Landmark Equity Fund, II, LLC v. Arias, No. 1:2015cv00202 - Document 30 (E.D. Cal. 2015)
Court Description: ORDER GRANTING IN PART 19 Plaintiff's Motion to Strike Portions of the Answer Filed by Cecilio Rosales and Virginia Rosales, signed by Magistrate Judge Jennifer L. Thurston on 7/9/2015. (Hall, S)
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 LANDMARK EQUITY FUND, II, LLC, 12 Plaintiff, 13 14 v. JULIO ARIAS, et al., 15 Defendants. ) ) ) ) ) ) ) ) ) Case No.: 1:15-cv-00202 - JLT ORDER GRANTING IN PART PLAINTIFF’S MOTION TO STRIKE PORTIONS OF THE ANSWER FILED BY CECILIO ROSALES AND VIRGINIA ROSALES (Doc. 19) 16 17 Plaintiff Landmark Equity Fund II, LLC seek to strike the affirmative defenses asserted by 18 defendants Cecilio Rosales and Virginia Rosales. (Doc. 19). On June 2, 2015, Defendants filed their 19 opposition to the motion (Doc. 24), to which Plaintiff filed a reply on July 3, 2015 (Doc. 26). For the 20 following reasons, Plaintiff’s motion to strike is GRANTED IN PART. 21 I. Background 22 Plaintiff initiated this action for the foreclosure of real property and enforcement of a debt for 23 which the property is secured as collateral. (Docs. 1, 8). Plaintiff alleges the real property in issue is 24 located at 1524 Lincoln Street, Bakersfield, California 93305, and title for the property was vested in 25 Raul Aguilar. (Doc. 8 at 2, ¶ 9.) According to Plaintiff, Mr. Aguilar “transferred the Property to 26 Defendant Arias, per a warranty deed recorded 6/15/01, Kern County Document No. 201082359.” (Id.) 27 Plaintiff alleges that around 2004 or 2005, Cecelio Rosales and Virginia Rosales “began 28 occupying the Property while Arias occupied a nearby house and agreed to act as a straw man borrower 1 1 on their behalf as to the Property.” (Doc. 8 at 3, ¶ 10.) Plaintiff alleges Arias “transferred title to the 2 Property to himself, in his current name, per a warranty deed recorded 5/1/06, Kern County Document 3 No. 206107275.” (Id., ¶ 11.) Further, Plaintiff alleges Arias “executed a promissory note for 4 $168,000.00 to Mortgage Electronic Registration Systems, [MERS] nominee for WMC Mortgage Corp, 5 for which the Property was secured as collateral, per a Deed of Trust, dated 11/2/06, recorded 11/28/06, 6 Kern County Document No. 0206291233.” (Id., ¶ 12.) 7 8 9 10 11 12 13 14 15 According to Plaintiff, the Arias is identified as the Borrower in the Deed of Trust, which contains the following provisions: Borrower shall occupy, establish and use the Property as Borrower’s principal residence within 60 days after execution of this Security Instrument and shall continue to occupy the Property as Borrower’s principal address for at least one year after the date of occupancy, unless Lender otherwise agrees in writing, which consent shall not be unreasonably withheld, or unless extenuating circumstances exist which are beyond Borrower’s control. [Deed of Trust ¶ 6] … Borrower shall be in default if, during the Loan application process, Borrower or any persons or entities acting at the direction of Borrower or with Borrower’s knowledge and consent gave materially false, misleading, or inaccurate information or statements to Lender (or failed to provide Lender with material information) in connection with the Loan. Material representations include, but are not limited to, representations concerning Borrower’s occupancy of the Property as Borrower’s principal residence. [Deed of Trust ¶8] 16 17 (Doc. 8 at 13, ¶¶ 13-15.) Plaintiff asserts Arias did not disclose “his role as a straw man borrower for 18 the Rosales Defendants and non-occupancy of the Property, contrary to the Note and Deed of Trust.” 19 (Id. at 4, ¶ 17.) Further, Plaintiff alleges that “Arias breached his obligations under the Note and Deed 20 of Trust” through failing to disclose this role, and by “failing to make timely payments.” (Id., ¶ 19.) 21 Plaintiff alleges MERS “assigned the Notice and Deed of Trust to Liquidation Properties, Inc. 22 n/k/a Citigroup Global Markets Realty Corp” on October 30, 2008, and the assignment was recorded 23 on December 18, 2008. (Doc. 8 at 4, ¶ 18.) 