Barry et al v. EMC Mortgage et al

Filing 29

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 9/15/11. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
TIMOTHY BARRY, et al.
:
v.

:

Civil Action No. DKC 10-3120

:
EMC MORTGAGE
:
MEMORANDUM OPINION
Presently pending and ready for resolution is a motion to
strike

affirmative

Susan Barry.

defenses

(ECF No. 26).

filed

by

Plaintiffs

Timothy

and

The issues are fully briefed and

the court now rules pursuant to Local Rule 105.6, no hearing
being

deemed

necessary.

For

the

reasons

that

follow,

Plaintiffs’ motion will be granted in part and denied in part.
I.

Background1
This case arises from the efforts of Plaintiffs Timothy and

Susan Barry to refinance the mortgage on their Maryland home.
After

contacting

several

lenders,

Plaintiffs

spoke

with

a

representative at First Ohio Banc and Lending (“First Ohio”),
who allegedly informed them that they could obtain $75,000 in

1

The background of this case is discussed at greater length
in the court’s earlier memorandum opinion denying Defendant EMC
Mortgage Corp.’s (“EMC”) motion for a more definite statement
and granting its motion to dismiss various counts in Plaintiffs’
complaint.
See Barry v. EMC Mortg., No. DKC 10-3120, 2011 WL
2669436, at *1-2 (D.Md. July 6, 2011).

equity

from

Plaintiffs

the

and

refinance.

First

Ohio

(ECF
agreed

No.
on

1

a

¶¶

5,

7,

settlement

13-14).

date

and,

although “unnerved by the settlement officer’s lack of knowledge
about

the

transaction”

and

certain

discrepancies

between

the

planned and official loan transactions, such as a lower equity
cash out, Plaintiffs proceeded with the refinance.
24).

(Id. ¶¶ 18-

Plaintiffs subsequently realized that they were making

interest

only

payments

on

a

negatively

amortizing

loan

and

contacted EMC, to whom First Ohio had sold the loan, to discuss
a potential restructuring.
Plaintiffs

allegedly

(Id. ¶¶ 29-30, 33-35).

reached

agreements

with

EMC

Although

designed

to

modify the loan and lower the loan’s principal, the principal
nonetheless continued to increase, as did Plaintiffs’ monthly
payments.

(Id. ¶¶ 33-35, 37, 40-44).

Unable to make these

payments, Plaintiffs defaulted on the loan.
On

November

3,

2010,

complaint in federal court.

Plaintiffs

(Id. ¶ 45).

filed

(ECF No. 1).

a

thirty-count

Count I alleged that

EMC breached the loan modification agreement.

Count II alleged

that both EMC and First Ohio were liable for gross negligence.
Count

III

alleged

that

both

Defendants

were

liable

“intentional violation of the duty of good faith.”

for

an

Counts IV,

V, VI, and VII alleged that First Ohio was liable for “fraud,
fraudulent

concealment,

fraudulent
2

misrepresentation,

and

negligent misrepresentation.”

Count VIII alleged that EMC was

liable for violations of the Maryland Consumer Protection Act.
Counts

IX

through

XXIX

violations

of

Truth

Settlement

Procedures

the

alleged
in

that

Lending

Act,

and

EMC
Act,

was
the

corresponding

liable
Real

for

Estate

regulations.

Counts XVI, XXV, XXVII, and XXVIII also implicated First Ohio.
Finally, count XXX sought injunctive relief to prohibit EMC from
foreclosing

on

the

property,

submitting

negative

credit

reporting, or engaging in any other complained of activity.
First Ohio moved to dismiss all counts raised against it,
claiming that the relevant statutes of limitation had expired.
(ECF No. 9).

EMC filed a motion for a more definite statement

as to counts I and VIII and also sought to dismiss counts II,
III, and IX through XXX.
Ohio’s

motion

dismissed.

was

(ECF No. 6).

granted,

(ECF No. 22).

and

all

On July 6, 2011, First
counts

against

it

were

EMC’s motion for a more definite

statement was denied, but its motion to dismiss counts II, III,
and IX through XXX was granted.

(Id.).

With counts I and VIII

still pending against it, EMC answered Plaintiffs’ complaint on
July 20, 2011, asserting six “affirmative defenses”: (1) the
complaint’s failure “to state a claim upon which relief can be
granted,” (2) EMC’s good faith compliance with all applicable
laws, (3) estoppel, (4) release, (5) statute of frauds, and (6)
3

waiver.

(ECF No. 24 ¶¶ 170-172).2

Plaintiffs moved to strike

these six affirmative defenses (ECF No. 26), and EMC opposed
this motion (ECF No. 28).
II.

