No “Fraud Exception” to Rooker–Feldman in Eviction Collateral Attacks; Claim Preclusion as a Backstop

Introduction

Tony Cole v. Joseph C. Faulkner, et al. (7th Cir. Jan. 21, 2026) is a nonprecedential Seventh Circuit disposition arising out of a long-running landlord–tenant dispute and multiple related Illinois state-court proceedings. Tony Cole, a tenant of residential and commercial space at 1205 North Milwaukee Avenue in Chicago, alleged that a sequence of state-court eviction actions and a subsequent sheriff’s eviction were improper, retaliatory, and enabled by a fraudulent transfer of the property.

After losing possession in state court, Cole sued a former landlord (Jin Lee), the successor owner (1205 Milwaukee LLC), its ownership-related individuals (including Joseph Faulkner), and attorneys involved in the state litigation. He asserted: (1) retaliatory eviction under 42 U.S.C. § 3617 (Fair Housing Act), (2) due process violations under 42 U.S.C. § 1983, and (3) state-law claims (fraudulent transfer, retaliatory eviction, legal malpractice), seeking damages and injunctive relief that would effectively unwind the state-court outcomes.

The core federal issues on appeal were (i) whether Cole could use alleged “fraud” or “collusion” in the state proceedings to obtain federal injunctive relief from the state judgments, (ii) whether private parties pursuing evictions could be treated as state actors for § 1983 purposes, and (iii) what must be pleaded to state an FHA retaliation claim under § 3617.

Summary of the Opinion

The Seventh Circuit affirmed dismissal of Cole’s federal case. It held:

  • There is no fraud-based exception to the Rooker–Feldman doctrine; federal courts cannot grant injunctive relief that would require evaluating or vacating state-court judgments based on alleged corruption.
  • Even if Rooker–Feldman did not apply due to timing, Cole’s attempted federal undoing of the eviction results was barred by claim preclusion once the state judgments became final.
  • Cole failed to state a § 1983 claim because the defendants did not act “under color of law”; using state judicial processes and making conclusory collusion allegations is not enough to establish state action.
  • Cole failed to state a Fair Housing Act retaliation claim because § 3617 retaliation must be tethered to discriminatory housing practices involving a protected characteristic, which he did not plead.
  • Recusal was properly denied; adverse rulings do not show judicial bias.
  • A newly raised First Amendment theory was waived because it was not presented to the district court.

Analysis

Precedents Cited

1) Rooker–Feldman and the rejection of a “fraud exception”

  • Rooker v. Fid. Tr. Co., 263 U.S. 413 (1923) and D.C. Ct. of Appeals v. Feldman, 460 U.S. 462 (1983): These foundational cases establish that lower federal courts lack appellate jurisdiction over state-court judgments. The Seventh Circuit treated Cole’s request for injunctive and declaratory relief—voiding the transfer and halting “retaliatory” state litigation—as an impermissible attempt to functionally review or undo state-court outcomes.
  • Hadzi-Tanovic v. Johnson, 62 F.4th 394, 405 (7th Cir. 2023): The district court quoted this decision for the proposition that lower federal courts cannot review state-court judgments “no matter how wrong” they may be. The appellate panel endorsed the broader point that alleged state-court error does not create federal jurisdiction to overturn the judgment.
  • Gilbank v. Wood Cnty. Dep't of Hum. Servs., 111 F.4th 754 (7th Cir. 2024) (en banc): This was the central modern authority. The opinion used Gilbank in two ways: (i) to reaffirm that claims of corruption/fraud in state litigation do not create an exception—because adjudicating the claim would still require a federal court to assess and effectively nullify a state judgment; and (ii) to refine the district court’s initial overbroad jurisdictional ruling by recognizing that Rooker–Feldman does not automatically bar damages claims arising from harms connected to state proceedings (even though Cole ultimately lost on other grounds).

2) Claim preclusion as the decisive “backstop”

  • H.A.L. NY Holdings, LLC v. Guinan, 958 F.3d 627, 632-33 (7th Cir. 2020): The panel relied on this decision for the practical move of treating claim preclusion as an affirmative defense that can defeat an effort to relitigate issues tied to state proceedings—especially where Rooker–Feldman timing arguments might be contested.
  • Bonnstetter v. City of Chicago, 811 F.3d 969, 975 (7th Cir. 2016): Supplied the standard three-part test for claim preclusion: (1) final judgment on the merits, (2) same cause of action, and (3) same parties or privies.
  • Parungao v. Cmty. Health Sys., Inc., 858 F.3d 452, 457 (7th Cir. 2017): Supported the “same claim” analysis via the “group of operative facts” approach: different legal theories do not avoid preclusion when they arise from the same core events. Here, the operative nucleus was Cole’s eviction from the property.

3) State action and § 1983 limits when private parties use courts

  • L.P. v. Marian Catholic High Sch, 852 F.3d 690, 696 (7th Cir. 2017): Provided the articulation of the required “nexus” showing for attributing private conduct to the state.
  • Lugar v. Edmondson Oil Co., 457 U.S. 922, 937 (1982): The underlying Supreme Court authority for the “fairly attributable to the state” standard.
  • Spiegel v. McClintic, 916 F.3d 611, 616 (7th Cir. 2019) and Fries v. Helsper, 146 F.3d 452, 458 (7th Cir. 1998): These cases did the key pleading work: conclusory assertions of conspiracy/joint action, without concrete factual allegations, do not plausibly establish action under color of state law. Cole’s allegations that defendants filed “baseless” eviction suits and used “state judicial mechanisms” fell squarely into the insufficient category.

