Iqbal v. Patel

Summarized by William Wallo , Bakke Norman, S.C.
10 years 12 months ago

Citation:

iqbal v. Patel, __ F.3d __, 2015 WL 859541 (7th Cir. March 2, 2015)

Tag(s):

Ruling:

Finding that the Rooker-Feldman doctrine did not preclude pursuit of the plaintiff's claims, the Seventh Circuit Court of appeals reversed the district court's dismissal of a civil racketeering complaint.

Procedural context:

After entry of judgment in a state court foreclosure action, the losing party filed a federal lawsuit alleging that the state court plaintiffs conspired to defraud him and sought treble damages under RICO provisions. The district court found that the Rooker-Feldman doctrine barred consideration of the claims as they challenged the state court judgment, and dismissed the complaint for want of jurisdiction. On appeal, the Seventh Circuit held that because the alleged injury potentially predated the state litigation and caused independent injury, the Rooker-Feldman doctrine did not block the suit. Reversed.

Facts:

The plaintiff purchased a gas station and hired a manager based upon the recommendation of his gas supplier. When the supplier was not paid for shipments, it sued the plaintiff under a guaranty. A judgment was entered, and the parties entered into a settlement where the plaintiff signed a mortgage in favor of the supplier. After further non-payment, the supplier foreclosed upon the mortgage. The plaintiff then sued in federal court, alleging that the manager and the supplier conspired against him. The plaintiff accused them of racketeering and sought treble damages under the Racketeer Influenced and Corrupt Organizations Act. The district court found that the plaintiff's claims were "intertwined" with the state court judgments and that the Rooker-Feldman doctrine (which essentially provides that the U.S. Supreme Court is the sole federal court which can review judgments of state courts in civil litigation) barred consideration of them. The complaint was dismissed. On appeal, the Seventh Circuit Court of Appeals noted that it did not matter what reason was given for objecting to the state court judgment, as the doctrine is jurisdictional. However, federal courts do retain jurisdiction to award damages for fraud that imposes "extra-judicial injury." Here, the plaintiff's complaints that he was deceived and "set up" by the defendants involved activities that allegedly predated the state litigation and caused injury independent of it. Rooker-Feldman did not bar the suit. Reversed, with directions to consider whether the claims were foreclosed by the doctrine of claim preclusion or as a result of any state law compulsory-counterclaim requirements.

Judge(s):

Easterbrook, Rovner, and Sykes

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