Cape Flattery Limited v. Titan Maritime, LLC
Filing
92
ORDER Granting In Part And Denying In Part Plaintiff's Motion To Strike Allegations And Affirmative Defenses In Defendant Titan Maritime, LLC, DBA Titan Salvage, A Crowley Company's Answer [Doc. 61] To Complaint of Plaintiff Cape Flattery L imited re 64 and 61 . Signed by JUDGE J. MICHAEL SEABRIGHT on 7/31/12. (gls, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
CAPE FLATTERY LIMITED,
)
)
Plaintiff,
)
)
vs.
)
)
TITAN MARITIME LLC dba TITAN )
SALVAGE, A CROWLEY
)
COMPANY,
)
)
Defendant.
)
)
_______________________________ )
CIVIL NO. 08-00482 JMS/KSC
ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFF’S
MOTION TO STRIKE
ALLEGATIONS AND
AFFIRMATIVE DEFENSES IN
DEFENDANT TITAN MARITIME,
LLC, DBA TITAN SALVAGE, A
CROWLEY COMPANY’S ANSWER
[DOC. 61] TO COMPLAINT OF
PLAINTIFF CAPE FLATTERY
LIMITED
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S
MOTION TO STRIKE ALLEGATIONS AND AFFIRMATIVE DEFENSES
IN DEFENDANT TITAN MARITIME, LLC, DBA TITAN SALVAGE, A
CROWLEY COMPANY’S ANSWER [DOC. 61] TO COMPLAINT OF
PLAINTIFF CAPE FLATTERY LIMITED
I. INTRODUCTION
On October 24, 2008, Plaintiff Cape Flattery Limited (“Plaintiff”)
filed a Complaint asserting that Defendant Titan Maritime, LLC dba Titan Salvage,
a Crowley Company (“Defendant”) was grossly negligent in salvaging Plaintiff’s
boat, the M/V CAPE FLATTERY (“the Vessel”). The Complaint seeks (1) a
declaration that Plaintiff is entitled to indemnity or contribution from Defendant
under the Oil and Pollution Act of 1990 (“OPA 90”), 33 U.S.C. § 2701 et seq.; and
(2) injunctive relief enjoining Defendant from requesting arbitration or seeking an
Anti-Suit Injunction in the courts of England to compel arbitration pursuant to the
parties’ Salvage Contract dated February 4, 2005 (the “Agreement”), which
provides that disputes arising under the Agreement shall be settled by arbitration in
London, England with English law and practice to apply.
In response to the Complaint, Defendant filed a Motion to Compel
Arbitration. On March 19, 2009, the court denied the Motion on the basis that the
dispute does not fall within the scope of the agreement to arbitrate. See Cape
Flattery LTD v. Titan Mar. LLC, 607 F. Supp. 2d 1179 (D. Haw. 2009). On July
26, 2011, the Ninth Circuit affirmed. See Cape Flattery LTD v. Titan Mar. LLC,
647 F.3d 914 (9th Cir. 2011), certiorari denied, 132 S. Ct. 1862 (2012). Despite
these Orders determining that the parties’ dispute is not subject to arbitration, on
April 26, 2012 Defendant filed an Answer asserting various affirmative defenses
based on the parties’ Agreement and its arbitration provision.
Currently before the court is Plaintiff’s Motion to Strike Allegations
and Affirmative Defenses in Defendant’s Answer. Plaintiff asserts that
Defendant’s affirmative defenses based on the Agreement are precluded by the
March 19, 2009 Order and July 26, 2011 Opinion, and that other defenses are
insufficiently pled. Based on the following, the court GRANTS in part and
DENIES in part Plaintiff’s Motion to Strike.
2
II. BACKGROUND
A.
Allegations in the Complaint
As alleged in the October 24, 2008 Complaint, on February 2, 2005,
the Vessel ran aground on a submerged reef off Barbers Point, Oahu, Hawaii. Doc.
No. 1, Compl. ¶ 4. In response, the United States Coast Guard issued a Notice of
Federal Interest in connection with the grounding of the Vessel and activated
Unified Command to respond to the threat of oil discharge. Id. ¶ 5.
On February 4, 2005, Pacific Basin Shipping (HK) Ltd., acting on
behalf of Plaintiff as owner of the Vessel, signed an Agreement for Defendant to
salve (i.e., refloat) the Vessel. Id. ¶ 21. The Agreement includes a clause whereby
the parties agree to arbitrate any disputes “arising under” the Agreement in London
under English Law. Id. ¶ 23.
Defendant participated in removing the Vessel from the reef and
eliminating the threat of oil discharge. Id. ¶ 6. Plaintiff alleges that Defendant
acted with gross negligence by using tugs with submerged heavy tow lines which
damaged the coral reef, even though Defendant was expressly warned not to use
such tow lines and had previously used floating tow lines that would not cause
coral damage. Id. ¶¶ 8-11. On February 10, 2005, the United States Coast Guard
designated Plaintiff the responsible party for costs and damages arising from the
3
response to the oil spill threat pursuant to OPA 90.1 Id. ¶ 13. On August 8, 2008,
Plaintiff was informed that it may be liable for restoration of the coral in an amount
in excess of $15 million. Id. ¶ 15.
