Local Access, LLC v. Peerless Network, Inc.

Filing 1049

ORDER granting in part and denying in part 958, S-964 Peerless Network, Inc.'s Motion to Strike. The Motion is GRANTED to the extent that Defenses 11, 13, and 22 are STRICKEN and Defenses 5, 16, and 19 will be treated as denials. The Motion is otherwise DENIED. Signed by Magistrate Judge Embry J. Kidd on 7/28/2023. (RMN)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
LOCAL ACCESS, LLC,
Plaintiff,
v.

Case No: 6:17-cv-236-WWB-EJK

PEERLESS NETWORK, INC.,
Defendant.
ORDER
This cause comes before the Court on Peerless Network, Inc.’s Motion to Strike
(Docs. 958, S-964), filed April 14, 2023. Local Access, LLC, responded in opposition
on April 28, 2023. (Docs. 966, S-1046.) 1 Upon consideration, the Motion is due to be
granted in part and denied in part.
I.

BACKGROUND

Peerless moves pursuant to Federal Rule of Civil Procedure 12(f) to strike
certain affirmative defenses Local Access asserts in its Answer and Affirmative
Defenses to Peerless’s Counterclaims (Docs. 941, S-951). (Doc. S-964.) Peerless asserts
various claims against Local Access for fraud and breach of contract. (Doc. 193.) Local
Access asserts twenty-two affirmative defenses. (S-951.) Peerless moves to strike
seventeen of them, asserting that they plead only bare-bones conclusory allegations or
are not actually affirmative defenses. (Doc. S-964.) The Court addresses each
1

The Court cites to the sealed version of these documents in this Order; however, no
portion of this Order references sealed material.

challenged affirmative defense in turn.
II.

STANDARD

Federal Rule of Civil Procedure 8(b) provides that when a party responds to
a pleading, it must “state in short and plain terms its defenses to each claim asserted
against it.” Fed. R. Civ. P. 8(b)(1)(A). Federal Rule 8(c) requires a party to
“affirmatively state any avoidance or affirmative defense.” Fed. R. Civ. P. 8(c)(1).
“The purpose of Rule 8(c) is simply to guarantee that the opposing party has notice
of any additional issue that may be raised at trial so that he or she is prepared to
properly litigate it.” Hassan v. U.S. Postal Serv., 842 F.2d 260, 263 (11th Cir. 1988).
Pursuant to Rule 12(f), “[t]he court may strike from a pleading an insufficient
defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R.
Civ. P. 12(f). “By its very definition, ‘[a]n affirmative defense is established only
when a defendant admits the essential facts of a complaint and sets up other facts in
justification or avoidance.’ Thus, a defense which simply points out a defect or lack
of evidence in a plaintiff's case is not an affirmative defense.” Morrison v. Exec. Aircraft
Refinishing, Inc., 434 F. Supp. 2d 1314, 1318 (S.D. Fla. 2005) (quoting Will v.
Richardson–Merrell, Inc., 647 F. Supp. 544, 547 (S.D. Ga. 1986)).
However, although “an affirmative defense may be stricken if it is legally
insufficient, . . . striking a defense is a drastic remedy, which is disfavored by the
courts.” Adams v. JP Morgan Chase Bank, N.A., No. 3:11-cv-337-J-37MCR, 2011 WL
2938467, at *1 (M.D. Fla. July 21, 2011) (citations and internal quotation marks
omitted); see also Somerset Pharm., Inc. v. Kimball, 168 F.R.D. 69, 71 (M.D. Fla. 1996)

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(stating that motions to strike are not favored and are often considered time wasters).
“‘An affirmative defense is insufficient as a matter of law only if: (1) on the face of
the pleadings, it is patently frivolous, or (2) it is clearly invalid as a matter of law.’”
Adams, 2011 WL 2938467, at *1 (quoting Microsoft Corp. v. Jesse's Computers & Repair,
Inc., 211 F.R.D. 681, 683 (M.D. Fla. 2002)).
III.

