Durga Property Holdings, Inc. v. City of Effingham, Illinois

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted June 4, 2025*
Decided June 13, 2025
Before
MICHAEL B. BRENNAN, Circuit Judge
MICHAEL Y. SCUDDER, Circuit Judge
THOMAS L. KIRSCH II, Circuit Judge
No. 24-3177
DURGA PROPERTY HOLDINGS, INC.,
Plaintiff-Appellant,
v.
CITY OF EFFINGHAM, ILLINOIS,
Defendant-Appellee.
Appeal from the United States District
Court for the Southern District of Illinois.
No. 24-CV-01773-SPM
Stephen P. McGlynn,
Judge.
O R D E R
Durga Property Holdings, Inc., the owner of a mall in Effingham, Illinois, sued
the City after it foreclosed on the mall property to satisfy various liens. The district
court dismissed the suit for lack of jurisdiction pursuant to the Rooker-Feldman doctrine,
* We have agreed to decide the case without oral argument because the parties jointly waived
oral argument, the briefs and record adequately present the facts and legal arguments, and oral argument
would not significantly aid the court in deciding the appeal. F ED . R. A PP. P. 34(a)(2)(C), (f).
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with FED. R. A PP. P. 32.1

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and Durga now appeals. We agree that dismissal was proper, but we take a different
path of reasoning than the district court.
I
In 2019 the City of Effingham filed suit in Illinois state court to force the owner of
the Village Square Mall to perform maintenance work that would address unsafe
conditions at the Mall. Durga bought the Mall property in 2020 and subsequently
intervened in the case. Then, in August 2020, the state court entered an Agreed Order
approved by the parties. The Order detailed a schedule of work Durga would perform
at the Mall and specified that if Durga did not comply with the schedule, the City
would be authorized to perform the work itself.
Three months later, on November 23, 2020, the state court held an evidentiary
hearing at which it found that Durga had failed to substantially comply with the
Order’s requirements. So the state court authorized the City to complete the work.
Durga appealed, but did not prevail, see City of Effingham v. Vill. Square Mall Realty
Mgmt. LLC, No. 5-20-0431, 2021 WL 1977186 (Ill. App. Ct. May 17, 2021), and the case
became final on August 15, 2022, see City of Effingham v. Vill. Square Mall Realty Mgmt.
LLC, No. 19-MR-68 (Ill. Cir. Ct. Aug. 15, 2022).
During this litigation, the City started performing the work at the Mall as
authorized by the November 2020 order. As it accrued expenses completing the work
and defending itself in court, the City entered liens on the Mall. The City then filed
another case in state court in December 2020 to enforce these liens through foreclosure.
The court initially entered summary judgment for the City in 2023, but it then granted
Durga’s motion to stay the judgment and open discovery. After almost a year of
discovery and continuances, the state court ultimately entered an order of judgment for
foreclosure and sale on July 30, 2024. See City of Effingham v. Durga Property Holdings,
Inc., No. 20-CH-22 (Ill. Cir. Ct. July 30, 2024).
Just a few days earlier, on July 24, Durga filed this suit in federal court under 42
U.S.C. § 1983. Durga alleged that the City prevented it from performing maintenance
work at the Mall—as the August 2020 Order had required—by refusing to issue the
necessary permits. Durga asserted multiple constitutional claims, arguing that the
City’s denial of permits and eventual foreclosure on the Mall constituted a taking in
violation of the Fifth Amendment, a denial of equal protection and substantive due
process in violation of the Fourteenth Amendment, and interference with Durga’s
contracts (its leases of space in the mall) in violation of the Contracts Clause.
Durga moved in the district court for preliminary injunctive relief to prevent the
sale of the Mall until the federal court resolved its § 1983 lawsuit. The City responded

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by moving to dismiss the case for lack of subject matter jurisdiction under the Rooker-
Feldman doctrine. See Rooker v. Fidelity Tr. Co., 263 U.S. 413 (1923); D.C. Ct. of Appeals v.
Feldman, 460 U.S. 462 (1983). Alternatively, the City urged the district court to dismiss
pursuant to the abstention principles of Younger v. Harris, 401 U.S. 37 (1971).
The district court dismissed the case for lack of jurisdiction, concluding that
Durga’s claims were barred by Rooker-Feldman because granting relief would effectively
require reversing the state-court judgment of foreclosure and order of sale. The district
court then denied the motion for preliminary injunctive relief as moot.
On November 4, 2024—after the district court dismissed the § 1983 suit—the
Mall was sold. The sale has yet to close, however, because Durga appealed the state
court’s order of foreclosure and the Illinois Appellate Court stayed the closing of the
sale during the appeal, which is still pending.
Durga now appeals the dismissal of its federal case. It argues that none of its
constitutional grievances spring from a state-court judgment, so Rooker-Feldman does
not deprive the lower federal courts of jurisdiction to hear Durga’s claims.
II
We review the dismissal of a suit for lack of jurisdiction without deference to the
district court. See B.D. ex rel. Myer v. Samsung SDI Co., 91 F.4th 856, 860 (7th Cir. 2024).
The Rooker-Feldman doctrine applies only when (1) the federal plaintiff is a state-court
loser, (2) the state-court judgment became final before the federal proceedings began,
(3) the state-court judgment caused the injury underlying the federal claim, (4) the claim
invites a federal court to review and reject that state-court judgment, and (5) the state-
court loser did not have a reasonable opportunity to raise the federal issue in state
court. See Gilbank v. Wood County Dep’t of Hum. Servs., 111 F.4th 754, 766 (7th Cir. 2024)
(en banc).
As we understand Durga’s allegations, each of its theories of relief seeks to
remedy, at least in part, the City’s enforcement of liens through foreclosure. Indeed,
even where the City’s complained-of conduct occurred before the imposition of the
liens—as with the alleged discrimination in denying Durga certain permits—the
ultimate, cascading harm stemming from its acts is Durga’s loss of ownership of the
Mall.
But the state case concerning the foreclosure is not yet final. Under Illinois law, a
foreclosure judgment with an order of sale does not finalize a property-foreclosure
action. See Romspen Mortg. Ltd. P’ship v. BGC Holdings LLC-Arlington Place One, 20 F.4th
359, 364 (7th Cir. 2021). Instead, judicial confirmation of the sale finalizes such a case.

