Opinion ID: 175689
Heading Depth: 2
Heading Rank: 1

Heading: Real Party in Interest Argument Waived

Text: Dr. See strenuously challenges RK's identity, calling it an unlawful beast which does not own the claim and could not have brought this suit. [2] In the midst of trial, after Krilich testified that RK Company was the name under which he did business, Dr. See investigated RK's identity on an Illinois public records website and discovered that RK was not a legally registered corporation. The next day, Dr. See brought a motion for judgment as a matter of law, claiming that RK was not the party alleged in the complaint. He claims that RK is an unlawful common law trust created for tax evasion purposes, and as such, the trust is the real party in interest and any action needed to be brought by its trustee. Rule 17(a) of the Federal Rules of Civil Procedure requires that an action must be prosecuted in the name of the real party in interest. The real party in interest is the person who possesses the right or interest to be enforced through litigation, and the purpose of this procedural rule is to protect the defendant against a subsequent action by the party actually entitled to recover. Fed.R.Civ.P. 17(a) advisory comm.'s note (2009); see also Rawoof v. Texor Petroleum Co., Inc., 521 F.3d 750, 756 (7th Cir.2008); 4 Moore's Federal Practice § 17.10 (3d. 2009). But the rule also reflects an understanding that such disputes would be easy to resolve, as it further provides: The court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action. After ratification, joinder, or substitution, the action proceeds as if it had been originally commenced by the real party in interest. Fed.R.Civ.P. 17(a)(3). The allowance of a reasonable time for the correct party to step into the plaintiff's role suggests that an objection will be raised when such joinder is practical and convenient. Gogolin & Stelter v. Karn's Auto Imports, Inc., 886 F.2d 100, 102 (5th Cir.1989); see also 6A Wright, Miller & Kane, Federal Practice and Procedure § 1554 (3d ed. 2008) (Regardless of what vehicle is used for presenting the objection . . . it should be done with reasonable promptness.). Other circuit courts have held that the defense is waived if it is first raised during or shortly before trial. See, e.g., Rogers v. Samedan Oil Corp., 308 F.3d 477, 483 (5th Cir.2002); United HealthCare Corp. v. Amer. Trade Ins. Co., 88 F.3d 563, 569 (8th Cir.1996) (waived when first raised at pretrial conference); Allegheny Int'l v. Allegheny Ludlum Steel Corp., 40 F.3d 1416, 1431 (3d Cir.1994); Whelan v. Abell, 953 F.2d 663, 672-73 (D.C.Cir.1992); United States ex rel. Reed v. Callahan, 884 F.2d 1180, 1183 n. 4 (9th Cir.1989); Hefley v. Jones, 687 F.2d 1383, 1388 (10th Cir.1982) (waived when first raised sixteen days before trial). In Weissman v. Weener, we observed that our legal system is not geared to having judges take over the function of lawyers even when the result would be to rescue clients from their lawyers' mistakes, in acknowledging that other circuits have found Rule 17(a) to be an affirmative defense that can be waived. 12 F.3d 84, 86 (7th Cir.1993) (citations omitted). Today, we too hold that real party in interest is a defense subject to waiver. We review the factual determinations upon which a court predicates a finding of waiver for clear error and the legal question of whether the conduct amounts to waiver de novo. e360 Insight v. Spamhaus Project, 500 F.3d 594, 599 (7th Cir.2007); Ernst & Young LLP v. Baker O'Neal Holdings, Inc., 304 F.3d 753, 756 (7th Cir.2002). Dr. See acknowledges that the defense that RK was not the real party in interest is subject to waiver, Appellant's Br. at 31, but insists that his motion was timely because he filed it as soon as he discovered that RK was not duly incorporated. Dr. See claims he had no reason to doubt RK's legal status and that he was blindsided by the realization that RK was not the registered corporation he believed it to be. Dr. See misunderstands what it means to be timely. Over seven years passed between RK's complaint and the bench trial. Dr. See could have, as he did the evening of Krilich's testimony, uncovered this information by a simple search of Illinois's public records. He could also have filed discovery requests about the authenticity of RK's identity and incorporation. He did not, and his mid-trial objection was far too late. See, e.g., Gogolin & Stelter, 886 F.2d at 102-03 (defense waived when made at the close of plaintiff's evidence); Allegheny Int'l, 40 F.3d at 1431 (defense waived when brought in a summary judgment motion). Moreover, had Dr. See earlier objected to RK's position as the plaintiff, the only consequence would have been for Krilich to ratify the commencement of the action, or to be joined or substituted as the plaintiff. Krilich has testified that he did business as RK Company. If RK and Krilich are one and the same, there would have been no reason for the court to have dismissed the suit without giving Krilich the opportunity to formally substitute his name for that of RK. And, a timely objection during the early stages of litigation would have uncovered any truth to, and allowed the parties to determine the relevance of, Dr. See's claim that RK was an unlawful common law trust set up for tax evasion purposes. [3] Dr. See waived the defense that RK was not the real party in interest by failing to object during the more than seven years between the complaint and the beginning of trial.