Based on these factual allegations, the Complaint asserts two claims.
The first claim, for declaratory relief, seeks a judgment declaring that Defendant’s
use of submerged lines during the salve of the Vessel was grossly negligent such
that Plaintiff has the right to indemnity and contribution from Defendant, as is
authorized by OPA 90, 33 U.S.C. § 2709.2 Id. ¶¶ 18-20. The second claim, for
injunctive relief, seeks to prevent Defendant from either requesting arbitration or
seeking an Anti-Suit Injunction in the courts of England to compel Plaintiff to
arbitrate its claims. Id. ¶ 25. The Complaint asserts that Plaintiff’s gross
negligence claim does not “arise under” the Agreement and therefore is not subject
to arbitration. Id. ¶ 23.
1
OPA 90, 33 U.S.C. § 2702(a), provides that a “responsible party for a vessel . . . which
poses the substantial threat of a discharge of oil, into or upon the navigable waters or adjoining
shorelines or the exclusive economic zone is liable for the removal costs and damages . . . that
result from such incident.” Covered removal costs and damages include, among other things,
removal costs incurred by the United States, damages for injury or loss of natural resources and
subsistence use of natural resources, and net costs of providing increased or additional public
services during or after removal activities. 33 U.S.C. § 2702(b).
2
OPA 90, 33 U.S.C. § 2709 provides that “[a] person may bring a civil action for
contribution against any other person who is liable or potentially liable under this Act or another
law.”
4
B.
Events in the District Court After the Complaint
With its Complaint, Plaintiff also filed an Ex Parte Motion for
Temporary Restraining Order (“TRO”) to enjoin Defendant from seeking
arbitration or an Anti-Suit Injunction in the English Courts to compel Plaintiff to
arbitrate. Doc. No. 6. On November 4, 2008, the parties entered into a Stipulation
whereby Plaintiff withdrew its Motion for TRO without prejudice and Defendant
agreed not to initiate arbitration under the Agreement or seek an Anti-Suit
Injunction in the English courts “unless and until this Court grants a Motion to
Compel Arbitration and/or Motion to Dismiss to be filed by Defendant.” Doc. No.
15 at 2-3. The Stipulation further provides that “[n]othing in this stipulation is to
be construed as a waiver of Defendant’s right to move this Court to compel
arbitration or of any other defense.” Id. at 3.
Defendant subsequently filed its Motion to Compel Arbitration, which
this court denied on March 19, 2009. The March 19, 2009 Order explained that
under Ninth Circuit law, the provision in the Agreement providing that the parties
would arbitrate any dispute “arising under” the Agreement is narrow and “reaches
only those disputes between the parties that relate to the interpretation and
performance of the Agreement itself.” Cape Flattery, 607 F. Supp. 2d at 1188.
The March 19, 2009 Order found that Plaintiff’s assertion that Defendant was
5
grossly negligent in salving the Vessel does not relate to the interpretation and
performance of the Agreement because this alleged breach of duty is wholly
separate from any duties arising under the Agreement. The March 19, 2009 Order
reasoned:
Because damage to the reef as a result of using
submerged tow lines was clearly foreseeable, and
because Plaintiff is strictly liable under the law for
damage to the reef, the court concludes that a duty of care
was owed by Defendant to Plaintiff.
This duty -- to prevent foreseeable damage to the
coral reef -- is separate from and above and beyond
Defendant’s duties under the Agreement. . . . The parties
point to no Agreement provision that Defendant allegedly
breached -- the Agreement is silent regarding what tow
lines Defendant must use, how precisely Defendant must
salve the Vessel, and whether Defendant must take
precautions to prevent harm to the coral reef. Simply put,
finding a breach of Defendant’s duty to prevent
foreseeable harm to the reef will not require determining
whether Defendant performed under the Agreement.
Defendant’s duty to prevent foreseeable harm to the coral
reef exists regardless of the Agreement.
Id. at 1190 (footnotes omitted). As a result, the March 19, 2009 Order concluded
that Plaintiff raised claims “sound[ing] wholly in tort [that] do not relate to ‘the
interpretation and performance’ of the Agreement” such that the dispute is not
arbitrable. Id.
6
C.
The Ninth Circuit’s July 26, 2011 Opinion
Defendant appealed the March 19, 2009 Order to the Ninth Circuit,
which affirmed in a July 26, 2011 Opinion. The July 26, 2011 Opinion confirmed
that the arbitration provision in the Agreement must be read narrowly and therefore
had “no difficulty concluding that the present dispute is not arbitrable.” Cape
Flattery, 647 F.3d at 923. The July 26, 2011 Opinion reasoned:
The present dispute does not turn on an interpretation of
any clause in the contract. As the district court noted,
“[t]he parties point to no Agreement provision that
Defendant allegedly breached -- the Agreement is silent
regarding what tow lines Defendant must use, how
precisely Defendant must salve the Vessel, and whether
Defendant must take precautions to prevent harm to the
coral reef.” Cape Flattery, 607 F. Supp. 2d at 1190
(footnote omitted). Nor does the dispute turn on Titan’s
performance under the contract. Instead the dispute
involves a tort claim based on Hawaii and maritime tort
law, incorporated as part of the Oil Pollution Act of
1990, and limited by that federal statute to grossly
negligent acts.
