No “Fraud Exception” to Rooker-Feldman in Eviction-Related Federal Suits; Claim Preclusion and Pleading Standards Narrow § 1983 and FHA Retaliation Theories

Case: Tony Cole v. Joseph C. Faulkner, et al.
Court: United States Court of Appeals for the Seventh Circuit
Date: January 21, 2026
Disposition: Nonprecedential order; judgment affirmed

1. Introduction

This appeal arose from Tony Cole’s multi-front dispute over a Chicago property at 1205 North Milwaukee Avenue, where he occupied both a second-floor residential unit and a first-floor commercial space. Cole alleged that his eviction was improper, retaliatory, and the product of a fraudulent property transfer. He sued a constellation of defendants—his former landlord (Jin Lee), the purchaser entity (1205 Milwaukee LLC), individuals connected to ownership (including Joseph Faulkner), and attorneys (Christopher Acuna and David Yanoff).

Cole’s federal complaint sought damages and sweeping injunctive relief, including restoration of utilities, a stay of “retaliatory” legal actions, and a declaration voiding the property transfer. The district court dismissed; Cole appealed.

The Seventh Circuit addressed three principal legal issues:

• whether the federal court could grant injunctive relief that would effectively overturn state-court eviction outcomes (Rooker-Feldman and preclusion),
• whether private defendants became state actors for § 1983 purposes by using state eviction processes, and
• whether Cole pleaded a viable Fair Housing Act retaliation claim under 42 U.S.C. § 3617.

2. Summary of the Opinion

The Seventh Circuit affirmed the dismissal. It rejected Cole’s argument that alleged “fraud” or collusion in state proceedings created an exception to Rooker-Feldman. It further explained that even if the relevant state judgments were not final when Cole filed federally, his attempt to overturn them was barred by claim preclusion once final judgments issued.

The court also affirmed dismissal of Cole’s § 1983 claim because he failed to plausibly allege that the private defendants acted “under color of law.” Finally, it affirmed dismissal of the Fair Housing Act retaliation claim because Cole did not plead retaliation connected to discriminatory housing practices based on a protected characteristic. The court rejected Cole’s bias/recusal arguments and found a newly raised First Amendment theory waived for failure to present it in the district court.

3. Analysis

3.1 Precedents Cited

A. Rooker-Feldman and the “no fraud exception” principle

• 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 decisions establish that lower federal courts lack appellate jurisdiction over state-court judgments; review lies in the U.S. Supreme Court.
• Hadzi-Tanovic v. Johnson, 62 F.4th 394, 405 (7th Cir. 2023)
  The district court quoted this articulation of the doctrine’s rigidity: even if a state judgment is wrong under federal law, lower federal courts cannot review it.
• Gilbank v. Wood Cnty. Dep't of Hum. Servs., 111 F.4th 754 (7th Cir. 2024) (en banc)
  This was the key modern Seventh Circuit authority used on appeal. The panel relied on Gilbank to reject a fraud/corruption carve-out: claims of corruption in the state process would still require the federal court to evaluate and effectively negate the state judgment, which Rooker-Feldman forbids. The opinion also used Gilbank to address timing/finality questions (i.e., whether the state judgment was final when the federal suit was filed).

B. Claim preclusion as an independent bar

• H.A.L. NY Holdings, LLC v. Guinan, 958 F.3d 627, 632-33 (7th Cir. 2020)
  The court invoked this line of authority for the proposition that, even where Rooker-Feldman is not the correct jurisdictional tool (including because of timing), ordinary preclusion doctrines may dispose of attempts to relitigate.
• Bonnstetter v. City of Chicago, 811 F.3d 969, 975 (7th Cir. 2016)
  Provided the familiar three elements: (1) final judgment on the merits by a competent court, (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” inquiry focusing on the “same group of operative facts,” even if new legal theories are asserted.

C. § 1983 “state action” pleading requirements for private parties

• L.P. v. Marian Catholic High Sch, 852 F.3d 690, 696 (7th Cir. 2017) (quoting Lugar v. Edmondson Oil Co., 457 U.S. 922, 937 (1982))
  Supplied the governing test: Cole had to plead a “sufficient nexus” so that the deprivation by a private party is “fairly attributable to the state.”
• Spiegel v. McClintic, 916 F.3d 611, 616 (7th Cir. 2019) (quoting Fries v. Helsper, 146 F.3d 452, 458 (7th Cir. 1998))
  Reinforced that “mere allegations of joint action or a conspiracy” do not establish state action and are insufficient to survive dismissal.

D. Fair Housing Act retaliation pleading

• Block v. Frischholz, 587 F.3d 771, 776 (7th Cir. 2009)
  Anchored the panel’s view that an FHA retaliation theory must connect to discriminatory housing practices tied to protected traits (race, color, religion, sex, familial status, national origin, or disability).

E. Recusal/bias and issue preservation

• Liteky v. United States, 510 U.S. 540, 555-56 (1994)
  Used to reject bias claims premised solely on adverse rulings.
• Bradley v. Vill. Univ. Park, 59 F.4th 887, 897 (7th Cir. 2023)
  Supported waiver/forfeiture: issues not raised in the district court cannot be advanced for the first time on appeal.

3.2 Legal Reasoning

A. Why the requested injunctive relief failed (Rooker-Feldman, then preclusion)

Cole’s federal suit sought relief that would functionally negate or suspend the effect of state-court eviction judgments (e.g., stopping enforcement, restoring access/utilities, declaring the transfer void). The panel treated this as the paradigmatic scenario in which a lower federal court is being asked to sit in review of state-court results.