DISCUSSION
A. Affirmative Defense 1

The first affirmative defense asserts that Peerless has waived any claim under
Counts IV, V, VII, VIII, or IX that it had the right to be the exclusive provider of
services to Local Access. (Doc. S-951 at 18–19.) While the affirmative defense goes
into quite some detail, essentially, the basis for it arises from actions taken by Peerless
in a prior case between the parties, Local Access, LLC v. Peerless Network, Inc., No. 14-cv399 (M.D. Fla.) (“Case 399”), wherein Peerless withdrew a motion to amend its
counterclaim against Local Access. (See id.)
Peerless argues that withdrawing its motion to amend in Case 399 did not rise
to the level of a waiver. (Doc. S-964 at 5.) Peerless also argues that its amending the
Homing Tandem Agreement (the “Agreement”) in connection with the settlement of
Case 399 is not a waiver. (Id. at 5–6.) Local Access responds that Peerless’s motion is
an improper attempt to obtain summary judgment on the defense without
consideration of the facts. (Doc. S-1046 at 4.)
Peerless’s argument does not establish that this defense should be stricken
pursuant to Rule 12(f). This affirmative defense can more adequately be characterized

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as a factual dispute between the parties that is inappropriate to address on a motion to
strike. “To the extent that a defense puts into issue relevant and substantial legal and
factual questions, it is ‘sufficient’ and may survive a motion to strike, particularly when
there is no showing of prejudice to the movant.” Reyher v. Trans World Airlines, Inc.,
881 F. Supp. 574, 576 (M.D. Fla. 1995). Here, substantial factual questions remain as
to the waiver issue, and no prejudice has been identified; therefore, the Court will deny
the motion to strike this defense.
B. Affirmative Defenses 2 and 3
The second and third affirmative defenses assert that Peerless waived the right
to assert that the Agreement does not provide for outbound service, by (1) sending
Local Access rate decks, which contained pricing for outbound service, and (2) setting
up facilities for outbound test calls, working with Local Access to place outbound test
calls, and completing outbound test calls. (Doc. S-951 at 19.)
Peerless argues that these are not affirmative defenses to Peerless’s claims
because none of Peerless’s counterclaims depend on the assertion that the Agreement
does not provide for outbound services. (Doc. S-964 at 6.) Moreover, Peerless asserts
that the referenced actions are not sufficient to rise to the level of waiver. (Id. at 6–7.)
Local Access admits that the Court dismissed Peerless’s counterclaim for a judicial
declaration on whether the contract provides for outbound traffic (Doc. 936 at 2), but
it is Local Access’s position that Peerless’s surviving counterclaims still allege that the
contract does not allow for outbound traffic in paragraphs which are incorporated into
its existing counterclaims. (Doc. S-1046 at 6–7.)

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For the same reasons the undersigned declined to strike the first affirmative
defense, the Court will also deny the motion to strike these two affirmative defenses.
Even though Peerless’s counterclaim for a judicial declaration on whether the contract
provides for outbound traffic has been dismissed, the question of whether the
Agreement provided for outbound services is related to Peerless’s counterclaims. Thus,
to the extent that these affirmative defenses put into issue relevant and substantial
factual questions with no showing of prejudice to Peerless, the defenses are sufficient.
See Reyher, 881 F. Supp. at 576.
C. Affirmative Defenses 5 and 16
The fifth affirmative defense asserts that Count IV fails to state a claim upon
which relief can be granted (Doc. S-951 at 20), and the sixteenth affirmative defense
asserts that Counts VII and VIII are not pleaded with sufficient particularity or
specificity to state a claim for fraud (id. at 25). Peerless asserts that “failure to state a
claim” is not an affirmative defense, and even if it were, the Court has rejected Local
Access’s argument that Peerless failed to state a claim in the aforementioned Counts.
(Doc. S-964 at 7–8.) Local Access acknowledges as much, but requests that the Court
treat these defenses as specific denials, rather than striking the defenses. (Doc. S-1046
at 9–10.)
The parties are correct that the defense of failure to state a claim is not an
affirmative defense. In re Rawson Food Serv., Inc., 846 F.2d 1343, 1349 (11th Cir. 2010)
(“A defense which points out a defect in the plaintiff's prima facie case is not an
affirmative defense.”) However, the Court declines to strike these defenses because

