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Estate of Burford v. Accounting Practice Sales, Inc.

United States Court of Appeals, Seventh Circuit

March 13, 2017

Estate of William J. Burford, Plaintiff-Appellant,
v.
Accounting Practice Sales, Inc. and Gary L. Holmes, Defendants-Appellees.

          Argued January 12, 2017

         Appeal from the United States District Court for the Southern District of Illinois. No. 12-CV-01212-JPG-SCW - J. Phil Gilbert, Judge.

          Before Bauer, Sykes, and Hamilton, Circuit Judges.

          Hamilton, Circuit Judge.

         Defendant Accounting Practice Sales (APS) terminated its brokerage contract with William Burford after he failed, in his exclusive territory for APS, to meet his minimum yearly sales volume for four consecutive years. Burford sued. APS defended on the grounds that Bur-ford failed to meet his sales requirement and that his contract was terminable at will. The case was tried after an earlier appeal in the case, and the jury ruled in favor of APS. While this appeal by Burford was pending, he passed away. His estate has carried on the appeal, arguing that the district court erred by permitting APS to defend on the basis of Burford's failure to meet his sales volume requirement, by refusing to admit an exhibit, and by refusing to order a new trial on the theory that the jury verdict was contrary to the weight of the evidence as to whether APS waived its right to terminate the contract. None of these arguments warrants a new trial. We affirm the judgment of the district court in favor of APS.

         I. Factual and Procedural Background

         Defendant APS acts as a broker for the purchase and sale of accounting practices. APS works through brokers who are treated as independent contractors and are assigned exclusive sales territories for APS. The brokers and APS share commissions for successful sales. Plaintiff Burford became a broker for APS in 2003, and over the next several years, he and APS agreed to add additional states as part of his exclusive territory. Burford's contract included a "minimum yearly sales volume" requirement. On appeal, the parties do not dispute that Burford did not meet this requirement for four consecutive years.

         In March 2010, APS owner Gary Holmes spoke with Burford about his poor performance. Burford acknowledged that he needed to improve, but he failed to meet his minimum yearly sales volume requirements again in 2010 and 2011. In 2012, APS terminated Burford's contract and reassigned his sales territory.

         Burford brought suit in an Illinois state court, claiming that APS breached his contract by terminating it without the required good cause. He also sought to pierce the corporate veil to hold Holmes personally liable for the breach. The district court granted summary judgment in favor of the defendants on the theory that Burford's contract with APS was terminable at will. In the earlier appeal, we reversed on that point, finding that the contract's provision that "APS cannot terminate this agreement unless it is violated by Burford" meant that the contract was not terminable at will. Burford v. Accounting Practice Sales, Inc., 786 F.3d 582, 587-88 (7th Cir. 2015). We remanded for trial on the contract claim. The jury found for APS, and the district court entered judgment on the verdict.

         On appeal, Burford raises three issues. First, he claims that the trial court erred by supposedly allowing APS to change the legal theory for its defense in violation of the "mend-the-hold" doctrine in Illinois law. Second, Burford argues that the district court abused its discretion by denying admission of an exhibit. Third, he claims that the jury's verdict was contrary to the weight of the evidence on whether APS waived its right to enforce the minimum sales requirement.

         II. Analysis

         A. "Mend the Hold"

         Burford's first argument on appeal is that APS should not have been allowed to assert its defense that it terminated Burford's contract for good cause since he had missed his minimum sales requirements for several years. Burford's theory is a variation of the "mend-the-hold" doctrine in Illinois law. That doctrine, which takes its name from a nineteenth-century wrestling phrase, is less a set of rules than a flexible concept of equity. It prevents one party to litigation, especially in contract disputes, from trying to change its position or theories at such a late stage in the dispute as to cause unfair prejudice to the opposing party. See Harbor Ins. Co. v. Continental Bank Corp., 922 F.2d 357, 362 (7th Cir. 1990) ("[W]here a party gives a reason for his conduct and decision touching any thing involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration. He is not permitted thus to mend his hold."), quoting Ohio & Mississippi Railway Co. v. McCarthy, 96 U.S. 258, 267-68 (1877); see also Ryerson Inc. v. Federal Ins. Co., 676 F.3d 610, 614 (7th Cir. 2012) (collecting cases); Horwitz-Matthews, Inc. v. City of Chicago, 78 F.3d 1248, 1251 (7th Cir. 1996); FHP Tectonics Corp. v. American Home Assurance Co., 57 N.E.3d 575, 587-88 (111. App. 2016) (declining to apply doctrine in absence of unfair surprise or arbitrariness). The doctrine seems to correlate fairly closely to federal courts' approach to efforts to amend pleadings under Federal Rule of Civil Procedure 15. The doctrine also lies close to the boundary between matters of substance and procedure for purposes of Erie Railroad Co. v. Tompkins. See Harbor Insurance, 922 F.2d at 363-65.

         Whatever the scope of the mend-the-hold doctrine, and whether it is procedural or substantive, it does not help Bur-ford in this case. From its earliest discovery responses, APS advanced two central arguments in defense: first, it terminated Burford's contract for good cause because he failed to meet his minimum yearly sales volume, and ...


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