The Sherwin-Williams Company v. Courtesy Oldsmobile-Cadillac, Inc., et al.

Filing 37

Order Regarding Motion To Strike Affirmative Defenses, signed by Magistrate Judge Michael J. Seng on 2/16/2016. (Yu, L)

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1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 12 1:15-cv-01137 MJS HC SHERWIN-WILLIAMS COMPANY, ORDER REGARDING MOTION TO STRIKE Plaintiff, AFFIRMATIVE DEFENSES 13 14 15 16 (Doc. 29) v. COURTESY OLDSMOBILECADILLAC, INC., and BEN WELLS, Defendants. 17 18 19 20 21 22 23 24 25 26 27 I. INTRODUCTION Presently before the Court is Plaintiff Sherwin-Williams Company’s motion to strike or dismiss affirmative defenses raised by Defendants Courtesy OldsmobileCadillac, Inc. (“Courtesy Olds”) and Ben Wells (“Wells”) in their amended answer. (See ECF No. 30.) On July 22, 2015, Plaintiff filed the instant complaint against Defendants. (ECF No. 1.) In the complaint, Plaintiff asserts breach of contract claims against Defendants. Plaintiff contends that in April, 2011 it entered into a supply agreement whereby Courtesy Olds agreed to exclusively use $900,000 of Plaintiff’s automotive paint and 28 1 1 coating products. In consideration, Plaintiff advanced Courtesy Olds a prepaid discount 2 of $175,000 and a discount of 15% of the list price of its paint products. Defendant Wells 3 entered into a personal guaranty of Courtesy Olds’ performance under the supply 4 agreement. 5 Plaintiff contends that Courtesy Olds has ceased or sold its operations and 6 stopped purchasing Plaintiff’s products, thereby breaching the supply agreement. It 7 asserts a cause of action against Courtesy Olds for breach of the supply agreement, and 8 one against Wells for breach of the personal guaranty. 9 Defendants filed an answer to the complaint on October 5, 2015. (ECF No. 15.) In 10 the answer, Defendants alleged thirty-four (34) affirmative defenses to the complaint. 11 (Id.) The parties stipulated to allow Defendants to voluntarily amend the answer. 12 Defendants filed an amended answer on November 23, 2015. (ECF No. 26.) In the 13 amended answer, Defendants withdrew six of the 34 affirmative defenses originally 14 raised. (Id.) 15 On December 14, 2015, Plaintiff filed a motion to strike affirmative defenses to the 16 amended answer. (ECF No. 29.) Defendants filed an opposition on January 29, 2016, 17 and Plaintiff filed a reply on February 5, 2016. (ECF Nos. 33-35.) 18 All parties have consented to Magistrate Judge jurisdiction under 28 U.S.C. § 19 636(c). (ECF Nos. 19-20.) The Court has deemed the motion to strike submitted without 20 oral argument. 21 22 II. ARGUMENTS PRESENTED 23 Plaintiff presents five separate grounds why nearly all of the affirmative defenses 24 remaining in the amended answer should be stricken1: 1) Defenses based on a third 25 party’s assumption of the supply agreement fail because the supply agreement requires 26 27 28 1 Plaintiff also alleges that Defendants first affirmative defense for failure to state a claim for relief should be stricken. However, Plaintiff raises this argument for the first time in its reply brief. "The district court need not consider arguments raised for the first time in a reply brief." Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007). Plaintiff’s argument is disregarded. 2 1 written waiver; 2) Defenses based on Plaintiff’s alleged failure to provide products 2 meeting industry standards fail because Defendants waived all warranties in the supply 3 agreement; 3) Defenses based on failures of conditions precedent and fraud are barred 4 because they rely on impermissible parole evidence or were waived by Defendants in 5 the supply agreement; 4) Several of the affirmative defenses, including ones based on 6 fraud, offset, and mitigation, lack particularity and thus are insufficiently plead; and, 5) 7 Several are not affirmative defenses at all but simply argument that Plaintiff has failed to 8 prove the elements of the claims in its complaint. Defendants repond that all of the 9 defenses presented are proper and t none should be stricken. 