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And judicial confirmation has not occurred here because Durga’s appeal of the
foreclosure order remains pending.
Because Durga’s federal claims all relate to the still-unresolved foreclosure
litigation, the relevant state-court judgment was not final before Durga commenced its
§ 1983 action. Rooker-Feldman, therefore, does not bar federal jurisdiction. See Exxon
Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 293 (2005) (rejecting application of
Rooker-Feldman where the plaintiff filed suit in federal court “before any judgment in
state court”).
III
Durga’s claims are barred by Younger abstention, however—an alternative basis
for dismissal that the City pressed in the district court. As relevant here, this doctrine
applies where the exercise of federal jurisdiction would interfere with civil proceedings
that implicate a state’s interest in enforcing the orders and judgments of its courts. See
J.B. v. Woodard, 997 F.3d 714, 722 (7th Cir. 2021). The City’s enforcement of its liens on
the Mall presents such a state interest. See Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 13–14
(1987) (identifying lien enforcement as the type of important state interest that justifies
Younger abstention). Because each of Durga’s claims challenges, at least in part, the
validity of the liens underlying the foreclosure or the City’s use of foreclosure
proceedings to take over the Mall property, a federal court judgment favorable to Durga
would interfere with the enforcement proceedings pending in state court.
That is not the end of the inquiry, however. Younger requires abstention only if
the state case (1) is judicial in nature, (2) implicates important state interests, (3) offers
an adequate opportunity for review of constitutional claims, and (4) involves no
extraordinary circumstances, such as harassment or bias. See FreeEats.com, Inc. v.
Indiana, 502 F.3d 590, 596 (7th Cir. 2007) (citing Majors v. Engelbrecht, 149 F.3d 709, 711
(7th Cir. 1998)). Durga’s claims satisfy all four conditions.
First, the ongoing state proceeding is clearly judicial—the foreclosure action is
currently on appeal with the Illinois Appellate Court. Second, the City asserted in the
district court, and Durga never disputes, that enforcing its municipal codes to eliminate
dangerous structures is an important state interest. And a state’s interests are
particularly important where, as here, the underlying case involves local executive
action. See Courthouse News Serv. v. Brown, 908 F.3d 1063, 1072–73 (7th Cir. 2018). Third,
Durga could have raised its constitutional claims in the state court, though it is unclear
from the record whether it did. State courts, such as the Illinois circuit court overseeing
the foreclosure, have jurisdiction over constitutional claims, see E. Cent. Ill. Pipe Trades
Health & Welfare Fund v. Prather Plumbing & Heating, Inc., 3 F.4th 954, 957 (7th Cir. 2021),

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and Durga would have known when the proceedings started that—in its view—the
City’s enforcement of the liens would be unconstitutional. Fourth, Durga cites no
extraordinary circumstances that justify federal intervention. Our review of the record
demonstrates that the City acted only through appropriate court channels, and Durga
has provided no basis upon which to conclude that it is being harassed or is the target
of bias within the state-court litigation. Further, Durga’s assertion that the City is,
effectively, trying to unlawfully steal its property lacks any evidentiary foundation.
For these reasons, dismissal pursuant to Younger is proper here. And dismissing,
rather than staying, the case pursuant to Younger is appropriate because Durga has not
asserted, and we have no reason to believe, that the state court could not provide the
injunctive and monetary relief Durga seeks. See FreeEats.com, 502 F.3d at 600.
We owe a brief word in closing to the nature of the dismissal. The district court
dismissed the case with prejudice based on the Rooker-Feldman doctrine. But while
dismissals on the merits are generally with prejudice, see St. John v. Cach, LLC, 822 F.3d
388, 392 (7th Cir. 2016), dismissals for a lack of jurisdiction must be without prejudice,
see White v. Ill. State Police, 15 F.4th 801, 808 (7th Cir. 2021). Dismissals pursuant to an
abstention doctrine, like Younger, fall into the latter category. See Am. Trial Laws. Ass’n v.
N.J. Sup. Ct., 409 U.S. 467, 469 (1973); see also Courthouse News Serv., 908 F.3d at 1075
(ordering the district court to dismiss without prejudice on remand). We therefore
MODIFY the judgment to state that Durga’s claims are dismissed without prejudice. As
so modified, the judgment is AFFIRMED.

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