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“without more, [it] is akin to a denial that Plaintiff cannot prove an element of [her]
case.” J.G.G. Tobacco Holding Co., Inc. v. Antigua Esteli Tobacco, Corp., No. 19-23732CIV, 2020 WL 4926582, at *2 (S.D. Fla. May 20, 2020) (treating defense of failure to
state a claim as a general denial and denying motion to strike same).
D. Affirmative Defense 7
The seventh affirmative defense asserts that Peerless’s claims are barred by the
doctrine of estoppel. (Doc. S-951 at 21–22.) Peerless argues that estoppel is an
equitable defense that must be pleaded with particularity but that Local Access’s
affirmative defense falls short of pleading fraud, misrepresentation, or the concealment
of a material fact, which it contends Illinois law requires. (Doc. S-964 at 8–9.) Local
Access responds that Illinois law is not as stringent as Peerless asserts, and in any
event, the affirmative defense is sufficiently pleaded. (Doc. S-1046 at 10–14.)
Estoppel is an equitable doctrine that must be pleaded with particularity—on
this point, the parties agree. Microthin.com, Inc. v. Siliconezone USA, LLC, No. 06 C 1522,
2006 WL 3302825, at *10 (N.D. Ill. Nov. 14, 2006). However, the parties disagree on
how particularly Illinois law requires this defense to be pleaded. 2 Peerless asserts there
are six elements to this affirmative defense (Doc. S-964 at 8), while Local Access says
there are only three elements. (Doc. S-1046 at 10–11.)

2

The parties agree that Illinois substantive law applies.

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At least one Illinois federal court has stated:
To state an equitable estoppel affirmative defense to a
federal claim, a defendant must allege: (1) a
misrepresentation by the party against whom estoppel is
asserted; (2) reasonable reliance on that misrepresentation
by the party asserting estoppel; and (3) detriment to the
party asserting estoppel. Kennedy v. United States, 965 F.2d
413, 417 (7th Cir. 1992). Under Illinois law, a defendant
must plead six elements: (1) the other person
misrepresented or concealed material facts; (2) the other
person knew at the time he or she made the representations
that they were untrue; (3) the party claiming estoppel did
not know that the representations were untrue when they
were made and when they were acted upon; (4) the other
person intended or reasonably expected that the party
claiming estoppel would act upon the representations; (5)
the party claiming estoppel reasonably relied upon the
representations in good faith to his or her detriment; and (6)
the party claiming estoppel would be prejudiced by his or
her reliance on the representations if the other person is
permitted to deny the truth thereof.
Glen Flora Dental Ctr., Ltd. v. First Eagle Bank, 487 F. Supp. 3d 722, 739 (N.D. Ill. 2020).
However, as Local Access points out, other Illinois federal courts have not made this
same distinction, stating that the affirmative defense of estoppel is pleaded in just three
elements. Microthin.com, 2006 WL 3302825, at *10.
It appears to the undersigned that the court in Microthin.com was addressing
affirmative defenses that were pleaded in response to federal claims of patent
infringement. Id. at *1, *9. Thus, it stated the affirmative defense of estoppel is pleaded
in three elements. Id. at *10. As the affirmative defense of estoppel in this case is
pleaded in response to Illinois state law claims (S-951), Illinois law requires the
pleading of six elements. Glen Flora, 487 F. Supp. 3d at 739.

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Under either pleading standard, however, a review of the seventh affirmative
defense reveals that it fails to plead an affirmative misrepresentation. Local Access
admits as much, but states that, as pleaded, this affirmative defense is adequate,
because the misrepresentation can be inferred based on the representation cited. (Doc.
S-1046 at 11.) Local Access also cites Illinois authority that supports that idea that “it
is sufficient that a fraudulent or unjust effect results from allowing another person to
raise a claim inconsistent with his or her former declarations.” In re Scarlett Z.- D., 28
N.E.3d 776, 785 (Ill. 2015). The undersigned concludes that this affirmative defense is
adequately pleaded, in light of Scarlett and Local Access’s detailed accounting of the
representations made by Peerless and the actions Local Access took in reliance.
E. Affirmative Defense 8
The eighth affirmative defense asserts that Peerless is equitably estopped from
claiming that the Agreement did not provide for routing of the outbound traffic. (Doc.
S-951 at 22.) Peerless asserts similar arguments to those made as to the second, third,
and seventh affirmative defenses. (Doc. S-964 at 9–10.) Therefore, the Court will not
strike this affirmative defense for the same reasons articulated supra.
F. Affirmative Defenses 9 and 10
The ninth and tenth affirmative defenses assert that Peerless expressly released
Local Access from certain claims. (Doc. S-951 at 23.) Peerless argues that these
defenses are insufficiently pleaded because they fail to identify which of Peerless’s
counts were released. (Doc. S-964 at 10.) Local Access counters that the affirmative
defenses provide fair notice.

