Court Opinion

ID: 9486136
Source: CourtListenerOpinion
Date Created: 2023-08-05 11:38:54.385923+00
Date Added: 2024-06-11T17:51:32.653729
License: Public Domain

CUDAHY, Circuit Judge,
concurring in part and dissenting in part.
I disagree with some reluctance with a masterful analysis by the majority, which seems to turn back at the moment of truth from its own conclusions. Based on Gleason v. Seaboard Air Line Ry., 278 U.S. 349, 49 S.Ct. 161, 73 L.Ed. 415 (1929), the majority concludes that Prudential should be both vicariously liable for Loochtan’s fraud as well as liable on an equitable reformation theory because Loochtan’s knowledge is imputed to Prudential.
Admittedly, the plaintiffs failed to cite Gleason, but they argued vigorously that Loochtan was Prudential’s agent and that Loochtan was a “general agent” of Prudential and therefore that his actions “are binding upon it.” Appellant’s Br. at 9. Under Gleason, Prudential was simply incorrect in relying on the fact that Loochtan could defeat imputation by acting adversely to his principal. Therefore, there simply was no waiver of this claim. No doubt the adversary system contemplates that the Truth will best emerge from the combat of the lawyers. But this “game” theory can be carried too far. Certainly, this is not the first case where the judge’s research is better than that of the litigants. Nor would it be unusual for a court to decide an issue — squarely presented by the facts — despite the fact that the question was not briefed with perfect clarity. Perhaps most famously, Justice Brandéis had no trouble declaring that “the question for decision” in Erie R.R. Co. v. Tompkins, 304 U.S. 64, 69, 58 S.Ct. 817, 818, 82 L.Ed. 1188 (1938) was “whether the oft-challenged doctrine of Swift v. Tyson [41 U.S. (16 Pet.) 1, 10 L.Ed. 865 (1842) ] shall now be disapproved,” despite the fact that the continued vitality of Swift v. Tyson had been neither briefed nor argued. See Erie, Summary of Briefs, 304 U.S. at 64-69, 58 S.Ct. at 817-18.1
*1216The court here is surely free to rest its decision on Gleason, even without the benefit of the parties’ exchange on this point. Because there is no reason to believe that anyone has been placed at an unfair disadvantage by the court’s diligence and analytical prowess, I would permit the plaintiffs to go forward with the equitable reformation claim against Prudential.2
Unfortunately, the fraud action presents a more difficult problem. I say “unfortunately” because the plaintiffs certainly have, as the majority explains, a straightforward fraud action against Debra and Loochtan. Maj. op. at 1213-14. The only complication is that the plaintiffs here did not rely on anyone’s misrepresentation. However, as the majority points out, maj. op. at 1212-13, the Illinois common law would no doubt relent in its strict requirement that there be a link between the defendant’s misrepresentation and the plaintiffs loss.
Nonetheless, the plaintiffs have persistently, and wrongfully, contended that they had no fraud action without the equitable reformation claim. This is not a case where the arguments for waiver are the strongest, such as where one of the parties has been unfairly surprised or where the district court has been deliberately bypassed. But under Debbe v. Tripp, 863 F.2d 1356 (7th Cir.1988), there is no plain error rule in civil cases and no apparent basis for relieving the plaintiffs of the consequence of the waiver. There is some suggestion that a plain error analysis might be applied to prevent a “miscarriage of justice.” See id. at 1362. Since Debra and Loochtan were co-conspirators in Werner’s murder we may indeed be on the verge of such a “miscarriage”. However, I would not press for such an outcome here.
I therefore respectfully dissent to the extent indicated.

. The majority contends that Erie is a very different case because it involved "a precedent so deeply entrenched in the law” that a litigant would be loathe to challenge it. Maj. op. at 1215. But the very first line of Erie, quoted above, refers to the precedent (Swift v. Tyson) as "oft-challenged". See also Mapp v. Ohio, 367 U.S. 643, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961); Batson v. Kentucky, 476 U.S. 79, 106 S.Ct. 1712, 90 L.Ed.2d 69 (1986); Teague v. Lane, 489 U.S. 288, 109 S.Ct. 1060, 103 L.Ed.2d 334 (1989); Robert L. Stern et al., Supreme Court Practice § 6.26 (6th ed. 1986) ("But where the Court believes there is sufficient reason to address the point despite its omission, such as where a basic unfairness might escape review, the Court may do just that.”).

. The majority contends that it must find otherwise because the plaintiffs expressly disavowed their winning argument. "This is a case in which the lawyer for a party tells the appellate court that he does not base his claim on grounds X and Y (ground X that Prudential is vicariously liable for Loochtan’s fraud, ground Y that Loochtan’s fraud is actionable even though it did not impair the plaintiff's property rights).” Maj. op. at 1215. As I explain below, I agree with the majority that grounds X and Y are waived. Plaintiff's counsel told the court (1) that they were not bringing a fraud action against Prudential, and (2) that without equitable reformation, they lacked "standing” to bring a fraud action. But this algebra does not encompass the equitable reformation claim (which should perhaps be designated as ground Z). While the plaintiffs did not cite Gleason for the proposition, they surely did not "disclaim” that argument. Because the plaintiffs insisted throughout this litigation that Loochtan’s knowledge is imputed to Prudential (though admittedly not for the reasons that the majority persuasively explores), this claim is not waived, and the plaintiffs should be permitted to go forward on this ground.