Res-Mo Springfield, LLC v. Tuscany Properties, L.L.C. et al
MEMORANDUM AND ORDER denying 11 Motion to Strike Affirmative Defenses. Signed by Magistrate Judge David J. Waxse on 8/5/2013. (do)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
RES-MO SPRINGFIELD, LLC,
Case No. 13-2169-EFM-DJW
TUSCANY PROPERTIES, L.L.C., et al.,
MEMORANDUM AND ORDER
Pending before the Court is Plaintiff’s Motion to Strike Affirmative Defenses (ECF No.
11) and Memorandum in Support (ECF No. 12). Plaintiff, RES-MO Springfield, LLC, (“RESMO”) asks the Court to strike certain affirmative defenses in the Answer (ECF No. 9) filed by
Defendants Tuscany Properties, LLC (“Tuscany”), Donna S. Blake, Brent T. Blake, and Cypress
Enterprises, Inc. (collectively “Defendants”). Defendants filed a Memorandum in Opposition
(ECF No. 15) asking the Court to deny the Motion or, in the alternative, to allow them to amend
their answer to provide additional notice of the bases for the affirmative defenses. Upon review,
the Court concludes that the Motion should be denied.
On April 10, 2013, RES-MO filed a Complaint (ECF No. 1) seeking to recover on a
promissory note and to enforce guaranties. RES-MO claims that it is the successor in interest to
a promissory note which was originally executed by Tuscany to Columbian Bank to fund the
development of property in Cass County, Missouri.
RES-MO also claims that Ms. Blake
executed a commercial guaranty to Columbian Bank for Tuscany’s indebtedness. Before RESMO obtained the note, the Federal Deposit Insurance Corporation (“FDIC”) held the note as
receiver for Columbian Bank. Defendants admit in their answer that Ms. Blake executed a
guaranty1 but deny that RES-MO is entitled to any recovery and also assert the following
affirmative defenses, which RES-MO now moves to strike:
2. Plaintiff lacks standing to file the captioned case and is not the real party in
4. Plaintiff’s claims are barred, in whole or in part, by waiver, estoppel, and/or
5. Plaintiff failed to mitigate its alleged damages.
6. Requiring Donna S. Blake to execute the guaranty violates Regulation B of the
Equal Credit Opportunity Act and, as a result, her guaranty is null and void.
7. The granting of Plaintiff’s demand would result in unjust enrichment, as
Plaintiff would receive more money than Plaintiff is entitled to receive.
8. The Complaint fails to allege whether or not the purported assignments were
partial or complete, and there is no evidence that the purported assignments were
At this early stage of the proceedings, the parties have not yet conducted formal discovery.
A. Parties’ Arguments
RES-MO requests that the Court strike the affirmative defenses in paragraphs 4 and 5,
arguing that under the D’Oench, Duhme doctrine, codified in 12 U.S.C. 1823(e), Defendants are
precluded from litigating the affirmative defenses of waiver, estoppel, laches, or failure to
Plaintiff asserts that as to the FDIC or its successors in interest, the
D’Oench, Duhme doctrine invalidates any side agreement not explicitly documented in the
official records of the original failed lender. Because Defendants did not provide any such
Defs.’ Answer (ECF No. 9) at 2:11.
Id. at 4.
Pl.’s Mem. in Supp. (ECF No. 12) at 1.
supporting documentation, RES-MO claims that their affirmative defenses of waiver, estoppel,
laches, and failure to mitigate damages fail as a matter of law.4
Next, RES-MO asks the Court to strike the affirmative defense in paragraph 6, wherein
Defendants allege that requiring Ms. Blake to execute a guaranty violated Regulation B of the
Equal Credit Opportunity Act (“ECOA”). RES-MO first argues that Ms. Blake does not meet
the statutory definition of an “applicant” under the ECOA as set forth in 15 U.S.C. § 1691a(b).
RES-MO assumes that Defendants are relying on an expanded definition of “applicant” pursuant
to 12 C.F.R. § 202.2(e), but argues that this expansion is unwarranted and unauthorized by law.5
Then, RES-MO posits that there is no authority in the ECOA for nullifying an instrument such as
a guaranty, although it recognizes that there is a split of authority on this issue.6
Lastly, RES-MO makes a brief argument as to the sufficiency of all of the affirmative
defenses raised in paragraphs 2, 4, 5, 6, 7, and 8. It states that because the language of Rule 8(a)
parallels that of 8(b) and 8(c), the Supreme Court’s recent reinterpretation of the pleading
standards for complaints in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v.
