Izett v. Crown Asset Mgmt., LLC

DAVID ALLAN IZETT, Plaintiff, v. CROWN ASSET MANAGEMENT, LLC, et al., Defendants.

Case No. 18-cv-05224-EMC

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

December 14, 2018

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO STRIKE AFFIRMATIVE DEFENSES

Docket No. 18

Before the Court is Plaintiff's motion to strike affirmative defenses asserted in Defendants' Answer. See Docket No. 18-1 ("Mot."); Docket No. 12 ("Ans."). For the reasons discussed below, the Court GRANTS in part and DENIES in part Plaintiff's motion.

I. LEGAL STANDARD

Federal Rule of Civil Procedure 8(b)(1) requires a party to "state in short and plain terms its defenses to each claim asserted against it." Federal Rule of Civil Procedure 12(f) allows a court to "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." "The key to determining the sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of the defense." Wyshak v. City Nat 7 Bank, 607 F.2d 824, 827 (9th Cir. 1979).

As an initial matter, the parties dispute whether the heightened pleading standard articulated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009) applies with equal force to affirmative defenses as it does to complaints. The Ninth Circuit has not yet spoken on this issue, but courts in this District, including this Court, have "consistently" applied the Twombly and Iqbal standard to affirmative defenses. Perez v. Gordon & Wong Law Grp., P.C., No. 11-CV-03323-LHK, 2012 WL 1029425, at *8 (N.D. Cal. Mar. 26, 2012). So have the "vast majority" of district courts presented with the issue. Barnes v. AT & T Pension Ben. Plan-Nonbargained Program, 718 F. Supp. 2d 1167, 1171-72 (N.D. Cal. 2010) (citing cases); Barnes & Noble, Inc. v. LSI Corp., 849 F. Supp. 2d 925, 929 (N.D. Cal. 2012)).

The Court finds the authority adopting the Twombly and Iqbal standard to affirmative defenses persuasive, and will therefore apply it to the instant motion.¹ Under this standard, "a defense need not include extensive factual allegations in order to give fair notice, [but] bare statements reciting mere legal conclusions may not be sufficient." Perez, 2012 WL 1029425, at *8 (citations omitted). The party pleading an affirmative defense must allege "enough supporting facts to nudge a legal claim across the line separating plausibility from mere possibility." Id. (citations omitted). In addition to factually insufficient defenses, a court may also strike from an answer matter that is immaterial or impertinent. Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'don other grounds, 510 U.S. 517 (1994). An "immaterial" matter is "that which has no essential or important relationship to the claim for relief or the defenses being pleaded," and "impertinent" matter consists of "statements that do not pertain, and are not necessary, to the issues in question." Id. (citations omitted).

II. DISCUSSION

Defendants have asserted twenty affirmative defenses, and Plaintiff has moved to strike them all as insufficiently pled, immaterial, or not affirmative defenses. The Court addresses each category below.

A. Not Affirmative Defenses

Four of the affirmative defenses asserted by Defendants are not affirmative defenses at all.

Defendants' second defense is that the "allegations of the Complaint fail to state a claimagainst Defendants." Ans. at 7. "[T]here is ample authority for the . . . proposition that [f]ailure to state a claim is not a proper affirmative defense but, rather, asserts a defect in [a plaintiff's] prima facie case." Martinez v. Cty. of Sonoma, No. 15-CV-01953-JST, 2016 WL 1275402, at *2 (N.D. Cal. Apr. 1, 2016) (quoting Barnes, 718 F. Supp. 2d at 1174). Affirmative defenses, on which the defendant bears the burden of proof, "plead matters extraneous to the plaintiff's prima facie case, which deny plaintiff's right to recover, even if the allegations of the complaint are true." Id. (citation omitted). In contrast, "[a] defense which demonstrates that plaintiff has not met its burden of proof is not an affirmative defense." Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1088 (9th Cir. 2002). In arguing to the contrary, Defendants say that "failure to state a claim" is listed as an affirmative defense in Form 30 in the appendix to the Federal Rules of Civil Procedure. See Opp. at 14-15. This exact argument has been repeatedly rejected by courts in this District. See, e.g., Barnes, 718 F. Supp. 2d at 1174; Perez, 2012 WL 1029425, at *11.

Similarly, Defendants' fifth defense simply states that they "did not commit any actionable violations of the FDCPA and/or RFDCPA." Opp. at 8. And Defendants' seventh defense states that they "have, at all material times with respect to Plaintiff, acted in good faith in an effort to comply fully with all relevant federal and state laws."² Id. These defenses do not "plead matters extraneous to the plaintiff's prima facie case, which deny plaintiff's right to recover," but rather argue that Plaintiff has failed to establish a prima facie case. Martinez, 2016 WL 1275402, at *2. They are therefore not affirmative defenses.