10 11 III. LEGAL STANDARD 12 A. Motion to Strike Affirmative Defenses 13 Pursuant to Federal Rule of Civil Procedure 12(f), the Court may, on its own or on 14 a party's motion, strike "an insufficient defense or any redundant, immaterial, impertinent 15 or scandalous" matter from a pleading. Fed. R. Civ. P. 12(f). The function of Rule 12(f) is 16 "to avoid the expenditure of time and money that must arise from litigating spurious 17 issues by disposing of those issues prior to trial." Whittlestone, Inc. v. Handi—Craft Co., 18 618 F.3d 970, 973 (9th Cir. 2010). 19 Before a motion to strike affirmative defenses may be granted, the Court "must be 20 convinced that there are no questions of fact, that any questions of law are clear and not 21 in dispute, and that under no set of circumstances could the defense succeed." Jones v. 22 Sweeney, No. CV-F-04-6214-AWI-DLB, 2006 U.S. Dist. LEXIS 33069, 2006 WL 23 1439080, at *1 (E.D. Cal. May 24, 2006) (citing SEC v. Sands, 902 F. Supp. 1149, 1165 24 (C.D. Cal. 1995)). "[C]ourts may not resolve disputed and substantial factual or legal 25 issues in deciding a motion to strike." Whittlestone, 618 F.3d at 973 (internal quotation 26 marks and alterations omitted). 27 Motions to strike affirmative defenses "are disfavored and infrequently granted." 28 Neveau v. City of Fresno, 392 F. Supp. 2d 1159, 1170 (E.D. Cal. 2005). The Court "must 3 1 view the pleading under attack in the light more favorable to the pleader." Garcia ex rel. 2 Marin v. Clovis Unified School Dist., 2009 U.S. Dist. LEXIS 83352, 2009 WL 2982900, at 3 *23 (E.D. Cal. Sept.14, 2009) (internal citation omitted). Even if a court strikes an 4 affirmative defense, leave to amend should be freely given where the opposing party will 5 not be prejudiced given the strong policy favoring resolution of cases "on the proofs 6 rather than the pleadings." Rennie & Laughlin, Inc. v. Chrysler Corp., 242 F.2d 208, 213 7 (9th Cir. 1957); Wyshak v. City Nat'l Bank, 607 F.2d 824, 827 (9th Cir. 1979). 8 "An affirmative defense, under the meaning of Federal Rule of Civil Procedure 9 8(c), is a defense that does not negate the elements of the plaintiff's claim, but instead 10 precludes liability even if all of the elements of the plaintiff's claim are proven." Barnes v. 11 AT & T Pension Ben. Plan-Nonbargained Program, 718 F. Supp. 2d 1167, 1173 (N.D. 12 Cal. 2010). "It is a defense on which the defendant has the burden of proof." Id. at 1174. 13 On the other hand, “a defense which points out a defect in the plaintiff's prima facie case 14 is not an affirmative defense.” Zivkovic v. S. California Edison Co., 302 F.3d 1080, 1088 15 (9th Cir. 2002) (citing Flav-O-Rich v. Rawson Food Service, Inc., 846 F.2d 1343, 1349 16 (11th Cir. 1988)). While courts rarely grant Rule 12(f) motions to strike affirmative 17 defenses, if an affirmative defense is a negative defense and should instead be included 18 as a denial in the answer, the motion to strike will be granted. See Barnes, 718 F. Supp. 19 2d at 1173. 20 An affirmative defense is insufficient as a matter of pleading if it fails to give 21 plaintiff "fair notice." "The 'fair notice' required by the pleading standards only requires 22 describing the defense in 'general terms.'" Kohler v. Flava Enterprises, Inc., 779 F.3d 23 1016, 1019 (9th Cir. 2015) (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal 24 Practice and Procedure § 1274 (3d ed. 1998)). This is less demanding than the 25 Twombly/Iqbal standard, but still requires a party to plead some factual basis for its 26 allegations. Dodson v. Munirs Co., No. CIV. S-13-0399 LKK, 2013 U.S. Dist. LEXIS 27 85768, 2013 WL 3146818, at *2 (E.D. Cal. June 18, 2013) ("Fair notice generally 28 requires that the defendant identify the nature and grounds for the affirmative defense, 4 1 rather than plead a detailed statement of the facts upon which the defense is based."); 2 Inc. v. eHelp Corp., 315 F. Supp. 2d 1046, 1049 (N.D. Cal. 2004) ("A 3 reference to a doctrine, like a reference to statutory provisions, is insufficient notice."). 