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Upon review of these defenses, the undersigned finds that they are sufficiently
pleaded. The undersigned does not consider these affirmative defenses to be barebones, as they contain references to factual allegations. Moreover, the undersigned
does not read the case cited by Peerless in support of its argument, Bluegreen Vacations
Unlimited, Inc. v. Timeshare Termination Team, LLC, No. 20-CV-25318, 2021 WL
2476488, at *3 (S.D. Fla. June 17, 2021), to support the claim that affirmative defenses
should identify which counts were purportedly released. Thus, the undersigned finds
these affirmative defenses are sufficiently pleaded.
G. Affirmative Defense 11
The eleventh affirmative defense asserts that Counts VII and VIII, for fraudulent
inducement and fraud, are barred by the doctrine of unjust enrichment. (Doc. S-951 at
23.) Peerless asserts that the defense of unjust enrichment is not a cognizable
affirmative defense. (Doc. S-964 at 10) (citing Minalga v. Fid. Invs. Institutional
Operations Co., No. 01 C 4173, 2002 WL 31527251, at *2 (N.D. Ill. Nov. 14, 2002);
Local Access, LLC v. Peerless Network, Inc., No: 6:17–cv–236–Orl–40TBS, 2018 WL
3067908, at *7 (M.D. Fla. May 21, 2018) (striking Peerless’s asserted affirmative
defense of unjust enrichment on this basis)). Local Access recognizes this but asserts
that the Court should treat it as a counterclaim, citing Federal Rule of Civil Procedure
8. (Doc. S-1046 at 14–15.) At this late stage in the proceedings, the undersigned finds
that it would be prejudicial to Peerless to allow Local Access to designate this defense
as a counterclaim. Additionally, this defense was previously stricken in Case 399.
Therefore, this affirmative defense is stricken.

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H. Affirmative Defense 12
The twelfth affirmative defense asserts that Peerless’s equitable claims are
barred by the doctrine of unclean hands. (Doc. S-951 at 23–24.) The affirmative
defense of unclean hands is an equitable defense that must be pleaded with
particularity. Microthin.com, 2006 WL 3302825, at *10. Peerless argues that the
examples Local Access cites in this affirmative defense, if taken as true, are merely
examples of breach of contract by Peerless and reflect that the parties have disputes
regarding the meaning of the Agreement and its amendments. (Doc. S-964 at 11–12.)
However, Local Access has alleged facts that support a defense of unclean hands
because it identifies alleged bad faith acts Peerless took. Therefore, the motion to strike
this affirmative defense is denied.
I. Affirmative Defense 13
Local Access does not oppose the striking of this defense. Accordingly, the
Motion will be granted as to Defense 13.
J. Affirmative Defense 14
The fourteenth affirmative defense asserts that all of Peerless’s claims are barred
by the doctrine of res judicata or collateral estoppel, to the extent that they rely upon
the assertion that the March 31, 2017 settlement agreement is unclear, invalid, or
unenforceable. (Doc. S-951 at 24–25.) Peerless argues that Local Access does not
identify any affirmative claim by Peerless that relies upon the assertion that the March
17, 2017 settlement agreement is unclear, invalid, or unenforceable. (Docs. S-964 at
12-13.) So, Peerless asserts, even if res judicata or collateral estoppel applies with

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respect to the settlement agreement, those doctrines are not actually defenses to any of
Peerless’s claims. (Id. at 13.) But Local Access counters that Peerless alleged that Local
Access made misrepresentations related to the settlement agreement and incorporates
those allegations into its counterclaims:
Peerless alleges certain terms of the March 31, 2017
settlement agreement and contends that LA made several
misrepresentations to procure that agreement. Doc. 146 at
¶¶ 81-86, 120, 130, 154, 162 & 171. Peerless specifically
related those alleged misrepresentations to LA’s contract
with Inteliquent and alleged that LA did not disclose all
material terms of that agreement to Peerless. Id. Thus, to
the extent that Peerless’s counterclaims rely upon these
express allegations, the affirmative defense is appropriate
and should stand.
(Doc. S-1046 at 18.)
Local Access asserts that while Peerless continues to contend that the settlement
agreement is ambiguous (see Doc. S-964 at 13), and some of Local Access’s defenses
depend on the settlement agreement, it is appropriate for Local Access to assert a
defense stating that Peerless is barred from contesting the clarity and enforceability of
the settlement agreement terms. (Id.) The Court agrees and finds that this defense
should remain.
K. Affirmative Defense 15
The fifteenth affirmative defense asserts that any failure of performance by
Local Access under any exclusivity requirements of the Agreement was caused by
Peerless’s own actions to prevent such performance. (Doc. S-951 at 25.) Peerless
argues Local Access has failed to plead any affirmative actions Peerless took to prevent

