Fluidmaster, Inc. v. Kemper Independence Insurance Company
MEMORANDUM OPINION AND ORDER Signed by the Honorable Robert M. Dow, Jr on 11/13/2017. Mailed notice (jk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
KEMPER INDEPENDENCE INSURANCE
Case No. 17-cv-5169
Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER
Before the Court are Plaintiff’s motions [15; 16] to strike Defendant’s first and second
affirmative defenses.1 For the reasons set for the below, the Court grants Plaintiff’s motions
[15;16] to strike Defendant’s first and second affirmative defenses without prejudice and with
leave to amend.
Plaintiff is a manufacturer and distributer of plumbing supplies, including water supply
lines that connect external water supplies to various fixtures and appliances. Defendant is an
insurance company that issues policies of property and casualty insurance to property owners,
including for damages caused by leaking plumbing fixtures and appliances. Defendant insured
Larry and Rosemary Capobianco, who submitted a claim to Defendant for property damage they
claim to have incurred as a result of water leaking from a broken acetal coupling nut on a water
supply line manufactured by Plaintiff. On or about June 26, 2017, Defendant informed Plaintiff
that it intended to file suit against Plaintiff to recover the amount that Defendant paid to its
Plaintiff filed two motions to strike that appear to be identical in substance. [See 15; 16.]
insureds as a result of the leaking supply line. Defendant noted, however, that it wished to
explore a pre-suit resolution of its subrogation claim.
While Defendant was waiting for a response from Plaintiff, Plaintiff filed this lawsuit on
June 29, 2017, seeking declaratory relief that: (1) Plaintiff’s supply line was not defective in any
way, (2) Plaintiff was not negligent in the design, manufacture, labeling, inspection, assembly, or
testing of its supply line, and (3) Plaintiff is not liable to Defendant for the damages claimed by
Defendant. [See 1.] On August 9, 2017, Defendant answered the complaint, bringing three
counterclaims and raising five affirmative defenses. [See 11.]
Currently before the Court are Plaintiff’s motions to strike two of these affirmative
defenses [15;16]. Plaintiff moves to strike Defendant’s first affirmative defense, which asserts
that Defendant’s insureds are indispensable parties under Federal Rule of Civil Procedure 19(b).2
Plaintiff also moves to strike Defendant’s second affirmative defense, which asserts that this Court
lacks subject matter jurisdiction because the inclusion of Defendant’s insureds as indispensable
parties would destroy the Court’s diversity jurisdiction.3
Under Federal Rule of Civil Procedure 12(f) “the court may strike from a pleading an
insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R.
Defendant’s first affirmative defense states: “Plaintiff has failed to join an indispensable party under Rule 19.
Defendant’s insureds, Larry and Rosemary Capobianco, have a claim against Fluidmaster for their deductible.
Defendant Kemper does not have standing to bring a claim for that deductible on their behalf. Larry and Rosemary
Capobianco have not been added to this matter, but will be adversely affected by a declaratory judgment in Plaintiff’s
favor. They are therefore indispensable parties.” [11, at 3-4.]
Defendant’s second affirmative defense states: “Joinder of Larry and Rosemary Capobianco as indispensable parties
under Rule 19 will destroy diversity in this case. Complete diversity is required not only between the plaintiffs and
defendants named in the complaint, but also between those whose joinder is indispensable under Rule 19. Exxon
Mobil Corp. v. Allapattah Services, Inc., 545 U.S. 546, 562 (2005). This court therefore lacks subject matter
jurisdiction over this case under 28 U.S.C. §1332 because indispensable parties to this matter are not diverse.” [11, at
Civ. P. 12(f). Motions to strike are generally disfavored but may be used to expedite a case by
“remov[ing] unnecessary clutter.” Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286,
1294 (7th Cir. 1989); see also NewNet Commc'n Techs., LLC v. VI E-Cell Tropical Telecom, Ltd.,
2015 WL 1520375, at *3 (N.D. Ill. Mar. 30, 2015) (“But where a defendant's asserted [affirmative
defenses] are both legion and mostly frivolous, a motion to strike can aid the parties in resolving
the case by removing irrelevant issues from consideration.”).