24 Plaintiff asserts, “Arias executed a loan modification of the Note and Deed of Trust, with SN 25 Servicing, servicer for Citigroup” on February 18, 2010, with a retroactive effective date of January 12, 26 2010. (Doc. 8 at 4, ¶ 20.) Plaintiff alleges that Arias represented himself as the borrower in the loan 27 modification, and “certified, represented and agreed with SN that he lived in the Property as his 28 principal address.” (Id., ¶¶ 20-21.) According to Plaintiff, Arias also breached the loan modification 2 1 through “failing to make timely payments, failed to disclose his straw-man execution of the Instruments 2 for the Rosales Defendants and his non-occupancy of the Property.” (Id., ¶ 22.) 3 Plaintiff alleges Citigroup sold the loan in June 2011 to Residential Fund 76, LLC, and 4 “formally assigned the Notice, Deed of Trust and 2010 Modification” on October 11, 201. (Doc. 8 at 5 5, ¶¶ 24-25.) Plaintiff asserts that Residual Fund 76, LLC then assigned the Note, Deed of Trust, and 6 Modification to Landmark Financial Solutions (“LFS”) on October 28, 2011. (Id., ¶ 26.) 7 Plaintiff alleges Arias executed a second loan modification on September 29, 2011, 8 “stipulating that LFS was the holder of the loan, representing himself as the borrower, reducing the 9 principal loan balance to $80,000.00, per his fulfillment of its conditions, including applying for [the 10 Hardest-Hit Fund].” (Doc. 8 at 5, ¶ 27.) However, Plaintiff asserts that Arias breached the 2011 11 modification agreement. (Id., ¶ 30) According to Plaintiff, LFS assigned the Note, Deed of Trust and 12 Modifications to Plaintiff on January 27, 2015. (Doc. 8 at 5, ¶ 31.) 13 Based upon these facts, Plaintiff seeks the foreclosure of the Property, “a post-sale 14 judgment/writ of possession/ejectment” and enforcement of the Notice, Deed of Trust, and Loan 15 Modification instruments “under which Arias is indebted to Plaintiff.” (See Doc. 8 at 6-7.) 16 Cecilio and Virginia Rosales Arias filed their answer to the amended complaint on June 10, 17 2015. (Doc. 16.) Defendants denied many factual allegations, and stated the following affirmative 18 defenses: (1) failure to state a cause of action, (2) actions in good faith, (3) estoppel/ratification, (4) 19 lack of standing, (5) statute of limitations, (6) laches, (7) ratification of acts, (8) equitable estoppel, 20 laches, and unclean hands, (9) waiver, (10) full performance, and (11) consent. (See Doc. 16 at 4-7, ¶¶ 21 50-60.) Defendants indicated they were reserving a right to state additional affirmative defense based 22 upon new facts that may be discovered. (Id. at 7, ¶ 61.) Further, in his prayer for relief, Defendants 23 requested they “be awarded attorneys fees and costs.” (Id. at 7.) Plaintiff now requests that Court “strik[e] the affirmative defenses and prayer for attorney’s fees 24 25 of the Rosales Defendants and … deem certain averments in the First Amended Complaint admitted.” 26 (Doc. 19 at 1.) 27 /// 28 II. Legal Standards 3 Rule 8 of the Federal Rules of Civil Procedure requires a party responding to a pleading to 1 2 “state in short and plain terms its defenses to each claim asserted against it.” Fed. R. Civ. P. 8(b)(1). 3 Further, responding parties are instructed to “state any avoidance or affirmative defense, including: 4 accord and satisfaction; assumption of risk; contributory negligence; duress; estoppel; failure of 5 consideration; fraud; illegality; injury by fellow servant; laches; license; payment; release; res judicata; 6 statute of frauds; statute of limitations; and waiver.” Fed. R. Civ. P. 8(c). The Court may strike “an insufficient defense or any redundant, immaterial, impertinent, or 7 8 scandalous matter” from a pleading, either on the Court’s own motion or by motion of a party. Fed. R. 9 Civ. P. 12(f). A defense may be “insufficient” as a matter of pleading or as a matter of law. See 10 Security People, Inc. v. Classic Woodworking, LLC, 2005 U.S. Dist. LEXIS 44641, at *5 (N.D. Cal. 11 Mar. 4, 2005) (citing Wyshak v. City Nat’l Bank, 607 F.2d 824, 827 (9th Cir. 1979); Kaiser Aluminum 12 & Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1057 (5th Cir. 1982)). The Ninth 13 Circuit has explained a defense is insufficiently pled if it fails to give “fair notice” of the defense. 