Polk et al v. Legal Recovery Law Offices et al, No. 3:2012cv00641 - Document 34 (S.D. Cal. 2013)
Court Description: ORDER Granting 28 Plaintiff's Motion to Strike Affirmative Defenses With Leave to Amend. Defendants must file their amended answer, if any, on or before July 10, 2013. Signed by Judge Thomas J. Whelan on 6/19/2013. (srm)
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Polk et al v. Legal Recovery Law Offices et al Doc. 34 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 TERRY POLK, and TIMOTHY WAGONER, 13 v. 14 15 16 CASE NO. 12-CV-0641-W-MDD ORDER GRANTING PLAINTIFFS’ MOTION TO STRIKE AFFIRMATIVE DEFENSES [DOC. 28] WITH LEAVE TO AMEND Plaintiffs, LEGAL RECOVERY LAW OFFICES, and PALISADES COLLECTION, 17 18 Defendants. Pending before the Court is Plaintiffs’ motion to strike Defendant’s affirmative 19 defenses under Federal Rule of Civil Procedure 12(f). (Mot. [Doc. 28].) Defendants 20 oppose. (Opp’n [Doc. 31].) The Court decides the matter on the papers submitted and 21 without oral argument. See CIV. L. R. 7.1(d.1). For the reasons discussed below, the 22 Court GRANTS Plaintiffs’ motion to strike [Doc. 28] with leave to amend selected 23 affirmative defenses. 24 // 25 // 26 // 27 // 28 // -1- 12cv0641w Dockets.Justia.com 1 I. BACKGROUND 2 On March 14, 2012, Plaintiffs filed suit against Defendants alleging violation of 3 the Federal Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (the “FDCPA”), 4 California Civil Code §§ 1788, et seq., and for negligence. Defendants filed separate 5 answers, each including twenty identical affirmative defenses. (Answers [Doc.s 16, 6 17].) 7 On February 19, 2013, Plaintiffs filed this motion to strike all twenty of 8 Defendants’ affirmative defenses on the basis that “Defendants have attempted to allege 9 defenses which are not actually defenses, Defendants have raised immaterial defenses, 10 and that the defenses are not pled with sufficient particularity to provide Plaintiff[s] 11 with ‘fair’ notice.” (Mot. 6:17-22.) 12 13 II. LEGAL STANDARDS 14 A. 15 Under Federal Rule of Civil Procedure 12(f), a court “may strike from a pleading Motion to Strike 16 an insufficient defense or any redundant, immaterial, impertinent, or scandalous 17 matter.” “[T]he function of a 12(f) motion to strike is to avoid the expenditure of time 18 and money that must arise from litigating spurious issues by dispensing with those issues 19 prior to trial.” Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983). 20 At the same time, 12(f) motions are “generally regarded with disfavor because of the 21 limited importance of pleading in federal practice, and because they are often used as 22 a delaying tactic.” Neilson v. Union Bank of Cal., N.A., 290 F. Supp. 2d 1101, 1152 23 (C.D. Cal. 2003). Unless it would prejudice the opposing party, courts freely grant 24 leave to amend stricken pleadings. Wyshak v. City Nat’l Bank, 607 F.2d 824, 826 (9th 25 Cir. 1979); see also Fed. R. Civ. P. 15(a)(2). 26 An affirmative defense may be insufficient as a matter of pleading or as a matter 27 of law. Sec. People, Inc. v. Classic Woodworking, LLC, 2005 WL 645592, at *2 (N.D. 28 Cal. 2005). “The key to determining the sufficiency of pleading an affirmative defense -2- 12cv0641w 1 is whether it gives the plaintiff fair notice of the defense.” Wyshack, 607 F.2d at 827 2 (citing Conley v. Gibson, 355 U.S. 41 (1957)) (emphasis added); Simmons v. Navajo, 3 609 F.3d 1011, 1023 (9th Cir. 2010); Schutte & Koerting, Inc. v. Swett & Crawford, 4 298 Fed. Appx. 613, 615 (9th Cir. 2008). Fair notice generally requires that the 5 defendant state the nature and grounds for the affirmative defense. See Conley, 355 6 U.S. at 47. It does not, however, require a detailed statement of facts. Id. at 47-48. 