DF Activities Corp. v. Brown – Case Brief
DF Activities Corp. v. Brown, 851 F.2d 920 (7th Cir. 1988).
Facts: Brown (D) lived in a house designed by Frank Lloyd Wright known as the Willits House. A Wright enthusiast controlled DF Activities Corporation (P) and P sought to purchase the Willits Chair. P’s art director contends that the parties entered into a verbal agreement on November 26, 1986 to sell for $60,000 in two equal installments due on December 31 and March 26. A letter including the first installment was mailed but it was returned with a note indicating that the chair had been sold to another party. P sued for breach of contract and sought the difference between the agreed upon price and the price at which D sold the chair to the other party. P appealed the court’s grant of D’s motion to dismiss under Rule 12(b)(6) on the grounds that the claim was barred by the statute of frauds.
Issue: Whether a defense based on the statute of frauds must always be determined at trial.
Holding and Rule: No. A plaintiff in a suit on a contract within the statute of frauds should not be allowed to resist a motion to dismiss that is backed by an affidavit that D denies the contract was made on the grounds that evidence supporting his claim may arise during discovery. There was no point to keep the lawsuit alive on the mere hope that D would make a judicial admission in a deposition, and some courts even allow D’s simple denial in a pleading to defeat a judicial admission.
Dissent: (Flaum) I disagree with the holding that additional discovery is prohibited whenever a defendant raises a statute of frauds defense and submits a sworn denial that she formed an oral contract with P. Courts should have the authority to exercise discretion to determine permissible discovery and not be forced to rule either way in such situations. This is critical, as D’s affidavit does not contain a conclusive denial of contract formation.
Disposition: Affirmed.