Bank of America, N.A. v. Grec Homes IX, LLC et al

Filing 259

ORDER denying 156 Motion to Dismiss for Failure to State a Claim; denying 156 Motion to Strike. Signed by Judge Cecilia M. Altonaga on 6/19/2014. (ps1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 13-21718-CIV-ALTONAGA/O’Sullivan
BANK OF AMERICA, N.A.,
Plaintiff/Counter-Defendant,
vs.
GREC HOMES IX, LLC, et al.,
Defendants/Counter-Plaintiffs.
________________________________/
ORDER
THIS CAUSE came before the Court on Plaintiff/Counter-Defendant, Bank of America,
N.A.’s (the “Bank[’s]”) Motion to Dismiss Second Amended Counterclaim and Strike
Affirmative Defenses . . . (“Motion”) [ECF No. 156], filed March 11, 2014.
Defendants/Counter-Plaintiffs, GREC Homes IX, LLC (“GREC IX”); GREC Homes X, LLC
(“GREC X”); GREC Homes XI, LLC (“GREC XI”); GREC Homes XII, LLC (“GREC XII”);
Augustin Herran (“Herran”); Rosiel Herran (“Herran’s Wife”); Armando Guerra (“Guerra”);
Maria C. Guerra (“Guerra’s Wife”); Manuel Herran (“Herran’s Father”); Nyria Herran; Emiliano
Herran (“Herran’s Cousin”); and Miriam Herran (collectively, “Defendants” or “CounterPlaintiffs”), filed their Response in Opposition to Plaintiff’s Motion to Dismiss . . . (“Response”)
[ECF No. 191] on April 22, 2014. On May 15, 2014, the Bank filed its Reply Memorandum . . .
(“Reply”) [ECF No. 219]. A hearing on the Motion took place on May 20, 2014 (“May 20
Hearing”) [ECF No. 224]. This Order assumes the reader is familiar with the case and the
Court’s earlier orders, and consequently contains an abbreviated discussion of the issues and
applicable law.

Case No. 13-21718-CIV-ALTONAGA/O’Sullivan
I. BACKGROUND
A. Procedural Background
On September 3, 2013, Defendants filed an Amended Answer, Affirmative Defenses, and
Counterclaim (“Amended Counterclaim”) [ECF No. 68]. The Amended Counterclaim contained
eleven causes of action and twelve affirmative defenses. (See generally Am. Counterclaim). On
September 30, 2013, the Bank filed a Motion to Dismiss Defendants’ Amended Counterclaim . .
. (“First Motion to Dismiss”) [ECF No. 93]. By Order dated January 23, 2014 (“January 23
Order”) [ECF No. 140], the Court granted in part the First Motion to Dismiss and struck several
of the affirmative defenses. (See generally Jan. 23 Order). Defendants submitted a Corrected
Second Amended Answer, Affirmative Defenses, and Counterclaim (“SAC”) [ECF No. 150] on
February 14, 2014.
B. Factual Summary
This matter arises out of a loan transaction for a real estate development project between
the Bank and Defendants GREC IX, GREC X, GREC XI, and GREC XII (collectively, the
“Borrowers” or “GREC Entities”). (See Complaint ¶ 7 [ECF No. 1]). In the early to mid-2000s,
when Herran decided to venture into real estate development, the Bank sought his business, and
over time Herran “built a relationship of trust and confidence with the Bank that extended far
beyond that of [a] creditor [and] debtor . . . .” (SAC ¶¶ 8–9).1
In 2005, Herran embarked on a real estate project to develop eighty-two acres of land into
a 1,186-unit residential property initially known as “Keys Edge,” later identified as “Grand
Palms.” (Id. ¶ 11). GREC IX was formed for the sole purpose of purchasing the land and
developing the Keys Edge property, with Herran serving as principal. (See id. ¶ 12). It was

1

Citations to the SAC refer to the numbered paragraphs corresponding to the counterclaims.

