COMMERCE & INDUSTRY INSURANCE COMPANY v. PREFERRED TANK & TOWER, INC. et al

Filing 69

ORDER granting in part and denying in part 41 Motion to Strike Affirmative Defenses of Defendant Preferred Tank & Tower Maintenance Division, Inc.. Signed by Judge Richard L. Young on 10/16/2013. (TMD)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
EVANSVILLE DIVISION

COMMERCE & INDUSTRY
INSURANCE COMPANY,

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Plaintiff,
vs.
PREFERRED TANK & TOWER, INC.;
PREFERRED TANK & TOWER
MAINTENANCE DIVISION, INC.;
PREFERRED TANK & TOWER
MAINTENANCE DIVISION,
INCORPORATED,
Defendants.

3:13-cv-00010-RLY-WGH

ENTRY ON PLAINTIFF’S MOTION TO STRIKE AFFIRMATIVE
DEFENSES OF DEFENDANT PREFERRED TANK & TOWER
MAINTENANCE DIVISION, INC.

I.

Introduction
Plaintiff, Commerce & Industry Insurance Company, issued four workers’

compensation insurance policies, covering a span of approximately three and one-half
years, to Preferred Tank & Tower, Inc. (“PTT”) and Preferred Tank & Tower
Maintenance Division, Inc. (“PTTMD”). Plaintiff alleges that PTT and PTTMD
breached the terms of the policies by failing to pay the insurance premiums when due,
and seeks damages in excess of three million dollars for breach of contract, or, in the
alternative, unjust enrichment.
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In its Answer to Plaintiff’s Amended Complaint, PTTMD counterclaimed,
alleging that the parties had an agreement with respect to Policy WC 1606559, whereby
PTTMD would pay Plaintiff the sum of $155,482.00 in twelve monthly installments of
$12,956.00. In support of its contention, PTTMD designated a promissory note dated
November 13, 2012, outlining its promise to pay the Policy premiums by way of regular
payments that would begin on December 10, 2012. PTTMD alleges that Plaintiff
accepted installments for December 2012, January 2013, February 2013, and April 2013.
From these same facts, PTTMD also asserted three affirmative defenses: (1) accord and
satisfaction, (2) promissory estoppel, and (3) unclean hands.
Plaintiff moved to dismiss PTTMD’s counterclaim based on a letter, dated
November 21, 2012, that was sent by Plaintiff’s representative to PTTMD. The letter
allegedly establishes that Plaintiff rejected PTTMD’s offer to make installment payments
on the policy in lieu of a lump sum. The letter specifically provides:
Please be advised that we are unable at this time to finalize an installment
plan for policy WC 1606559 for $155,482.00. It has come to our attention
that there are related policies that remain unpaid. For this reason, we
cannot offer an installment plan.
In an Order dated August 2, 2013, the court denied Plaintiff’s motion to dismiss
PTTMD’s counterclaim in part, ruling that PTTMD had successfully alleged that Plaintiff
accepted four installment payments after the correspondence from Plaintiff set forth
above. Additionally, the court granted the motion to dismiss in part, finding the
counterclaim should have been asserted as an affirmative defense of payment. On
August 14, 2013, PTTMD filed an Amended Answer reflecting the same.

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This matter now comes before the court on Plaintiff’s motion to strike PTTMD’s
affirmative defenses, pursuant to Federal Rule of Civil Procedure 12(f). At the time this
motion was filed, PTTMD had not filed the August 14, 2013, Amended Answer. Thus,
PTTMD’s Answer asserted three, and not four, affirmative defenses. Because PTTMD’s
Answer and Amended Answer differ only in only one limited respect – PTTMD’s
counterclaim in its Answer is asserted in its Amended Answer as a fourth affirmative
defense of partial payment – the court finds ruling on the present motion to strike would
not prejudice either party. Accordingly, and for the reasons set forth below, the court
GRANTS in part and DENIES in part Plaintiff’s motion to strike the affirmative
defenses of (1) accord and satisfaction, (2) promissory estoppel, and (3) unclean hands.
II.

Legal Standard
Rule 12(f) authorizes the court, on its own motion or on motion from any of the

parties, to “strike from a pleading an insufficient defense or any redundant, immaterial,
impertinent, or scandalous matter.” FED. R. CIV. P. 12(f). In Heller Financial, Inc. v.
Midwhey Powder Co., the Seventh Circuit emphasized that affirmative defenses are
pleadings, and, as such, must set forth “a short and plain statement of the claim showing
that the pleader is entitled to relief.” 883 F.2d 1286, 1294 (7th Cir. 1989); FED. R. CIV. P.
8(a)(2). Notably though, this court has held that the more stringent pleading standards
established by the Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)
and Ashcroft v. Iqbal, 556 U.S. 662 (2009) do not apply to affirmative defenses. J & J
Sports Prods. v. Munoz, No. 1:10-cv-1563, 2011 U.S. Dist. LEXIS 77373, at *3 (S.D.
Ind. July 15, 2011).
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Motions to strike are generally disfavored as potential dilatory tactics. Heller, 883
F.2d at 1294. See also Parker v. Rockies Express Pipeline LLC, No. 1:11-cv-0139, 2012
U.S. Dist. LEXIS 144289, at *8 (S.D. Ind. Oct. 5, 2012). (“[M]otions to strike are
disfavored [] because they are not always a good use of the time it takes to file and rule
upon them. Often, that which a party wants stricken is harmless.”). However, when
“motions to strike remove unnecessary clutter from the case, they serve to expedite, not
delay.” Heller, 883 F.2d at 1294. The Seventh Circuit set forth the standard for a motion
to strike affirmative defenses:
Affirmative defenses will be stricken only when they are insufficient on the
face of the pleadings. Motions to strike . . . will not be granted unless it
appears to a certainty that plaintiffs would succeed despite any state of the
facts which could be proved in support of the defense, and are inferable
from the pleadings.
Williams v. Jader Fuel Co., 944 F.2d 1388, 1400 (7th Cir. 1991) (internal citations and
quotation marks omitted). The Heller court added that affirmative defenses that “are
nothing but bare bones conclusory allegations” or “fail[] totally to allege the necessary
elements of the alleged claims” are “meritless,” and should be stricken. 883 F.2d at
1295.
III.