Iqbal, 556 U.S. 662 (2009) should apply to the Defendants’ affirmative defenses.7
Defendants oppose the Motion, stressing that the Federal Rules of Civil Procedure
require them to plead affirmative defenses in order to avoid waiving them.8 Further, Defendants
argue that this Court has previously held that the holdings in Iqbal and Twombly apply to
Id. at 2.
Id. at 3.
Id. at 3–4.
Id. at 4–5.
Defs.’ Mem. Opposing Pl.’s Mot. To Strike Affirmative Defenses (ECF No. 15) at 3.
complaints but not affirmative defenses, so RES-MO’s general objection is misplaced.9
Defendants contend that it is far too early in the litigation process to test the soundness of their
defenses and that discovery will serve that purpose.10 Lastly, they assert that RES-MO has failed
to explain how the affirmative defenses prejudice RES-MO.11 The general tenor of Defendants’
response is that they should not be penalized for preserving affirmative defenses on which they
B. Affirmative defenses under the D’Oench, Duhme doctrine
In paragraphs 4 and 5, Defendants contend that “[RES-MO’s] claims are barred, in whole
or in part, by waiver, estoppel, and/or laches” and that RES-MO “failed to mitigate its alleged
RES-MO argues that the D’Oench, Duhme doctrine precludes these defenses
because they are unsupported by explicit documentation.
Very briefly, D’Oench, Duhme,
codified in 12 U.S.C. § 1823(e), invalidates any agreement that diminishes or defeats a
corporation’s interest in assets obtained through the FDIC if the agreement was not properly
executed in writing, approved by the corporation’s board of directors, and maintained as an
official record.13 By allowing bank regulators to rely only on properly executed bank records,
the doctrine allows the regulators to quickly and efficiently review the records of failed financial
institutions.14 RES-MO, thus, posits that because the Defendants did not provide any additional
Id. at 3.
Id. at 5.
Defs.’ Answer (ECF No. 9) at 4.
There are a few narrow exceptions to the rule that are not relevant to this discussion. 12 U.S.C. § 1823(e)(2)
(2012). Additionally, where the FDIC previously held the note, a subsequent assignee retains the same protection as
if were the FDIC itself. See Bank Midwest, N.A. v. Millard, 10-2387-JAR, 2012 WL 2583385 at *3 (D. Kan. July 3,
F.D.I.C. v. Noel, 177 F.3d 911, 918 (10th Cir. 1999).
records, they cannot avail themselves of the defenses of waiver, estoppel, laches, and failure to
Because striking a pleading is a “drastic remedy,” courts are hesitant to do so.15 To
overcome this policy, a movant must show that the “challenged allegations cannot succeed under
any circumstances.”16 Out of an abundance of caution, “[i]f the record reveals any doubt as to
whether under any contingency a certain matter may raise an issue, the Court should deny the
At this early stage of litigation, without investigation through discovery of the bases for
these defenses, the Court is unable to determine if they are barred by the D’Oench Duhme
doctrine.18 Other than the facts alleged in RES-MO’s complaint and a cursory timeline of the
events at issue, the Court has little before it to help it determine if the affirmative defenses are,
indeed, precluded. Notwithstanding the doctrine’s apparent clarity, there may be scenarios
where the doctrine would not apply.19 Thus, RES-MO’s motion is simply premature. The Court
must, therefore, deny RES-MO’s request under the D’Oench Duhme doctrine to strike the
affirmative defenses in paragraphs 4 and 5.
C. Affirmative Defense under Regulation B of the ECOA
Next, RES-MO asks the Court to strike affirmative defense in paragraph 6, which claims
that requiring Ms. Blake’s to execute a guaranty violated Regulation B of the ECOA, making the
Bowers v. Mortgage Elec. Registration Sys., 10-4141-JTM, 2011 WL 2149423 at *2 (D. Kan. June 1, 2011).
Falley v. Friends Univ., 787 F. Supp. 2d 1255, 1259 (D. Kan. 2011).
Miller v. Pfizer, Inc., 99-2326-KHV, 1999 WL 1063046 at *3 (D. Kan. Nov. 10, 1999).
See Bank of the Ozarks v. Khan, 903 F. Supp. 2d 1370, 1381 (N.D. Ga. 2012) (“Without development of the facts
underlying these defenses, the Court cannot determine whether they are barred by the D'Oench Duhme doctrine as
the Bank claims.”); Kelley Metal Trading Co. v. Al-Jon, Inc., 92-4116-R, 1993 WL 34673 (D. Kan. Jan. 12, 1993)
(“The insufficiency of this defense is not clearly apparent.”).