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estimated a loan of over $80,000,000 would be required to complete the project. (See id. ¶ 14).
Teresa Bello (“Bello”) and John Nichols (“Nichols”), “Bank executives whose duties included
fomenting a relationship of trust with [] Herran” (id. ¶ 10), assured Herran he was an “elite” and
“preferred” customer, and the Bank would “always find the way to work things out with respect
to any loan” (id. ¶ 13). As a result of “the relationship of trust and confidence that was
established between [] Herran and the Bank and its executives, including [] Bello and [] Nichols,
[] Herran chose to give GREC IX’s business to the Bank.” (Id. ¶ 14).
In October 2005, Bello and Nichols suggested Herran form several shell entities —
GREC X, GREC XI, and GREC XII (collectively, the “Phantom GREC Entities”) — and include
them in a Promissory Note [ECF No. 1-2] for the loan in order to circumvent certain
transactional state and local taxes and fees on any future real estate projects developed under
those entities. (See id. ¶¶ 15, 17). Relying on the representations of Bank executives, Herran
formed the Phantom GREC Entities and listed them as borrowers on the Promissory Note along
with GREC IX, even though the Phantom GREC Entities were not involved in the land
purchases. (See id. ¶ 17).
In November 2005, the Bank, through Bello and Nichols, insisted Herran, Guerra,
Herran’s Father, and Herran’s Cousin (the “Husband Guarantors”) each personally guarantee the
Promissory Note for the loan. (See id. ¶ 19). The Bank also required the personal guaranties of
the wives of the Husband Guarantors — Herran’s Wife, Guerra’s Wife, Nyria Herran, and
Miriam Herran (collectively, the “Wife Guarantors”). (See id. ¶ 21). Of all the individual
guarantors, only Herran and Herran’s Cousin (the “Investor Guarantors”) were investors in
GREC IX.2 (See id. ¶ 20).
2

At the May 20 Hearing, counsel for Defendants clarified that contrary to the allegations in paragraph 20
of the SAC, Herran’s Cousin is an investor in GREC IX.

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Based on these representations and Herran’s trust in the Bank, on November 14, 2005,
the GREC Entities executed a Promissory Note and Master Loan Agreement [ECF No. 1-1] for
$84,250,000 from the Bank to fund the acquisition of the land for Keys Edge. (See id. ¶ 24). At
the same time, each of the Husband and Wife Guarantors executed personal Guaranty
Agreements [ECF No. 1-2] on the loan. (See id.). The loan and personal guaranties were
renewed several times, with the most recent renewal occurring in May 2012. (See id. ¶ 31).
After the loan was executed, Bank executives approached GREC IX executives about
purchasing an interest rate swap to protect the business interest from the possibility of rising
interest rates. (See id. ¶ 26). The Bank, through its executives, represented interest rates were
going to rise. (See id.). At the time these representations were made, the Bank knew them to be
false, but it used the interest rate swap agreement3 as a means of garnering more fees from the
Borrowers. (See id.). Relying on the representations, Herran, on behalf of GREC IX, agreed to
the Rate Swap. (See id. ¶ 27). Shortly thereafter, interest rates fell, costing the Borrowers nearly
two million dollars in charges associated with falling interest rates. (See id. ¶ 28).
The SAC contains nine causes of action: fraudulent inducement of GREC IX to enter the
Rate Swap (Count I); fraudulent inducement of the Wife Guarantors to execute personal
guaranties on the Promissory Note (Count II); fraudulent inducement of the Husband Guarantors
to execute personal guaranties on the Promissory Note (Count III); fraudulent inducement of
Herran to execute a personal guaranty on the Promissory Note (Count IV); breach of fiduciary
duty owed to GREC IX related to the Rate Swap and acquisition/subordination of Franklin
Bank’s interest in the loan (Count V); breach of fiduciary duty owed to the Phantom GREC

3

The interest rate swap agreement is comprised of an ISDA 2002 Master Agreement [ECF No. 93-1],
Schedule to the 2002 Master Agreement [ECF No. 93-2], March 9, 2006 Confirmation [ECF No. 93-3],
and April 6, 2007 Confirmation [ECF No. 93-4] (collectively, the “Rate Swap”).

