Mehta v. Shah

113 F. App'x 165
CourtCourt of Appeals for the Seventh Circuit
DecidedAugust 19, 2004
DocketNos. 02-2988 and 02-3157
StatusPublished
Cited by4 cases

This text of 113 F. App'x 165 (Mehta v. Shah) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mehta v. Shah, 113 F. App'x 165 (7th Cir. 2004).

Opinion

ORDER

Acrimony, accusations, and an inability to accept the inevitable permeate this case. It arises out of a failed business venture between Baqar Shah and his former attorney, Mahendra Mehta. Shah and Mehta formed a corporation to purchase a mortgage from Superior Bank. Superior Bank sold the mortgage to a different corporation, one that, unbeknownst to Mehta, Shah had formed on his own. Mehta filed suit in state court against Shah for breach of fiduciary duty and against Superior Bank for breach of contract; he also sued the subsequent purchasers of the property that Shah’s corporation had purchased. Before the state court, Mehta prevailed in his claim against Shah, but his claims against Superior and the other defendants were dismissed on the grounds of collateral estoppel. While the case was pending on appeal to the Illinois Appellate Court, the Federal Deposit Insurance Corporation, as receiver for Superior Bank, removed the matter to the U.S. District Court. There, Judge William Hibbler entered an order reaffirming the state court judgment. Mehta appeals the dismissal of his claims against Superior and the others, while Shah appeals from the jury’s verdict in favor of Mehta. We affirm.

I

The events leading up to this appeal started almost fifteen years ago when Mehta and Shah formed a business venture to purchase a mortgage. Several years before the venture, Shah was developing real estate in Zion, Illinois, and had gotten into a financial jam. Throughout the lawsuits and bankruptcy proceedings that followed, Mehta acted as Shah’s attorney. A few years later, faced with an opportunity to get himself back in the black, Shah leapt. He needed $300,000 to buy a $900,000 mortgage from Superior Bank, a mortgage that he had personally guaranteed. Mehta and Shah agreed to form 3SM Realty & Development, Inc., a joint venture, to purchase the mortgage.

Joint business ventures with one’s attorney are rarely encouraged, as they can be fraught with problems, see for example Illinois Rule of Professional Conduct (IRPC) 1.8(a), and this venture was no different. The venture was created to purchase the Superior loan, but something happened along the way. The parties bitterly debate exactly what that was, but what did not happen is clear—3SM did not [167]*167purchase the Superior note. Instead, a company called 7M did, a company also founded by Shah. Mehta, however, was not a part of 7M, nor did he know of its existence until after its purchase of the Superior note.

As soon as Mehta got wind of 7M’s purchase of the note, he moved to intervene in the foreclosure sale, claiming that he had a valid contract with Superior to purchase the note. The Circuit Court of Lake County, which was overseeing the foreclosure action, disagreed with Mehta. It found that he had only an unsigned, undated contract, probably left over from earlier preliminary meetings with Superi- or, and that this document conferred no rights on him either to purchase the property or to intervene in the foreclosure sale. Superior Bank FSB and 7M v. LaSalle National Bank, et al., No. 90-CH-745 (Lake County, Ill. Feb. 17, 1994) (unpublished order). Mehta appealed, but the Illinois Appellate Court upheld the judgment. Superior Bank FSB and 7M v. LaSalle National Bank, et al., Appeal Nos. 2-94-0323 and 2-94-0617 (Ill.App.Ct. April 11, 1995) (unpubhshed order).

Following 7M’s purchase of the note, various lots of the mortgaged property were sold off to other parties. Mehta then filed suit on behalf of 3SM and himself, in November 1995, in Cook County, raising several claims regarding his interest in the property. Mehta claimed that Shah had breached his fiduciary duty to Mehta by forming a different corporation to purchase the Superior note. He also sued Superior for breach of contract, and he sued a variety of named and unnamed defendants who had (in his view unlawfully) purchased land from 7M. In 1996, while the Cook County suit was pending, Mehta filed lis pendens notices in both Lake County, where the property was located, and Cook County, regarding his claims to the property.

In the state court, the jury found that Shah had breached his fiduciary duty to Mehta when he formed 7M without Mehta’s knowledge and then bought the Superior note. The state court dismissed Mehta’s claims against Superior and the other defendants, holding that the previous Lake County decision precluded them. Specifically, it concluded that the Lake County court definitively found that Mehta had no valid contract with Superior and so no right to purchase the note. Because Mehta never had a right to purchase the loan, any subsequent sales to later purchasers could not have violated his rights, and he thus had no claim against the purchasers. The Cook County court concluded that Mehta was attempting to assert the same claims again, which was impermissible under IlHnois principles of claim and issue preclusion.

After final decisions had been rendered and the case was on appeal in the IUinois appellate court, the Federal Deposit Insurance Corporation (FDIC) was appointed receiver of Superior and, pursuant to 12 U.S.C. § 1819(b)(2)(B), it removed the entire case to federal court. See Lester v. RTC, 994 F.2d 1247, 1252 n. 7 (7th Cir.1993) (upholding removal as proper after trial court judgment and whüe post-trial motions were pending). The district court adopted the Illinois trial court’s decision as its own and the parties appealed to this court. 3SM Realty & Development, Inc. v. Superior Bank FSB, et al., No. 01-C-8132 (N.D.Ill. July 17, 2002) (unpublished order). Shah appeals from the jury’s verdict against him and from the award of attorneys’ fees assessed against him in favor of the FDIC. Mehta appeals from the court’s finding that the intervention action in Lake County bars his claims against Superior and the purchaser defendants.

[168]*168II

A

Shah complains about a number of aspects of his trial, including some evidentiary rulings, the jury instructions, the denial of his motion for judgment as a matter of law, and the award of attorneys’ fees to the FDIC. We address each issue in turn.

First, Shah maintains that the trial court erred in not allowing him to introduce into evidence two exhibits relating to the Illinois Rules of Professional Conduct. The first, Exhibit 1, appears to be two pages of text from the Attorney Registration Disciplinary Committee (ARDC) booklet, and the second, Exhibit 1A, the whole booklet. We say “appears,” as neither of the exhibits are in the record. We cannot review the trial court’s discretionary refusal to admit those exhibits without having the exhibits as part of the record. Shah, as the appellant, was responsible for making sure that the appellate record contained all the evidence needed for meaningful review. Birchler v. Gehl Co., 88 F.3d 518, 519-20 (7th Cir.1996). Shah has waived the issue by failing to include the exhibits in the record.

For the same reason, we cannot review the state court’s refusal to give Shah’s tendered jury instruction, Illinois Pattern Jury Instruction N. 60.01.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

In Re: Mahendra R. Mehta
Seventh Circuit, 2011
3SM Realty & Development, Inc. v. Federal Deposit Insurance
443 F. App'x 181 (Seventh Circuit, 2010)
Mehta v. Shah (In Re Shah)
350 B.R. 69 (S.D. Texas, 2006)

Cite This Page — Counsel Stack

Bluebook (online)
113 F. App'x 165, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mehta-v-shah-ca7-2004.