4 Plaintiff contends that the heightened standard of Twombly/Iqbal should apply. 5 Plaintiff argues that courts in this district have held that Kohler did not address the 6 pleading standard and did not resolve the split with regard to which standard should 7 apply. (Reply at 4.) However, in so arguing, Plaintiff relies on a case from the Northern 8 District of California, rather than the Eastern District, for this proposition. See Perez v. 9 Wells Fargo & Co., No. 14-CV-0989-PJH, 2015 WL 5567746, at *3 (N.D. Cal. Sept. 21, 10 2015). 11 Since Kohler, every judge in this district that has evaluated the split in light of the 12 Kohler decision has found that the fair notice standard should apply. See Frazier v. City 13 of Rancho Cordova, 2016 U.S. Dist. LEXIS 11769 (E.D. Cal. Jan. 29, 2016) (Nunley, J.); 14 Beco Dairy Automation, Inc. v. Global Tech Sys., 2015 U.S. Dist. LEXIS 173415 (E.D. 15 Cal. Dec. 30, 2015) (O’Neill, J.); Castellano v. Access Premier Realty7, Inc., 2015 U.S. 16 Dist. LEXIS 158078 (E.D. Cal. Nov. 20, 2015) (England, J.); Springer v. Fair Isaac Corp., 17 2015 U.S. Dist. LEXIS 154765 (E.D. Cal. Nov. 13, 2015) (Nunley, J.); Bryant v. Romero, 18 2015 U.S. Dist. LEXIS 135647 (E.D. Cal. Oct. 5, 2015) (Beck, J.); Beco Dairy 19 Automation, Inc. v. Global Tech Sys., 2015 U.S. Dist. LEXIS 130503 (E.D. Cal. Sept. 28, 20 2015) (O’Neill, J.); Lexington Ins. Co. v. Energetic Lath & Plaster, Inc., 2015 U.S. Dist. 21 LEXIS 123123 (E.D. Cal. Sept. 14, 2015) (Muller, J.); J & J Sports Prods. v. Angulo, 22 2015 U.S. Dist. LEXIS 111218 (E.D. Cal. Aug. 21, 2015) (Muller, J.); Edwards v. Cnty. of 23 Modoc, 2015 U.S. Dist. LEXIS 94216 (E.D. Cal. July 17, 2015) (England, J.); Landmark 24 Equity Fund, II, LLC v. Arias, 2015 U.S. Dist. LEXIS 89981 (E.D. Cal. July 9, 2015) 25 (Thurston, J.); Aubin Indus. v. Caster Concepts, Inc., 2015 U.S. Dist. LEXIS 82881 (E.D. 26 Cal. June 23, 2015) (England, J.). 27 Plaintiff correctly notes that this Court, in a decision issued shortly after Kohler, 28 held that the heightened requirements of Twombly/Iqbal should apply. See Hamilton v. 5 1 Quinonez, 2015 U.S. Dist. LEXIS 33111 (E.D. Cal. Mar. 16, 2015) (Seng, J.).2 The Court 2 did not address Kohler in Hamilton. This Court, now having reviewed Kohler and the 3 intervening decisions of the other judges of the district relying on Kohler, concludes that 4 the fair notice standard should and shall apply. 5 B. Use of Extrinsic Evidence 6 Plaintiff argues that many of the affirmative defenses should be stricken in light of 7 various provisions of the supply agreement. Plaintiff attached a copy of Wells’ personal 8 guaranty to the complaint. Plaintiff did not, however, attach a copy of the supply 9 agreement to the complaint. 10 A written instrument attached to pleading is properly incorporated by reference 11 into the pleading. See Fed. R. Civ. P. 10(c) (“A copy of a written instrument that is an 12 exhibit to a pleading is a part of the pleading for all purposes.”). It is not enough to just 13 refer to the instrument, it must actually be attached to the pleading. See Shelter Mut. Ins. 14 Co. v. Public Water Supply Dist. No. 7, 747 F.2d 1195, 1198 (8th Cir. 1984). Further, 15 with regard to a motion to strike, the grounds for a motion to strike must appear on the 16 face of the pleading under attack. SEC v. Sands, 902 F. Supp. at 1165. As the supply 17 agreement was not attached to either the complaint or the amended answer, it is 18 extrinsic evidence. “[C]ourts may take into account documents whose contents are 19 alleged in a complaint and whose authenticity no party questions, but which are not 20 physically attached to the plaintiff 's pleading." Davis v. HSBC Bank, 691 F.3d 1152, 21 1160 (9th Cir. 2012). Here, Defendants challenge the authenticity and application of the 22 supply agreement. Accordingly, the Court finds it inappropriate to apply the terms of the 23 supply agreement against Defendants’ pleading in this motion to strike. 