Finally, Defendants' twentieth defense states that they "reserve the right to assert additional defenses upon discovery of further information concerning Plaintiffs [sic] claims." Ans. at 11. "The mere reservation of affirmative defenses is not an affirmative defense." Weintraub v. Law Office of Patenaude & Felix, A.P.C., 299 F.R.D. 661, 668-69 (S.D. Cal. 2014) (citation omitted). If Defendants decide to assert additional affirmative defenses at a later date,they may do so by amending their pleadings in compliance with the procedure set out in Federal Rule of Civil Procedure 15.

Accordingly, the Court GRANTS the motion to strike Defendants' second, fifth, seventh, and twentieth affirmative defenses without leave to amend.

B. Insufficiently Pled

As noted above, the Rule 8 pleading standard does not require detailed factual allegations, but a "pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do." Iqbal, 556 U.S. at 678 (citation omitted). Defendants' first (bona fide error), third (good faith), fourth (mitigation of damages), sixth (waiver), ninth (intervening or supervening events), eleventh (First Amendment), thirteenth (improper purpose),³ fourteenth (statute of limitations), fifteenth (laches), eighteenth (bad faith litigation), and nineteenth (collateral estoppel) affirmative defenses offer only conclusions and formulaic recitations of possible defenses. For example, Defendants' statute of limitation defense simply reads: "Plaintiff's claims and/or causes of action are time barred by the statute of limitations." Ans. at 10. They "make no mention of the applicable statute," or any other facts that would suggest that Plaintiff's claims are time-barred. Polk v. Legal Recovery Law Offices, 291 F.R.D. 485, 490 (S.D. Cal. 2013).

Accordingly, the Court GRANTS the motion to strike Defendants' first, third, fourth, sixth, ninth, eleventh, thirteenth, fourteenth, fifteenth, eighteenth, and nineteenth affirmative defenses with leave to amend with supporting factual content.

C. Immaterial and Impertinent

Defendants' eighth affirmative defense states: "Without admitting that any damages exist, if damages were suffered by Plaintiff as alleged in the Complaint, those damages wereproximately caused by and contributed by persons other than Defendant. The liability, if any exists, of all defendants and/or any responsible parties, named or unnamed, should be apportioned according to their relative degrees of fault, and the liability of this DEFENDANTS should be reduced accordingly." Ans. at 8. Courts have held that affirmative defenses like apportionment and equitable indemnity "while applicable in negligence and intentional tort actions, have no relation to . . . FDCPA or RFDCPA claims" like those asserted in Plaintiff's complaint. Perez, 2012 WL 1029425, at *11.

Defendants' tenth affirmative defense asserts: "The actions of DEFENDANTS complained of in the Complaint constitute communications that were made in good faith and in anticipation of or in connection with ongoing litigation and Plaintiffs claims are therefore barred, in whole or in part, by the California litigation privilege." Ans. at 9. The invocation of the "California litigation privilege" appears to be a reference to California Civil Code § 47(b)(2), which protects "communications made to achieve the objects of the litigation, even though the publication is made outside the courtroom and no function of the court or its officers is involved." Komarova v. Nat'l Credit Acceptance, Inc., 175 Cal. App. 4th 324, 336 (Ct. App. 2009) (citation omitted).

But the California Court of Appeal in Komarova, following the "majority" of the federal district courts to have considered the question, concluded that the litigation privilege cannot be used to shield violations of the RFDCPA. Id. at 337. Komarova reasoned that if the privilege were applicable to RFDCPA claims, the very communications from debt collectors intended to harass debtors into paying would fall within the scope of the privilege, since the communications are made to "achieve the objects of litigation." Id. at 338. "Applying the privilege in this manner would effectively vitiate the [RFDCPA] and render the protections it affords meaningless." Id. (citation omitted). Thus, Komarova concluded that the RFDCPA, as the more specific statute, prevailed over the general litigation privilege. Id. at 399-40. Nearly all federal district courts since Komarova have agreed with its analysis. See Taymuree v. Nat'l Collegiate Student Loan Tr. 2007-2, No. 16-CV-06138-YGR, 2017 WL 952962, at *4 n.3 (N.D. Cal. Mar. 13, 2017). Defendants themselves concede that "the litigation privilege may not be a defense to a FDCPA and/or RFDCPA claim."...