Empire Community Development LLC v. Walters
- Kenneth Karas
- 7:25-cv-04192
- U.S. District Court · Southern District of New York
- 7
In Empire Community Development v. Walters, Judge Karas denied Walters’s temporary restraining order because federal court could not review the state foreclosure judgment.
Derrick Walters’s request to stop the foreclosure sale was denied. Empire Community Development LLC was permitted to proceed without the federal TRO, while any request to return the case to state court remained for later briefing.
What happened
Empire Community Development LLC v. Walters concerns Derrick Walters’s effort to stop a foreclosure sale after a New York state court entered a foreclosure judgment against him. Walters asked the federal court for an emergency order stopping the sale scheduled for May 30, 2025.
The court concluded that Walters was trying to undo or appeal the state court’s foreclosure judgment. It ruled that the federal court could not review that judgment under the Rooker-Feldman rule, which prevents federal district courts from acting as appeals courts for state court decisions. The court therefore found that Walters had not shown a likely chance of success or a sufficiently serious dispute to justify emergency relief.
Judge Kenneth M. Karas denied the temporary restraining order. The order also set deadlines for any motion by Empire Community Development to return the case to state court, but it did not decide that motion.
The detailed version
- Empire Community Development LLC v. Walters · No. 7:25-cv-04192
- Kenneth Karas
- May 29, 2025
Background
Empire Community Development LLC sought to foreclose a mortgage on property in Newburgh, New York. According to the materials before the court, Walters signed a $49,600 note and mortgage in 2006 and stopped making payments beginning with the installment due October 1, 2013. Empire filed a foreclosure action in New York state court in 2019. Walters was personally served in February 2020 but did not answer or appear. The state court entered an order of reference in 2021 and a Judgment of Foreclosure and Sale on August 1, 2022.
A foreclosure sale was later delayed after Walters filed for Chapter 13 bankruptcy protection. The bankruptcy court dismissed that case on November 15, 2024. After a later sale was scheduled, Walters filed multiple applications in state court challenging the foreclosure and seeking to stop the sale. The state court denied the pending applications on May 19, 2025 and allowed the sale to proceed, according to the response filed in federal court. The state court later stated that it would not sign a proposed order memorializing those rulings because it believed removal of the matter to federal court had affected its jurisdiction.
Federal Proceedings and Arguments
On May 22, 2025, Walters filed an emergency motion for a temporary restraining order, or TRO, seeking to stay the foreclosure. The court initially denied the TRO without prejudice because Walters had not satisfied the notice and service requirements for emergency relief. After the court directed service, Walters served Empire on May 28, 2025, and Empire filed its opposition the same day.
Empire argued that the federal court should deny the TRO because Walters’s claims were an improper attack on the state foreclosure judgment. It relied on the Rooker-Feldman doctrine, a jurisdictional rule under which federal district courts generally cannot review and reject final state court judgments. Empire also argued that the removal to federal court was improper and untimely and that the matter should be returned to state court.
Court’s Analysis
The court applied the standard used for a preliminary injunction, which also governs a TRO in this circuit. A person seeking such relief must show a likelihood of success on the merits or sufficiently serious questions for litigation, along with irreparable harm, a favorable balance of hardships, and consistency with the public interest.
The court focused on the Rooker-Feldman doctrine. It stated that Walters had lost the foreclosure action and was seeking to undo the resulting state court judgment. Resolving his challenges in his favor would require the federal court to determine that the state court had entered its judgment incorrectly. The federal court concluded that it lacked jurisdiction to do that. It therefore found that Walters had shown neither a likelihood of success nor sufficiently serious questions warranting emergency relief.
Disposition
The court denied the TRO. The order did not decide Empire’s possible motion to remand the matter to state court; instead, it set June 25, 2025 as the deadline for that motion, July 25, 2025 for Walters’s response, and August 9, 2025 for Empire’s reply.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.