789 F.3d 730
7th Cir.2015Background
- Illinois Business Brokers Act of 1995 requires broker registration and written brokerage agreements; unregistered brokers’ promises are unenforceable.
- Global Technology & Trading, Inc. orally contracted with Satyam (now Tech Mahindra) to act as broker in Bridge Strategy Group acquisition in Illinois.
- Global brokered the acquisition; Satyam refused to pay and Global sued in state court for about 3% commission (~$600,000).
- Satyam removed to federal court on diversity grounds, arguing lack of a written contract and that the Act blocks relief.
- Rule 8(c) requires affirmative defenses to be raised in the answer; district court allowed a belated assertion of the Act, relying on excusable neglect and existing case law; Global claimed lack of knowledge of the Act.
- Court ultimately declines to decide whether the Act is an affirmative defense under Rule 8(c) and affirms the district court’s discretion to permit asserting such a defense late, noting possible alternative paths (excusable neglect, amendments).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Act is an affirmative defense under Rule 8(c) | Global treats the Act as a defense, not raised in time | Satyam relies on Rule 8(c) timing; Act blocks relief | Court declines to decide; declines to overrule Williams; district courts may permit belated defenses |
| Whether late assertion of an affirmative defense can be excused | Delay should be excused due to lack of knowledge of the Act | Delay should not be excused; prejudice to plaintiff | District court did not abuse discretion; excusable neglect supports late assertion |
| Whether Rule 15(a)(2) or Rule 6(b)(1)(B) could justify belated defense | Amendments or extensions could have been allowed | Such options were not pursued | Court notes alternatives exist; affirmed use of discretionary approach under Williams/Schmidt |
| Overall result of allowing belated affirmative defense | Belated defense would bar recovery | Efficiency and fairness favor timely defense | Affirmative defense permitted; authority not abused; case resolved without overruling Williams |
Key Cases Cited
- Williams v. Lampe, 399 F.3d 867 (7th Cir. 2005) (excusable neglect can justify late defenses pending prejudice)
- Schmidt v. Eagle Waste & Recycling, Inc., 599 F.3d 626 (7th Cir. 2010) (late defenses may be allowed if no prejudice)
- Pioneer Investment Services Co. v. Brunswick Associates L.P., 507 U.S. 380 (Sup. Ct. 1993) (defines excusable neglect for extension of time)
- Jackson v. District of Columbia, 254 F.3d 262 (D.C. Cir. 2001) (amendments may be allowed to add defenses if no prejudice)
- Harris v. Secretary of Veterans Affairs, 126 F.3d 339 (D.C. Cir. 1997) (alternative late-defense remedy cited in some circuits)