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Entities related to the Promissory Note (Count VI); fraudulent inducement of the Phantom
GREC Entities to execute the Promissory Note (Count VII); violation of the Wife Guarantors’
rights under the Equal Credit Opportunity Act, 15 U.S.C. sections 1601–1691f (the “ECOA”)
(Count VIII); and violation of the Bank Holding Company Act, 12 U.S.C. sections 1971–1978
(the “BHCA”), against the Phantom GREC Entities (Count IX). (See generally SAC).
The SAC contains the following affirmative defenses: (1) the Bank’s claims are barred by
the doctrine of unclean hands; (2) the Bank contributed to its own alleged damages by refusing to
properly fund the loan; (3) any award to the Bank is subject to offset for damages suffered as a
result of the Bank’s misconduct; (4) the claims against the Wife Guarantors violate the ECOA;
(5) the claims against the individual guarantors are unenforceable, as the guaranties were the
result of fraud in the inducement; (6) the claims against the Phantom GREC Entities are barred,
as the Note and its renewals were procured through fraud; (7) all claims against the Defendants
are unenforceable, as the Bank violated the BHCA by requiring the Phantom GREC Entities’
participation in the loan; and (8) all claims against Defendants are void, as the Bank’s
requirement of having the Phantom GREC Entities added to the Promissory Note is an illegal
attempt to avoid the Florida documentary stamp tax in contravention of public policy. (See
generally SAC).
The Motion seeks dismissal of the counterclaims and the striking of the affirmative
defenses. (See generally Mot.).
II. ANALYSIS
The Bank continues to argue waivers and releases contained in the loan documents
foreclose Counter-Plaintiffs’ claims against the Bank. (See Mot. 3). According to the Bank, the
effect of the waivers and releases compels dismissal of all of the counterclaims and defenses.

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(See id.). More specifically, the Bank argues Counts I, II, III, IV and VII fail to state claims for
rescission. (See id. 3–15). The Bank maintains dismissal of Count V is warranted because the
Bank did not owe GREC IX any fiduciary duties pursuant to the terms of the Rate Swap and loan
documents, and new allegations concerning the Bank’s conduct in connection with the Franklin
Bank loan interest are conclusory. (See id. 15–17). Regarding Count IX, the Bank contends
advising Counter-Plaintiffs to form the Phantom GREC Entities and requiring the latters’
inclusion on the Promissory Note does not amount to an anti-competitive tying arrangement
sufficient to state a cause of action for violating the BHCA. (See id. 17–19).
Counter-Plaintiffs assert — as they did in their earlier briefing — the waivers and
releases in the loan documents are not binding, as releases and merger and integration clauses
contained in fraudulently induced contracts are unenforceable. (See Resp. 33–34). CounterPlaintiffs argue they have cured the previous pleading defects in their fraudulent inducement
claims (Counts I, II, III, IV, and VII), entitling them to seek rescission of the various loan
documents. (See id. 8–9). Counter-Plaintiffs maintain they have adequately pleaded a claim for
breach of fiduciary duty in Count V. (See id. 24–27). Counter-Plaintiffs reason they have
adequately pleaded a claim pursuant to the BHCA in Count IX, as the Bank’s requirement of
having the Phantom GREC Entities included as borrowers on the Promissory Note is an anticompetitive tying arrangement designed to benefit the Bank. (See id. 31–33). Finally, CounterPlaintiffs note the Bank does not challenge the substance of Counts VI and VIII, and the
affirmative defenses, and these must be allowed to proceed on the basis of the properly pleaded
allegations of fraudulent inducement. (See id. 33–37).
A. Enforceability of the Releases, Waivers, and Merger & Integration Clauses
As it did in the First Motion to Dismiss, the Bank asserts all of the counterclaims and