7 On the other hand, an affirmative defense is legally insufficient only if it clearly lacks 8 merit “under any set of facts the defendant might allege.” McArdle v. AT&T Mobility, 9 LLC, 657 F. Supp. 1140, 1149-50 (N.D. Cal. 2009). 10 11 B. Pleading for Affirmative Defenses 12 Before addressing the merits of Plaintiffs’ motion against each of Defendants’ 13 affirmative defenses, the Court must resolve a preliminary issue raised by the parties. 14 The question is whether the Court should extend the Supreme Court’s holdings in Bell 15 Atlantic Corporation v. Twombly and Ashcroft v. Iqbal to evaluate the pleading 16 sufficiency of Defendants’ affirmative defenses. See 556 U.S. 662, 129 S. Ct. 1937 17 (2009); 550 U.S. 544 (2007). 18 As discussed above, the Ninth Circuit has directed courts to evaluate the 19 pleading sufficiency of affirmative defenses under the “fair notice” standard. Wyshack, 20 607 F.2d at 827. In their motion, Plaintiffs contend that Defendants have alleged 21 immaterial defenses and defenses which are not actually defenses, and failed to plead 22 their defenses with sufficient particularity to provide Plaintiffs with fair notice. (Mot. 23 6:17-22.) Moreover, Plaintiffs contend that Defendants have not raised the defenses 24 “beyond the speculative level.” (Id. 6:22-23.) Plaintiffs also suggest that the pleading 25 standards established by the Supreme Court in Twombly and Iqbal apply. (See Id. at 3.) 26 Although the Ninth Circuit has not yet adopted the Twombly/Iqbal pleading standard 27 28 -3- 12cv0641w 1 for affirmative defenses, Plaintiffs cite to several district courts that have done so.1 (Id. 2 at 7.) In response, Defendants rely on other district courts, including one within this 3 district, that have declined to extend Twombly and Iqbal to affirmative defenses.2 4 (Opp’n 9.) Based on the case law, it is clear that this point of law is unresolved. See 5 Barnes, 718 F. Supp. 2d at 1171 (“[N]either the Ninth Circuit or any other Circuit 6 Courts of Appeals have extended Twombly’s heightened pleading standard to 7 affirmative defenses.”). 8 Absent further direction, this Court declines to extend the Twombly/Iqbal 9 pleading standards to affirmative defenses. Several considerations inform this 10 conclusion. Most significantly, the Ninth Circuit has continued to recognize the “fair 11 notice” standard of affirmative defense pleading even after Twombly and Iqbal. See 12 Simmons, 609 F.3d at 1023; Schutte & Koerting, 298 Fed. Appx. at 615. 13 Moreover, the Supreme Court’s analysis in Twombly and Iqbal is itself limited to 14 pleadings under Federal Rule of Civil Procedure 8(a)(2). 129 U.S. at 1950; 550 U.S. 15 at 555. Rule 8(a)(2) requires that the party stating a claim for relief provide “a short 16 and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. 17 Civ. P. 8(a)(2) (emphasis added). Rule 8(c), on the other hand, only requires a 18 responding party to “affirmatively state” its affirmative defenses. Fed. R. Civ. P. 8(c) 19 (emphasis added). The Supreme Court’s discussion in Iqbal suggests that this 20 distinction is important. See 129 S. Ct. At 1950. Factual plausibility—which is the key 21 difference between Twombly/Iqbal pleading and “fair notice” pleading—is particularly 22 suited to claim pleading because Rule 8(a)(2) requires that the party “show[ ]” that it 23 24 1 27 2 Plaintiffs cite Hayne v. Green Ford Sales, Inc., 263 F.R.D. 647, 650 (D. Kan. 2009) 25 for the proposition that district-courts from the Second, Fifth, Sixth, Seventh, Ninth, and Eleventh Circuits have concluded that the Twombly/Iqbal standard applies to affirmative 26 defenses. See J&J Sports Prods., Inc. v. Scace, 2011 WL 2132723, at *1 (S.D. Cal. 2011). Additionally, this Court recently declined to extend the Twombly/Iqbal