Legal Memorandum: Raising an "Ordinary Course Defense"

Issue: Can the ‘Ordinary Course Defense’ be raised at later stages of litigation, if it was not raised in the pleadings?

Area of Law: Litigation & Procedure
Keywords: Later stages of litigation; Ordinary course of defense
Jurisdiction: Federal
Cited Cases: 477 F.3d 616
Cited Statutes: 11 US Code § 547(c)
Date: 04/01/2013

See, e.g., First Union Nat’l Bank v. Pictet Overseas Trust Corp., 477 F.3d 616 at 622 n.5 (8th Cir. 2007) (citing Sanders v. Dep’t of the Army, 981 F.2d 990, 991 (8th Cir.1992) (per curiam) (finding that the district court did not abuse its discretion by allowing an affirmative defense to be raised for the first time in a motion to dismiss); Stoebner v. Parry, Murray, Ward & Moxley, 91 F.3d 1091, 1093-94 (8th Cir.1996) (per curiam) (citing favorably a Ninth Circuit opinion allowing an affirmative defense to be raised for the first time in a summary judgment motion); Coohey v. United States, 172 F.3d 1060, 1064 n.8 (8th Cir.1999) (recognizing that “an affirmative defense can even be raised on appeal where the evidence supports that defense”). 

In In re National Lumber & Supply, Inc., 184 B.R. 74 (9th Cir. BAP 1995), for instance, the court pointed out that ordinary course generally is an affirmative defense that must be pleaded.  In that case, however, no prejudice was shown, and therefore the defense was allowed, even though it was raised for first time at the summary judgment stage.  Id. at 79.  The trustee argued in National Lumber that it was prejudiced by the inadequate pleading, because the discovery cutoff date had elapsed over two months before the defense was first raised, but the court was not persuaded.  The trustee had never asked the court for an extension of the discovery cutoff date, nor for a […]

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