Id. at 924.
Defendant’s petitions for rehearing en banc and for a writ of
certiorari were denied. See Titan Maritime, LLC v. Cape Flattery Ltd., 132 S. Ct.
1862 (2012).
///
7
D.
Defendants’ Answer to the Complaint
After the resolution of the appeal on Defendant’s Motion to Compel
Arbitration, Defendant filed an Answer on April 26, 2012. Doc. No. 61.
The Answer includes several affirmative defenses that invoke the
Agreement, including:
TWELFTH AFFIRMATIVE DEFENSE
38. Defendant alleges and incorporates by reference as
though fully set forth herein, each and every defense and
limitation contained in or made available to Defendant by
the terms of the Salvage Contract.
THIRTEENTH AFFIRMATIVE DEFENSE
39. Defendant alleges and incorporates by reference as
though fully set forth herein, each and every defense and
limitation available to it under English law, being the
governing law of the Salvage Contract, including but not
limited to limitation of liability under section 185 of the
Merchant Shipping Act of 1995 (UK) which incorporates
the International Convention on Limitation of Liability
for Maritime Claims 1976.
...
FIFTEENTH AFFIRMATIVE DEFENSE
41. Defendant expressly claims the benefits of any
arbitration or forum selection clauses in the underlying
Salvage Contract. In answering Plaintiff’s Complaint,
Defendant does not mean to waive or limit its rights to
later pursue this matter in arbitration or to seek to
dismissal or transfer venue of this action to the Court
agreed to by the parties in the forum selection clause.
...
TWENTIETH AFFIRMATIVE DEFENSE
46. Defendant alleges, without admitting any duty
owed to Plaintiff, that at all material times during the
8
salvage of the Vessel it exercised due diligence and acted
in a reasonable and prudent manner, complying with all
applicable standards of care, under the Salvage Contract,
which is governed by English law, and/or the orders and
directions of (1) the Plaintiff, as the [Responsible Party
under OPA 1990], its Qualified Individual, Spill
Management Team and/or other agents and designated
representatives; (2) the United States of America,
through [the Federal-On-Scene Coordinator] and/or its
agents and designated representatives including but not
limited to the [United States Coast Guard]; and/or (3) the
State of Hawaii through the [State-On-Scene
Coordinator] and/or its agents and designated
representatives.
The Answer also generally denies the allegations supporting
Plaintiff’s claim for injunctive relief seeking to prevent Defendant from either
requesting arbitration or seeking an Anti-Suit Injunction in the courts of England.
Id. ¶¶ 21-26.
The other affirmative defenses at issue in Plaintiff’s Motion to Strike
are the following:
FOURTEENTH AFFIRMATIVE DEFENSE
40. Defendant expressly claims that it is entitled [to]
exoneration from or limitation of liability under the
Limitation of Liability Act, 46, U.S.C. §§ 30501, et seq.,
to any and all of Plaintiff’s claim.
...
SEVENTEENTH AFFIRMATIVE DEFENSE
43. Plaintiff has failed to join indispensable parties,
specifically the United States of America and/or the State
of Hawaii, given that Defendant, at all material times
during the salvage of the Vessel, acted with approval
9
from and under the orders and directions and/or was
otherwise directed by the United States of America,
through the [the Federal-On-Scene Coordinator] and/or
its agents and designated representatives including but
not limited to the [United States Coast Guard]; and/or the
State of Hawaii, through the [State-On-Scene
Coordinator] and/or its agents and designated
representatives.
Id. ¶¶ 40, 43.
E.
Plaintiff’s Motion to Strike
On May 17, 2012, Plaintiff filed its Motion to Strike Defendant’s
Answer pursuant to Rule 12(f). Doc. No. 64. Defendant filed an Opposition on
July 2, 2012, Doc. No. 83, and Plaintiff filed a Reply on July 9, 2012. Doc. No.
85. A hearing was held on July 23, 2012.
III. STANDARD OF REVIEW
Rule 12(f) provides that the district court “may strike from a pleading
an insufficient defense or any redundant, immaterial, impertinent, or scandalous
matter.”
A defense is insufficient where “there are no questions of fact, [] any
questions of law are clear and not in dispute, and []under no set of circumstances
could the defense succeed.” S.E.C. v. Sands, 902 F. Supp. 1149, 1165 (C.D. Cal.