standard to affirmative 28 defenses. See Kohler v. Islands Restaurants, LP, 280 F.R.D. 560 (S.D. Cal. 2012). -4- 12cv0641w 1 is entitled to relief. Id. (“But where the well-pleaded facts do not permit the court to 2 infer more than mere possibility of misconduct, the complaint has alleged—but it has 3 not ‘show[n]’—‘that the pleader is entitled to relief.’”) (quoting Fed. R. Civ. P. 4 8(a)(2)). Stating an affirmative defense under Rule 8(c), however, does not require the 5 pleader to “show” entitlement to its defense.3 See Fed. R. Civ. P. 8(c). Applying the 6 same standard of pleading to claims and affirmative defenses, despite this clear 7 distinction in the rules’ language, would run counter to the Supreme Court’s warning 8 in Twombly that legislative action, not “judicial interpretation,” is necessary to 9 “broaden the scope” of specific federal pleading standards. See 550 U.S. at 569 n. 14. 10 Finally, the Court is persuaded by the District of Colorado’s recognized 11 distinction between the time plaintiff has to compose a complaint versus the time a 12 defendant has to answer it. See Holdbrook, 2010 WL 865380, at *2. As the court 13 explained, “it is reasonable to impose stricter pleading requirements on a plaintiff who 14 has significantly more time to develop factual support for his claims than a defendant 15 who is only given [21] days to respond to a complaint and assert its affirmative 16 defenses.” Id.; see Fed. R. Civ. P. 12(a). 17 For these reasons, the Court will review the sufficiency of Defendants’ affirmative 18 defenses under the “fair notice” pleading standard. 19 // 20 // 21 // 22 // 23 // 24 // 25 // 26 // 27 28 3 Nor does pleading of non-affirmative defenses under Rule 8(b)(1) require any type of “showing.” See Fed. R. Civ. P. 8(b)(1). Rule 8(b)(1) only requires the responding party to “state in short and plain terms its defenses to each claim asserted against it.” Id. -5- 12cv0641w 1 III. DISCUSSION 2 A. 3 In their first affirmative defense, Defendants allege that Plaintiffs’ Complaint “in First Affirm ative Defense - Failure to State a Claim 4 whole, or in part, fails to state a claim upon which relief can be granted.” (Answers ¶ 5 70.) The Court agrees with Plaintiffs that this simple identification of one of 6 Defendants’ defenses is insufficient to provide “fair notice.” See Wyshak, 607 F.2d at 7 827. Although Defendants’ pleading need not be supported by detailed factual 8 allegations, it must at least give notice of the “grounds upon which it rests.” Conley, 9 355 U.S. at 47. Therefore, the Court STRIKES Defendants’ first affirmative defense 10 WITH LEAVE TO AMEND. 11 12 B. Second Affirm ative Defense - Statute of Lim itations 13 In their second affirmative defense, Defendants allege that Plaintiffs’ claims are 14 “barred by the applicable statute of limitations.” (Answer ¶ 71.) Again, the Court 15 agrees with Plaintiffs that this statement alone is insufficient to provide fair notice. In 16 Wyshak, the Ninth Circuit was confronted with a nearly identical pleading. 607 F.2d 17 at 827 (“[P]laintiff’s claims are barred by the applicable statute of limitations.”). In 18 Wyshack, the court held that fair notice was provided because an attached 19 memorandum identified the actual statute upon which the defense rested. Id. Here, 20 Defendants make no mention of the applicable statute in its answer, and has attached 21 no supplemental briefing on that point. (See Answer ¶ 71.) Accordingly, the Court 22 STRIKES Defendants’ second affirmative defense WITH LEAVE TO AMEND. 23 24 25 26 C. Th ird, Fourth and Seventeenth Affirm ative Defenses - Good Faith and Due Care In their third affirmative defense, Defendants contend that “all of [their] . . . 