Standard of Review
Motions to strike are governed by Federal Rule of Civil

Procedure 12(f), which gives the court discretion to “strike
from

a

pleading

an

insufficient

defense

or

any

immaterial, impertinent, or scandalous matter.”
generally

accepted

that

a

motion

to

strike

redundant,

While it is

“is

neither

an

authorized nor proper way to procure the dismissal of all or
part of” a pleading, 5C Charles Alan Wright & Arthur R. Miller,
Federal Practice & Procedure § 1380, 391 (3d ed. 2004), some
courts have found that an untimely answer may be stricken in its
entirety

under

certain

circumstances,

see

Canady

v.

Erbe

Elektromedizin GmbH, 307 F.Supp.2d 2, 8 (D.D.C. 2004).

In any

context,

remedy

however,

Rule

12(f)

motions

seek

“a

drastic

which is disfavored by the courts and infrequently granted.”
Clark v. Milam, 152 F.R.D. 66, 70 (S.D.W.Va. 1993); see also
Waste Mgmt. Holdings v. Gilmore, 252 F.3d 316, 347 (4th Cir.
2001).

2

EMC also reserved the right to raise additional defenses
that it discovered through the course of discovery.
(Id. ¶
173).
4

III. Analysis
Plaintiffs

have

moved

to

strike

the

six

affirmative

defenses asserted by EMC by contending that they fail to satisfy
the pleading requirements set forth by the United States Supreme
Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007),
and Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009).

EMC argues, in

response, that Twombly and Iqbal do not apply to affirmative
defenses

because

they

merely

interpreted

Rule

8(a)(2),

which

addresses the requirements for pleading a claim for relief.
Before addressing the merits of these arguments, a brief
review

of

Supreme

Twombly
Court

and

Iqbal

considered

is

warranted.

whether

a

In

Twombly,

complaint

the

asserting

violations of ¶ 1 of the Sherman Act could survive a motion to
dismiss when it alleged “parallel conduct” and contained only a
conclusory

assertion

that

“contract,

combination,

or

the

defendants

conspiracy.”

had
550

entered
U.S.

into
at

a

550.

Reasoning that a complaint must set forth facts demonstrating
that the claim “is plausible on its face,” the Court concluded
that the Twombly plaintiffs had failed to “nudge[] their claims
across the line from conceivable to plausible” because their
parallel
defendants’
behavior.

conduct

allegation

“natural,

more

unilateral”

Id. at 565-66.

likely

engagement

suggested
in

the

free-market

The Court also rejected legal labels
5

and conclusions that were devoid of supporting facts, thereby
refusing

to

credit

the

plaintiffs’

mere

assertion

“contract, combination, or conspiracy” existed.

that

a

Id. at 555-57,

564.
The Court clarified Twombly in the Iqbal opinion, setting
forth

a

two-pronged

analytical

approach

sufficiency of a complaint under Rule 8.

for

evaluating

the

129 S.Ct. at 1950.

First, bare legal conclusions that do nothing more than recite
the elements of a cause of action need not be credited, and the
courts may exclude them from the Rule 8 analysis entirely.

Id.

Second, in order to state a claim, the complaint must “plausibly
give rise to an entitlement to relief,” a showing that requires
more than the “mere possibility of misconduct.”

Id.

Neither Twombly nor Iqbal expressly addressed the pleading
requirements applicable to affirmative defenses, and district
courts throughout the country have since debated the issue.3
majority

of

circuit,

have

district
concluded

courts,
that

apply to affirmative defenses.

including

the

those

Twombly-Iqbal

The

within

this

approach

does

See, e.g., Bradshaw v. Hilco

Receivables, LLC, 725 F.Supp.2d 532, 536 (D.Md. 2010); Racick v.
Dominion

3

Law

Assocs.,

270

F.R.D.

228,

233

(E.D.N.C.

2010).

To date, the Supreme Court and the circuit courts of
appeals have not addressed this issue.
6

These opinions have principally relied on two justifications to
reach

this

conclusion.

First,

they

reason

that

“‘it

makes

neither sense nor is it fair to require a plaintiff to provide
the defendant with enough notice that there is a plausible,
factual basis for [a] claim under one pleading standard and then
permit a defendant under another pleading standard simply to
suggest that some defense may possibly apply in the case.’”
Racick, 270 F.R.D. at 233 (quoting

Palmer v. Oakland Farms,

Inc., No. 5:10cv00029, 2010 WL 2605179, at *4 (W.D.Va. June 24,
2010).

Second,

they

cite

the

importance

of

litigation

efficiency, explaining that boilerplate defenses serve only to
“clutter

the

requiring

docket

opposing

and

.

