                            In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

No. 03-2605
BARRY AVIATION INCORPORATED,
                                               Plaintiff-Appellant,
                                v.


LAND O’LAKES MUNICIPAL AIRPORT
COMMISSION, TOWN OF LAND O’LAKES
WISCONSIN, RICHARD PETERSON, et al.,
                                            Defendants-Appellees.

                         ____________
            Appeal from the United States District Court
              for the Western District of Wisconsin.
            No. 02 C 635—Barbara B. Crabb, Chief Judge
                         ____________
      ARGUED JANUARY 16, 2004—DECIDED JULY 26, 2004
                         ____________



  Before FLAUM, Chief Judge, RIPPLE and ROVNER, Circuit
Judges.
  RIPPLE, Circuit Judge. Barry Aviation, Inc. filed a seven-
count complaint against the defendants on November 22,
2002. The district court dismissed the counts based on 18
U.S.C. § 1961 and 42 U.S.C. § 1983 for failure to state a claim
upon which relief could be granted. It then dismissed the
2                                                  No. 03-2605

remaining five counts based on state law because it deter-
mined that Barry Aviation had failed to allege its state of
incorporation and therefore had not alleged jurisdiction
based on diversity of citizenship. The district court denied
leave to amend the complaint because it concluded that the
statute of limitations had expired for each claim. For the
reasons set forth in the following opinion, we reverse the
judgment of the district court and remand the case for pro-
ceedings consistent with this opinion.


                               I
                      BACKGROUND
         1
A. Facts
  Barry Aviation, Inc. operated as a “Fixed Base Operator”
(“FBO”) at the airport at Land O’Lakes, Wisconsin. FBOs
“generally operate aircraft sales, rentals, charters, repair for
airplanes and avionics, fuel services, and aircraft storage
facilities at public airports.” R.2 at 3. The defendants include
the Town of Land O’Lakes, Wisconsin (“Town”), the Land
O’Lakes Municipal Airport Commission (“Airport Commis-
sion”), and six individuals who were members of the Town
Board or Airport Commission at various times during the
relationship with Barry Aviation.
  In 1993, Barry Aviation’s principal, Timothy Barry, at-
tended a public meeting with Karl Kerscher, the manager of
the airport and head of the Land O’Lakes Airport Commis-
sion. Barry Aviation alleged that, during this meeting, the
defendants presented substantial plans for the future redevel-
opment of the airport and represented that existing usage of


1
   At this stage of the proceedings, we must accept as true the
allegations of the complaint.
No. 03-2605                                                      3

the airport was in excess of 10,000 Federal Aviation Adminis-
                                                 2
tration (“FAA”) defined “operations” per year. To support
their representations regarding the quantity of operations,
the defendants provided Barry Aviation with records
prepared by the FAA that purportedly were based on the
Town’s official certified records. One form, FAA Form OMB
2120-0015, confirmed the defendants’ representation of
10,000 operations for the twelve-month period ending in
September 1991. Barry Aviation also alleged that the Town
and Airport Commission provided it with a “Project
Statement” created by the defendants for the Wisconsin
Department of Transportation (“WDOT”) and the FAA as
part of the Town’s effort to obtain government funds. This
document represented that the airport had 11,000 operations
for the twelve-month period ending July 1993.
  Based upon these materials and assurances, Barry Aviation
entered into a multi-year contract as the airport’s new FBO.
Barry Aviation alleged that it complied with the contract,
completing renovations, establishing a maintenance facility,
purchasing numerous new planes, and establishing other
services required by the agreement. In spite of its efforts,
during the period between 1993 and 2001, Barry Aviation
experienced “an unexpected and unprecedented low level
of business.” Id. ¶ 18. Barry Aviation brought its concern
about the low level of business to the defendants’ attention
during this time. The defendants responded to the concerns
by asserting that Barry Aviation’s meager business levels were
a result of its own actions, specifically its method of opera-
tion and its personnel, and also the seasonal nature of
business due to the airport’s location. At various times, the
defendants reassured Barry Aviation that operations con-


