisdiction over efforts to vacate state foreclosure judgments. Second, independent damages claims framed under TILA or similar statutes can evade Rooker-Feldman only if they seek compensation for a party’s conduct rather than reversal of the judgment; yet under New York’s expansive transactional res judicata, such claims are frequently precluded when they arise from the same facts resolved in foreclosure. Finally, the court corrects the form of the dismissal: jurisdictional dismissals must be without prejudice.

Although nonprecedential, the decision provides persuasive guidance to litigants and courts: raise all transaction-related theories in the foreclosure forum; do not expect a federal do-over; and keep jurisdictional and preclusion analyses distinct. That approach promotes finality, judicial economy, and the proper allocation of authority between state and federal courts.

Note on Precedential Status

This ruling is a Second Circuit summary order. By local rule, such orders do not have precedential effect, though they may be cited subject to Federal Rule of Appellate Procedure 32.1 and Local Rule 32.1.1.