.

.

create

counsel

to

conduct

unnecessary
unnecessary

work”

by

discovery.

Bradshaw, 725 F.Supp.2d at 536 (internal quotation marks and
citations omitted).
In

response,

the

small

minority

of

courts

within

this

circuit rejecting the application of the Twombly-Iqbal pleading
standard
absence

to
of

concluded

affirmative
an

that

appellate
Twombly

defenses
court
and

have

opinion

Iqbal

relied

on

on

issue

confined

the

either

themselves

sufficiency of claims for relief under Rule 8(a).

or
to

the
have
the

See Amason v.

PK Mgmt., No. 3:10-1752-MJP-JRM, 2011 WL 1100211, at *8 (D.S.C.
Mar. 1, 2011); Lopez v. Asmar’s Mediterranean Food, Inc., No.
7

1:10cv1218, 2011 WL 98573, at *2 (E.D.Va. Jan. 10, 2011).

For

instance, in Lopez, the court focused on the wording differences
between

Rule

8(a),

which

requires

the

pleader

to

show

entitlement to relief, and Rule 8(b), which requires only a
statement of the defense in “short and plain terms.”

The Lopez

court then stated that both Twombly and Iqbal focused on Rule
8(a)’s

“entitlement

conclusion

that

interpretations

of

to

relief”

these
Rule

language

opinions

“begin

8(a)(2)’s

pleader is entitled to relief.”

to

justify

its

end

with

and

required

showing

that

the

Id.

The majority’s resolution of this issue presents the more
reasoned view, and the text of the Federal Rules supports this
conclusion.
certainly

While
not

the

language

identical,

those

of

Rules

sections

8(a)

and

contain

8(b)

is

important

textual overlap, with both subsections requiring a “short and
plain” statement of the claim or defense.

Additionally, Form

30, appended to the Federal Rules pursuant to Rule 84, strongly
suggests that bare-bones assertions of at least some affirmative
defenses

will

not

suffice,

as

the

Form’s

illustration

of

a

statute of limitations’ defense sets forth not only the name of
the affirmative defense, but also facts in support of it.

Given

Rule 84’s focus on illustrating “the simplicity and brevity that
these

rules

contemplate,”

the
8

additional

factual

detail

contained in Form 30 is hardly superfluous.
conclusory,

implausible

allegations,

In prohibiting

Twombly

and

Iqbal

thus

merely made explicit principles long implicit in the general
pleading requirements of the Federal Rules.
Additionally, Twombly and Iqbal recognize the fairness and
efficiency

concerns

highlighted

by

district

courts

that

have

subsequently applied those standards to affirmative defenses.
All

pleading

requirements

exist

to

ensure

that

the

opposing

party receives fair notice of the nature of a claim or defense.
Bradshaw, 725 F.Supp.2d at 536.
recognized

this

concern,

The Supreme Court has long

Conley

v.

Gibson,

355

U.S.

41,

47

(1957), abrogated on other grounds by Twombly, 550 U.S. 544, and
it

did

not

application
Twombly,

go
of

550

unnoticed
that

U.S.

at

in

approach
561

Twombly,
to

thus

affirmative

(acknowledging

notice” within a plaintiff’s complaint).

supporting
defenses.

the

“need

for

the
See
fair

Litigation efficiency

is also an important rationale underlying the Twombly and Iqbal
opinions.

See Twombly, 550 U.S. at 558-59 (discussing the need

for “some specificity in pleading before allowing a potentially
massive

factual

controversy

to

proceed”

(internal

quotation

marks and citations omitted)); Iqbal, 129 S.Ct. at 1950 (“Rule 8
. . . does not unlock the doors of discovery for a plaintiff
armed with nothing more than conclusions.”).
9

Cases refusing to

apply the Twombly-Iqbal approach to affirmative defenses attempt
to

downplay

opposing
limited

these

party

efficiency

can

discovery

simply

forms

concerns

obtain

such

as

Lopez, 2011 WL 98573, at *2.

by

noting

additional
contention

that

facts

the

through

interrogatories.

This response, however, ignores

precisely the type of unnecessary discovery that troubled the
Supreme Court in Twombly and Iqbal and that has since troubled
courts applying their approach to affirmative defenses.
e.g.,

Twombly,

(explaining

550

that

U.S.

the

at

572

majority’s

(Stevens,

holding

did

J.,
not

See,

dissenting)
even

permit

“limited discovery” to determine whether a conspiracy existed
among the defendants).