Cole attempted to avoid this by alleging “fraud” and collusion. The panel relied on Gilbank v. Wood Cnty. Dep't of Hum. Servs. to reiterate that there is no fraud-based escape hatch: adjudicating “corruption” claims would still require assessing and undoing the state court’s decision.

Cole also argued that state judgments were not final when he filed federally. The panel did not rest the case on a granular timing debate; instead, it explained that even if Rooker-Feldman did not apply at filing, claim preclusion ultimately barred the effort to overturn the eviction results once final judgments were entered. This sequencing matters: it underscores that jurisdictional doctrines and merits-based defenses can operate in tandem, with preclusion providing a backstop when Rooker-Feldman is unavailable or uncertain.

B. Why the damages claims did not revive the case

After judgment, the district court corrected its earlier view to acknowledge that Rooker-Feldman did not categorically eliminate federal jurisdiction over damages claims arising from harms connected to state proceedings (citing Gilbank). But the case still failed because Cole’s theories were either precluded (eviction-related claims and malpractice) or inadequately pleaded (state action and FHA retaliation).

C. § 1983: using the courts is not, by itself, acting “under color of law”

Cole alleged that the defendants became state actors because they filed eviction suits and used “state judicial mechanisms,” and he added conclusory allegations of collusion with judges. The panel applied the “fairly attributable to the state” framework from L.P. v. Marian Catholic High Sch (quoting Lugar v. Edmondson Oil Co.) and the pleading constraint from Spiegel v. McClintic (quoting Fries v. Helsper): merely asserting a conspiracy or joint action does not plausibly establish state action.

In practical terms, the opinion reinforces a bright line: private parties do not become state actors just because they litigate, win, and obtain enforcement through routine state processes.

D. FHA retaliation: retaliation must be tethered to protected-class discrimination

Cole framed his claim as “retaliatory eviction” under 42 U.S.C. § 3617. The panel held that it was not enough to allege retaliation in the abstract. Relying on Block v. Frischholz, the court required allegations that the challenged conduct was connected to discriminatory housing practices based on protected characteristics (race, color, religion, sex, familial status, national origin, or disability). Because Cole did not plead such a protected-trait discrimination theory, his § 3617 claim was dismissed.

E. Recusal and appellate waiver

The panel rejected Cole’s bias argument under Liteky v. United States, emphasizing that adverse rulings almost never prove judicial bias. It also rejected Cole’s newly asserted First Amendment theory as waived under Bradley v. Vill. Univ. Park because it was not raised in the district court.

3.3 Impact

• Eviction-to-federal pivot remains tightly constrained. Litigants seeking federal injunctive relief that would effectively reverse state eviction outcomes will face Rooker-Feldman headwinds—especially when the remedy would require a federal court to declare state judgments void or unenforceable.
• Fraud/collusion allegations must be routed through state appellate processes, not federal “collateral attack.” The opinion’s reliance on Gilbank signals a firm Seventh Circuit stance: alleging corruption does not expand lower federal jurisdiction to review state judgments.
• Preclusion is the practical “cleanup” doctrine. Even where litigants try to exploit timing gaps in finality, claim preclusion can foreclose later federal re-litigation once state judgments become final.
• § 1983 claims against private landlords/attorneys require more than “they used the courts.” This reinforces pleading discipline in civil rights complaints tied to private eviction litigation.
• FHA retaliation claims cannot be pleaded as generic retaliation. The opinion cautions practitioners to articulate the protected trait and discriminatory housing practice that allegedly triggered the retaliation.

4. Complex Concepts Simplified

• Rooker-Feldman doctrine: A rule that lower federal courts cannot act like appellate courts reviewing state-court judgments. If the federal remedy would require undoing a state judgment, Rooker-Feldman is implicated.
• No “fraud exception”: Even if a party claims the state judgment was procured by fraud or corruption, a federal district court still generally cannot vacate or override it; the proper route is state appellate review and, if applicable, U.S. Supreme Court review.
• Claim preclusion (res judicata): Once there is a final judgment, the same parties cannot relitigate the same dispute (defined by the same “operative facts”), even under new legal labels.
• State action (under color of law) for § 1983: § 1983 targets constitutional violations by the government (or those acting like the government). Private parties do not become state actors just by filing lawsuits and using ordinary court procedures.
• FHA retaliation (42 U.S.C. § 3617): Protects against retaliation for exercising fair-housing rights, but the claim must be connected to discrimination prohibited by the FHA—typically tied to protected characteristics.
• Waiver/forfeiture on appeal: If you do not raise an argument in the district court, you usually cannot introduce it for the first time on appeal.

5. Conclusion

The Seventh Circuit’s order in Cole v. Faulkner consolidates several doctrine-driven limits on eviction-related federal litigation: (1) no fraud-based pathway around Rooker-Feldman for injunctive relief aimed at state judgments; (2) claim preclusion as an independent and often decisive bar once state judgments are final; (3) stringent state-action pleading requirements preventing § 1983 claims against ordinary private litigants; and (4) a reminder that FHA retaliation must be tethered to protected-class discrimination. Taken together, the decision signals that post-eviction federal suits must be carefully framed to avoid being, in substance, a collateral attack on state-court outcomes.