1995) (internal quotation and citation omitted). “Immaterial matter is that which
has no essential or important relationship to the claim for relief or the defenses
10
being plead.” Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d
on other grounds by Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) (quoting 5A
Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1382, at
706-07 (1990)). In comparison, “[i]mpertinent matter consists of statements that
do not pertain, and are not necessary, to the issues in question.” Id. Finally,
“[r]edundant matter is defined as allegations that constitute a needless repetition of
other averments or are foreign to the issue.” Sliger v. Prospect Mortg., LLC, 789
F. Supp. 2d 1212, 1216 (E.D. Cal. 2011) (quotations and citations omitted).
The purpose of a Rule 12(f) motion is to “avoid the expenditure of
time and money that must arise from litigating spurious issues by dispensing with
those issues prior to trial.” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970,
973 (9th Cir. 2010) (quoting Fogerty, 984 F.2d at 1527). With that said, however,
12(f) motions are “generally regarded with disfavor because of the limited
importance of pleading in federal practice, and because they are often used as a
delaying tactic.” Kohler v. Islands Restaurants, LP, 280 F.R.D. 560, 563-64 (S.D.
Cal. 2012) (quoting Neilson v. Union Bank of Cal., N.A., 290 F. Supp. 2d 1101,
1152 (C.D. Cal. 2003)). As a result, “[m]atter will not be stricken from a pleading
unless it is clear that it can have no possible bearing upon the subject matter of the
litigation.” Clark v. State Farm Mut. Auto. Ins. Co., 231 F.R.D. 405, 406 (C.D.
11
Cal. 2005) (quoting Cal. Dept. of Toxic Substances Control v. Alco Pac., Inc., 217
F. Supp. 2d 1028, 1033 (C.D. Cal. 2002)); see also Sands, 902 F. Supp. at 1166
(stating that “courts are reluctant to determine disputed or substantial questions of
law on a motion to strike”).
Whether to strike affirmative defenses is within the court’s discretion.
Fed. Sav. & Loan Ins. Corp. v. Gemini Mgmt., 921 F.2d 241, 244 (9th Cir. 1990).
IV. DISCUSSION
Plaintiff argues that Defendant’s (1) affirmative defenses based on the
Agreement must be stricken because they are barred by law of the case and
therefore are immaterial, impertinent and/or redundant;3 (2) affirmative defense
based on the Limitation of Liability Act is insufficiently pled because Defendant
cannot meet the requirements for its application; and (3) affirmative defense for
failure to join indispensable parties fails as a matter of law. Defendant agrees to
withdraw its affirmative defense for failure to join indispensable parties, see Doc.
No. 83, Def.’s Opp’n at 17-18, but otherwise argues that it can assert defenses
3
Plaintiff’s Motion also seeks to strike Defendant’s response to Plaintiff’s claim for
injunctive relief. At the July 23, 2012 hearing, however, Plaintiff agreed that its claim for
injunctive relief is moot in light of the parties’ November 4, 2008 Stipulation in which
Defendant agreed not to initiate arbitration under the Agreement or seek an Anti-Suit Injunction
in the English courts “unless and until this Court grants a Motion to Compel Arbitration and/or
Motion to Dismiss to be filed by Defendant,” Doc. No. 15 at 2-3, the March 19, 2009 Order, and
the July 26, 2011 Opinion. The court therefore DEEMS MOOT the parties’ arguments regarding
Defendants’ Answer responding to Plaintiff’s claim for injunctive relief.
12
based on the Agreement and the Limitation of Liability Act.4 The court addresses
these arguments in turn.
A.
Affirmative Defenses Based on the Agreement
Plaintiff argues that Defendant’s affirmative defenses relating to the
Agreement and its arbitration provision are immaterial, impertinent, redundant, and
insufficient pursuant to the law of the case doctrine. Specifically, Plaintiff asserts
that the March 19, 2009 Order and the July 26, 2011 Opinion both determined that
Plaintiff’s claim for gross negligence is not arbitrable under the Agreement such
that these affirmative defenses must be stricken. The court agrees.
1.
Law of the Case Framework
The law of the case doctrine is a judicial invention designed to aid in
the efficient operation of court affairs. United States v. Thrasher, 483 F.3d 977,
981 (9th Cir. 2007) (citing Herrington v. Cnty. of Sonoma, 12 F.3d 901, 904 (9th
Cir. 1993)). “Under the ‘law of the case’ doctrine, a court is ordinarily precluded
from reexamining an issue previously decided by the same court, or a higher court,
in the same case.” United States v. Jingles, 682 F.3d 811, 816-17 (9th Cir. 2012)
(quoting Richardson v. United States, 841 F.2d 993, 996 (9th Cir. 1988)); see also
4
The court therefore GRANTS Plaintiff’s Motion to Strike Defendant’s seventeenth
affirmative defense.
13
United States v. Park Place Assoc., 563 F.3d 907, 925 (9th Cir. 2009) (stating that
“when a court decides upon a rule of law, that decision should continue to govern
the same issues in subsequent stages in the same case” (quoting Arizona v.
California, 460 U.S. 605, 618 (1983))). For the doctrine to apply, the issue in
question must have been “decided explicitly or by necessary implication in the
previous disposition.” United States v. Lummi Indian Tribe, 235 F.3d 443, 452
(9th Cir. 2000). Further, under the law of the case doctrine, a party may neither
“revisit theories that it raises but abandons,” nor “offer up successively different
legal or factual theories that could have been presented in a prior request for
review.” Sec. Investor Prot. Corp. v. Vigman, 74 F.3d 932, 937 (9th Cir. 1996)
(quotations and citations omitted).