Affirmative defenses are pleadings and, as such, remain subject to the pleading
requirements of the Federal Rules of Civil Procedure. Heller, 883 F.2d at 1294; Shield Techs.
Corp. v. Paradigm Positioning, LLC, 2012 WL 4120440, at *10 (N.D. Ill. Sept. 19, 2012) (noting
that affirmative defenses must be adequately pled under Rules 8 and 9 and must withstand a Rule
12(b)(6) challenge). Most courts in this district have applied the “plausibility” pleading standard
in Twombly and Iqbal to affirmative defenses. See Lincoln Gen. Ins. Co. v. Joseph T. Ryerson &
Son, Inc., 2015 WL 3819215, at *2 (N.D. Ill. June 18, 2015); Naylor v. Streamwood Behavioral
Health Sys., 2012 WL 5499441, at *7 (N.D. Ill. Nov. 13, 2012) (collecting cases). Thus, an
affirmative defense must comply with Rule 8(a) by providing “a short and plain statement” of the
nature of the defense. Bobbitt v. Victorian House, Inc., 532 F. Supp. 734, 737 (N.D. Ill. 1982)
(citing Fed. R. Civ. P. 8(a)). This is meant to give the plaintiff “fair notice” of what the
affirmative defense is and the “grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007). “A pleading that offers ‘labels and conclusions' or a ‘formulaic recitation
of the elements * * * will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 555). “Ordinarily, [affirmative] defenses will not be struck if they are
sufficient as a matter of law or if they present questions of law or fact.” Heller, 883 F.2d at 1294.
Defendant’s first and second affirmative defenses are both dependent on its insureds being
indispensable parties under Federal Rule of Civil Procedure 19(b).4 Under Rule 19(b), “[i]f a
person who is required to be joined if feasible cannot be joined, the court must determine whether,
in equity and good conscience, the action should proceed among the existing parties or should be
dismissed. The factors for the court to consider include: (1) the extent to which a judgment
rendered in the person’s absence might prejudice that person or the existing parties; (2) the extent
to which any prejudice could be lessened or avoided by: (A) protective provisions in the judgment,
(B) shaping relief; or (C) other measures, (3) whether the judgment rendered in the person’s
absence would be adequate; and (4) whether the plaintiff would have an adequate remedy if the
action were dismissed for nonjoinder.” Fed. R. Civ. P. 19(b). “Rule 19(b) spells out factors for
the court to consider ... with an emphasis on practical measures that will allow either the entire suit
or part of it to go forward.” Askew v. Sheriff of Cook County, Ill., 568 F.3d 632, 635 (7th Cir.
2009). “[T]he rule does not state what weight is to be given to each factor. This must be
determined by the court in terms of the facts of a given case and in light of the governing
equity-and-good-conscience test.” 7 Charles A. Wright & Arthur R. Miller, FED. PRAC. & PROC.
§ 1608 (3d Ed.) (citations omitted).
Plaintiff argues that insureds typically are not considered indispensable parties in
subrogation actions for the purposes of Rule 19(b) and asserts that there is no reason for the Court
to reach a different conclusion given the conclusory allegations in Defendant’s answer.
Because Defendant’s insureds cannot be joined without destroying the Court’s diversity jurisdiction, the Court can
evaluate the Rule 19(b) factors without first determining whether Defendant’s insureds are necessary parties under
Rule 19(a). Bio-Analytical Servs., Inc. v. Edgewater Hosp., Inc., 565 F.2d 450, 452 (7th Cir. 1977) (“If, as in the
present case, joinder of an absent party would destroy diversity jurisdiction, 19(a) is inapplicable.” (citing Bonnet v.
Trs. of Schs. of Twp. 41 N., 563 F.2d 831, 834 (7th Cir. 1977)).
