Federal Deposit Insurance Corporation v. Varrasso et al
Filing
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MEMORANDUM AND ORDER signed by Judge William B. Shubb on 4/9/2012 granting 43 Plaintiff's Motion to Strike defendant Varrasso's affirmative defense of comparative fault. Defendant has twenty days from the date of this Order to file an amended answer, if he can do so consistent with this Order. (Kirksey Smith, K)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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NO. CIV. 2:11-2628 WBS CKD
FEDERAL DEPOSIT INSURANCE
CORPORATION as Receiver for
INDYMAC BANK, F.S.B.,
MEMORANDUM AND ORDER RE:
MOTION TO STRIKE
Plaintiff,
v.
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RICHARD K. VARRASSO doing
business as Richard Varrasso
and Associates and
AppraisalTrust.com, an
individual; PREMIER VALLEY,
INC. doing business as CENTURY
21 M&M ASSOCIATES, a
California corporation; and
KAREN BHATTI, an individual,
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Defendants.
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----oo0oo---Plaintiff Federal Deposit Insurance Corporation
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(“FDIC”) as Receiver for Indymac Bank, F.S.B. (“Indymac”) brought
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this action against defendants Richard K. Varrasso, doing
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business as Richard Varrasso and Associates and
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AppraisalTrust.com, Premier Valley, Inc. (“Premier”), doing
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business as Century 21 M&M Associates, and Karen Bhatti, arising
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out of defendants’ allegedly wrongful misrepresentations
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regarding the purchase of two residential properties.
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before the court is plaintiff’s motion to strike Varrasso’s
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affirmative defense of comparative negligence pursuant to Federal
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Rule of Civil Procedure 12(f).
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I.
(Docket No. 43.)
Factual and Procedural Background
Plaintiff FDIC is a government entity appointed by the
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Presently
Office of Thrift Supervision to act as Receiver for IndyMac
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pursuant to 12 U.S.C. § 1821(d)(2)(B).
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legal claims have accordingly been retained by or transferred to
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the FDIC.
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(Compl. ¶ 1.)
IndyMac’s
(Id.)
Varrasso is engaged in the business of appraising
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residential real property.
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Varrasso prepared appraisal reports in connection with two
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residential properties.
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Varrasso knew that the appraisals would be used by lenders, such
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as IndyMac, for mortgage lending purposes.
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Plaintiff further alleges that Varrasso failed to comply with
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regulatory requirements established for transactions funded
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through federally regulated financial institutions, and that this
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failure resulted in mistakes such as inflating the listing price
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of the property, neglecting to address the listing history of the
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property, and failing to use and analyze comparable sales.
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¶¶ 19, 30, 47.)
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(Id. ¶ 3.)
In 2006 and 2007,
(Id. ¶¶ 12, 16.)
Plaintiff alleges that
(Id. ¶¶ 20, 49.)
(Id.
Plaintiff maintains that IndyMac funded the two
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mortgages in reliance on the appraisals that Varrasso prepared.
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(Id. ¶¶ 21, 50.)
Plaintiff further alleges that it suffered
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foreseeable damages on the loans.
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(Id. ¶¶ 22, 32, 51, 61.)
Plaintiff filed its Complaint on July 6, 2011, alleging
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six claims for relief.
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against Varrasso for negligent misrepresentation and breach of
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contract.
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February 28, 2012.
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affirmative defense states that:
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Plaintiff asserts causes of action
(Id. ¶¶ 17-32, 45-61.)
Varrasso filed his Answer on
(Docket No. 42.)
Varrasso’s first
. . . Plaintiff’s predecessor in interest was itself
negligent and such negligence was a contributing,
proximate cause to Plaintiff’s alleged injuries and
damages, if any there were, and that such comparative
fault and negligence on the part of the Plaintiff’s
predecessor in interest shall serve to reduce the
damages, if any, which are the subject of this lawsuit.
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(Answer of Def. Varrasso at 8:6-10.)
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II.
Judicial Notice
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In general, a court may not consider items outside the
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pleadings when deciding a motion to dismiss, but it may consider
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items of which it can take judicial notice.
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F.3d 1370, 1377 (9th Cir. 1994).
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notice of facts “not subject to reasonable dispute” because they
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are either “(1) generally known within the territorial
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jurisdiction of the trial court or (2) capable of accurate and
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ready determination by resort to sources whose accuracy cannot
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reasonably be questioned.”
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may properly be taken of matters of public record outside the
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pleadings.
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(9th Cir. 1986).
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Barron v. Reich, 13
A court may take judicial
Fed. R. Evid. 201.
Judicial notice
See MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504
Plaintiff filed a request for judicial notice that
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requests that the court take judicial notice of the unpublished
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Order Granting Plaintiff’s Motion to Strike Defendant’s Fifth
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Affirmative Defense Pursuant to Federal Rule of Civil Procedure
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12(f) in Federal Deposit Ins. Corp. v. Mahan, Case No. CV11-054-4
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(C.D. Cal. Nov. 14, 2011).
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that the court take judicial notice of the existence of the
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district court’s opinion in F.D.I.C. v. Mahan, the request is
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granted.
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Burbank, 136 F.3d 1360, 1364 (9th Cir. 1998).
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will not take judicial notice of any disputed facts contained in
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the opinion.
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Cir. 2001).
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III. Discussion
To the extent that plaintiff requests
See Burbank-Glendale-Pasadena Airport Auth. v. City of
However, the court
See Lee v. City of L.A., 250 F.3d 668, 690 (9th
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Pursuant to Rule 12(f), the court may “strike from a
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pleading an insufficient defense or any redundant, immaterial,
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impertinent, or scandalous matter.”
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purpose of the rule is to avoid the costs that accompany
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litigating spurious issues by dispensing with those issues prior
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to trial.
