WEC 98C-3 LLC v. SFA Holdings Inc., No. 23-1489 (7th Cir. 2024)
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This case involves a dispute over unpaid rent for a department store in an Illinois mall. The store was operated by CPS Partnership, which leased the retail space from WEC 98C-3 LLC. Saks Inc. guaranteed that it would pay the rent if CPS could not. However, when CPS stopped paying rent, Saks did not make any payments to WEC. This led to WEC defaulting on its mortgage, and the property was purchased by 4 Stratford Square Mall Holdings, LLC (“Stratford”) at a foreclosure auction. Initially, WEC sued Saks for damages. Later, Stratford intervened with its own claim for damages. The district court ruled only on Stratford’s claim for unpaid rent, finding that it was entitled to payment from Saks.
The district court's decision was appealed to the United States Court of Appeals for the Seventh Circuit. Saks argued that Stratford lacked standing to sue, that the district court erred in certifying its judgment for immediate appeal, and that the district court erred in rejecting Saks’s affirmative defenses. The appellate court found that Stratford did have standing to sue Saks, and the district court properly certified its judgment for appeal. On the merits, the appellate court concluded that Saks could not mount any of its desired defenses as it had waived its right to present affirmative defenses to liability in the guaranty that it signed. Therefore, the appellate court affirmed the district court’s judgment.
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