2
  An “operation” refers to an arrival or a departure of an aircraft
from an airport.
4                                                No. 03-2605

tinued to exceed 10,000 per year during 1991-1997. They pro-
vided Barry Aviation with a copy of a request for federal
funds they made in 1997 and 1998. In that submission, the
Commission and Town stated that their operations were
11,200 for the twelve-month period ending August 1997.
  Because Barry Aviation’s business levels were not consis-
tent with the operations levels stated in these documents, it
requested the underlying documents upon which the FAA
and WDOT documents were based. It received, instead, the
same materials it initially had received representing the
operations level for 1991-92. However, in 2000, while cleaning
a portion of the airport terminal basement controlled by the
defendants, Barry Aviation fortuitously discovered an
unmarked file cabinet with Commission and Town records.
The “files contained the actual original operations log/rec-
ords prepared by and kept by Defendants” from 1985 through
2000. Id. ¶ 25. Although seemingly important records, they
were not stored in any public office. Upon examination,
these files did not confirm the operation levels stated in the
FAA, WDOT and other documents supplied earlier for
Barry Aviation. Indeed, the files revealed that the stated
operations levels were “over 2000% the actual amount of
operations performed at the Airport in the relevant years.”
Id. After gaining permission to copy certain records, Barry
Aviation returned the files to the defendants. In May of
2002, the file cabinet and uncopied materials disappeared
and are unaccounted for at the present time.


B. District Court Proceedings
  The district court granted the defendants’ motion to dis-
miss on May 16, 2003. It first addressed the Racketeer
Influenced and Corrupt Organizations Act (“RICO”) and
§ 1983 claims, which ultimately were based on fraud alle-
gations. The court concluded that the underlying allegations
No. 03-2605                                                  5

of fraud were not pleaded with the requisite particularity.
In spite of this impediment, the district court also addressed
and rejected both the due process and equal protection
claims brought pursuant to § 1983. The court first deter-
mined that Barry Aviation waived its § 1983 claim based on a
violation of equal protection because the “defendants raised a
question in their brief about the existence of an equal protec-
tion claim,” but Barry Aviation “said nothing in its respon-
sive brief to explain how such a claim factor[ed] into its
allegations.” R.26 at 12. In addressing the due process claim,
the court noted that Barry Aviation only advanced a denial
of substantive due process, not procedural due process. The
court found that Barry Aviation could not demonstrate that
being free from the alleged fraud was a fundamental right
deeply rooted in our history and traditions or implicit in the
concept of ordered liberty; Barry Aviation also could not
demonstrate “ ‘why having a state-law remedy for whatever
injury the defendants caused [the plaintiff] is inadequate
under the federal constitution.’ ” Id. at 14 (quoting Khan v.
Gallitano, 180 F.3d 829, 835 (7th Cir. 1999)). Once the court
dismissed the § 1983 claims, it also dismissed the RICO
claim. The court noted that Barry Aviation could not “point
to a single federal statute enumerated in RICO that provides
the link to a predicate act of racketeering activity in this
case.” Id. at 16.
  After dismissing both federal claims, the court determined
that the plaintiff had failed to establish diversity jurisdic-
tion. See 28 U.S.C. § 1332. In this respect, Barry Aviation’s
undoing was that it had pleaded only its principal place of
business without also stating its state of incorporation. Its
failure to plead this information, in spite of the fact the
defendants pointed out this deficiency, caused the court to
dismiss the state law claims for lack of jurisdiction.
  Finally, the court refused to provide Barry Aviation leave
to amend its complaint. The court determined from the
6                                                 No. 03-2605

complaint that the statute of limitations had run as to both
federal claims and that any amendment would be futile. The
court held that RICO claims have a four-year statute of
limitations and that § 1983 utilized a six-year limit. The court
then noted that the complaint alleged that the defendants
fraudulently had induced Barry Aviation to enter a contract in
1993. At the same time, continued the court, Barry Aviation
admitted in its complaint that it had “suffered ‘an unex-
pected and unprecedented low level of business’ during the
years ‘1993 through 2001’ and that it [had] brought these
‘material deviations from the operations’ to the attention of
‘defendants’ at ‘various times’ during” 1993-2001. Id. at 17-
18 (quoting R.2 ¶ 18). Reading these allegations in their
totality, the court determined that the “plaintiff knew and
reported these ‘material deviations from the operations’ to
defendant[s] as early as 1993.” Id. at 18. Therefore, the court
concluded, Barry Aviation’s claims expired in 1997 and
1999. Because Barry Aviation did not file its claims until
November 22, 2002, it was outside the limitations period.