14 Wyshak, 607 F.2d at 827. A defense is insufficient as a matter of law when there are no questions of 15 fact, questions of law are clear and not in dispute, and the defense would not succeed under any 16 circumstances. SEC v. Sands, 902 F. Supp. 1149, 1165 (C.D. Cal. 1995) (citations omitted). Further, a 17 defense may be stricken as immaterial if it “has no essential or important relationship to the claim for 18 relief or the defenses being pleaded.” Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993) 19 (citations omitted), rev’d on other grounds, 510 U.S. 517 (1994); see also Fed. R. Civ. P. 12(f). The purpose of a motion to strike under Rule 12(f) “is to avoid the expenditure of time and 20 21 money that must arise from litigating spurious issues.” Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 22 880, 885 (9th Cir. 1983). However, motions to strike affirmative defenses “are disfavored and 23 infrequently granted.” Neveau v. City of Fresno, 392 F. Supp. 2d 1159, 1170 (E.D. Cal. 2005). Even if 24 a court strikes an affirmative defense, leave to amend should be freely given where the opposing party 25 will not be prejudiced given the strong policy favoring resolution of cases “on the proofs rather than the 26 pleadings.” Rennie & Laughlin, Inc. v. Chrysler Corp., 242 F.2d 208, 213 (9th Cir. 1957); Wyshak, 27 607 F.2d at 827. 28 III. Discussion and Analysis 4 1 A. 2 Failure to State a Cause of Action: “Defendants allege that the Plaintiff failed to state facts sufficient to constitute a cause of action against the Defendants.” (Doc. 16 at 4, ¶ 50.) 3 Plaintiff contends this “is not a proper affirmative defense.” (Doc. 19 at 5.) In response, 4 Defendants assert the defense was raised “as a precautionary matter due to [their] inability at the 5 pleadings stage to determine the terms of the assignment upon which plaintiff claims a right to pursue 6 this action. (Doc. 24 at 4.) 7 Significantly, proper “[a]ffirmative defenses plead matters extraneous to the plaintiff’s prima 8 facie case, which deny plaintiff’s right to recover, even if the allegations of the complaint are true.” 9 Federal Deposit Ins. Corp. v. Main Hurdman, 655 F. Supp. 259, 262 (E.D. Cal. 1987). In contrast, a 10 denial of allegations in the complaint or “an assertion that the [plaintiff] cannot prove the elements of 11 [its] claim” is not a proper affirmative defense. Solis v. Couturier, 2009 U.S. Dist. LEXIS 63271 at 12 *8-9 (E.D. Cal. July 8, 2009). Accordingly, “[f]ailure to state a claim is an assertion of a defect in 13 Plaintiff’s prima facie case, not an affirmative defense.” Joe Hand Promotions, Inc. v. Estrada, 2011 14 U.S. Dist. LEXIS 61010 at *5 (E.D. Cal. June 8, 2011); see also Boldstar Tech., LLC v. Home Depot, 15 Inc., 517 F. Supp. 2d 1283, 1291 (S.D. Fla. 2007) (“Failure to state a claim is a defect in the plaintiff’s 16 claim; it is not an additional set of facts that bars recovery notwithstanding the plaintiff’s valid prima 17 facie case”). Therefore, Defendants’ first affirmative defense is STRICKEN. 18 19 B. Actions in Good Faith: “Defendant alleges that these answering Defendants acted reasonably, properly and in good faith in all transactions relevant hereto, and did not directly or indirectly perform any acts whatsoever which would constitute a breach of the Note and/or Deed of Trust.” (Doc. 16 at 4-5, ¶51.) 20 21 Plaintiff argues this affirmative defense “is immaterial, insufficient and impertinent as the only 22 transactions at issue are the Note, Deed of Trust and Modifications, which the Rosales Defendants did 23 not execute, of which they deny any knowledge.” (Doc. 19 at 5, emphasis omitted.) On the other 24 hand, Defendants argue “this affirmative defense is properly asserted since plaintiff alleges [they] are 25 proper party defendants to the Foreclosure count.” (Doc. 24 at 4.) 