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Angelopoulos v. Keystone Orthopedic Specialists, S.C.

United States District Court, N.D. Illinois, Eastern Division

June 6, 2017

DR. NICHOLAS ANGELOPOULOS, Plaintiff,
v.
KEYSTONE ORTHOPEDIC SPECIALISTS, S.C., WACHN, LLC, and MARTIN R. HALL, M.D., Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBERT M. DOW, JR. UNITED STATES DISTRICT JUDGE

         Before the Court are Defendants' motion to amend/correct the proposed pretrial order to include a contested jury instruction on ratification [402] and Defendants' request to include as part of the jury instruction on determining the existence of a partnership a sentence indicating that the applicable burden of proof is clear and convincing evidence. For the reasons set forth below, which elaborate on the rulings stated in open court on the morning of June 5, 2017, Defendants' motion to add a jury instruction on ratification [402] is denied, and Defendants' request to include a sentence on clear and convincing evidence in the partnership jury instruction is denied.

         I. Ratification Affirmative Defense

         On May 30, 2017, the fifth day of trial, Defendants filed a motion to amend/correct the proposed pretrial order to include a contested jury instruction on ratification. The proposed jury instruction states: “If you believe that the Plaintiff ratified an agreement, then you must find in favor of the Defendants. Ratification occurs when an individual who signs or otherwise accepts the terms of an agreement, even under duress, remains silent for any considerable length of time afterward instead of trying to annul or void the agreement even though he had the opportunity to do so.” [402, Exhibit A.]

         Federal Rule of Civil Procedure 8(c) requires a defendant to plead any affirmative defense-“including” but not limited to those enumerated in the Rule-in the answer to the complaint. Fed.R.Civ.P. 8(c). The purpose of that rule, as the Seventh Circuit has explained, “is to avoid surprise and undue prejudice to the plaintiff by providing her notice and the opportunity to demonstrate why the defense should not prevail.” Venters v. City of Delphi, 123 F.3d 956, 967 (7th Cir. 1996). As the court of appeals explained, “as with other pleadings, the district court has the discretion to allow an answer to be amended to assert an affirmative defense not raised at the outset.” Id. In other words, Defendants are correct that there is no “bright-line rule” that a failure to plead an affirmative defense constitutes a waiver of the defense and that prejudice to the other side is the touchstone of the analysis. Neuma, Inc. v. Wells Fargo & Co., 515 F.Supp.2d 825, 850 (N.D. Ill. 2006); see also Best v. City of Portland, 554 F.3d 698, 700 (7th Cir. 2009).

         Leave to amend therefore frequently is permitted in response to a motion to dismiss and even at the summary judgment stage or later. See Neuma, 515 F.Supp.2d at 850; see also Marwil v. Cluff, 2007 WL 2608845, at *10 (S.D. Ind. Sept. 5, 2007) (allowing assertion of additional defense four months before trial date). Nonetheless, as the Seventh Circuit stressed in Venters, “the defendant remains obligated to act in timely fashion.” 123 F.3d at 967. Thus, “[o]nce the availability of an affirmative defense is reasonably apparent, the defendant must alert the parties and the court to his intent to pursue that defense.” Id. Prompt action ensures both that the defendant has not been dilatory and that the plaintiff does not suffer prejudice. In considering prejudice, courts in the Seventh Circuit often have looked to the timing of a belated assertion of an affirmative defense and have tended to deny leave to add a defense when it is asserted at or after the “eleventh hour.” See, e.g., Venters, 123 F.3d at 967-68 (rejecting additional defense “at the eleventh hour”); Marwil. 2007 WL 2608845, at *10 (permitting amended affirmative defense “not at the eleventh hour”). In Venters, for example, the Seventh Circuit reversed a district court's decision to permit the assertion of a new defense in a reply brief on summary judgment filed a month before trial and on the eve of an oral argument in the district court. 123 F.3d at 967-68. By waiting until the “eleventh hour, ” the court of appeals found that the defendant had “bushwhacked” the plaintiff, causing it prejudice because it had been “deprived of any reasonable opportunity to address the defense.” Id.

         Applying this case law to the facts of this case, the Court denies Defendants' motion to add a ratification affirmative defense jury instruction at the eleventh hour. This case is almost five years old, Defendants did not move to include this defense until the fifth day of trial, and the defense was never pled nor mentioned in parties' pretrial order listing of claims and defenses. Since Plaintiff was not put on notice of this defense until the eleventh hour, Plaintiff did not have a reasonable opportunity to address the defense. See Marketing Specialists, Inc. v. Bruni, 135 F.R.D. 35, 50-52 (W.D.N.Y. 1989) (denying motion for leave to add affirmative defense made during trial on prejudice grounds). As Plaintiff points out in his response, Defendants did not raise the specter of a ratification defense until after several key witnesses-Drs. Angelopoulos, Chang, and Weber-had testified, and Plaintiff may have taken a different approach to their direct examinations, not to mention in his opening statement, had he been on notice of the proposed defense.

         The Court also notes that Defendants' proposed ratification defense appears to overlap with their failure to mitigate affirmative defense, as both defenses are based at least in part on the suggestion that Plaintiff should have left Keystone and WACHN earlier than he did, and the Court has instructed the jury on Defendants' failure to mitigate defense.

         II. Existence of a Partnership: Clear and Convincing Evidence Burden of Proof

         The Court denies Defendants' request to add to the existence of a partnership jury instruction on page 40 a sentence explaining that the applicable burden of proof is clear and convincing evidence. The jury instruction on page 40 states:

A partnership between two or more persons is a contractual relationship and therefore there must be a meeting of minds of the parties to create a partnership. Written articles of agreement are not necessary, for a partnership may exist under a verbal agreement, and circumstances may be sufficient to establish such an agreement. Partnership agreements as to the division of profits may be express or implied from acts, transactions, and the previous conduct of the partners.
In determining the existence of a partnership, the following factors are material: the manner the parties have dealt with each other; the mode in which each has, with the knowledge of the other, dealt with persons in a partnership capacity; whether the partner contributed capital; whether the alleged partnership has advertised using the firm name; whether the alleged partners shared the profits, whether the parties have filed a partnership certificate with the county clerk and whether they have carried telephone listings using the firm name. However, mere participation in profits does not alone create a partnership. The question of whether the parties intended that an agreement or arrangement constitutes a partnership, must be determined from the language and conduct of the parties and from all the facts and circumstances surrounding the transaction. It is an accepted partnership practice that one partner may be charged with greater managerial responsibilities.

Defendants seek to add a sentence stating: “When the evidence contains writings that distinctly indicate a relationship other than a partnership, the plaintiff must prove a partnership by clear and convincing evidence.”

         “The burden of proving the existence of a partnership rests on the party asserting it”-in this case, Plaintiff. Seidmon v. Harris, 526 N.E.2d 543, 546 (Ill.App.Ct. 1988). The burden of proof normally is a preponderance of the evidence. However, under Illinois law, where the evidence contains “writings of the parties that distinctly indicate a relationship other than a partnership, ” the plaintiff must establish the existence of a partnership by clear and convincing evidence. Id. (citing Baker v. Baker, 161 Ill.App. 430, 437 (Ill.App.Ct. 1911)). “Distinct evidence giving rise to the clear and convincing ...


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