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affirmative defenses are improper because they have been waived and released through the
various loan documents. (See Mot. 3). But as previously explained, it “is the well-settled rule
‘that a party can not contract against liability for his own fraud[,]’ absent specific contractual
language to the contrary.” (Jan. 23 Order 10 (alteration in original; citations omitted)). Where,
as here, “a party alleges that a contract was procured by fraud or misrepresentations as to a
material fact, an integration clause will not make the contract incontestable, and the oral
representation may be introduced into evidence to establish fraud.” MeterLogic, Inc. v. Copier
Solutions, Inc., 126 F. Supp. 2d 1346, 1363 (S.D. Fla. 2000) (citations omitted). As before,
Counter-Plaintiffs adequately plead sufficient facts to support their claims they were fraudulently
induced into signing the various loan documents and personal guaranties. The releases and
disclaimers contained in the loan documents did not compel a dismissal of the counterclaims or
the striking of affirmative defenses before, nor do they persuade a different result is warranted
now.
B. Counts I, II, III, IV, & VII — Fraudulent Inducement Claims
The Bank reasserts Counter-Plaintiffs’ claims for fraudulent inducement fail because
Counter-Plaintiffs are unable to state claims for the relief Counts I, II, III, IV, and VII seek —
rescission of the loan documents and Rate Swap. (See Mot. 3–15). The Bank argues rescission
is unavailable as a remedy because the benefits Counter-Plaintiffs received have not been
returned to the Bank and Counter-Plaintiffs fail to allege the inadequacy of a remedy at law.
(See id.).
“Florida law provides for an election of remedies in fraudulent inducement cases:
rescission, whereby the party repudiates the transaction, or damages, whereby the party ratifies
the contract.” Mazzoni Farms, Inc. v. E.I. DuPont De Nemours and Co., 761 So. 2d 306, 313

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(Fla. 2000) (citation omitted). Although rescission is a “drastic and extraordinary measure . . .
[rescission] is appropriate in situations where one party has fraudulently induced another party to
contract . . . .” Ohio Players, Inc. v. Polygram Records, Inc., No. 99Civ.0033, 2000 WL
1616999, at *3 (S.D.N.Y. Oct. 27, 2000) (alteration added; citation and internal quotation marks
omitted). “[A] party seeking rescission must show, inter alia, that he has rescinded the contract
and notified the other party of such rescission, has offered to return any benefits from the
contract[,] and has no adequate remedy at law.” Gov’t of Aruba v. Sanchez, 216 F. Supp. 2d
1320, 1365 (S.D. Fla. 2002) (alterations added) (citing Billian v. Mobil Corp., 710 So. 2d 984,
990–91 (Fla. 4th DCA 1998)). But where no tangible benefit has been provided, alleging the
return of benefits is unnecessary. See Crown Ice Mach. Leasing Co. v. Sam Senter Farms, Inc.,
174 So. 2d 614, 618 (Fla. 2d DCA 1965); see also Staaldam Beheer B.V. v. ASAP Installations,
LLC, No. 809-CV-02226-T-17EAJ, 2010 WL 1730780, at *4–5 (M.D. Fla. Apr. 28, 2010).
The Court now turns to the specific arguments regarding the various counts that seek
rescission.
1. Count I
The Bank, relying in large part on the Court’s prior statements on this issue, asserts
GREC IX cannot rescind the Rate Swap because GREC IX is incapable of returning the benefits
it received, and the allegation regarding the return of a single monthly payment made to GREC
IX on the Rate Swap is insufficient to rescind the agreement. (See Mot. 14–15). According to
Counter-Plaintiffs, courts have refused to apply the tender back rule where benefits received
under a contract were, at best, intangible. (See Resp. 9–13 (citing cases)). Further, CounterPlaintiffs contend in similar cases involving fraudulently induced insurance contracts, Florida
courts have found rescission is a viable remedy. (See id. 13–16).