4) FHA retaliation pleading under § 3617

  • Block v. Frischholz, 587 F.3d 771, 776 (7th Cir. 2009): The panel treated Block as defining the necessary link between § 3617 retaliation and discriminatory housing practices tied to protected statuses (race, color, religion, sex, familial status, national origin, disability). Cole’s complaint did not plead discrimination based on a protected characteristic; thus, the retaliation theory was legally incomplete.

5) Recusal/bias and waiver on appeal

  • Liteky v. United States, 510 U.S. 540, 555-56 (1994): Used for the proposition that judicial rulings alone rarely show bias warranting recusal.
  • Bradley v. Vill. Univ. Park, 59 F.4th 887, 897 (7th Cir. 2023): Supported the waiver holding: arguments not raised in the district court are forfeited on appeal.

Legal Reasoning

  1. Federal injunctive relief was treated as an attempted end-run around state-court judgments. Cole’s requested injunctions and declarations (e.g., voiding the transfer; staying “retaliatory” actions; restoring utilities in the wake of eviction) would, as a practical matter, undercut the possession judgments and related state determinations. Under Rooker/Feldman and the Seventh Circuit’s en banc gloss in Gilbank, a federal district court cannot assume the role of a reviewing court even if the litigant frames the attack as “fraud” or “collusion.”
  2. Even a potentially debatable Rooker–Feldman timing issue did not save the case. Cole argued that state judgments were not final when he filed federally. The panel effectively responded: whatever the timing, final judgments now exist, and claim preclusion prevents a second bite at the apple. This reasoning underscores a practical sequencing: when Rooker–Feldman’s scope is contested, preclusion doctrines may independently compel dismissal.
  3. § 1983 failed because “using courts” is not the same as “being the state.” The court required factual allegations showing that the private defendants’ conduct was fairly attributable to the state (a nexus/joint action showing under Lugar). Cole’s allegations were conclusory and essentially described ordinary litigants using ordinary state procedures. Under Spiegel and Fries, that does not plausibly plead state action.
  4. FHA retaliation failed because the pleaded retaliation was not anchored to protected-class discrimination. The panel rejected the notion that any “housing rights” dispute automatically triggers § 3617. Instead, relying on Block, the opinion required allegations connecting the challenged conduct to discriminatory housing practices based on protected categories.
  5. Recusal required more than dissatisfaction with outcomes. Applying Liteky, the court treated adverse rulings and mootness determinations as routine judicial acts, not evidence of bias.

Impact

Although labeled NONPRECEDENTIAL, the order is practically important for how it operationalizes controlling Seventh Circuit law—especially Gilbank v. Wood Cnty. Dep't of Hum. Servs.—in the eviction and property-litigation context.

  • Rooker–Feldman “fraud” framing is unlikely to succeed. The opinion reinforces that allegations of corrupt state proceedings do not open a federal forum for injunctive relief that would nullify state judgments; the remedy lies in state appellate review and, where appropriate, Supreme Court review—not collateral federal district court intervention.
  • Preclusion doctrines will often decide post-eviction federal suits. Even where plaintiffs attempt careful pleading to avoid Rooker–Feldman, final state eviction judgments frequently trigger claim preclusion because federal claims typically arise from the same eviction nucleus of facts.
  • § 1983 claims premised on “they sued me” or “they used the sheriff” remain difficult. Absent concrete facts showing coordinated state involvement beyond ordinary judicial process, private landlords and their counsel generally remain private actors.
  • FHA retaliation requires protected-class grounding. This order signals that a generalized “retaliatory eviction” label is insufficient under § 3617 without pleading discrimination tied to a statutorily protected characteristic.

Complex Concepts Simplified

Rooker–Feldman doctrine
A jurisdiction rule: federal district courts cannot act like appellate courts reviewing state-court judgments. If the relief requested would require a federal court to declare a state judgment wrong or to undo it, the federal court generally cannot hear it.
“Fraud exception” to Rooker–Feldman (rejected here)
Some litigants argue that if a state judgment was obtained by fraud or corruption, a federal court may set it aside. The Seventh Circuit, following Gilbank, rejects that idea when the requested federal remedy would still entail evaluating and invalidating the state judgment.
Claim preclusion (res judicata)
A final-judgment rule: once a court has issued a final judgment, the same parties cannot relitigate the same claim (meaning the same core set of facts) in a new lawsuit, even using different legal theories.
State action / “under color of law” (§ 1983)
§ 1983 applies to governmental conduct. Private parties generally are not liable unless their conduct is fairly attributable to the state (for example, through significant state involvement or a true joint plan with state officials). Simply filing lawsuits or using standard court procedures is not enough.
FHA retaliation (42 U.S.C. § 3617)
Retaliation under the FHA is not a general anti-retaliation statute for any housing dispute. It protects persons who exercise FHA rights connected to preventing or opposing discrimination based on protected characteristics (race, color, religion, sex, familial status, national origin, disability).
Recusal for bias
A judge is not disqualified merely because a party loses motions or the judge issues adverse rulings. Bias typically requires an extrajudicial source or unusually clear evidence of prejudice.

Conclusion

The Seventh Circuit’s disposition in Cole v. Faulkner delivers a clear message for litigants seeking federal relief after adverse state eviction outcomes: allegations of fraud or collusion do not create a pathway for federal injunctive relief that would functionally overturn state judgments. Where Rooker–Feldman does not conclusively resolve timing disputes, claim preclusion will often bar repackaged federal litigation arising from the same eviction events. The order also reaffirms two frequent pleading pitfalls: private eviction litigants are generally not state actors under § 1983, and FHA § 3617 retaliation requires a protected-class discrimination anchor.