24 Unlike Rule 12(b) & (c) of the Federal Rules of Civil Procedure, Rule 12(f) does 25 26 27 28 2 Additionally, after the issuance of Kohler, Judge O’Neill also held that the Twombly/Iqbal standard should apply to affirmative defenses in Johnson v. Golden Empire Transit Dist., 2015 U.S. Dist. LEXIS 45515 (E.D. Cal. Apr. 7, 2015). Judge O’Neill did not, however, refer to Kohler, and in two separate decisions after Johnson, he relied upon Kohler and applied the fair notice standard. See, e.g., Beco Dairy Automation, Inc. v. Global Tech Sys., 2015 U.S. Dist. LEXIS 173415 (E.D. Cal. Dec. 30, 2015) (O’Neill, J.). 6 1 not specifically state that consideration of matters outside of the pleadings converts the 2 motion to one for summary judgment pursuant to Rule 56. See Fed. R. Civ. P. 12(d). 3 Nevertheless, "several courts have held that submission of extrinsic evidence in support 4 of a motion to strike converts the [Rule 12 (f)] motion into one for summary judgment." 1 5 W. Schwarzer & A. Tashima, Federal Civil Procedure Before Trial ¶ 9:405 at p. 9-145 6 (2015) (citing United States Oil Co. v. Koch Refining Co., 518 F.Supp 957 (D. Wis. 7 1981)). 8 9 10 The Court concludes it would be counterproductive to convert this motion to a motion for summary judgment. Accordingly, the Court shall not address arguments premised on extrinsic evidence such as the supply agreement. 11 12 IV. ANALYSIS 13 A. Failure to Properly Notice Motion 14 Defendants correctly note that the present motion was not properly filed. Plaintiff 15 filed only a memorandum of points and authorities in support of a motion to strike. (ECF 16 No. 29.) That document did not provide proper notice to Defendants of the date and time 17 of the hearing on the motion as required by the Local Rules. See E.D. Cal. Local Rules 18 133, 230. Rather than requiring Plaintiff to re-file and properly notice the motion, the 19 Court, in the interest of judicial efficiency, provided notice to the parties on January 5, 20 2016 that it was setting a hearing on the motion on February 12, 2016. (ECF No. 31.) 21 Defendants, both represented by qualified counsel, have been provided sufficient 22 notice of the motion by the Court. Defendants contention that the motion was not timely 23 filed because of Plaintiff’s failure to state the time and date of the hearing fails. “Motions 24 defectively noticed shall be filed, but not set for hearing…” Local Rule 230(b). 25 Accordingly, the Local Rules allow for the filing of a defectively noticed motion, and 26 Defendants were served with the motion through the Court’s Electronic Court Filing 27 system. The Local Rules also require the Clerk of Court to immediately notify Plaintiff of 28 the defective notice. Local Rule 230(b). That did not occur. As such, the Court notified 7 1 the parties of the time and date of the hearing. 2 While the Court will proceed to address the merits of this motion, Plaintiff’s 3 counsel is admonished to review and comply with the Federal Rules of Civil Procedure 4 and the Local Rules for the Eastern District of California for future filings. Waiver of Right of Third Party to Assume Courtesy Old’s Obligations 5 B. 6 Plaintiff contends that affirmative defenses 3, 4, 5, 12, 16, 19, 31, and 32 fail as a 7 matter of law as Defendants have not alleged that Plaintiff entered into a written waiver 8 of its rights as required by section nine of the supply agreement. The supply agreement 9 is extrinsic evidence and may not be used as a basis to strike affirmative defenses in the 10 pleadings. To the extent that Plaintiff’s argument is based on the written waiver provision 11 of the supply agreement, the motion fails. 