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The January 23 Order concluded the equitable remedy of rescission was unavailable to
GREC IX, “[a]s GREC IX is incapable of returning the benefits it received from the Rate
Swap[.]” (Jan. 23 Order 17 (citation omitted)). Counter-Plaintiffs note in their present briefing,
“[w]here restoration of the status quo is impossible . . . a court may still grant rescission,
provided the equities between the parties can be balanced.” Braman Dodge, Inc. v. Smith, 515
So. 2d 1053, 1054 (Fla. 3d DCA 1987) (alterations added; citations omitted); see also Kobatake
v. E.I. DuPont de Nemours and Co., 162 F.3d 619, 626–27 (11th Cir. 1998) (applying Georgia
law); Methodist Hosps., Inc. v. FTI Cambio, LLC, No. 2:11-CV-036, 2011 WL 2610476, at *5
(N.D. Ind. July 1, 2011) (“Equity will in an appropriate case order rescission without restoration
if . . . (7) restoration is impossible for some reason not hereinbefore mentioned and the clearest
and strongest equity demands that rescission be granted (sometimes with a monetary substitute
for restoration).”) (citation omitted). It is unclear whether the equities between the parties will
be capable of being “balanced,” but the Court declines the invitation to dismiss on the basis of
difficulty in balancing the equities at the pleading stage, given a “flexible and pragmatic
approach” is preferred. Kobatake, 162 F.3d at 626 (citation omitted).
Regarding the unavailability of an adequate remedy at law, Counter-Plaintiffs somewhat
better plead this element now than they did in their earlier pleading. (See SAC ¶ 40). They
explain because of “the nature of a [Rate Swap] (akin to an insurance contract),” there is no
adequate remedy at law. (Id.). While the allegation is admittedly weak, because the Court is
deciding this issue without the benefit of a factual record, in light of the additional efforts to
plead this element it appears the better course is to resolve this question at summary judgment or
trial. See Belaire at Boca, LLC v. Ass’ns Ins. Agency, Inc., No. 06-80887-CIV, 2007 WL
1812218, at *4 (S.D. Fla. June 22, 2007) (refusing to dismiss claim for rescission on ground an

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inadequate remedy at law was not pleaded) (citation omitted)); Rubesa v. Bull Run Jumpers,
LLC, No. 09-CV-81107, 2010 WL 376320, at *3 (S.D. Fla. Jan. 26, 2010) (refusing to dismiss
claim for rescission despite inclusion of claim for legal remedy in complaint “[b]ecause the facts
are not yet developed in this case”) (alteration added)).
2. Counts II, III, & IV
In Counts II, III, & IV, the individual guarantors allege they were fraudulently induced
into signing unwarranted personal guaranties for the loan when, in fact, the loan could have been
made based on the loan-to-value ratio. (See SAC ¶¶ 41–67). The Court previously dismissed the
Husband and Wife Guarantors’ rescission claims because the guarantors failed to adequately
plead they returned the benefits received or allege they received no benefits. (See Jan. 23 Order
17–18).
Despite the Bank’s assertions to the contrary, the earlier pleading deficiencies have been
cured. Counter-Plaintiffs now allege none of the individual guarantors (except for Herran and
Herran’s Cousin — the Investor Guarantors) “were principals or individual investors in any of
the GREC Entities, including GREC IX.” (SAC ¶¶ 48, 57). These guarantors received no
benefits, tangible or otherwise (see id.), as the proceeds from the loan went directly to GREC IX
and the purchase of real estate in GREC IX’s name (see id. ¶ 25).
As to the Investor Guarantors, alleging return of a benefit is not required to state a claim
for rescission if restoration to the status quo is impossible. See Braman Dodge, Inc., 515 So. 2d
at 1054. Instead, and again, in these situations a court looks to see if it can balance the equities
between the parties. See id.; see also Methodist Hosps., 2011 WL 2610476, at *5. Given the
allegations of fraudulent inducement to procure the personal guaranties and the decline in the
land’s value, it does not appear possible to return the parties to the status quo. Therefore, any

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failure of the Investor Guarantors to return whatever benefits they received as investors or as
principals in the GREC Entities is not a ground to dismiss the claim for rescission.4
3. Count VII
The Court previously determined the Phantom GREC Entities had arguably “pleaded
enough facts to support their assertion that [they] never received a benefit pursuant to the loan.”
(Jan. 23 Order 19).