26 Notably, however, Defendants do not allege facts in their Answer to support a conclusion that 27 they acted in good faith. Moreover, to the extent that Defendants argue they “did not directly or 28 indirectly perform any acts whatsoever which would constitute a breach,” this defense goes to the 5 1 merits of the complaint. An allegation that “merely negates an element [the plaintiff] was required to 2 prove … [is] not an affirmative defense.” Zivkovic v. Southern California Edison Co., 302 F.3d 1080, 3 1088 (9th Cir. 2002). Therefore, the second affirmative defense is STRICKEN. 4 C. 5 6 7 Estoppel/ Ratification: “Defendants allege that Plaintiffs predecessors in interest directed, ordered, approved and/or ratified Defendants’ occupancy of the property alleged herein, and Plaintiff unreasonably delayed in bringing this action and is estopped and barred from alleging the matters set forth in said Amended Complaint.” (Doc. 16 at 5, ¶ 52.) Plaintiff argues this affirmative defense fails to provide fair notice because no facts are pled in 8 support of the defense. (Doc. 19 at 5.) Plaintiff notes that Defendants “do not allege Plaintiff misled 9 them to a particular result, or even executed any written documents with them, per the Statute of 10 Frauds.” (Id.) Further, Plaintiff asserts the defense “is impertinent as the Rosales Defendants fail to 11 allege the existence of a voidable contract with Plaintiff or its predecessors.” (Id.) 12 In response, Arias asserts the defense based upon their “faithful performance pursuant to the 13 terms of the Promissory Note and Deed of Trust since 2006.” (Doc. 24 at 5.) According to 14 Defendants, “The fact that ARIAS and ROSALES’ [sic] have made all payments and complied with all 15 of the terms in the[] operative contracts warrants the assertion of these defenses that any breach…may 16 estop plaintiff from pursuing this action or otherwise constitute a ratification by plaintiff and/or its 17 predecessors in interest not to enforce or otherwise pursue the occupancy clause as a default.” (Id.) 18 Significantly, however, these assertions are not made in the answer, which fails to provide Plaintiff fair 19 notice of how the doctrine of estoppel or ratification may be applied. See J & J Sports Productions, 20 Inc. v. Montanez, 2010 U.S. Dist. LEXIS 137732 at *8-9, (E.D. Cal. Dec. 13, 2010) (striking an 21 affirmative defense based upon estoppel where the plaintiff failed “to specify which theory of estoppel 22 is being asserted and the allegation [was] wholly insufficient to provide . . . adequate notice of the facts 23 supporting the defense”). Therefore, Defendants’ third affirmative defense is insufficiently pled, and is 24 STRICKEN with leave to amend. Standing: “Defendants allege that Plaintiff lacks standing to sue.” (Doc. 16 at 5, ¶ 53.) 25 D. 26 Plaintiff argues this is not an affirmative defense, but rather “an allegation Plaintiff has not met 27 its burden of proof to pursue this case.” (Doc. 19 at 6, citing Dairy Employees Union Local No. 17 v. 28 Dairy, 2015 U.S. Dist. LEXIS 14805 at *10 (C.D. Cal. Feb. 6, 2015)). In response, Defendants assert 6 1 they are unable to determine whether Plaintiff has standing “[u]ntil discovery is conducted concerning 2 the underlying security documents and the …sundry assignments plaintiff claims the right to pursue.” 3 (Doc. 24 at 5.) 4 Importantly, because “standing is an element of plaintiff’s prima facie case,” a challenge to 5 standing is not a proper affirmative defense. Dodson v. Strategic Rests. Acquisition Co. II, LLC, 289 6 F.R.D. 595, 604 (E.D. Cal. 2013) (striking an affirmative defense for lack of standing, because the issue 7 “is properly addressed through denial or a motion to dismiss”). Therefore, Defendants’ fourth 8 affirmative defense is STRICKEN. 