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Iqbal v. Patel

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

July 10, 2017

MIR S. IQBAL, Plaintiff,
v.
TEJASHKUMAR 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 JUDGE

         This matter is before the court on defendants Warren Johnson and S-Mart Petroleum Inc.'s motion for summary judgment (DE # 23, renewed by DE # 53) and defendant Tejashkumar M. Patel's motion for summary judgment (DE # 55).

         I. BACKGROUND

         Plaintiff Mir Iqbal (“Iqbal”) was a partner in S-M-1 Acquisition Corp (“S-M-1").[1] (DE # 23 at 3.) In March of 2007, Iqbal was approached by defendant Warren Johnson (“Johnson”), the president of S-Mart Petroleum (“S-Mart”), and Johnson's real estate broker, S.P. Singh (“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 (“Ahmed”)[2] 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, Johnson and Singh introduced Iqbal to Tejashkumar Patel. (Id.) After being introduced, 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 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, located in Indiana, entered summary judgment in favor of S-Mart. (Id.; see also DE # 23-5.) On October 1, 2009, SMart entered into a settlement agreement with Iqbal, S-M-1, and 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, [3] and SGTC II, Inc.[4]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.[5] (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 later 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. (DE # 23 at 9.)

         In January 2012, Iqbal learned from 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 of this relationship between Johnson and Patel. (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.) In response, defendants Johnson and S-Mart filed a counterclaim and moved for summary judgment on all of Iqbal's claims. (DE ## 8, 23.) Rather than ruling on the defendants' motion, the court dismissed Iqbal's claims and the counterclaim for lack of subject matter jurisdiction, pursuant to the Rooker-Feldman doctrine. (DE ## 39, 42, 43.) However, the Seventh Circuit ruled that the Rooker-Feldman doctrine did not bar Iqbal's suit and reversed this court's judgment. (DE # 50-1 at 5.)

         After the reversal, defendants Johnson and S-Mart renewed their motion for summary judgment on May 16, 2015. (DE # 53.) Defendant Patel filed his own motion for summary judgment on May 26, 2015, in which he joins Johnson and S-Mart's motion. (DE # 55.) Therefore, the arguments made in Johnson and S-Mart's motion serve as the collective arguments of Johnson, S-Mart, and Patel (collectively, “defendants”). The motions have been fully briefed and are ripe for ruling.

         II. ANALYSIS

         Defendants argue that Iqbal's claims for relief are barred by the doctrine of res judicata. (DE # 24 at 8.) S-Mart previously filed two suits against Iqbal in Tippecanoe Superior Court in Indiana, both of which resulted in final judgments. Defendants contend that Iqbal's current suit is an impermissible attempt to relitigate issues that could have been raised in those earlier actions. (Id.)

         To determine whether res judicata applies, federal courts apply the preclusion law of the state that rendered the judgment. Hicks v. Midwest Transit, Inc., 479 F.3d 468, 471 (7th Cir. 2007). Here, the court will apply Indiana law. Specifically, defendants ask the court to apply Indiana's compulsory counterclaim rule: Indiana Trial Rule 13(A). (DE ## 24 at 9; 53 at 2; 56 at 2.) Trial Rule 13(A) states:

A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject-matter of the opposing party's claim and does not require for its adjudication the ...

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