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Iqbal v. Patel

United States District Court, N.D. Indiana, Hammond Division

March 27, 2014

MIR S. IQBAL, Plaintiff,
v.
TEJASKUMAR M. PATEL, WARREN JOHNSON, S-MART PETROLEUM, INC., Defendants. WARREN JOHNSON, S-MART PETROLEUM, INC., Counter Claimants,
v.
MIR S. IQBAL, Counter Defendant.

OPINION AND ORDER

JAMES T. MOODY, District Judge.

This matter is before the court on defendants Warren Johnson and S-Mart Petroleum ("defendants") Inc.'s motion for summary judgment. (DE # 23.) On December 27, 2013, the court issued an order explaining that it believed it did not have jurisdiction over plaintiff's claims under the Rooker-Feldman doctrine. (DE # 39.) The court gave the parties 30 days to file a response to that order, and both plaintiff and defendants filed briefs in response. (DE ## 40, 41.)

The court summarized the facts of this case in its previous order as follows:

Plaintiff Mir Iqbal ("Iqbal") was a partner in S-M-1 Acquisition Corp ("S-M-1"). (DE # 23 at 3.) In March of 2007, Iqbal was approached by defendant Warren Johnson, the president of S-Mart Petroleum ("S-Mart"), and Johnson's real estate broker, S.P Singh, who recommended that Iqbal purchase a gas station in Lafayette, Indiana ("the gas station"). (DE # 1 at 3.) Through his company, S-M-1, Iqbal purchased the gas station. ( Id. ) S-M-1 then entered into a Motor Fuel Sales Agreement with S-Mart. ( Id. ) In the agreement, S-M-1 agreed to purchase at least 120, 000 gallons of motor fuel per month from S-Mart from April 1, 2007 until March 31, 2013. (DE # 23 at 3.) Iqbal and Ali Ahmed[1] signed a personal guaranty in connection with the Motor Fuel Sales Agreement. ( Id. at 4.)

Iqbal, who lived in Illinois at the time that he purchased the gas station, had no intention of running the gas station himself. (DE # 1 at 3.) Around the time that Iqbal purchased the gas station, defendant Johnson and Singh introduced Iqbal to Tejaskumar Patel. ( Id. ) After being introduced to Patel, Iqbal and Patel entered into an agreement whereby Patel would have complete operational and financial control over the gas station. ( Id. ) After Patel began running the gas station and the gas station had received gas from S-Mart, S-M-1 failed to pay for the gas as set out in the Motor Fuel Sales Agreement. (DE # 23 at 4.) Johnson allowed Patel to skip gas payments for five consecutive weeks, but Iqbal had no knowledge of this practice until after the five-week period was over. (DE # 1 at 4.) At that point, Patel left his position at the gas station, and Johnson stopped delivering the gas. ( Id. )
By October 1, 2008, the unpaid amount owed on the gas totaled $67, 829.58. (DE # 23 at 4.) S-Mart eventually filed suit against S-M-1, Iqbal, and Ali Ahmed in Indiana state court to recover the money it was owed under the Motor Fuels Sales Agreement. ( Id. ) On April 14, 2009, the Tippecanoe Superior Court, entered summary judgment in favor of S-Mart. ( Id .; see also DE # 23-5.) On October 1, 2009, S-Mart entered into a settlement agreement with Iqbal, S-M-1, and Ali Ahmed to settle the judgment from the Tippecanoe Superior Court. (DE # 23 at 4; see also DE # 23-1 at 18-19.) Pursuant to the settlement agreement, Iqbal, M&U, LLC, [2] and SGTC II, Inc.[3] executed a promissory note payable to S-Mart in the amount of $75, 000.00. (DE # 23-4 at 5; DE # 23-1 at 18-19.) Additionally, SGTC, II, Inc. entered into a new Motor Fuel Sales Agreement with S-Mart. (DE # 23 at 5; DE # 23-1 at 18-19.)
On August 25, 2009, M&U, LLC purchased the gas station and real estate that S-M-1 had owned.[4] (DE # 23 at 6.) M&U, LLC executed a mortgage in favor of S-Mart on October 1, 2009. ( Id. ) The mortgage granted S-Mart a first mortgage lien on the gas station located at the Lafayette property M&U, LLC had purchased. ( Id.; DE # 23-2 at 37-49.) S-Mart eventually filed suit against Iqbal, M&U, LLC, and SGTC II, Inc. in Tippecanoe Superior Court to enforce the settlement agreement, collect on the promissory note, foreclose the mortgage, and collect damages for breach of the second Motor Fuel Sales Agreement. (DE # 23 at 7; DE # 23-6 at 1.) On June 28, 2010, the Tippecanoe Superior Court entered summary judgment in favor of S-Mart and against Iqbal, M&U, LLC, and SGTC II, Inc. (DE # 23 at 7.) That summary judgment order included an order of foreclosure on the gas station. (DE # 23-8 at 4.) On October 6, 2010, M&U, LLC filed for bankruptcy. ( Id. at 8.) On December 1, 2011, the bankruptcy court approved an agreement between M&U, LLC and S-Mart to lift the automatic bankruptcy stay on the gas station. ( Id .; see also DE # 23-11.) On March 7, 2012, a Sheriff's sale was held and the gas station was sold to Big Boom, Inc.[5] (DE # 23 at 9.)
In January 2012, Iqbal learned from J.P. Singh that defendants Patel and Johnson were doing business together at several other gas stations throughout Indiana. (DE # 35-1.) Up until that point, Iqbal was unaware that Johnson and Patel knew each other.[6] ( Id. ) Iqbal learned from Singh that Johnson and Patel had been working together with the goal of running Iqbal's gas station into the ground, so Johnson could foreclose on the property. ( Id. ) After learning this information, Iqbal filed the present suit, alleging Civil Rico violations, fraud, and unjust enrichment. (DE # 1.) Defendants Johnson and S-Mart have now moved for summary judgment on all of Iqbal's claims.[7] (DE # 23.)

(DE # 39 at 2-5.)

In its previous analysis, the court explained why it believed the Rooker-Feldman doctrine applied to divest this court of jurisdiction over plaintiff's claims. ( Id. at 5-16.) In response, defendants agree with the court's analysis (DE # 40), and plaintiff disagrees with the analysis (DE # 41). Plaintiff makes several arguments as to why he believes Rooker-Feldman is not applicable to this case, and the court will address each in turn.

First, plaintiff argues that:

Rooker-Feldman does not prevent the lower federal courts from reviewing state-court judgments that were allegedly procured through fraud. In other words, when a "state-court loser" complains that the winner owes his triumph not to sound legal principles-or even unsound ones-but to fraud, then the loser is not really complaining of an injury caused by a state-court judgment, but of an injury caused by the winner's chicanery.

(DE # 41 at 3.) In support of this argument, plaintiff points out that the Third, Sixth, and Ninth Circuit Courts of Appeals have carved out fraud exceptions to the Rooker-Feldman doctrine. ( Id. at 3-7); Kougasian v. TMSL, Inc., 359 F.3d 1136, 1140-42 (9th Cir. 2012); Pondexter v. Allegheny Cnty. Hous. Auth., 329 F.Appx. 347, 350 (3d Cir. 2009) In re Sun Valley Foods Co., 801 F.2d 186, 189 (6th Cir. 1986).

Thus, plaintiff is arguing that the court should adopt what at least one court has called a "fraudulent procurement" exception to the Rooker-Feldman doctrine. Anctil v. Ally Financial, Inc., No. 12-CV-8572, 2014 WL 516686, at *6 (S.D. N.Y. Feb. 10, ...


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