9 E. 10 11 12 Statute of Limitations: “Defendants allege that some, or all of the purported claims for damages are barred by the provisions of applicable statutes of limitations in the California Code of Civil Procedure, including but not limited to, Sections 318, 321, 336, 337, 337.1, 337.15, 337.2, 338, 338.1, 339, 339.5, 340, 340.1, 340.2, 340.3, 340A, 340.5, 340.6, 342, 343, 344, 345.” (Doc. 16 at 5, ¶ 54.) Plaintiff argues that Defendants fail to identify in the Answer “which if any claims are time 13 barred.” (Doc. 19 at 6, citing Hernandez v. County of Monterey, 2015 U.S. Dist. LEXIS 49822 at *9- 14 10 (N.D. Cal. Apr. 15, 2015)). In response, Defendants assert the affirmative defense is “based on the 15 suspected expiration of the statute of limitations governing plaintiff’s claim.” (Doc. 24 at 5.) 16 Defendants argue, “Plaintiff claims a breach of contract under the ‘occupancy clause,’ the fulfillment or 17 non-fulfillment of which occurred over 7 years ago… and the fact that this claim has not been raised at 18 any point in time prior to now suggests the applicable statute of limitations has expired.” (Id.) 19 Again, however, Defendants not state any facts in the Answer to support this affirmative 20 defense. As the court noted in Hernandez, a defendant must identify the claim to which he believes a 21 statute of limitation applies, and allege facts to give a plaintiff fair notice of the defense. Id., 2015 U.S. 22 Dist. LEXIS 49822 at *10; see also Wyshak, 607 F.2d at 827. Accordingly, the affirmative defense is 23 STRICKEN with leave to amend. 24 25 F. Laches: “Defendants allege that Plaintiff and its predecessors in interest, have unreasonably delayed in bringing this action, and such delay has caused prejudice to Defendants’ defense hereto, and, therefore, the action is barred by the doctrine of laches.” (Doc. 16 at 5.) 26 27 28 As explained by the Ninth Circuit, “Laches is an equitable time limitation on a party's right to bring suit.” Kling v. Hallmark Cards, Inc., 225 F.3d 1030, 1036 (9th Cir. 2000). To establish the 7 1 doctrine is applicable, a defendant must show “both an unreasonable delay by the plaintiff and 2 prejudice to itself.” Id. (quoting Couveau v. American Airlines, 218 F.3d 1078, 1083 (9th Cir. 2000)). 3 Here, Defendants did not allege facts to demonstrate Plaintiff unreasonably delayed in 4 commencing this action, or allege facts supporting a determination that prejudice resulted due to the 5 delay in filing. Because their answer fails to overcome the presumption that the doctrine is not 6 applicable, Defendants’ sixth affirmative defense is STRICKEN with leave to amend. 7 G. 8 Ratification: “Defendants allege that Plaintiff had actual and/or constructive knowledge of the circumstances on which the Amended Complaint is based. Plaintiff expressly and/or impliedly accepted those circumstances and/or ratified the conduct of which it now complains, and as a result, is barred from any recovery.” (Doc. 16 at 6, ¶ 56.) 9 10 Plaintiff contends this affirmative defense “is redundant as duplicative of the Third Defense, 11 which also pleads Estoppel and fails to plead any facts.” (Doc. 19 at 6-7.) In response, Defendants 12 argue they “believe there is a basis for the affirmative defense Ratification of Acts since plaintiff is the 13 last in a long list of assignees who may have waived the occupancy requirement, ratified the waiver of 14 the occupancy by accepting mortgage payments, and/or ratified the conduct of prior assignees who 15 have either waived or ratified the performance or conditions for performance under the Note and Deed 16 of Trust.” (Doc. 24 at 6.) 17 As an initial matter, the affirmative defense is not identical to the third affirmative defense 18 because the third defense is limited to Defendants’ occupancy of the residence in issue. Nevertheless, 19 Defendants do not dispute that the facts asserted in opposition to the motion were not alleged in the 20 Answer. Without the factual allegations, Plaintiff was not given fair notice of how or why Defendants 21 believed the affirmative defense of ratification was applicable to the action. See Wyshak, 607 F.2d at 22 827. Therefore, Defendants’ seventh affirmative defense is STRICKEN with leave to amend. 