National Asset Consultants, LLC v. Midwest Holdings-Indianapolis , LLC

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued November 9, 2021
Decided June 16, 2022
Before
FRANK H. EASTERBROOK , Circuit Judge
MICHAEL S. KANNE , Circuit Judge
MICHAEL B. BRENNAN, Circuit Judge
Nos. 21‐1773 & 21‐1765
NATIONAL A SSET C ONSULTANTS, LLC,
Plaintiff‐Appellant,
v.
MIDWEST H OLDINGS‐INDIANAPOLIS , LLC,
Defendant‐Appellee, Cross‐Appellant,
and
F.C. T UCKER C OMPANY , LLC, et al.,
Defendants‐Appellees.
Appeals from the United States
District Court for the Southern
District of Indiana, Indianapolis
Division.
No. 1:18‐cv‐01616‐JRS‐DML
James R. Sweeney II, Judge.
O R D E R
David Hennessy and Vickie Yaser filed a suit in state court in Indiana. They
asked the court to require Midwest Holdings to perform what they described as a con‐
tract for the sale of a parcel of land. The suit names some additional parties, and other
transactions have led to a realignment of who is suing whom, but those details do not
matter.

-- 1 of 3 --

Nos. 21‐1773 & 21‐1765 Page 2
What does matter is that one exhibit to the state‐court complaint has an altered
page. Hennessy and Yaser, through their broker Sari Mandresh, made a bid on the
property, which had been listed for sale by Midwest Holdings (through its broker Jim
Bleier) at a price of $80,000. Hennessy and Yaser’s form offer asked Midwest to indicate
whether it accepted, rejected, or countered the offer—and, if it made a counteroffer, to
specify how much. The page that Midwest sent to Mandresh had the “counter” box
checked, but no price. Mandresh, who had offered the full asking price, assumed that
Midwest had made a mistake. Mandresh altered the form on the assumption that the
check should have been in the “accepted” box, and she initialed the changes. Bleier and
Mandresh communicated for several days in apparent agreement that a deal had been
made. Before the closing, however, Midwest received a higher offer and sold the parcel
to National Asset, refusing to honor any deal with Hennessy and Yaser. They sued in
state court and attached to their complaint the form as Mandresh had altered it.
The state suit remains pending, stalled while everyone awaits the outcome of this
federal suit. The federal claim, pursued under the diversity jurisdiction, is that, by filing
the altered page in state court, Hennessy and Yaser—and others said to be vicariously
liable for their acts—violated the Indiana Crime Victims Relief Act (the Act), Ind. Code
§34‐24‐3‐1, by committing fraud and counterfeiting. The turnabout plaintiffs, led by Na‐
tional Asset, sought damages for this asserted fraud.
One might think that damages would be available only if Hennessy and Yaser
were to win the state suit because the judge failed to detect the change. Otherwise no
harm, no foul. And that poses the question why a potential issue in a state case can be
extracted for separate litigation in federal court. Perhaps abstention or some other doc‐
trine requires the federal suit to be dismissed or held in abeyance while the state suit
continues. At oral argument we directed all parties to file supplemental memoranda ad‐
dressing those issues, which their briefs had not mentioned.
Everyone replied by asking us to resolve the appeal on the merits, if only because
the parties to the state and federal suits do not completely overlap. It is not clear that
this is a sufficient reason for parallel litigation. Federal courts regularly abstain or stay
proceedings in favor of state litigation on the same subject that was underway before
the federal suit began. See, e.g., Driftless Land Area Conservancy v. Valcq, 16 F.4th 508 (7th
Cir. 2021). But abstention and stays are discretionary, and we conclude that the best
way to get the state case moving is to resolve the federal suit on the merits.
This does not entail a decision whether the Act is an appropriate device for liti‐
gating in federal court the authenticity of an exhibit filed in state court. The district
judge resolved the claim on a different ground: that the Act permits relief only if the
fraud or counterfeiting has caused injury, and that Hennessy and Yaser had established

-- 2 of 3 --

Nos. 21‐1773 & 21‐1765 Page 3
the absence of injury, entitling them to summary judgment. 2021 U.S. Dist. LEXIS 60938
(S.D. Ind. Mar. 30, 2021).
That the state case is still pending, and that the state judge has not even arguably
been deceived, might be a path to this conclusion, but National Asset maintains other‐
wise. It says that the very existence of the litigation made the parcel unmarketable (or
greatly diminished its potential selling price), so that injury did not depend on the state
suit’s outcome. The problem with that understanding, the federal district judge replied,
2021 U.S. Dist. LEXIS 60938 at *23–31, is that what reduced the parcel’s liquidity is not
one page of one exhibit to a complaint. It is the complaint itself, accompanied—as Indi‐
ana law requires—by a lis pendens in the real‐estate property records. The lis pendens no‐
tifies potential buyers that the interests a seller can convey may be subject to the suit’s
outcome. The district judge observed that a lis pendens would have been filed whether
or not the page had been altered, so any injury would have been the same. National As‐
set could have asked the state judge to order the lis pendens to be withdrawn, but it did
not. This led the federal judge to conclude that the altered page did not injure anyone,
which knocks out any claim for damages under the Act.
We agree with this disposition, for the reasons the district judge gave. The right
way to contest the alteration would be to ask the state judge to lift the lis pendens and
dismiss the state suit as a sanction, or perhaps to resolve the state suit in National As‐
set’s favor on the ground that the response to the $80,000 offer really was a “counter”
and that no contract was formed. Or the state judge might decide that the page matches
an oral agreement and is valid.
The appellate briefs address some other issues, but given the conclusion we have
reached about the absence of injury caused by the altered page, none of them need be
addressed.
A FFIRMED

-- 3 of 3 --