27 actions were taken in good faith and with due care, and Defendant[s] did not directly 28 engage in the alleged act, acts or omission(s) constituting the alleged violations or causes of action asserted by plaintiff.” (See Answer ¶ 72.) In their fourth affirmative -6- 12cv0641w 1 defense, Defendants allege that they did not “engage in any conduct that was 2 intentional, knowing, willfull [sic], reckless, malicious, wanton or outrageous and 3 Defendants acted in good faith at all times.” (See Answer ¶ 73.) In their seventeenth 4 affirmative defense, Defendants contend that they “acted lawfully and within their legal 5 rights, with a good faith belief in the exercise of their rights and in furtherance of a 6 legitimate business purpose and such actions were justified and reasonable under 7 circumstances based on the information available.” (See Answer ¶ 86.) 8 A good faith defense fails as a matter of law with regard to the alleged FDCPA 9 violation because the FDCPA is essentially a strict liability statute. See Clark v. Capital 10 Credit & Collection Servs., 460 F. 3d 1162, 1175 (9th Cir. 2006) (stating that the 11 FDCPA does not require that a violation of § 1692e be knowing or intentional). 12 Moreover, a good faith defense fails as a matter of law with regard to the negligence 13 claim because a plaintiff’s claim for negligence may stand irrespective of the defendant’s 14 state of mind. See Restatement (Third) of Torts § 3 (2012). 15 However, good faith may be a viable defense to the alleged violation of the 16 California Civil Code because § 1788.15(a) states that “[n]o debt collector shall collect 17 or attempt to collect a consumer debt by means of judicial proceedings when the debt 18 collector knows that service of process, where essential to jurisdiction over the debtor 19 or his property, has not been legally effected.” Cal. Civ. Code § 1788.15(a) (West 20 2009). Furthermore, Section 1788.30(b) allows for liability for additional damages 21 besides actual damages where a debt collector violates the statute “willfully and 22 knowingly.” Cal. Civ. Code § 1788.30(b) (West 2007). Moreover, due care is a legally 23 viable defense to a negligence claim. See Restatement (Third) of Torts § 3 (2012). 24 Nevertheless, the Court agrees with Plaintiffs that these statements alone are 25 insufficient to provide fair notice. Defendants provide no basis for their claims. 26 Therefore, the Court STRIKES Defendants’ third, fourth and seventeenth affirmative 27 defenses WITH LEAVE TO AMEND. 28 -7- 12cv0641w 1 D. Fifth , Sixth , Seventh , Eigh th , and Ninth Affirm ative Defense - 2 Doctrines of Estoppel, Lach es, W aiver, Res Judicata, & Collateral 3 Estoppel 4 In their fifth, sixth, seventh, eighth, and ninth affirmative defenses, Defendants 5 claim that Plaintiffs’ claims are barred by the doctrines of estoppel, laches, waiver, res 6 judicata, and collateral estoppel. (See Answer ¶ 74-78.) Though these doctrines may 7 be legally plausible, the Court agrees with Plaintiffs that these statements are 8 insufficient to provide fair notice. Defendants provide no basis for these claims in their 9 answers, and “a reference to a doctrine . . . is insufficient notice.” Qarbon.com Inc. v. 10 eHelp Corp., 315 F. Supp. 2d 1046, 1049 (N.D. Cal. 2004). Accordingly, the Court 11 STRIKES Defendants’ fifth, sixth, seventh, eighth, and ninth affirmative defenses 12 WITH LEAVE TO AMEND. 13 14 E. Tenth Affirm ative Defense - Mitigation of Dam ages 15 In their tenth affirmative defense, Defendants allege that Plaintiffs “failed to 16 mitigate [their] damages, if any were suffered.” (See Answer ¶ 79.) Defendants provide 17 no basis for this claim in their answers. Additionally, this affirmative defense fails to 18 give Plaintiffs any indication regarding the conduct supporting the defense. 