23 24 25 H. Equitable Estoppel, Laches, and Unclean Hands: “Defendants allege that the Complaint's claims are barred by the Equitable Doctrines of Equitable Estoppel, Laches, and Unclean Hands.” (Doc. 16 at 6, ¶ 57.) Plaintiff argues this affirmative defense should be stricken because it “improperly and 26 confusingly combines several defenses under a single heading rather than pleading them separately 27 and showing which apply, per Fed. R. Civ. P. 8.” (Doc. 19 at 7.) In addition, Plaintiff argues that it 28 8 1 “improperly duplicate the unsupported Third and Sixth Defenses.” (Id., citing Dairy Employees, 2015 2 U.S. Dist. LEXIS 14805 at *20-21). 3 Defendants agree the affirmative defense “is duplicative of prior affirmative defenses” to the 4 extent it is based upon the doctrines of equitable estoppel and laches. (Doc. 24 at 6.) However, 5 Defendants contend the defense should not be stricken because “unclean hands [w]as not previously 6 stated and is appropriate … to the extent plaintiff has not dispelled through averments or documents 7 it’s [sic] good standing to maintain this lawsuit.” (Id.) 8 The doctrine of unclean hands bars recovery for a plaintiff who engaged in “reprehensible 9 conduct in the course of the transaction at issue.” McKennon v. Nashville Banner Publ’g Co., 513 10 U.S. 352, 360 (1995) (citations omitted). Here, Defendants do not identify any conduct by Plaintiff 11 amounting to “unclean hands” in support of this defense in the Answer. Because the assertion lacks 12 factual support, it is insufficient to give Plaintiff fair notice of the basis of this defense. See CTF 13 Devel., Inc. v. Penta Hospitality, LLC, 2009 U.S. Dist. LEXIS 99538, at *22 (N.D. Cal. Oct. 26, 2009) 14 (“simply stating that a claim fails due to plaintiff’s ‘unclean hands’ is not sufficient to notify the 15 plaintiff what behavior has allegedly given them ‘unclean hands’”) (emphasis in original). Therefore, 16 Defendants’ sixth affirmative defense is STRICKEN with leave to amend. 17 I. 18 Waiver: “Defendants believe, and on such information and belief, allege that Plaintiffs predecessors in interest engaged in conduct that constitutes a waiver of their rights concerning the ‘occupancy clause’ Plaintiff claims has been breached and warrants judicial foreclosure.” (Doc. 16 at 6, ¶ 58.) 19 20 Waiver is an “intentional relinquishment or abandonment of a known right.” United States v. 21 Perez, 116 F.3d 840, 845 (9th Cir. 1997). Here, there is no indication in Defendants’ answer that 22 Plaintiff engaged in activity that might constitute a waiver of known rights. Without supporting factual 23 allegations, the assertion that the doctrine of waiver is applicable is insufficient to provide fair notice. 24 See J & J Sports Prods., Inc. v. Nguyen, 2012 U.S. Dist. LEXIS 51641, at *4 (N.D. Cal. Mar. 22, 2012) 25 (finding an affirmative defense insufficient where the defendant “does not provide any supporting facts, 26 making it impossible for Plaintiff to ascertain the basis for the affirmative defense[]”). Accordingly, 27 this affirmative defense is STRICKEN with leave to amend. 28 J. Full Performance: “Defendants allege that the full performance under the terms of the Note and Deed of Trust fulfills all the duties and obligations to Plaintiff, and no other 9 duty or obligation to Plaintiff remains on behalf of the Defendants, collectively.” (Doc. 16 at 6, ¶ 59.) 1 2 3 Defendants assert, “This defense is self-explanatory insofar as both ARIAS' [sic] and the 4 ROSALES' [sic] have fully performed under the terms of the, Promissory Note and Deed of Trust, 5 which are the operative contracts and agreements upon which plaintiff ceased to oust the defendants 6 from the property and take ownership in its own name.” (Doc. 24 at 8.) Significantly, the denial of 7 allegations in the complaint is not a proper affirmative defense. See Solis, 2009 U.S. Dist. LEXIS 8 63271 at *8-9. Therefore, Defendants’ tenth affirmative defense is STRICKEN. 10 Consent: “Defendants allege that Plaintiff’s predecessors in interest consented, expressly and/or impliedly, to any acts or conduct complained of in the Amended Complaint and, therefore, Plaintiff is barred from recovery.” (Doc. 16 at 7, ¶ 60.) 