12 Plaintiff also asserts that Defendants did not sufficiently plead the affirmative 13 defenses as they did not state the third party who assumed the obligations under the 14 supply agreement. However, Plaintiff acknowledges that Defendants’ nineteenth 15 affirmative defense identifies the third party – Merced Chevrolet, Inc. As Defendants 16 have identified the third party (and Plaintiff has not alleged any confusion as to the third 17 party, or whether more than one third party assumed the obligations of the contract) the 18 amended answer provides Plaintiff fair notice of the defense. 19 Plaintiff’s final argument with regard to these affirmative defenses is that they 20 insufficiently plead waiver which, under Ohio state law, requires proof of a clear, 21 unequivocal, decisive act of the party against whom the waiver was asserted. (Mot. at 6 22 (citing Saydell v. Geppetto’s Pizza & Ribs Franchise Sys., Inc., 100 Ohio App. 3d 111, 23 123 (1994).). First, this argument is relies on a claim that section nine of the supply 24 agreement contains a choice of law provision requiring the use of Ohio state law. 25 Resolution of that claim would require consideration of extrinsic evidence. 26 properly addressed by a motion to strike. Even assuming the legal standard stated 27 above, Defendants have provided fair notice of the waiver as required under Kohler. 779 28 F.3d at 1019. Defendants need not provide detailed information regarding the manner in 8 It is not 1 which the waiver occurred. As Defendants have provided fair notice of legally and 2 factually plausible defenses, Plaintiff’s motion to strike affirmative defenses 3, 4, 5, 12, 3 16, 19, 31, and 32 is DENIED. 4 C. Waiver of Warranties 5 Plaintiff next contends that affirmative defenses 6, 9, 10, 11, 16, 18, 22, 26, 27, 6 and 28 must be stricken based on Defendants alleged disclaimer of warranties in the 7 supply agreement. Much of Plaintiff’s argument focuses on whether the warranty 8 disclaimer in the supply agreement provided proper notice to Defendants under Ohio 9 state law. Once again, the argument is based on extrinsic evidence contained in the 10 supply agreement which is not properly before the Court for adjudication in a motion to 11 strike. Even assuming the terms of the supply agreement contain a waiver of warranties, 12 the Court would have to assume other facts not in evidence, including that the 13 agreement is enforceable and was not otherwise modified by extraneous evidence. 14 Plaintiff has not shown that the affirmative defenses must fail as a matter of law or fact 15 based solely on the pleadings. 16 Plaintiff’s final argument with regard to these affirmative defenses is that the 17 twenty-second affirmative defense was insufficiently plead. The defense alleges a 18 material breach of the supply agreement, but fails to state what provision of the 19 agreement was breached. 20 The twenty-second affirmative defense states: 21 (Material Breach) 22 Defendants are informed and believe and thereon allege that based on the conduct of Plaintiff, including Plaintiff’s failure to provide products which did not meet industry standards for quality, and the use of which threatened a loss of business from insurers who refused the dealer’s use of Plaintiff’s substandard paint products, and Plaintiff’s failure to address complaints that its products which did not meet industry standards for quality, and the use of which threatened a loss of business from insurers who refused the dealer’s use of Plaintiff’s substandard paint products, Plaintiff materially breached the contract and is thereby estopped from asserting any of the alleged claims set forth in the Complaint. 