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Iqbal v. Patel

United States Court of Appeals, Seventh Circuit

March 2, 2015

MIR S. IQBAL, Plaintiff-Appellant,

Argued February 24, 2015

Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. 2:12 CV 56 -- James T. Moody, Judge.

For Mir S. Iqbal, Plaintiff - Appellant: Maurice J. Salem, Attorney, Salem Law Office, Palos Heights, IL.

For Tejaskumar M. Patel, Defendant - Appellee: T. Michael Doyle, Attorney, Doyle & Malinzak, P.C., Douglas, MI; Anthony S. Ridolfo Jr., Attorney, Hackman, Hulett & Cracraft, Llp, Indianapolis, IN.

For WARREN JOHNSON, Officer, S-MART PETROLEUM, INC., an Indiana Corporation, Defendant - Appellee: Andrew P. Feterick, James D. Moore, Attorneys, Ryan Moore & Cook, Frankfort, IN.

Before EASTERBROOK, ROVNER, and SYKES, Circuit Judges.


Page 729

Easterbrook, Circuit Judge.

Through a closely held corporation, Mir Iqbal bought a gasoline service station. (He also guaranteed its debts, so we need not mention the corporation again.) Iqbal contracted with S-Mart Petroleum for gasoline. Iqbal then hired Tejaskumar Patel to conduct the business, ceding operational control to him. He chose Patel on the recommendation of Warren Johnson, S-Mart's president. Patel ran the business but did not pay for the gasoline, leading S-Mart to sue on the contract in an Indiana court. The court entered a judgment of more than $65,000 against Iqbal as guarantor. He did not pay, and a settlement was reached. Iqbal gave S-Mart a note, secured by a mortgage on the business premises. When he still did not pay, a state court entered a second judgment against him, and the property was sold in a foreclosure auction.

Iqbal alleges in this federal suit that Patel and Johnson acted in cahoots to defraud him out of his business. The complaint accuses the defendants of racketeering and seeks treble damages under 18 U.S.C. § 1964, part of the Racketeer Influenced and Corrupt Organizations Act (RICO). The district court dismissed the complaint for want of jurisdiction, however, ruling that it is barred by the Rooker-Feldman doctrine because it challenges the state court's judgments. (N.D. Ind. Mar. 27, 2014).

Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923), and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983), after which the doctrine is named, hold that the Supreme Court of the United States is the sole federal tribunal authorized to review the judgments of state courts in civil litigation. See also, e.g., Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005); Lance v. Dennis, 546 U.S. 459, 126 S.Ct. 1198, 163 L.Ed.2d 1059 (2006). Iqbal invited trouble by asking the district court to undo the foreclosure.

When the judge directed the parties to address whether that would be possible, consistent with the Rooker-Feldman doctrine, Iqbal contended that it does not apply to fraud (either fraud out of court or fraud during litigation). As the district court rightly replied, Kelley v. Med-1 Solutions, LLC, 548 F.3d 600 (7th Cir. 2008), and other decisions in this circuit foreclose such an argument. The Rooker-Feldman doctrine is concerned not with why a state court's judgment might be mistaken (fraud is one such reason; there are many others) but with which federal court is authorized to intervene. See Harold v. Steel, 773 F.3d 884, 886 (7th Cir. 2014). The reason a litigant gives for contesting the state court's decision cannot endow a federal district court with authority; that's what it means to say that the Rooker-Feldman doctrine is jurisdictional. So although we recognize that other circuits disagree on this issue, or at least that language in their precedential decisions is in tension--compare Reusser v. Wachovia Bank, N.A., 525 F.3d 855, 859 (9th Cir. 2008), with Fielder v. Credit Acceptance Corp., 188 F.3d 1031 (8th Cir. 1999)--we shall stick with Kelley.

Iqbal maintains, however, that we abandoned Kelley in Johnson v. Pushpin Holdings, LLC, 748 F.3d 769 (7th Cir. 2014), without so much as citing it. That's not how precedent works. In this circuit it takes a circulation to the full court under Circuit Rule 40(e) for one panel to overrule another. But the panel in Jo ...

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