Although application of the doctrine is discretionary, id., a court
abuses its discretion in applying this doctrine if: “(1) the decision is clearly
erroneous and its enforcement would work a manifest injustice, (2) intervening
controlling authority makes reconsideration appropriate, or (3) substantially
different evidence was adduced at a subsequent trial.” Gonzalez v. Arizona, 677
F.3d 383, 389 n.4 (9th Cir. 2012) (citations omitted); see also Ingle v. Circuit City,
408 F.3d 592, 594 (9th Cir. 2005) (listing additional factors as including whether
other changed circumstances exist, or a manifest injustice would otherwise result).
14
2.
Application
Defendant raises as affirmative defenses that it (1) may take the
benefit of any arbitration or forum selection clause in the Agreement, Doc. No. 41,
¶ 41 (fifteenth affirmative defense); (2) is entitled to any defenses under the
Agreement and/or English law; id. ¶¶ 38, 39 (twelfth and thirteenth affirmative
defenses); and (3) complied with all standards of care under the Agreement. Id.
¶ 46 (twentieth affirmative defense). In short, Defendant asserts through these
affirmative defenses that the Agreement governs the parties’ dispute. Given that
the March 19, 2009 Order and the July 26, 2011 Opinion have already held that the
Agreement is inapplicable to Plaintiff’s claims, the court finds that the law of the
case doctrine precludes Defendant from raising these affirmative defenses.
The Motion to Compel Arbitration presented the issue of whether the
Agreement applies to Plaintiff’s gross negligence claim -- i.e., whether Plaintiff’s
gross negligence claim “arises under” the Agreement such that it is subject to
arbitration. Both the March 19, 2009 Order and the July 26, 2011 Opinion rejected
that the gross negligence claim arises under the Agreement. Rather, both decisions
explained that the breach of duty alleged in Plaintiff’s gross negligence claim has
an independent basis separate from any duties that Defendant had under the
Agreement.
15
For example, the March 19, 2009 Order explained:
[T]he mere fact that Plaintiff’s claims stem from
Defendant’s salve of the Vessel pursuant to the
Agreement is not sufficient to make them related to the
parties’ performance under the Agreement. The fact
finder need not determine what the Agreement required
Defendant to do or whether Defendant adequately
performed under the Agreement. Indeed, Plaintiff is not
alleging that Defendant breached the Agreement in any
respect.
607 F. Supp. 2d at 1191; see also Cape Flattery, 647 F.3d at 924 (explaining that
the dispute does not turn on interpretation of or performance under the
Agreement). The March 19, 2009 Order further explained that any argument by
Defendant that it was merely following the terms of the Agreement would not
shield Defendant from liability for gross negligence:
The court also recognizes that even if the Agreement
required Defendant to take care in salving the Vessel, the
Agreement could not change Defendant’s liability for any
gross negligence -- a party cannot contract out of liability
based on gross negligence. Royal Ins. Co. of Am. v. Sw.
Marine, 194 F.3d 1009, 1016 (9th Cir. 1999) (finding
that “a party to a maritime contract should not be
permitted to shield itself contractually from liability for
gross negligence”).
607 F. Supp. 2d at 1190 n.12.
There is no reason that this conclusion -- that the Agreement is not
relevant in determining Plaintiff’s claim for gross negligence -- should not apply
16
equally to Defendant’s affirmative defenses as it does to Defendant’s Motion to
Compel Arbitration. The March 19, 2009 Order and July 26, 2011 Opinion were
the result of considerable time and resources expended by not only the parties, but
also this court and the Ninth Circuit, and to allow Defendant to reopen the door to
the issues decided in these rulings would run wholly counter to the efficient
administration of justice. Further, none of the reasons not to apply the law of the
case doctrine applies -- the March 19, 2009 Order was affirmed by the July 26,
2011 Opinion, there is no intervening controlling authority making reconsideration
appropriate, and the evidence has not changed. See Gonzalez, 677 F.3d at 389 n.4
(outlining circumstances where applying law of the case would be an abuse of
discretion). The court therefore exercises its discretion to find that the law of the
case doctrine applies to prevent Defendant from asserting affirmative defenses
based on the Agreement.
In opposition, Defendant does not dispute that its affirmative defenses
raise the same issue as decided by the March 19, 2009 Order and July 26, 2011
Opinion. Rather, Defendant argues that the parties did not conduct discovery prior
to the March 19, 2009 Order and the July 26, 2011 Opinion such that Plaintiff has
failed to establish that the Agreement “can have no possible bearing upon the
subject matter of the litigation.” See Clark, 231 F.R.D. at 406 (explaining when a
17
matter can be stricken pursuant to Rule 12(f)). Defendant summarily opines that
discovery may establish that (1) Plaintiff intended for the present dispute to be
resolved through arbitration in London, and (2) Plaintiff’s claim for gross
negligence does in fact “arise under” the Agreement and is subject to arbitration.