23 24 25 26 27 (Am. Answer, ECF No. 26 at 9.) 28 9 1 Regardless whether the claim of material breach will prove meritorious or be 2 barred by an enforceable waiver of warranty provision of the supply agreement, 3 Defendants have provided fair notice to Plaintiff as to the basis of the material breach 4 claim. Kohler, 779 F.3d at 1019. Defendants explain that the paint products provided by 5 Plaintiff failed to meet industry standards for quality; that Defendants were threatened 6 with a loss of business from clients who refused the use of Plaintiff’s products; and that 7 Plaintiff failed to respond to complaints about the products. Defendants have provided 8 sufficient detail regarding the nature and ground of the affirmative defense. To the extent 9 Plaintiff seeks further information regarding the affirmative defense, it will have the 10 opportunity to do so through discovery. 11 Defendants have provided fair notice of legally and factually plausible defenses. 12 Plaintiff’s arguments to the contrary are improperly based on extrinsic evidence not 13 contained in the pleading. Plaintiff’s motion to strike affirmative defenses 6, 9, 10, 11, 16, 14 18, 22, 26, 27, and 28 is DENIED. 15 D. 16 Plaintiff next claims that several of Defendants’ affirmative defenses were not 17 Failure to Sufficiently Plead Affirmative Defenses plead with sufficient particularity. The Court shall address each contention in turn. 18 1. Fraud Based Affirmative Defenses 19 Plaintiff argues that affirmative defenses 26, 27, and 28 should be stricken as they 20 are based on theories of fraud or misrepresentation that have not been pled with 21 sufficient particularity. Although striking an insufficient defense is uncommon in federal 22 practice, and is of questionable utility given the availability of discovery to obtain a more 23 complete basis for the assertion of the defense, the Court agrees with Plaintiff on this 24 defense. 25 Federal Rule of Civil Procedure 9(b) requires allegations of fraud or mistake to be 26 plead with particularity. "In all averments of fraud, including affirmative defenses, the 27 circumstances constituting the fraud must be stated with particularity." Gold Club-SF, 28 LLC v. Platinum SJ Enter., 2013 U.S. Dist. LEXIS 170458 (N.D. Cal. Dec. 3, 2013); ADP 10 1 Comm'l Leasing, Inc. v. M.G. Santos, Inc., No. 13-cv-0587, 2013 U.S. Dist. LEXIS 2 103750, 2013 WL 3863897, at *9 (E.D. Cal. July 24, 2013); see also Solis v. Zenith 3 Capital, LLC, No. 08-cv-4854-PJH, 2009 U.S. Dist. LEXIS 43350, 2009 WL 1324051, at 4 *2 (N.D. Cal. May 8, 2009) ("Unless the defense is one that falls under Rule 9, there is 5 no requirement that a party plead an affirmative defense with particular specificity."). 6 "Averments of fraud must be accompanied by the who, what, when, where, and how of 7 the misconduct charged." Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) 8 (citations omitted). An exception to the particularity standard exists. The Ninth Circuit 9 "has held that the general rule that allegations of fraud based on information and belief 10 do not satisfy Rule 9(b) may be relaxed with respect to matters within the opposing 11 party's knowledge. In such situations, plaintiffs cannot be expected to have personal 12 knowledge of the relevant facts." Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993). 13 Defendants’ twenty-sixth and twenty-eighth affirmative defenses claim that 14 Plaintiff’s material misrepresentations regarding the quality of the paint products 15 fraudulently induced Plaintiff to enter the supply agreement. These defenses do not, 16 however, allege the who, what, where, when, and how of the fraud. Each consists of a 17 single sentence unaccompanied by any factual support. The motion to strike the twenty- 18 sixth and twenty-eighth affirmative defenses is GRANTED, albeit with leave to amend. 