Discussion
Plaintiff first argues that each of PTTMD’s defenses are premised on the

assumption that the agreement asserted in PTTMD’s counterclaim, whereby Plaintiff
agreed to accept monthly installment payments in lieu of the full amount due, is
enforceable. Plaintiff claims that the November 21, 2012, letter effectively refutes the

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existence of any such agreement. Accordingly, the three affirmative defenses should be
stricken.
The court rejects this argument because, in essence, Plaintiff has merely
demonstrated that it has evidence it will use as a defense to PTTMD’s counterclaim.
Plaintiff’s November 21, 2012, letter stands in direct conflict with PTTMD’s November
13, 2012, Promissory Note and the installment payments that Plaintiff allegedly accepted
in December 2012, January 2013, February 2013, and April 2013. Conflicting evidence
does not warrant the striking of PTTMD’s affirmative defenses. Rather, this creates a
genuine dispute of fact that is more properly resolved following discovery.
Plaintiff subsequently argues that PTTMD cannot satisfy the required elements of
each of its affirmative defenses. The court first considers the affirmative defense of
accord and satisfaction. Under Indiana law, a party asserting this defense must establish:
“(1) there is a good faith dispute, (2) the disputed sum is unliquidated, (3) there is
consideration, (4) the parties had a meeting of the minds with the intent to settle the
dispute, and (5) the contract was performed.” Sims-Madison v. Inland Paperboard &
Packaging, Inc., 379 F.3d 445, 450 (7th Cir. 2004) (quoting Sedona Dev. Group, Inc. v.
Merrillville Rd., LP, 801 N.E.2d 1274, 1278 n.1 (Ind. Ct. App. 2004)).
Assuming without deciding that PTTMD could satisfy the first four elements, it
cannot satisfy the fifth. As PTTMD’s own pleadings make clear, the alleged accord has
not been fully performed. PTTMD pleads that it paid four out of the twelve monthly
installments, thereby leaving seven remaining payments. The affirmative defense is
legally insufficient because PTTMD can offer no facts, either now or after discovery, that
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establish satisfaction of the alleged accord. Accordingly, with respect to PTTMD’s first
affirmative defense of accord and satisfaction, the court GRANTS Plaintiff’s motion to
strike.
The court now turns to PTTMD’s second affirmative defense of estoppel. The
Indiana Supreme Court determined that the doctrine of promissory estoppel requires a
showing of five elements: “(1) a promise by the promissor; (2) made with the expectation
that the promisee will rely thereon; (3) which induces reasonable reliance by the
promisee; (4) of a definite and substantial nature; and (5) injustice can be avoided only by
enforcement of the promise.” Brown v. Branch, 758 N.E.2d 48, 52 (Ind. 2001). The
Brown court summarized the doctrine by concluding, “[O]ne who by deed or conduct has
induced another to act in a particular manner will not be permitted to adopt an
inconsistent position, attitude, or course of conduct that causes injury to such other.” Id.
(citing 31 C.J.S. Estoppel and Waiver § 2 (1996)).
Plaintiff’s arguments as to the elements of estoppel are nothing more than a
reframing of its overarching contention that there was no agreement to allow PTTMD to
make monthly installments in lieu of paying a lump sum. Thus, Plaintiff has merely
demonstrated, once again, that there is an issue of fact that is best adjudicated following
discovery. PTTMD’s affirmative defense of estoppel sets forth a short and plain
statement of the defense and is not insufficient on its face. Accordingly, the court
DENIES Plaintiff’s motion to strike with respect to this defense.
PTTMD’s third, and final, affirmative defense of unclean hands is founded upon
the principle that “he who comes into equity must come with clean hands.” Wedgewood
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Cmty. Ass’n v. Nash, 781 N.E.2d 1172, 1178 (Ind. Ct. App. 2003). This doctrine, which
is not favored by courts, only applies when the wrongful conduct is both intentional and
has an “immediate and necessary relation to the matter before the court.” Id.
Plaintiff argues that it has not engaged in any misconduct, much less intentional
misconduct. However, Plaintiff fails to show “to a certainty that [it] would succeed
despite any state of the facts which could be proved in support of the defense.” Williams,
944 F.2d at 1400. Thus, PTTMD’s third affirmative defense of unclean hands is
sufficient under the Williams’ standard. Accordingly, the court DENIES Plaintiff’s
motion to strike with respect to this defense.
IV.

Conclusion
For the foregoing reasons, Plaintiff’s motion to strike affirmative defenses (Docket

# 41) is GRANTED in part and DENIED in part. The motion is GRANTED with
respect to PTTMD’s first affirmative defense of accord and satisfaction because PTTMD
cannot demonstrate performance of the alleged accord. The motion is DENIED with
respect to PTTMD’s remaining affirmative defenses, estoppel and unclean hands, as they
are sufficient on the face of the pleadings and present questions of fact.
SO ORDERED this 16th day October 2013.
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RICHARD L. YOUNG, CHIEF JUDGE
RICHARD L. YOUNG, CHIEF JUDGE
United States District Court
United States District Court
Southern District of Indiana
Southern District of Indiana

Distributed Electronically to Registered Counsel of Record.

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