19 Accordingly, the Court STRIKES Defendants’ tenth affirmative defense WITH 20 LEAVE TO AMEND. 21 22 F. Eleventh Affirm ative Defense - Th ird-Party Responsibility 23 In their eleventh affirmative defense, Defendants contend that “Plaintiff[s’] 24 damages, if any, were caused by the actions or inactions of others whom these 25 answering Defendants had no control.” (See Answer ¶ 80.) Defendants fail to give 26 Plaintiffs any indication as to who the “others” referred to are, their relationship to 27 them, or how they lacked control over them. Therefore, the Court STRIKES 28 Defendants’ eleventh affirmative defense WITH LEAVE TO AMEND. -8- 12cv0641w 1 2 G. 3 4 Twelfth and Th irteenth Affirm ative Defenses - Bona Fide Mistak e and Error In their twelfth and thirteenth affirmative defenses, Defendants contend that 5 “the alleged violations and/or causes of action asserted by [Plaintiffs] were or are the 6 result of a bona fide mistake” and a “bona fide error”. (See Answer ¶ 81.) The FDCPA 7 makes an exception for debt collectors “if the debt collector shows by a preponderance 8 of evidence that the violation was not intentional and resulted from a bona fide error 9 notwithstanding the maintenance of procedures reasonably adapted to avoid any such 10 error.” 15 U.S.C. § 1692k(c). Thus, these may be legally plausible affirmative defenses. 11 However, the Court finds that Defendants have not pled them with sufficient detail to 12 give fair notice because they fail to specify the mistake(s) or error(s) they refer to or 13 what, if any, “procedures reasonably adapted to avoid any such error [or mistake]” were 14 maintained. 15 Plaintiffs rely on Bradshaw v. Hilco Receivables, LLC, 725 F. Supp. 2d 532 (D. 16 Md. 2010), for the proposition that Defendants are required to comply with Fed. R. 17 Civ. P. 9(b) and plead the mistake defense “with particularity.” The Court need not 18 rule on this matter, as Defendants’ pleadings have not sufficed to give Plaintiffs 19 sufficient notice under the “fair notice” standard. Therefore, the Court STRIKES 20 Defendants’ twelfth and thirteenth affirmative defenses WITH LEAVE TO AMEND. 21 22 H. Fourteenth Affirm ative Defense - Contributory Negligence 23 In their fourteenth affirmative defense, Defendants allege that “Plaintiff[s’]claims 24 are diminished by the doctrine of contributory negligence.” (See Answer ¶ 83.) 25 Defendants’ pleading fails to give Plaintiff any indication regarding the conduct 26 supporting the defense. Thus, the Court STRIKES Defendants’ fourteenth affirmative 27 defense WITH LEAVE TO AMEND. 28 -9- 12cv0641w 1 I. 2 3 Fifteenth Affirm ative Defense - Protection Under First Am endm ent and Litigation Privilege In their fifteenth affirmative defense, Defendants contend that “[t]he alleged 4 violations and/or causes of action asserted are protected speech under the first 5 amendment and protected under the litigation privilege including but not limited to 6 California Civil Code §47.” (See Answer ¶ 84.) Defendants provide no basis for these 7 claims in their answers, and “a reference to a doctrine . . . is insufficient notice.” 8 Qarbon, 315 F. Supp. at 1049. Accordingly, the Court STRIKES Defendants’ fifteenth 9 affirmative defense WITH LEAVE TO AMEND. 10 11 J. Sixteenth Affirm ative Defense - Dam ages Lim itations 12 In their sixteenth affirmative defense, Defendants allege that “if Plaintiff[s] 13 [were] damaged in any sum or sums as alleged, which Defendant denies, then 14 Plaintiff[s’] damages are limited by 15 U.S.C. §§1692k(a)(1), 1692k(a)(2)(A), 15 1692k(a)(3) and 1692k(b)(1)” of the FDCPA. (See Answer ¶ 85.) This is not an 16 affirmative defense. As a matter of law, Plaintiffs’ claim under the FDCPA is limited 17 to the damages allowed by the statute. Defendants therefore need not plead this 18 limitation in their answers. Accordingly, the Court STRIKES Defendants’ sixteenth 19 affirmative defense WITHOUT LEAVE TO AMEND. 