The Phantom GREC Entities’ claim for rescission was nevertheless

dismissed because the absence of an adequate remedy at law was not pleaded. (See id. 20).
The Bank again argues the Phantom GREC Entities have not properly pleaded a claim for
rescission, specifically pointing to the requirement of pleading the inadequacy of a remedy at
law. (See Mot. 10–12). In this regard the SAC now alleges the “Phantom GREC Entities
received absolutely no benefit . . . from being included on the note . . . [and] have no interest in
either the land or in GREC IX.” (SAC ¶ 93) (alterations added). The only reason the Phantom
GREC Entities are included on the Promissory Note is allegedly because of the fraudulent
conduct of the Bank. (See id. ¶ 87). On the basis “damages cannot provide an adequate remedy
for the Phantom GREC Entities’ obligation to repay the Note” (Resp. 23), the Counter-Plaintiffs
allege they “have no adequate remedy at law” (SAC ¶ 94).
Again, “a court is rarely able to determine the adequacy of a remedy at law at the
pleading stage of a case before the facts are developed.” Billian, 710 So. 2d at 991; see also
Belaire at Boca, LLC, 2007 WL 1812218, at *4; Rubesa, 2010 WL 376320, at *3. And while
Count VI seeks damages for the Bank’s alleged breach of fiduciary duty to the Phantom GREC
Entities and may ultimately furnish an adequate legal remedy, the Court will not make this
4

Certainly the court in FDIC v. Kuang Hsung Chuang, 690 F. Supp. 192, 196–97 (S.D.N.Y. 1988),
refused to rescind a guaranty, noting a company president had received the benefit of the bargain from a
loan to his company. (See Jan. 23 Order 18 n.10). But the case does not address the possibility of
awarding rescission if restoring the parties to the status quo is impossible and the equities are capable of
being balanced, arguments the Court is asked to consider in the present briefing.

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determination on the pleadings alone. Cf. Anchor Bank, S.S.B. v. Conrardy, 763 So. 2d 360, 361
(Fla. 4th DCA 1998) (“[T]hat there is a related cause of action at law does not, alone, preclude
maintaining a rescission claim.” (alteration added; citation omitted)). Consequently, dismissal of
Count VII on the ground an inadequate remedy at law is not sufficiently pleaded is denied.
C. Count V — Breach of Fiduciary Duty
The Bank next argues the breach of fiduciary duty claim in Count V fails given the Bank
did not owe GREC IX the duties of a fiduciary pursuant to an express disclaimer contained in the
Rate Swap.

(See Mot. 15–17).

As to Counter-Plaintiffs’ new allegations concerning the

acquisition and subordination of a Franklin Bank participation interest in the loan (see SAC ¶¶
71, 73, 76), the Bank contends these do not support the claim for breach of fiduciary duty either
(see Mot. 16).
The Court previously determined the Phantom GREC Entities and the Bank were
engaged in a relationship of trust and confidence sufficient to establish a fiduciary relationship.
(See Jan. 23 Order 23 (citing Am. Counterclaim ¶¶ 10, 13)). In the SAC, Counter-Plaintiffs
again allege facts demonstrating a relationship of trust and confidence between the Bank and the
Phantom GREC Entities based on the relationship between the Bank and Herran. (See SAC ¶¶
10, 13).