Defendant concedes that insureds typically are not considered indispensable parties to subrogation
actions for the purposes of Rule 19(b). [23, at 4.] Still, Defendant argues that Plaintiff’s motions
to strike should be denied for four reasons. First, Defendant contends that there is no per se rule
establishing that insureds are never indispensable parties to subrogation action for the purposes of
Rule 19(b). Second, Defendant contends this case is distinguishable from the typical subrogation
action, because Plaintiff here seeks a declaratory judgment. Third, Defendant contends that it is
premature to strike its first and second affirmative defenses, as discovery has not taken place.
Finally, Defendant contends that Plaintiff will not be prejudiced by allowing discovery to go
forward with respect to these affirmative defenses.
The Court finds these arguments
Although it is true that there is no per se rule establishing that insureds are never
indispensable parties to subrogation actions for the purposes of Rule 19(b), Defendant recognizes
that insureds typically are not indispensable parties to subrogation actions.
[23, at 4.]
Defendant’s only explanation for why this case differs from the typical case is that this case is a
declaratory judgment action. But the Rule 19(b) factors apply in declaratory judgment actions.5
See, e.g., Evangelical Lutheran Church in Am. v. Atl. Mut. Ins. Co., 173 F.R.D. 507, 508 (N.D. Ill.
1997). The Court must therefore determine whether Defendant’s affirmative defenses allege
sufficient facts to show that its insureds are indispensable parties under Rule 19(b).
Defendant concedes that the Court “does not have enough information to conduct the
case-by-case analysis demanded by Rule 19(b) at this time,” implicitly recognizing that its first
and second affirmative defenses are facially deficient. Defendant argues, however, that the Court
should not strike its first and second affirmative defenses “until there are sufficient facts to
The Court notes that Defendant brings counterclaims for strict liability, negligence, and breach of express and
implied warranties [11, at 6-9], making this lawsuit more like a typical subrogation action.
evaluate whether the [insureds are indispensable parties] to this declaratory judgment action.”
[23, at 6.] In support of this argument, Defendant relies on Leon v. Jacobson Transportation
Company, in which the court declined to extend the Twombly and Iqbal pleading standard to
affirmative defenses because “[i]t is to everyone's benefit to have defendant plead its affirmative
defenses early, even if defendant does not have detailed facts.” 2010 WL 4810600, at *1 (N.D.
Ill. Nov. 19, 2010). That case, however, is at odds with the approach taken by a majority of courts
in this district, which have held the Twombly and Iqbal pleading standard applies to the pleading of
affirmative defenses. See, e.g., Shield Techs. Corp., 2012 WL 4120440, at *7 (discussing the
issue at length and citing cases). The Court recognizes that defendants are under somewhat of a
time crunch to develop and plead affirmative defenses in their first responsive pleading, but the
Court agrees with the courts that have applied the Twombly and Iqbal pleading standard to the
pleading of affirmative defenses. As discussed above, affirmative defenses are pleadings and
remain subject to the pleading requirements of the Federal Rules of Civil Procedure. Heller, 883
F.2d at 1294. “A pleading that offers ‘labels and conclusions' or a ‘formulaic recitation of the
elements * * * will not do.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). Here,
Defendant’s first and second affirmative defenses do not allege facts sufficient to show that its
insureds are indispensable parties under Rule 19(b) and therefore are facially deficient.
First, Defendant has not alleged facts showing that it or its insureds would be prejudiced by
allowing the case to proceed without joining its insureds. Defendant’s only allegation of potential
prejudice is its allegation that its insureds “have a claim against Fluidmaster for their deductible.”