19 However, the motion is DENIED with respect to the twenty-seventh affirmative 20 defense. That defense claims that Plaintiff concealed the fact that products did not meet 21 industry standard. Whether and how Plaintiff concealed knowledge regarding the inferior 22 quality of the paint products is information within the Plaintiff’s control, and the Rule 9(b) 23 standard is relaxed for that claim. Neubronner, 6 F.3d at 672. 24 2. Offset and Mitigation Affirmative Defenses 25 The sixth affirmative defense alleges Plaintiff failed to mitigate its alleged 26 damages by not addressing Defendants’ complaints about the quality of the paint 27 product provided. This argument is based on alleged warranty provisions of the supply 28 agreement and, for the reasons asserted above, is not properly presented in a motion to 11 1 strike and is denied. 2 Plaintiff further claims that there is no duty to mitigate lost profits as a volume 3 seller under Ohio law. Defendants claim that the failure to mitigate was based on 4 Plaintiff’s failure to address complaints as to the quality of the products provided. While 5 phrased as a defense based on failure to mitigate, the defense is in essence a claim that 6 Plaintiff breached the terms of the contract by providing inappropriate products, and that 7 any damages suffered by Plaintiff should be set-off or mitigated by Plaintiff’s breach of 8 the contract. Regardless of technical terms of the affirmative defense, Defendants have 9 provided Plaintiff fair notice of the factual grounds for the defense, and Plaintiff’s motion 10 to strike is denied. 11 Plaintiff also contends that Defendant’s eleventh affirmative defense for set-off is 12 insufficiently plead. The Court agrees. Defendants claim that Plaintiff’s actions caused 13 Defendants damages that should be set off against Plaintiff’s damages. However, 14 Defendants provide no information as to how they were damaged by Plaintiff’s conduct. 15 The eleventh claim for set-off is insufficiently plead. The Court GRANTS the motion to 16 strike the eleventh affirmative defense, but gives leave to amend. 17 18 19 3. “Other” Insufficiently Plead Affirmative Defenses Plaintiff asserts that affirmative defenses 8, 9, 23, 29, and 34 were insufficiently plead for various reasons. 20 Defendants’ eighth affirmative defense alleges “good faith” on Defendant’s part. 21 Plaintiff contends that this merely states a legal theory without factual support and 22 therefore fails to give fair notice. The Court agrees; the affirmative defense requires 23 additional detail. The motion to strike is granted, with leave to amend, in regard to 24 affirmative defense eight. 25 Plaintiff claims that affirmative defense nine, “unclean hands” is insufficiently 26 plead under Ohio law as it fails to describe how Plaintiff’s conduct was reprehensible, 27 inequitable, or unconscionable. This affirmative defense reflects that it is based on 28 Plaintiff’s refusal to respond to complaints about the products not meeting industry 12 1 standards for quality. This is fair notice. In addition, Plaintiff has not shown as a matter of 2 law that Defendants conduct cannot be found to be reprehensible, inequitable, or 3 unconscionable. The motion to strike the claim is denied. 4 Plaintiff next argues that Defendants’ affirmative defenses 23 and 34 lack 5 supporting facts or explanation and thus lack fair notice to Plaintiff. Affirmative defense 6 23 states that the contracts at issue are “unenforceable in whole or in part”, but provides 7 no explanation why. Affirmative defense 34 reserves to Defendants the right to assert 8 further affirmative defenses not presently known. Neither provides fair notice to enable 9 Plaintiff to conduct discovery into the defenses. Affirmative defense 23 is stricken with 10 leave to amend. Affirmative defense 34 is superfluous and is stricken without leave to 11 amend. Should Defendants discover new affirmative defenses during this litigation, they 12 may move to amend the answer under Fed. R. Civ. P. 15. Leave to amend is “freely 13 given when justice so requires.” 