                              II
                       DISCUSSION
  Barry Aviation submits that its claims were filed in a
timely manner. In its view, the defendants’ concealment of
necessary documents prevented the discovery of injuries
until 2000, when it found the file cabinet and airport rec-
ords. Barry Aviation claims that the district court therefore
should not have relied on the limitations period as the
ground for refusing leave to amend its complaint. The dis-
trict court’s denial of leave to amend a complaint is re-
viewed for an abuse of discretion. See Am. United Logistics,
Inc. v. Catellus Dev. Corp., 319 F.3d 921, 925-26 (7th Cir.
2003).
No. 03-2605                                                            7

A. Standard for Granting Leave To Amend
  Leave to amend a complaint should “be freely given when
justice so requires.” Fed. R. Civ. P. 15(a). “In the absence of
any apparent or declared reason—such as undue delay, bad
faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, futility of amendment, etc.—the
leave sought should, as the rules require, be ‘freely given.’”
Foman v. Davis, 371 U.S. 178, 182 (1962). That leave be “freely
given” is especially advisable when such permission is sought
after the dismissal of the first complaint. Unless it is certain
from the face of the complaint that any amendment would
be futile or otherwise unwarranted, the district court should
                                                                3
grant leave to amend after granting a motion to dismiss.
One treatise has explained succinctly the reason for this
approach:


3
   See Bisciglia v. Kenosha Unified Sch. Dist. No. 1, 45 F.3d 223, 230
(7th Cir. 1995) (reversing the denial of leave to amend because the
record was not clear that the plaintiff could state no set of facts
upon which relief can be granted); Rohler v. TRW, Inc., 576 F.2d
1260, 1266 (7th Cir. 1978) (“The permission to amend a complaint
should be refused only if it appears to a certainty that the plaintiff
cannot state a claim upon which relief can be granted.”); Austin
v. House of Vision, Inc., 385 F.2d 171, 172 (7th Cir. 1967) (per curiam)
(reversing the denial of leave to file a second amended complaint
and noting that whether a cause of action will state a claim
cannot be determined until the amended complaint is filed and
tested); see also Polich v. Burlington N., Inc., 942 F.2d 1467, 1472 (9th
Cir. 1991) (“Dismissal without leave to amend is improper unless
it is clear, upon de novo review, that the complaint could not be
saved by any amendment.”); cf. Garcia v. City of Chicago, 24 F.3d
966, 970 (7th Cir. 1994) (“A district court does not abuse its
discretion in denying leave to amend if the proposed repleading
would be futile . . . .”).
8                                                 No. 03-2605

    The federal rule policy of deciding cases on the basis of
    the substantive rights involved rather than on technical-
    ities requires that plaintiff be given every opportunity
    to cure a formal defect in his pleading. This is true even
    though the court doubts that plaintiff will be able to
    overcome the defects in his initial pleading. Amend-
    ment should be refused only if it appears to a certainty
    that plaintiff cannot state a claim. The better practice is
    to allow at least one amendment regardless of how un-
    promising the initial pleading appears because except in
    unusual circumstances it is unlikely that the court will
    be able to determine conclusively on the face of a
    defective pleading whether plaintiff actually can state a
    claim.
5A Charles Allen Wright & Arthur R. Miller, Federal Practice
and Procedure § 1357 (2d ed. 1990) (internal footnotes
omitted).