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Local Access’s performance. (Doc. S-964 at 13.) The Court disagrees. Local Access
has identified facts to show how Peerless’s acts, such as a failure to provide
information to Local Access, prevented Local Access’s performance. (Doc. S-951 at
25.) Ultimately, whether such a defense is successful is not an issue appropriate for
determination on a motion to strike.
L. Affirmative Defense 17
The seventeenth affirmative defense asserts that Peerless failed to satisfy
conditions precedent to Local Access’s performance under the Agreement because
“Peerless failed to provide Local Access with a list of all markets and/or LATAs in
which Peerless could provide services to [Local Access] and failed to provide Local
Access with notice of expansion into other markets and/or LATAs.” (Doc. S-951 at
25–26.) Peerless argues that “Local Access fails to identify any provision of the
Agreement that supports its claim that Peerless’s providing a list of markets was a
condition precedent to any of Local Access’s obligations.” (Doc. S-964 at 14.)
Local Access responds that this defense places Peerless on fair notice that Local
Access will challenge whether Peerless provided the requisite information before Local
Access could route traffic through Peerless in any given area. (Doc. S-1046 at 19.)
Peerless’s argument falls short of persuading the undersigned that the defense should
be stricken, as again, this appears to be an issue inappropriate for resolving at the
pleading stage.

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M. Affirmative Defense 19
The nineteenth affirmative defense asserts that any misunderstanding or
misconstruction of the Agreement, the first amendment, or the March 31, 2017
settlement agreement was the result of Peerless’s unilateral mistake and Peerless would
not be relieved of its contractual obligations. (Doc. S-951 at 26.) Peerless asserts that,
as pleaded, this is not an affirmative defense because Local Access does not plead that
it has made a mistake, but rather, that Peerless did. (Doc. S-964 at 14–15.) Local
Access concedes that this defense is “preemptive in nature” but serves to place Peerless
on notice of what Local Access will contend at trial. (Doc. S-1046 at 20.)
Given Local Access’s concession that this is not a true defense, but there being
no asserted prejudice in allowing it to remain, the Court will treat it as a denial of
Peerless’s anticipated arguments. Therefore, the Court will decline to strike this
defense. Hansen v. ABC Liquors, Inc., No. 3:09-CV-966-J-34MCR, 2009 WL 3790447,
at *2 (M.D. Fla. Nov. 9, 2009) (“[W]hen a party incorrectly labels a ‘negative averment
as an affirmative defense rather than as a specific denial[,] . . . the proper remedy is
not [to] strike the claim, but rather to treat [it] as a specific denial .”) (internal quotation
marks omitted).
N. Affirmative Defense 22
The twenty-second affirmative defense asserts that Counts VII and VIII are
barred to the extent that no claim of fraud in the inducement is actionable where the
alleged fraud contradicts a subsequent written contract. (Doc. S-951 at 27.) Peerless
argues that Local Access does not identify any allegation by Peerless that is

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inconsistent with the terms of the Agreement and its amendments. (Doc. S-964 at 15.)
Local Access agrees that a more definite statement would be appropriate and does not
oppose striking this defense. (Doc. S-1046 at 19.) However, Local Access requests
leave to amend the defense to provide greater specificity. (Id.) At this late stage in the
litigation, the Court finds that this affirmative defense is due to be stricken, without
leave to amend.
IV.

CONCLUSION

Accordingly, it is ORDERED that Peerless Network, Inc.’s Motion to Strike
(Docs. 958, S-964) is GRANTED IN PART and DENIED IN PART as follows:
1. The Motion is GRANTED to the extent that Defenses 11, 13, and 22 are
STRICKEN and Defenses 5, 16, and 19 will be treated as denials.
2. The Motion is otherwise DENIED.
DONE and ORDERED in Orlando, Florida on July 28, 2023.

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