Wehrs. v. Wells, No. 11-3369 (7th Cir. 2012)
Annotate this CaseWehrs alleged that his stock broker, Wells, violated federal securities and state laws by executing unauthorized trades on Wehrs’s account, causing significant losses. Wells never answered the complaint or appeared in court; default judgment entered. The court later vacated with respect to damages and granted summary judgment in favor of Wehrs. The Seventh Circuit affirmed, first upholding denial of the motion to vacate as to liability. Although Wells took quick action to correct the default, and alleged excusable neglect, asserting that his withdrawn counsel did not provide him notice of the date by which he had to respond, he did not set forth a meritorious defense. Wells implicitly admitted the allegations in contesting damages and only made a single conclusory statement that the transactions were authorized. To permit Wells to argue that Wehrs should have sold his shares at sooner to mitigate damages would allow Wells to contest liability, rather than the extent of damages. A defaulting party has no right to dispute liability. The duty to mitigate is an affirmative defense and Wells waived his right to this defense by not filing a responsive pleading and could not raise it under the guise of proximate cause.
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