B. Statute of Limitations
  Neither party disputes the district court’s implementation
of a four-year limitations period for the RICO claim and a
six-year period for the § 1983 claim. Rather, the dispute
centers on whether those periods should be deemed to have
expired under the circumstances here. We conclude that, on
the basis of this complaint, standing alone, the district court
should not have determined that the statute of limitations
necessarily barred these actions.
   We begin with the basic rule that the statute of limitations
is an affirmative defense, see Fed. R. Civ. P. 8(c), and need
not be addressed in the complaint. See U.S. Gypsum Co. v.
Indiana Gas Co., Inc., 350 F.3d 623, 626 (7th Cir. 2003). As we
have stated recently, “[a] complaint states a claim on which
relief may be granted whether or not some defense is
No. 03-2605                                                      9

potentially available.” United States v. N. Trust Co., Nos. 04-
1148 & 04-1150, 2004 WL 1381706 (7th Cir. June 22, 2004).
Complaints need not anticipate defenses; the resolution of
the statute of limitations comes after the complaint stage.
See id. (citing Gomez v. Toledo, 446 U.S. 635 (1980)).
   This general rule is subject to an important exception. The
statute of limitations issue may be resolved definitively on
the face of the complaint when the plaintiff pleads too much
and admits definitively that the applicable limitations
period has expired. See id.; Gypsum, 350 F.3d at 626. “A
litigant may plead itself out of court by alleging (and thus
admitting) the ingredients of a defense . . . .” Gypsum, 350
F.3d at 626. Therefore, we must determine whether Barry
Aviation has pleaded itself out of court in the allegations of
the complaint.


                                1.
   For both RICO claims and § 1983 claims, a cause of action
accrues when the plaintiff knew or should have known that
                              4
it had sustained an injury. This rule is referred to as the
discovery rule because the accrual date is not determined
when the injury occurs but when it is discovered or should
have been discovered. See Cada v. Baxter Healthcare, 920 F.2d
446, 450 (7th Cir. 1990). In Cada, the court explained that, to
the extent that defendants in a fraud case conceal the fraud,
“they postpone the date of accrual by preventing the
plaintiff from discovering that he is a victim of a fraud.” Id. at


4
  See McCool v. Strata Oil Co., 972 F.2d 1452, 1460 (7th Cir. 1992)
(RICO); Kelly v. City of Chicago, 4 F.3d 509, 511 (7th Cir. 1993)
(noting that a § 1983 claim accrues when the plaintiff knew or
should have know his or her constitutional rights had been
violated).
10                                                   No. 03-2605

451. This principle is based on the general rule that accrual
occurs when the plaintiff discovers that “he has been injured
and who caused the injury.” United States v. Duke, 229 F.3d 627,
630 (7th Cir. 2000). In Cada, we relied on Jensen v. Snellings, 841
F.2d 600 (5th Cir. 1988), in which our colleagues in the Fifth
Circuit wrote that “the limitations period applicable to a
cause of action for fraud . . . does not begin to run until the
plaintiff discovers, or in the exercise of reasonable diligence
should discover, the alleged fraudulent conduct.” Snellings,
841 F.2d at 606 (emphasis added); see also Martin v. Consul-
tants & Admins., Inc., 966 F.2d 1078, 1094 n.17 (7th Cir. 1992)
(describing Cada as holding that self-concealing frauds do
not extend the limitations period through equitable tolling
but, instead, postpone the date of accrual by preventing the
plaintiff from discovering he is a victim of a fraud).
  The complaint in this case can be read fairly as alleging
that Barry Aviation became aware gradually of the possibil-
ity of injury as business levels continued to fall short of
anticipated goals. At some point, no doubt, a reasonable
person would have investigated whether this disappointing
business pattern was the product of fraudulent misrepresen-
tations by the defendants, but the complaint before us does
not preclude the possibility that this date was within the
applicable statute of limitations.