11 Plaintiff argues this affirmative defense “is duplicative of the above defense[] of Waiver, 9 K. 12 which likewise fails to plead Plaintiff’s written consent to the straw man purchase or, funding of the 13 loan by Defendant Arias on behalf of the Rosales Defendants.” (Doc. 19 at 8-9, emphasis omitted.) In 14 response, Defendants assert they stated the defense “as a precautionary measure since the operative 15 underlying documents have not been attached to plaintiff’s Amended Complaint or otherwise been 16 made available to [them]…” (Doc. 24 at 7.) Also, Arias argues the defense is not duplicative to the 17 defense of waiver, “to the extent that there may have been a conscience waiving of the ‘Occupancy 18 Clause.’” (Id.) 19 Again, however, Defendants failed to plead any facts to support this affirmative defense in 20 their Answer. There are no facts from which it may be inferred that Plaintiff’s predecessors indicated 21 their consent, expressly or impliedly to the activities alleged in Plaintiff’s complaint. Without such 22 facts, Defendants fails to give Plaintiff fair notice of how this affirmative defense is applicable to the 23 action. See Wyshak, 607 F.2d at 827. Therefore, the eleventh affirmative defense is STRICKEN with 24 leave to amend. 25 26 L. Reservation of Defenses: “Defendants allege there may be new facts not alleged in Plaintiff’s Amended Complaint that may reveal new affirmative defenses which these answering Defendants may assert at the time of trial.” (Doc. 16 at 7, ¶ 61.) 27 “An attempt to reserve affirmative defenses for a future date is not a proper affirmative 28 defense in itself.” Solis v. Zenith Capital, LLC, 2009 U.S. Dist. LEXIS 43350, at *19 (N.D. Cal. May 10 1 8, 2009). (citation omitted). Rather, if a defendant seeks to add affirmative defenses at a later date, the 2 defendant “must comply with Rule 15 of the Federal Rules of Civil Procedure.” Id.; see also Wyshak, 3 607 F.2d at 826-27. Thus, Defendants’ reservation clause is not a proper affirmative defense, is 4 redundant, and is STRICKEN. Prayer for attorneys’ fees and costs 5 M. 6 In the prayer for relief, Defendants requested they “be awarded attorneys fees and costs.” (Doc. 7 16 at 7.) Plaintiff requests that Court strike the prayer because Defendants “they lack any contractual 8 or statutory basis for demanding their attorney’s fees and costs, which should be stricken with 9 prejudice.” (Doc. 13 at 1, 9.) Plaintiff contends: “The Deed of Trust and Note provide for the Lender 10 to collect expenses, such as attorney’s fees and costs in pursuing its remedies under them. The Note and 11 Deed of Trust do not provide for the Defendants to collect their fees and expenses under them.” (Id. at 12 8, emphasis omitted.) 13 Significantly, however, this Court has determined that striking portions of a prayer for relief is 14 not proper under Rule 12(f). Estate of Prasad v. County of Sutter, 958 F. Supp.2d 1101, 1128-29 (E.D. 15 Cal. 2013) (declining to strike a prayer for relief for damages or attorney’s fees because the prayer did 16 not “qualify material that may be stricken under any of ‘the five categories’ in Rule 12(f)”); see also 17 McGuire v. Recontrust Co., N.A., 2013 U.S. Dist. LEXIS 155864 at *9-10 (E.D. Cal. 2013) (“[A]n 18 improper prayer is neither an ‘insufficient defense’ nor a ‘redundant, immaterial, impertinent or 19 scandalous’ matter under Rule 12(f)”) (citation omitted). Accordingly, Plaintiff’s motion to strike the 20 prayer for attorneys’ fees and costs is DENIED. Plaintiff’s request to strike denials 21 N. 22 Plaintiff argues that Defendants should been deemed to have admitted ¶¶ 11-31 of the First 23 Amended Complaint (“FAC”), and “particularly ¶ 12-18, as [Defendants] invoke the Note and Deed of 24 Trust in their defenses.” (Doc. 19 at 10.) In these paragraphs of the FAC, Plaintiff makes several 25 allegations regarding the terms of the Deed of Trust, such as it “defines the Borrower as Defendant 26 Arias,” and includes an occupancy clause requiring the Borrower to “occupy, establish and use the 27 Property as Borrower’s principal residence within 60 days after execution of this Security Instrument 28 and shall continue to occupy the Property as Borrower’s principal address for at least one year after the 11 1 date of occupancy…” (Doc. 8 at 3, ¶¶13-14.) Further, Plaintiff makes several allegations related to the 2 assignments of the Note, Deed of Trust, and loan modifications. (Id. at 4-5, ¶¶ 23-29.) 