Doc. No. 83, Def.’s Opp’n at 12. The court rejects this argument.
Despite these clear rulings by this court and the Ninth Circuit,
Defendant asks the court to leave the door open to allow Defendant to explore a
new theory on how to attack these holdings -- i.e., that the parties agreed to
arbitrate all disputes despite the Agreement’s clear language and/or that the parties
had an agreement different than the written one set forth in the Agreement. The
law the case doctrine prevents what Defendant proposes -- where Defendant
already had the opportunity to fully and fairly litigate the issue of whether the
parties’ dispute arises under the Agreement, the law of the case doctrine prevents
Defendant from offering new theories going to the same issue it already litigated.
See, e.g., Vigman, 74 F.3d at 937 (stating that the law of the case doctrine prevents
a litigant from “offer[ing] up successively different legal or factual theories that
could have been presented in a prior request for review”); see also Peoples v.
United States, 403 F.3d 844, 846-47 (7th Cir. 2005) (explaining that the district
court found that the law of the case doctrine “blocks new theories as well as old
18
ones,” which “ensure[s] that the parties marshal all of their facts and arguments so
that a dispute may be resolved in one pass, and to conserve judicial resources”);
Gould, Inc. v. United States, 67 F.3d 925, 931 n.5 (Fed. Cir. 1995) (“To allow the
government to make new arguments regarding the same grounds for relief would
violate the purpose of the law of the case doctrine.”); Parts & Elec. Motors, Inc. v.
Sterling Elec., Inc., 866 F.2d 228, 234 (7th Cir. 1988) (“Again, same issue, new
arguments, none of which implicates an exception to the law of the case doctrine.
The prior panel’s finding precludes review of any new factual arguments, and
Sterling’s new legal argument is not based on any new controlling authority.”).
There is no exception to the law of the case doctrine for what
Defendant proposes -- that discovery might pan out on an alternative theory that a
litigant could have presented previously when the court addressed the issue in the
first instance. Nothing prevented Defendant from raising the argument that the
parties agreed to arbitrate despite the Agreement’s clear language and/or that the
parties had an agreement different than the written one set forth in the Agreement.
Instead, Defendant filed its Motion to Compel Arbitration arguing that parties’
dispute was governed by the plain language of the Agreement -- Defendant
asserted that “it is absolutely clear that [Plaintiff’s] alleged claims arose from
[Defendant’s] performance of its contractual obligations, and are governed by the
19
terms and conditions of the Agreement, and thus plainly ‘arise under’ the
Agreement.” Doc. No. 19-2, Motion to Compel at 1-2. Certainly, if the parties’
agreement was not fully embodied in the written Agreement, Defendant would
have known such fact before it brought its Motion to Compel and could have
presented evidence regarding the full scope of the parties’ agreement. And nothing
forced Defendant to file its Motion to Compel -- if Defendant believed there was
any ambiguity, it could have sought discovery before bringing its Motion.
Defendant took neither of these steps, and instead asked the court to determine the
applicability of the Agreement based on the purely legal question of whether
Plaintiff’s claim for gross negligence falls within the scope of the plain words of
the arbitration provision providing that parties agree to arbitrate any disputes
“arising under” the Agreement in London under English Law.5
The court will not leave the door open to an alternative theory that
Defendant could have -- but clearly did not -- present in its first Motion. The law
of the case doctrine exists for this precise reason -- to prevent litigants from taking
5
Defendant likely did not seek discovery because the Agreement lacks any ambiguity.
Defendant offers no explanation, other than its wholly speculative hope (and the fact that its
Motion to Compel Arbitration was denied), as to why it believes that discovery might show that
the parties intended to arbitrate this dispute. “District courts need not condone the use of
discovery to engage in ‘fishing expedition[s],’” Rivera v. NIBCO, Inc., 364 F.3d 1057, 1072 (9th
Cir. 2004), and the court will certainly not condone one in this action where Defendant already
had the opportunity to fully litigate this issue.
20
a “second bite” of the apple. See Jingles, 682 F.3d at 819 (“Jingles had his bite at
the apple, and we will not give him a second bite unless one of the exceptions to
the law of the case doctrine applies.”). Indeed, to allow Defendant a second bite of
the apple in this action would be especially unfair where over three years have
passed while Defendant has argued that the dispute is arbitrable pursuant to the
Agreement and never presented this alternative argument.
The court therefore GRANTS Defendant’s Motion to Strike as to
Defendant’s twelfth, thirteenth, fifteenth, and twentieth affirmative defenses. This
Order does not, however, preclude Defendant from later seeking to amend its
answer to assert these affirmative defenses if it has a supportable basis to assert that
one of the exceptions to the law of the case doctrine applies. But at this time,
Defendant offers no basis for why it believes that an exception might apply
(whether now or in the future), and the court will not allow Defendant to assert
defenses based on blind hope where Defendant has already had the opportunity to
litigate the issue.6
6
The court recognizes that in its Opposition, Defendant seeks leave to amend its Answer
pursuant to Federal Rule of Civil Procedure 15(a). Defendant also submitted with its Opposition
a proposed Amended Answer with an affirmative defense (1) recognizing that the March 19,
2009 Order and July 26, 2011 Opinion held that Plaintiff’s claims do not involve the
interpretation or performance of the Agreement; but nonetheless (2) reserving Defendant’s right
to seek relief under the Agreement if discovery establishes that Plaintiff’s claims involve the
interpretation and/or performance of the Agreement. See Doc. No. 83-2 (ninth affirmative
(continued...)