[11, at 3-4.] But Defendant has not alleged that its insureds actually intend to bring a suit against
Plaintiff to recover their deductible. The fact that its insureds have a potential claim—without
any indication that they intend to pursue that claim—is not sufficient to establish that Defendant’s
insureds would be prejudiced by allowing this suit to proceed without them.6 State Farm Fire &
Cas. Co. v. Electrolux Home Prod., Inc., 2012 WL 1287698, at *4 (N.D. Ill. Apr. 16, 2012)
(holding that deductible paying insureds were not indispensable parties under Rule 19(b) because
there was “no indication that any of the insured[s] who paid deductibles have pursued or plan to
pursue a separate action * * * to recover their deductibles”). In fact, given the cost of litigation,
absent an allegation of an extraordinarily high deductible, an action by an insured seems highly
unlikely. Hughes v. Kore of Indiana Enter., Inc., 731 F.3d 672, 675 (7th Cir. 2013) (concluding
that it would “not be realistic” for individuals to file lawsuits to recover $100). The cost of the
filing fee alone would consume a sizable portion of any recovery in an action to recover the
deductible of a typical homeowners insurance policy. Thus, Plaintiff simply has not alleged facts
to plausibly show that its insureds would be prejudiced if the Court allows Plaintiff to proceed with
its case without joining Defendant’s insureds.7 Id. Without alleging some additional kind of
prejudice, the first Rule 19(b) factor weighs in favor of allowing the case to proceed.
Second, because Defendant has not alleged facts indicating that Defendant or its insureds
would be prejudiced by allowing the action to proceed, the second factor —the extent to which the
prejudice can be lessened or avoided—is of no concern. Evangelical Lutheran Church in Am,
173 F.R.D. at 509.
“A finding of indispensability based on the existence of an insured's cause of action, with no indication that the right
will be exercised, would result in a per se rule that all insured must be joined in an action brought by partially
subrogated insurance companies, contrary to the case-by-case analysis demanded by Rule 19(b).” State Farm Fire &
Cas. Co. v. Electrolux Home Prod., Inc., 2012 WL 1287698, at *4 (N.D. Ill. Apr. 16, 2012). This is precisely the type
of per se rule that Defendant recognizes is inappropriate under Rule 19(b).
Even if Defendant alleged that its insureds intend to bring a claim against Plaintiff, it is not clear from the parties’
briefing that this would be sufficiently prejudicial to establish that Defendant’s insureds are indispensable parties
under Rule 19(b). The parties’ briefs do not address how a judgment in this case would affect a case brought by
Third, Defendant does not allege any facts showing that a judgment rendered in the
absence of its insureds would be inadequate. Indeed, Defendant does not even address this factor
at all in its opposition to Plaintiff’s motions to strike.
Fourth, although Plaintiff would have an adequate remedy if this action were dismissed for
nonjoinder, as Plaintiff could file this action in state court, this factor alone does not establish that
this action should not proceed in equity and good conscience. Bonnet v. Trs. of Schs. of Twp. 41
N., Range 12 E. of Third Principal Meridian, Cook Cty., Ill., 563 F.2d 831, 833 (7th Cir. 1977)
(“[W]e do not view the availability of an alternative remedy, standing alone, as a sufficient reason
for deciding that the action should not proceed among the parties before the court.”);
Bio-Analytical Servs., Inc. v. Edgewater Hosp., Inc., 565 F.2d 450, 453 (7th Cir. 1977) (holding
that the availability of an alternate remedy alone is not sufficient reason to find that a party is
indispensable under Rule 19(b)). Considering all the Rule 19(b) factors together, the Court finds
that Defendant has not alleged facts sufficient to show that its insureds are indispensable parties.
Defendant also argues that Plaintiff will not be prejudiced by allowing discovery to go
forward with respect to these affirmative defenses. However, the absence of prejudice to the
opposing party does not save otherwise facially insufficient allegations from being stricken. The
Court notes that defendants always have the option to add affirmative defenses at a later time
should they develop a plausible basis for doing so. See Fed. R. Civ. P. 15(a)(2) (instructing courts
to freely give a party leave to amend its pleadings “when justice so requires”); Kirsch v. Brightstar
Corp., 2014 WL 5166527, at *5 (N.D. Ill. Oct. 10, 2014) (allowing defendant to add an affirmative
defense more than a year after defendant filed its answer and more than a month after the close of
Should Defendant develop a plausible factual basis for its first and second
affirmative defenses through discovery, Defendant may move for leave to amend its answer.
For the foregoing reasons, the Court grants Plaintiff’s motions [15; 16] to strike
Defendant’s first and second affirmative defenses without prejudice and with leave to amend.
Dated: November 13, 2017
Robert M. Dow, Jr.
United States District Judge
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