14 Finally, Plaintiff asserts defense 29 is insufficiently plead. Affirmative defense 29 15 is for unjust enrichment. It claims that Plaintiff would be unjustly enriched if permitted to 16 recover damages against Defendants. “Unjust enrichment is not a cause of action or 17 even a remedy, but rather a general principle, underlying various legal doctrines and 18 remedies. It is synonymous with restitution." McBride v. Boughton, 123 Cal. App. 4th 19 379, 387, 20 Cal. Rptr. 3d 115 (2004) (citations omitted). "Under the law of restitution, an 20 individual is required to make restitution if he or she is unjustly enriched at the expense 21 of another." Durell v. Sharp Healthcare, 183 Cal.App.4th 1350, 1370, 108 Cal. Rptr. 3d 22 682 (2010). Defendants provide no allegation that they conferred any type of benefit 23 upon Plaintiff that suggests unjust retention of a benefit by Plaintiff. See Durell, 183 24 Cal.App.4th at 1370. Affirmative defense 29 is insufficiently plead and does not provide 25 Plaintiff fair notice of the basis of the defense. The defense is stricken with leave to 26 amend. Affirmative Defenses That Deny Plaintiff’s Allegations 27 E. 28 Plaintiff argues that Defendants’ Seventh, Fifteenth, Twentieth, Twenty-First, 13 1 Twenty-Fourth, and Thirty-Third Affirmative Defenses are denials of allegations into 2 Plaintiff’s case in chief. Those affirmative defenses allege that Defendants fully 3 performed, that Plaintiff improperly calculated damages, that any amounts owed under 4 the agreements have been paid in full, that Plaintiff is not entitled to attorney fees, that 5 the damages are speculative, and that and that Defendants substantially complied with 6 the terms of the agreements. 7 "A defense which demonstrates that plaintiff has not met its burden of proof is not 8 an affirmative defense." Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1088 (9th Cir. 9 2002); Richmond v. Mission Bank, No. 1:14-cv-00184-AWI, 2014 U.S. Dist. LEXIS 10 67920, 2014 WL 2002312 at *5 (E.D. Cal. May 15, 2014) (striking purported affirmative 11 defense based on failure to state a claim). Plaintiff is correct that the above claims are 12 not affirmative defenses but rather denials of the allegations of Plaintiff’s claims. 13 Accordingly, Plaintiff's Motion is GRANTED with respect to affirmative defenses 7, 15, 14 20, 21, 24, and 33. Those defenses are stricken from Defendants' amended answer 15 without leave to amend. The legal theories contained therein remain available for 16 Defendants to use and rely upon to try to show that Plaintiff is not entitled to relief on its 17 claims. 18 19 V. CONCLUSION AND ORDER 20 Plaintiff’s motion to strike Defendants' affirmative defenses (ECF No. 29) is 21 GRANTED in part and DENIED in part. Plaintiff's motion is GRANTED as to affirmative 22 defenses 8, 11, 23, 26, 28 and 29. Those affirmative defenses are STRICKEN from 23 Defendants' amended answer without prejudice. Plaintiff's motion is also GRANTED as 24 to affirmative defenses 7, 15, 20, 21, 24, 33 and 34. Those affirmative defenses are 25 STRICKEN with prejudice. Plaintiff’s motion is DENIED as to the other affirmative 26 defenses challenged in the motion, including defenses: 3, 4, 5, 6, 9, 10, 12, 16, 18, 19, 27 28 14 1 22, 27, 31 and 32. Defendants have twenty (21) days following the date this Order to file 2 a second amended answer should they choose to do so. 3 4 5 6 IT IS SO ORDERED. Dated: February 12, 2016 /s/ Michael J. Seng UNITED STATES MAGISTRATE JUDGE 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15

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