21
B.
The Limitation of Liability Act Affirmative Defense
Defendant’s Fourteenth Affirmative Defense asserts that Defendant is
“entitled to exoneration from or limitation of liability under the Limitation of
Liability Act, 47 U.S.C. §§ 30501, et seq., to any and all of Plaintiff’s claims.” In
simple terms, the Limitation of Liability Act “limits shipowner liability arising
from the unseaworthiness of the shipowner’s vessel or the negligence of the
vessel’s crew unless the condition of unseaworthiness or the act of negligence was
within the shipowner’s ‘privity or knowledge.’” In re BOWFIN M/V, 339 F.3d
1137, 1137 (9th Cir. 2003) (per curiam). Plaintiff argues that this affirmative
defense must be stricken because Defendant has not (and cannot) allege a
necessary element of this defense -- that it was an owner of any vessel that caused
the damages alleged in the Complaint7 -- and has therefore failed to allege
6
(...continued)
defense). This proposed Amended Answer is not properly before the court. If Defendant wishes
to file an Amended Answer, it may file an appropriate Rule 15 Motion consistent with this Order
(i.e., that absent a supportable basis, Defendant may not seek to relitigate issues already decided
(whether through discovery, motion, or otherwise)).
7
The parties argue regarding the scope of the term “owner” as used in the Limitation of
Liability Act. Although the court need not resolve this dispute at this time, it appears that
Defendant’s reliance on Dick v. United States, 671 F.2d 724 (2d Cir. 1982), is misplaced.
Although Defendant asserts that Dick stands for the proposition that any party who has control or
dominion over a vessel is entitled to assert the Limitation of Liability Act, the holding in Dick
“turns upon the particular statutory scheme involving federal public vessels and the status of
Coast Guard Auxiliaries,” and does not appear to apply here. See Complaint of Chesapeake
Shipping, Inc., 778 F. Supp. 153, 157 (S.D.N.Y. 1991).
22
sufficient facts from which the court can infer that Defendant is entitled to the
relief sought.
To the extent Plaintiff argues that Defendant does not qualify as a
“shipowner” under the Limitation of Liability Act, such argument raises a factual
issue inappropriate for determination on a Rule 12(f) motion. Putting aside this
factual question, Plaintiff’s remaining argument raises an unsettled issue of law
regarding the burden a defendant must carry in pleading an affirmative defense.
The Supreme Court recently held in Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), that “a
complaint must contain sufficient factual matter, accepted as true, to state a claim
to relief that is plausible on its face.” Since Twombly and Iqbal, no circuit to this
court’s knowledge has addressed whether this plausibility standard applies to
affirmative defenses, and district courts have been divided on this issue. Compare,
e.g., Perez v. Gordon & Wong Law Group, P.C., 2012 WL 1029425, at *6 (N.D.
Cal. Mar. 26, 2012) (finding that the heightened standard applies to affirmative
defenses); and Dion v. Fulton Friedman & Gullace LLP, 2012 WL 160221, at *2-3
(N.D. Cal. Jan. 17, 2012) (explaining that a majority of district courts have
extended Twombly and Iqbal to affirmative defense pleading); with Kohler v.
Islands Restaurants, LP, 280 F.R.D. 560, 566 (S.D. Cal. 2012) (declining to extend
23
the Twombly and Iqbal pleading standards to affirmative defenses); and J & J
Sports Prods., Inc. v. Scace, 2011 WL 2132723, at *1 (S.D. Cal. May 27, 2011)
(same).
District courts holding that the heightened standard applies to
affirmative defenses reason as follows:
Rule 8’s requirements with respect to pleading defenses
in an answer parallels the Rule’s requirements for
pleading claims in a complaint. Compare (a)(2) “a short
and plain statement of the claim showing that the pleader
is entitled to relief”, with (b)(1) “state in short and plain
terms its defenses to each claim asserted against it”. Rule
8(b)(2) further provides with respect to “denials” that
they “must fairly respond to the substance of the
allegations.” The court can see no reason why the same
principles applied to pleading claims should not apply to
the pleading of affirmative defenses which are also
governed by Rule 8. “Applying the standard for
heightened pleading to affirmative defenses serves a
valid purpose in requiring at least some valid factual
basis for pleading an affirmative defense and not adding
it to the case simply upon some conjecture that it may
somehow apply.” [Hayne v. Green Ford Sales, Inc., 263
F.R.D. 647, 650 (D. Kan. 2009; see also CTF Dev., Inc.
v. Penta Hospitality, LLC., 2009 WL 3517617, at *7-8
(D. Utah Oct. 26, 2009)]. Applying the same standard
will also serve to weed out the boilerplate listing of
affirmative defenses which is commonplace in most
defendants’ pleadings where many of the defenses
alleged are irrelevant to the claims asserted.