20 21 K. Eigh teenth Defense - Non-Materiality of Alleged False Representations 22 23 In their eighteenth affirmative defense, Defendants claim that “if any false 24 representations occurred, which is denied, that any false representations were non25 material and not actionable under the FDCPA.” (See Answer ¶ 87.) Under §1692e, “a 26 debt collector may not use any false, deceptive or misleading representation or means” 27 to collect a debt. 15 U.S.C. §1692e (West 1996). Defendants rely on Donohue v. 28 Quick Collect, Inc., 592 F. 3d 1027 (9th Cir. 2010) for the proposition that “false but - 10 - 12cv0641w 1 non-material misrepresentations are not likely to mislead the least sophisticated 2 consumer and therefore are not actionable under §§1692e or 1692f.” (Reply 8:1-5.) 3 The Court agrees with the Defendants that non-materiality may be a defense to 4 FDCPA claims, but also agrees with the Plaintiffs that the defense is not pled with 5 sufficient detail to give fair notice. Accordingly, the Court STRIKES Defendants’ 6 eighteenth affirmative defense WITH LEAVE TO AMEND. 7 8 L. Nineteenth Affirm ative Defense - Plaintiffs’ Bad Faith 9 In their nineteenth affirmative defense, Defendants allege that this suit “was 10 brought in bad faith and is completely without merit.” (See Answer ¶ 88.) Defendants 11 provide no basis for this claim in their answers. Accordingly, the Court STRIKES 12 Defendants’ nineteenth affirmative defense WITH LEAVE TO AMEND. 13 14 15 16 M. Twentieth Affirm ative Defense - Reservation of Righ t to Assert Additional Defenses As their twentieth affirmative defense, Defendants “reserve[] the right to add 17 additional affirmative defenses as may be discovered through future discovery.” (See 18 Answer ¶ 89.) Plaintiffs argue that this is not a defense. The Court agrees. The mere 19 “‘reservation of affirmative defenses’ is not an affirmative defense.” E.E.O.C. v. 20 Timeless Investments, Inc., 734 F.Supp. 2d 1035, 1055 (E.D. Cal. 2010). Defendants 21 may assert additional affirmative defenses later by amending their pleadings in 22 compliance with Rule 15. See Fed. R. Civ. P. 15; U.S. v. Global Mortg. Funding, Inc., 23 2008 WL 5264986 at *5 (C.D. Cal. 2008) (“[I]f a Defendant seeks to add affirmative 24 defenses, it must comply with the procedure set out in Federal Rule of Civil Procedure 25 15.”); Timeless Investments, Inc., 734 F.Supp. 2d at 1055 (“Rule 15 does not require 26 a defendant to “expressly reserve” unnamed affirmative defenses in its answer.”). In 27 short, Defendants “[are] either entitled to raise additional defenses at a later time or [] 28 [are] not; [their] right to reserve [their] rights to do so is a legal nullity.” Global Mortg. - 11 - 12cv0641w 1 Funding, Inc., 2008 WL 5264986 at *5. Therefore, the Court STRIKES Defendants’ 2 twentieth affirmative defense WITHOUT LEAVE TO AMEND. 3 4 IV. CONCLUSION 5 For the previously stated reasons, the Court GRANTS Plaintiffs’ motion to strike 6 [Doc. 28] and ORDERS as follows: 7 1. 8 9 The Court STRIKES Defendants’ sixteenth and twentieth affirmative defenses WITHOUT LEAVE TO AMEND. 2. The Court STRIKES Defendants’ first, second, third, fourth, fifth, sixth, 10 seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth, 11 fifteenth, seventeenth, eighteenth, and nineteenth affirmative defenses 12 WITH LEAVE TO AMEND. 13 14 4. Defendants must file their amended answer, if any, on or before July 10, 2013. 15 16 IT IS SO ORDERED. 17 18 DATED: June 19, 2013 19 20 21 Hon. Thomas J. Whelan United States District Judge 22 23 24 25 26 27 28 - 12 - 12cv0641w
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