Because Herran is the principal of GREC IX (see SAC ¶ 12), the same factual

allegations support the existence of a fiduciary relationship between GREC IX and the Bank.
The January 23 Order noted the disclaimer contained in the Rate Swap expressly and
unambiguously denies the existence of a fiduciary relationship between the Bank and GREC IX
for the purposes of that transaction. (See id. 22). Of course, GREC IX’s claim for breach of a
fiduciary relationship is dependent on GREC IX voiding the relevant provisions of the Rate
Swap through rescission.

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D. Count IX — Violation of the BHCA
The Amended Counterclaim alleged the Bank violated the BHCA by illegally tying the
loan agreement to the condition the Husband and Wife Guarantors personally guarantee the loan.
The SAC now alleges the Bank violated the BHCA by requiring the Phantom GREC Entities be
named as borrowers on the Promissory Note. (See SAC ¶ 106). The Bank argues this behavior
is neither a tying arrangement nor anti-competitive in nature. (See Mot. 18).
Counter-Plaintiffs allege the Bank explicitly conditioned an extension of credit to GREC
IX on the formation of the Phantom GREC Entities and their inclusion on the Promissory Note.
(See SAC ¶¶ 104–106).

Counter-Plaintiffs also allege these requirements are an “unusual

banking practice” and constitute an anticompetitive tying arrangement. (Id. ¶ 104; see also id. ¶
105). Counter-Plaintiffs explain the Bank “required that the Phantom GREC Entities be so
included as borrowers so that it could lock in and monopolize future banking and lending
activities of the Phantom GREC Entities.” (Id. ¶ 105).
Unlike the earlier BHCA claim, Counter-Plaintiffs now plead sufficient facts for the
Court to infer the alleged tying agreement was anticompetitive. The very nature of the creation
of the Phantom GREC Entities is alleged to have locked Herran and the Phantom GREC Entities
into future real estate developments deals. According to Counter-Plaintiffs, the granting of the
loan in the first instance was conditioned upon the Phantom GREC Entities being formed and
included as borrowers on the Promissory Note — an act alleged to be unusual and
anticompetitive. Consequently, Count IX states a claim pursuant to 12 U.S.C. section 1972.
E. Counts VI and VIII, and Defendants’ Affirmative Defenses
In conclusory fashion, the Bank argues the “releases and waivers [contained in the
various loan documents] operate to bar every conceivable claim and affirmative defense the

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Defendants might assert against the Bank.” (Mot. 3). Counter-Plaintiffs note the January 23
Order determined the substance of Counts VI and VIII, and the remaining affirmative defenses
were properly pleaded. (See Resp. 33–34). At the May 20 Hearing, Counter-Plaintiffs also
noted it would be improper for the Court to strike all of the affirmative defenses absent more
particularized briefing and a thorough analysis of each affirmative defense.
The Court agrees. Neither the Bank’s Motion nor its Reply contains any argument
specific to any of the eight affirmative defenses or the claims in Counts VI and VIII. The Court
previously found Counter-Plaintiffs stated a claim of breach of fiduciary duty as to the
Promissory Note (see Jan. 23 Order 22–24), and a violation of the ECOA (see id. 24–27), claims
substantially similar to those contained in Counts VI and VIII.

Similarly, the affirmative

defenses listed in the SAC are either duplicates or nearly similar versions of the affirmative
defenses the Court previously declined to strike. (See id. 29–31; compare SAC 6–11 with Am.
Counterclaim 6–12). Consequently, “[a]s Counter-Plaintiffs have properly pleaded the elements
of fraudulent inducement, the releases and disclaimers contained in the loan documents do not
compel a dismissal of the counterclaims or the striking of affirmative defenses.” (Jan. 23 Order
14 (alteration added); see also Part II.A, supra).
III. CONCLUSION
Based on the foregoing, it is
ORDERED AND ADJUDGED that the Bank’s Motion [ECF No. 156] is DENIED.
DONE AND ORDERED in Chambers at Miami, Florida, this 19th day of June, 2014.

_________________________________
CECILIA M. ALTONAGA
UNITED STATES DISTRICT JUDGE
cc:

counsel of record

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