Mirchandani et al v. BMO Harris Bank

Filing 17

ORDER Granting Defendant's 9 Motion to Dismiss. Signed by Judge Barry Ted Moskowitz on 7/16/18. (All non-registered users served via U.S. Mail Service)(dlg)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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HARESH MIRCHANDANI and
INDRA MIRCHANDANI,
Plaintiffs,

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v.

Case No.: 17-cv-2090-BTM-BGS
ORDER GRANTING
DEFENDANT’S MOTION TO
DISMISS [ECF NO. 9]

BMO HARRIS BANK, N.A.
successor to M&I MARSHALL &
ILSLEY BANK,
Defendant.

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Pending before the Court is Defendant BMO Harris Bank, N.A.’s motion to

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dismiss Plaintiffs Haresh Mirchandani’s and Indra Mirchandani’s Complaint.

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(Def.’s Mot. to Dismiss (“Def.’s MTD”), ECF No. 49.) On June 16, 2018, Plaintiffs

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filed what the Court will construe as an opposition to Defendant’s motion to

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dismiss. (ECF No. 14.) For the reasons discussed below, Defendant’s motion to

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dismiss is GRANTED.

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I. BACKGROUND
In 2014, Plaintiffs filed a complaint against Defendant in the Superior Court

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of Arizona, County of Maricopa1. (Def.’s MTD, Ex. A.) Plaintiffs alleged that

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Defendant engaged in predatory lending when it issued their business, SS

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Quality Fuels LLC (“Quality”), a swap loan, as well as breached several loan

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agreements when it sold Quality’s loans to TradeCor Desert Sky II, LLC. (Id. at

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3–5.) Plaintiffs, the sole members of Quality, served as signatories to the loan

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agreements. (Id.) The Arizona Superior Court dismissed Plaintiffs’ complaint

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with prejudice and held that Plaintiffs, as guarantors to the loan agreements, did

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not have standing to bring the lawsuit as the claims belonged to Quality. (Def.’s

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MTD, Ex. E at 4.) On appeal, the Arizona Court of Appeals affirmed the standing

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issue and a claim of judicial bias. (Id. at 11.) The Supreme Court of Arizona

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denied Plaintiffs’ petition for review. (Def.’s MTD, Ex. G.)

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On October 11, 2017, Plaintiffs initiated this action against Defendant

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alleging a 42 U.S.C. § 1983 violation. (Compl., ECF No. 1.) Plaintiffs allege that

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this action arises out of the dismissed state court action. (Compl. at 2.) Plaintiffs

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contend that the Arizona Superior Court did not follow the law when it dismissed

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their state court action against Defendant and should have recused because of a

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conflict of interest. (Id.) Plaintiffs petition this Court to overturn the Arizona

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Superior Court’s decision and retry the case. (Compl. at 2–3.)

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II. DISCUSSION

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Defendant moves to dismiss Plaintiffs’ action, arguing that pursuant to

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Federal Rule of Civil Procedure (“FRCP”) 12(b)(1), the Court lacks subject matter

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jurisdiction under the Rooker-Feldman doctrine. In the alternative, Defendant

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argues that the Complaint fails to state a claim under FRCP 12(b)(6). Because

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Defendant requests that the Court take judicial notice of filings and court rulings from the underlying action in the
Arizona state courts. (ECF No. 10.) Federal Rule of Evidence 201(b) permits a court to “judicially notice a fact
that is not subject to reasonable dispute because it can be accurately and readily determined from sources whose
accuracy cannot reasonably be questioned.” Specifically, a court may take judicial notice of prior decisions and
court records. See Holder v. Holder, 305 F.3d 854, 866 (9th Cir. 2002) (taking judicial notice of state court
decisions and briefs in determining whether plaintiff’s claims were barred by claim preclusion). Therefore, the
Court grants Defendant’s request for judicial notice of exhibits A through H.
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the Court agrees with Defendant that it lacks subject matter jurisdiction, it need

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not reach the 12(b)(6) argument.

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The Rooker-Feldman doctrine “prohibits a federal district court from

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exercising subject matter jurisdiction over a suit that is a de facto appeal from a

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state court judgment.” Kougasian v. TMSL, Inc., 359 F.3d 1136, 1139 (9th Cir.

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2004). Rooker-Feldman only applies to “cases brought by state-court losers

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complaining of injuries caused by state-court judgments rendered before the

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district court proceedings commenced and inviting district court review and

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rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus., Corp.,

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544. U.S. 280, 284 (2005). The Ninth Circuit has provided the following guidance

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regarding the doctrine’s role in federal courts:

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If a federal plaintiff asserts as a legal wrong an allegedly erroneous
decision by a state court, and seeks relief from a state court judgment
based on that decision, Rooker-Feldman bars subject matter
jurisdiction in federal district court. If, on the other hand, a federal
plaintiff asserts as a legal wrong an allegedly illegal act or omission
by an adverse party, Rooker-Feldman does not bar jurisdiction.

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Noel v. Hall, 341 F.3d 1148, 1164 (9th Cir. 2003).
As pled, Plaintiffs’ lawsuit is a de facto appeal of the Arizona state

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courts’ decisions. Plaintiffs allege that the Arizona state court did not follow

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the law and was conflicted because Defendant made a contribution to

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Judge David Udall’s cousin’s campaign. (Compl. at 2.) Plaintiffs allege

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that this “corruption” constitutes a section 1983 violation. (Id.) As a

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remedy, Plaintiffs request that this Court “overturn” the Arizona state court

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decisions and retry the merits of the case. As the Ninth Circuit notes,

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Rooker-Feldman bars this exact lawsuit. Noel, 341 F.3d at 1164.

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Accordingly, the Court lacks subject matter jurisdiction over this

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action and Defendant’s motion to dismiss is granted.

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//
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III. CONCLUSION
For the reasons discussed above, Defendant’s motion to dismiss (ECF No.

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9) is GRANTED.

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IT IS SO ORDERED.

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Dated: July 16, 2018

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