See Miller v. Pfizer, Inc., 99-2326-KHV, 1999 WL 1063046 at *3 (D. Kan. Nov. 10, 1999).
guaranty null and void. RES-MO candidly admits that courts in this District are split on whether
the ECOA allows guarantors to avoid their liability under a debt.20 There is also some dispute as
to whether a guarantor qualifies as an “applicant” for the purposes of the ECOA.21 These are
both essential issues that a court must settle in order to determine whether the guarantee violates
Regulation B of the ECOA. It would stretch reason to hold that Ms. Blake could not win under
any circumstances when courts interpret the potentially dispositive law in different manners.
Therefore, the Court concludes that the request to strike paragraph 6 should be denied.
D. Affirmative Defenses and Sufficiency of Pleading
Rule 12(f) directs that a court “may strike from a pleading any insufficient defense.”22 A
responding party, under Rule 8(b)(1)(A), must “state in short and plain terms its defenses to each
claim asserted against it.”23 In Twombly and Iqbal, the Supreme Court iterated that a plaintiff
may not proceed on a complaint that contains only bare assertions and conclusions.24 The Court
limited its reasoning to complaints and made no mention of the standards for answers.25
Boyd v. U.S. Bank Nat. Ass'n, 06-2115-KGS, 2007 WL 2822518 at *16 (D. Kan. Sept. 26, 2007) (“ [I]n the
District of Kansas, courts have found both that ‘the ECOA does not provide for the invalidation of a guaranty as a
remedy for an ECOA violation and that a party against whom the violation of ECOA has occurred can use the
violation offensively to avoid their obligation on the debt.’ ”).
Compare Moran Foods, Inc. v. Mid-Atl. Mkt. Dev. Co., 476 F.3d 436, 437 (7th Cir. 2007) (Guarantor was not
“applicant” under ECOA), with Citgo Petroleum Corp. v. Bulk Petroleum Corp., 08-CV654, 2010 WL 3931496 at *
9 (N.D. Okla. Oct. 5, 2010) (Guarantor was “applicant” under ECOA).
FED. R. CIV. P. 12(h).
Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
See generally id.
As RES-MO acknowledges, this District is split on whether Twombly and Iqbal apply to
answers.26 This Court has previously held, after a lengthy consideration of the issue, that they
only apply to complaints, and not to answers.27 In sum, Rules 8(b) and 8(c), unlike 8(a), do not
require responding parties to show why they are entitled to relief; therefore, the plain language of
Rule 8 appears to make sections (b) and (c) “markedly less demanding than that of rule 8(a).”28
This Court in Bowers also mentioned several reasons for applying a higher pleading standard to
complaints rather than answers, including the notion that plaintiffs have years to investigate and
draft a complaint while defendants only have a mere 21 days to respond.29 Here, RES-MO asks
the Court to reverse its stance while offering no contrary rationale, so the Court sees no reason to
revisit the same discussion. For these reasons the Court declines to strike the defenses in
paragraphs 2, 4, 5, 6, 7, and 8 as insufficiently plead.
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Strike Affirmative Defenses
(ECF No. 11) is denied.
IT IS SO ORDERED.
Dated in Kansas City, Kansas on this 5th day of August, 2013.
s/ David J. Waxse
David J. Waxse
United States Magistrate Judge
Falley v. Friends Univ., 787 F. Supp. 2d 1255, 1259 (D. Kan. 2011); Bennett v. Sprint Nextl Corp., 09-2122-EFM,
2011 WL 4553055 at *2 (D. Kan. Sept. 29, 2011); Unicredit Bank AG v. Bucheli, 10-2436-JWL, 2011 WL 4036466
at *6 (D. Kan. Sept. 12, 2011); United States ex rel. Minge v. TECT Aerospace, Inc., 07-1212-MLB, 2011 WL
2473076 at *3 (D. Kan. June 21, 2011); Bowers v. Mortgage Elec. Registration Sys., 10-4141-JTM, 2011 WL
2149423 at *4 (D. Kan. June 1, 2011); Contra Hayne v. Green Ford Sales, Inc., 263 F.R.D. 647, 652 (D. Kan.
Bowers v. Mortgage Elec. Registration Sys., 10-4141-JTM, 2011 WL 2149423 at *4 (D. Kan. June 1, 2011).
Bowers v. Mortgage Elec. Registration Sys., 10-4141-JTM, 2011 WL 2149423 at *3 (D. Kan. June 1, 2011)
(citing Falley v. Friends Univ., 787 F. Supp. 2d 1255, 1258 (D. Kan. 2011)).
Bowers v. Mortgage Elec. Registration Sys., 10-4141-JTM, 2011 WL 2149423 at *4 (D. Kan. June 1, 2011).
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