3 Defendants responded to the allegations of the complaint, stating: “With respect to Paragraphs 4 12 through 31, inclusive of the Amended Complaint, Defendants are not parties or signatories to the 5 transactions referenced, and therefore Defendants are without knowledge or information sufficient to 6 admit or deny the facts contained in those referenced paragraphs.” (Doc. 12 at 2.) Plaintiff argues the 7 response was improper because Defendants “clearly have knowledge of the documents,” and the Note 8 and Deed of Trust were “recorded in the office of the Kern County Recorder.” (Doc. 19 at 10.) Plaintiff 9 concludes that the allegations should be deemed admitted because “there is no basis for the Rosales 10 Defendants to refuse to admit the existence and terms of the Warranty Deeds, Note, Deed of Trust, 11 Modifications and Assignments in their answer.” (Id., citing In re AST Research Sec. Litig., 1994 U.S. 12 Dist. LEXIS 20850 at *4 (C.D. Ca. Nov. 10, 1994)). 13 In re AST Research Sec. Litig., the defendant neither admitted nor denied the allegations set 14 forth but instead referred “plaintiffs to documents readily available to defendants.” Id., 1994 U.S. Dist. 15 LEXIS 20850 at *4. Such documents included press releases issued by the defendant, quarterly reports 16 also issued by the defendant, and trading records. Id. The court found the defendant failed to comply 17 with the requirement of Rule 8(b) to either admit or deny the factual allegations, and deemed the 18 allegations of the complaint as admitted pursuant to Rule 8(d). Id. However, the court recognized that 19 “if a party is without knowledge or information sufficient to admit or deny, they may so state and this 20 has the effect of a denial.” Id. at *3 (citing Fed. R. Civ. P. 8(b)). 21 Specifically, under Rule 8(b), “A party that lacks knowledge or information sufficient to form a 22 belief about the truth of an allegation must so state, and the statement has the effect of a denial.” Fed. 23 R. Civ. P. 8(b)(5). Here, Defendants asserted they lacked information sufficient to respond to the 24 allegations of the complaint where Plaintiff quoted the terms of the Deed of Trust, and the parties to the 25 loan modifications because Defendants were not parties or signatories to the transactions alleged by 26 Plaintiff. (Doc. 16 at 3, ¶ 12.) These responses are sufficient to comply with Rule 8(b), under which 27 the responses are deemed denials, not admissions. See Fed. R. Civ. P. 8(b)(5). Accordingly, Plaintiff’s 28 request to deem ¶¶ 11-31 as admitted is DENIED. 12 1 2 IV. Conclusion Significantly, it does not appear many of the deficiencies identified above may be cured by 3 amendment. However, leave to amend the answer should be freely given where the plaintiff will not 4 be prejudiced. Rennie & Laughlin, 242 F.2d at 213; Wyshak, 607 F.2d at 827. 5 Accordingly, IT IS HEREBY ORDERED: 6 1. Plaintiff’s motion to strike the affirmative defenses is GRANTED IN PART; 7 2. Defendants’ first, second, fourth, and tenth affirmative defenses are STRICKEN without leave to amend; 8 9 3. Defendants’ reservation to state other affirmative defenses is STRICKEN without leave to amend; 10 11 4. Plaintiff’s motion to strike the prayer for attorney’s fees and costs is DENIED; 12 5. Plaintiff’s motion to deem ¶¶ 11-31 of the First Amended Complaint as admitted is DENIED; and 13 14 6. Any amended answer SHALL be filed within twenty-one days of the date of service of this order. If Defendants do not amend within this time period, the Answer will stand. 15 16 17 18 19 IT IS SO ORDERED. Dated: July 9, 2015 /s/ Jennifer L. Thurston UNITED STATES MAGISTRATE JUDGE 20 21 22 23 24 25 26 27 28 13
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