7th Circuit reinstates alleged racketeering lawsuit

The 7th Circuit Court of Appeals reversed the decision of a federal judge to dismiss a man’s lawsuit because it is barred by the Rooker-Feldman doctrine. A man who had his gas station foreclosed upon claimed the defendants acted in cahoots to defraud him out of his business.

Mir Iqbal purchased the gasoline service station and hired Tejaskumar Patel to operate the business. He hired Patel based on the recommendation of S-Mart Petroleum’s president. Iqbal contracted with S-Mart for gasoline. But Patel never paid for the gas, leading S-Mart to sue in state court. When Iqbal failed to pay the judgment, his property was sold in a foreclosure auction.

Iqbal then sued in federal court, alleging racketeering and seeking treble damages from S-Mart and Patel. The District Court dismissed based on the Rooker-Feldman doctrine, finding Iqbal’s claims intertwined with the previous state court decisions.

Federal courts do, however, retain jurisdiction to award damages for fraud that imposes extrajudicial inquiry, Judge Frank Easterbrook wrote in Mir S. Iqbal v. Tejaskumar M. Patel, et al., 14-1959. But the federal court cannot set aside the state court’s judgment.

Iqbal claimed that the defendants conducted a racketeering enterprise that predates the state court judgments and that he was “set up” so that the defendants could take over his business and reap the profits he anticipated.

“Because Iqbal seeks damages for activity that (he alleges) predates the state litigation and caused injury independently of it, the Rooker-Feldman doctrine does not block this suit. It must be reinstated,” Easterbrook wrote.

The matter is remanded for further proceedings.

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