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(9th Cir. 1983).
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disfavor and are not frequently granted.
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pleading under attack in the light more favorable to the
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pleader.”
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1:08-CV-1924, 2009 WL 2982900, at *23 (E.D. Cal. Sept. 14, 2009)
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(citation omitted).
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well-founded, Rule 12(f) motions often are not granted in the
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absence of a showing of prejudice to the moving party.”
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Hernandez v. Balakian, No. CV-F-06-1383, 2007 WL 1649911, at *1
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(E.D. Cal. June 1, 2007) (internal quotation marks omitted).
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Fed. R. Civ. P. 12(f).
The
Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885
“Motions to strike are generally viewed with
Courts must view the
Garcia ex rel. Marin v. Clovis Unified Sch. Dist., No.
“[E]ven when technically appropriate and
To determine that a defense is insufficient as a matter
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of law, “the court must be convinced that there are no questions
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of fact, that any questions of law are clear and not in dispute,
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and that under no set of circumstances could the defense
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succeed.”
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4607412, at *2 (N.D. Cal. Nov. 4, 2010).
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motion to strike based on legal insufficiency “will not be
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granted unless it appears to a certainty that plaintiff[] would
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succeed despite any state of the facts which could be proved in
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support of the defense.”
Schmidt v. Pentair, Inc., No. C08-4589, 2010 WL
In other words, a
Griffin v. Gomez, No. C 98-21038, 2010
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WL 4704448, at *4 (N.D. Cal. Nov. 12, 2010).
Denials that are
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improperly pled as defenses should not be stricken on that basis
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alone.
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(C.D. Cal. Nov. 15, 2007) (noting that the authority on this
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issue is sparse).
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defense of contributory negligence is immaterial or impertinent
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to the causes of action of negligent misrepresentation and breach
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of contract and should therefore be striken.
Mattox v. Watson, No. CV 07-5006, 2007 WL 4200213, at *1
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Plaintiff argues that Varrasso’s affirmative
“Comparative fault is not a defense to negligent
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misrepresentation, which is a species of the tort of deceit.
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a case arising from an allegation of deceit, whether intentional
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or negligent, Plaintiff’s behavior is subsumed under the reliance
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element.”
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LEXIS 143690, at *5 (C.D. Cal. Oct. 28, 2010) (citing Van Meter
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v. Bent Const. Co., 46 Cal. 2d 588, 594 (1956)).
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Carroll v. Gava, 98 Cal. App. 3d 892 (3d Dist. 1979), reasoned
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that the comparative fault concept
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In
F.D.I.C. v. Kirkland, No. CV 10-3286, 2010 U.S. Dist.
The court in
has no place in the context of ordinary transactions.
. . . Business ethics justify reliance upon the accuracy
of information imparted in buying and selling, and the
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risk of falsity is on the one who makes a representation.
This straightforward approach provides an essential
predictability to parties in the multitude of everyday
exchanges; application of comparative fault principles,
designed to mitigate the often catastrophic consequences
of personal injury, would only create unnecessary
confusion and complexity in such transactions.
Id. at 897 (citations omitted).
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Courts have recognized the possibility of a comparative
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negligence defense to a negligent misrepresentation claim when a
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plaintiff’s own conduct is “preposterous or irrational.”
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Meter v. Bent Constr. Co., 46 Cal. 2d at 595; see also F.D.I.C.
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v. JSA Appraisal Serv., No. 5:10-cv-02077-LHK, 2010 WL 3910173,
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at *2 (N.D. Cal. Oct. 2010).
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possible in this case, defendants’ conclusory statement that
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“[p]laintiff’s predecessor in interest was itself negligent and
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such negligence was a contributing, proximate cause to
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plaintiff’s alleged injuries and damages,” (Answer of Def.
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Varrasso at 8:6-7), is insufficient to plead that plaintiff’s
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conduct was “preposterous or irrational” or provide plaintiff
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with a fair notice of the basis for this defense.
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v. JSA Appraisal Serv., 2010 WL 3910173, at *2 (finding that
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defendants’ statement that “‘others,’ including Plaintiff, were
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at fault” did not provide adequate notice of the basis for the
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defense).
Van
While such a defense may be
See F.D.I.C.
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Striking Varrasso’s comparative negligence defense does
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not affect Varrasso’s ability to assert that plaintiff’s reliance
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on the acts and representations of third parties other than
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himself affects damages and causation.
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Court, 142 Cal. App. 3d 323, 331 (1st Dist. 1983) (“[Carroll’s]
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holding does not imply that relative fault will not be assessed
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See Kohn v. Superior
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between or among defendants jointly charged with misrepresenting
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to the plaintiff.
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broadly.”); F.D.I.C. v. Sethi, No. C-11-3339, 2011 WL 6749008, at
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*3 (N.D. Cal. Dec. 22, 2011).
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Only its dicta could be interpreted so
The remaining cause of action against Varrasso is for
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breach of contract.
It is well established that comparative
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fault is not a defense to a breach of contract claim.
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Kransco v. Am. Empire Surplus Lines, Ins. Co., 23 Cal. 4th 390,
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402-03 (2000); F.D.I.C. v. Kirkland, 2010 U.S. Dist. LEXIS
See
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143690, at *6.
Accordingly, the court will grant plaintiff’s
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motion to strike Varrasso’s affirmative defense of comparative
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fault.
IT IS THEREFORE ORDERED that plaintiff’s motion to
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strike defendant Varrasso’s affirmative defense of comparative
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fault be, and the same hereby is, GRANTED.
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Defendant has twenty days from the date of this Order
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to file an amended answer, if he can do so consistent with this
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Order.
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DATED:
April 9, 2012
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