Barnes v. AT & T Pension Ben. Plan-Nonbargained Program, 718 F. Supp. 2d
1167, 1172 (N.D. Cal. 2010).
24
Although the court recognizes that many district courts follow this
reasoning, the court finds the reasoning of those courts declining to extend
Twombly and Iqbal more persuasive. First, Twombly and Iqbal address claims for
relief under Rule 8(a)(2), which requires that a claim for relief provide “a short and
plain statement of the claim showing that the pleader is entitled to relief.”
(emphasis added). In comparison, “[s]tating an affirmative defense under Rule
8(c) . . . does not require the pleader to ‘show’ entitlement to its defense.” Kohler,
280 F.R.D. at 566. Rather, Rule 8(c) merely requires that a party “affirmatively
state any avoidance or affirmative defense.”8 Fed. R. Civ. P. 8(c); See also Iqbal,
556 U.S. at 679 (drawing the distinction that “where the well-pleaded facts do not
permit the court to infer more than the mere possibility of misconduct, the
complaint has alleged -- but it has not “show[n]”-- “that the pleader is entitled to
relief”).
Second, the Ninth Circuit has described the pleading standard for
affirmative defenses as a “fair notice” standard, Wyshak v. City Nat’l Bank, 607
F.2d 824, 827 (9th Cir. 1979), and has continued to apply this standard since
8
Supporting that the differing language between Rule 8(a)(2) and Rule 8(c) should be
accorded some meaning is that the drafters of the Federal Rules of Civil Procedure crafted Rules
that applied equally to both claims and affirmative defenses. See Fed. R. Civ. P. 9(b) (“In
alleging fraud or mistake, a party must state with particularity the circumstances constituting
fraud or mistake.”); see also Spradley v. Dugger, 825 F.2d 1566, 1567 (11th Cir. 1987) (applying
Rule 9(b) to affirmative defense)
25
Twombly and Iqbal. See Simmons v. Navajo County, Ariz., 609 F.3d 1011, 1023
(9th Cir. 2010); see also Kohler, 280 F.R.D. at 566.
Third, a plaintiff has much more time to investigate and draft a
complaint as compared to a defendant who must answer it (usually within twentyone days, see Fed. R. Civ. P. 12(a)(1)(A)(i)). Indeed, unlike a complaint,
affirmative defenses require no response. As a result, “[w]hatever one thinks of
Iqbal and Twombly, the ‘plausibility’ requirement that they impose is more fairly
imposed on plaintiffs who have years to investigate than on defendants who have
21 days.” Memory Control Enter., LLC v. Edmunds.com, Inc., 2012 WL 681765,
at *5 (C.D. Cal. Feb. 8, 2012) (quoting Wells Fargo & Co. v. United States, 750 F.
Supp. 2d 1049, 1051 (D. Minn. 2010)); see also Kohler, 280 F.R.D. at 566;
Holdbrook v. SAIA Motor Freight Line, LLC, 2010 WL 865380, at *2 (D. Colo.
2010).
Applying this reasoning, Defendant’s fourteenth affirmative defense
that it is “entitled to exoneration from or limitation of liability under the Limitation
of Liability Act” gives Plaintiff fair notice of the defense.9 The court therefore
9
In Opposition, Plaintiff relies on Grindle v. Fun Charters, Inc., 962 F. Supp. 1284,
1288 (D. Haw. 1996), for the proposition that Defendant must meet the same requirements of
asserting the Limitation of Liability Act as a defense, as if it had asserted it as an affirmative
claim. Contrary to Plaintiff’s argument, Grindle did not address the pleading requirements of
asserting a Limitation of Liability Act defense. Rather, “the only issue before [Grindle was]
(continued...)
26
DENIES Plaintiff’s Motion to Strike Defendant’s fourteenth affirmative defense.
V. CONCLUSION
Based on the above, the court GRANTS in part and DENIES in part
Defendant’s Motion to Strike Allegations and Affirmative Defenses. The court
STRIKES the Answer’s twelfth, thirteenth, fourteenth, fifteenth, and twentieth
affirmative defenses.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, July 31, 2012.
/s/ J. Michael Seabright
_____________________________
J. Michael Seabright
United States District Judge
Cape Flattery Ltd. v. Titan Marine LLC, Civ. No. 08-00482 JMS/KSC, Order Granting in Part
and Denying in Part Plaintiff’s Motion to Strike Allegations and Affirmative Defenses in
Defendant Titan Maritime, LLC, dba Titan Salvage, a Crowley Company’s Answer [Doc. 61] to
Complaint of Plaintiff Cape Flattery Limited
9
(...continued)
whether it has the jurisdiction to hear Defendants’ limitation defense.” 962 F. Supp. at 1286.
Although Grindle also determined that the defendant asserting this defense was required to post
a bond equal to the value of the vessel, id. at 1288, whether Defendant must post a bond in this
action is not currently before the court.
27
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