                                2.
  Moreover, the complaint also can be read to allege that,
when Barry Aviation did make an inquiry about the
representations that had induced it to undertake the busi-
ness arrangement, the defendants took additional affirma-
tive steps to prevent or at least defer it from learning of the
misrepresentations. “Equitable estoppel suspends the run-
ning of the statute of limitations during any period in which
No. 03-2605                                                    11

the defendant took active steps to prevent the plaintiff from
suing . . . .” Singletary v. Cont’l Illinois Nat. Bank & Trust Co.
of Chicago, 9 F.3d 1236, 1241 (7th Cir. 1993). Among those
steps can be the defendants’ “concealing evidence from the
plaintiff that he needed in order to determine that he had a
claim.” Id.; see also Jackson v. Rockford Hous. Auth., 213 F.3d
389, 394 (7th Cir. 2000) (“Active steps triggering equitable
estoppel include hiding evidence . . . .”); Chapple v. Nat’l
Starch & Chem. Co. & Oil, 178 F.3d 501, 506 (7th Cir. 1999)
(“[A] defendant who conceals vital information about the
existence of a plaintiff’s claim or makes representations to
the plaintiff causing it to delay bringing the claim, can be
estopped from relying on the statute of limitations as a
defense.”). Affirmative effort to prevent the plaintiff from
suing—above the defendant’s mere denial of liability—is
what is required. See Singletary, 9 F.3d at 1241; see also Cada,
920 F.2d at 451; Davenport v. A.C. Davenport & Son Co., 903
F.2d 1139, 1142 (7th Cir. 1990) (noting that to qualify as ac-
tive concealment of fraud the plaintiff must show that the
defendants “took additional affirmative steps after commit-
ting the fraud to keep it concealed”). Of course, the addi-
tional conduct must have been the cause of the plaintiff’s
failure to sue on time. See Chapple, 178 F.3d at 507. In Cada,
we gave as an example an employer’s providing forged
documents to “negate any basis for supposing that [the em-
ployee’s] termination was related to his age” after the employer
had used age improperly to terminate an employee. Cada,
920 F.2d at 451. In short, there must be an additional af-
firmative effort to delay the suit, and that effort must have
caused the plaintiff’s delay.
   The complaint in this case set forth facts that are consis-
tent with the doctrine of equitable estoppel. For example,
the complaint mentions that, when the plaintiff expressed
its “unexpected” low level of business, the defendants re-
plied to those concerns with additional fraudulent documents.
12                                                No. 03-2605

When Barry Aviation made inquiries about the operations
levels, the defendants did not merely deny their earlier
misrepresentations but presented documents purporting to
show these fictitious levels continued in subsequent years,
through 1997-98. The plaintiff produced these new fraudulent
documents and claimed that any unexpected low levels of
business were Barry Aviation’s fault rather than any result
of low operations levels. Further inquiry may establish that,
because of these additional acts, Barry Aviation was not
aware of the pertinent facts that would form the basis of a
fraud claim. See Chakonas v. City of Chicago, 42 F.3d 1132,
1136 (7th Cir. 1994).
   The complaint sets forth facts that demonstrate Barry
Aviation could establish that the defendants “conceal[ed]
evidence from the plaintiff that [it] needed in order to de-
termine that [it] had a claim.” Singletary, 9 F.3d at 1241; see
Cada, 920 F.2d at 451; Jackson, 213 F.3d at 396 (affirming the
denial of an equitable estoppel claim because the defendant’s
statement was not a “misstatement and was not likely to hide
discrimination”). The defendants’ concealment of evidence,
production of additional false documents and diversionary
explanations that the problems were the plaintiff’s own
doing all combined to keep the plaintiff from suing when it
was first injured. If Barry Aviation were to demonstrate
reasonable reliance on these assurances, it will have estab-
lished that it can rely upon equitable estoppel.
   Because leave to amend should be freely given and only
denied after a motion to dismiss where “it appears to a cer-
tainty that the plaintiff cannot state a claim upon which re-
lief can be granted,” Rohler, 576 F.2d at 1266, we must
conclude that the district court improperly denied leave to
amend.
No. 03-2605                                                13

                       Conclusion
  For the foregoing reasons, we reverse the decision of the
district court. The case is remanded for proceedings consis-
tent with this opinion.
                                 REVERSED and REMANDED

A true Copy:
       Teste:

                          _____________________________
                           Clerk of the United States Court of
                             Appeals for the Seventh Circuit




                   USCA-02-C-0072—7-26-04