Therefore, although Twombly and Iqbal

specifically addressed the sufficiency of a complaint under Rule
8(a), the Court likely did not intend to confine its holdings to
complaints alone.
Plaintiffs here seek to strike six “affirmative defenses”
set forth by Defendants: (1) failure to state a claim upon which
relief

can

applicable

be

granted,

laws,

(3)

good

estoppel,

frauds, and (6) waiver.4

4

(2)

faith

(4)

compliance

release,

(5)

with

all

statute

of

In the wake of Twombly and Iqbal, many

Defendants characterize Plaintiff’s purported failure to
state a claim for which relief can be granted as an “affirmative
defense,” and Plaintiffs do not challenge this classification.
Rule 8(c) does not define the contours of affirmative defenses,
10

courts have concluded that the assertion that a complaint fails
to state a claim for which relief could be granted is merely
conclusory, and they have stricken it accordingly.

See Ulyssix

Techs., Inc. v. Orbital Network Eng’g, Inc., No. ELH-10-02091,
2011 WL 631145, at *15 (D.Md. Feb. 11, 2011); Racick, 270 F.R.D.
at 234-35; Topline Solutions, Inc. v. Sandler Sys., Inc., No. L09-3102, 2010 WL 2998836, at *1-2 (D.Md. July 27, 2010).

This

conclusion, however, overlooks Form 30, which authorizes generic
language regarding a complaint’s failure to state a claim, thus
implicitly

demonstrating

that

such

language

satisfies

pleading requirements set forth in the Federal Rules.

the

Twombly

and Iqbal certainly clarified these requirements, but they did
nothing

to

Federal

Rules

Plaintiff’s
defense”

alter
or

the
its

request

must

fail.

to

language

contained

appendix.
strike
The

For

Defendant’s

lack

of

within
this

reason

first

practical

either

the

alone,

“affirmative

consequence

in

striking this defense bolsters the conclusion that it need not

and courts have frequently disagreed about whether failure to
state a claim constitutes such a defense. Compare Martin v. Sw.
Va. Gas Co., 135 F.3d 307, 309 (4th Cir. 1998) (recognizing
failure to state a claim as an affirmative defense), with Cheney
v. Vitro Am., Inc., No. 7:10-cv-00246, 2010 WL 5125281, at *1
(W.D.Va. Dec. 9, 2010) (noting that failure to state a claim is
not an affirmative defense).
This debate need not be resolved
here, however, because the parties do not raise the issue and,
as explained below, striking this defense (whatever the reason)
would serve no practical purpose.
11

be stricken.

Rule 12 expressly permits a party to raise the

defense of failure to state a claim in any responsive pleading,
as well as when moving for judgment on the pleadings and at
trial.

Although EMC waived the right to bring a Rule 12(b)(6)

motion by filing its answer, that waiver does not impact EMC’s
ability

to

raise

the

same

defense

at

a

later

time.

EMC’s

defense that Plaintiffs have failed to state a claim thus will
not be stricken.
A different result must obtain in regard to EMC’s five
remaining

defenses.

Each

of

those

defenses

sets

forth

conclusory legal statements wholly devoid of any factual content
to support them.

As a result, they fail to set forth in “short

and plain” terms the nature of the asserted defense and violate
Rule

8’s

general

pleading

requirements,

as

illustrated

interpreted through Form 30, Twombly, and Iqbal.

and

See, e.g.,

Bradshaw, 725 F.Supp.2d at 536 (striking a defense that the
defendant had “[a]t all times . . . acted in good faith”);
Francisco

v.

Verizon

South,

Inc.,

No.

3:09cv737,

2010

WL

2990159, at *8 (E.D.Va. July 29, 2010) (granting a plaintiff’s
motion to strike a defense of “good faith efforts to comply with
all

applicable

F.R.D.

at

237

laws,

rules,

(striking

and

“estoppel”

regulations”);
and

“waiver”

Racick,
defenses

270
as

“bare legal conclusion[s]”); Peoples State Bank of Wyalusing, PA
12

v. Wellsburg Truck Auto Sales, Inc., No. 3:10-CV-433, 2010 WL
4922877, at * 4 (M.D.Pa. Nov. 29, 2010) (striking a statute of
frauds defense that did “not state in any way why Defendants
[were] entitled to [it]” when Rule 8(b) requires a statement of
the

defense

defenses
estoppel,

of

in

“short

good

release,

faith

and

plain

compliance

statute

of

terms”).

Therefore,

EMC’s
laws,

with

all

applicable

frauds,

and

waiver

will

be

stricken.
The deadline for amendment of pleadings in the scheduling
order passed on September 9, 2011.

(ECF No. 25).

In light of

this decision, EMC may have an additional twenty-one days to
file a motion for leave to amend its answer.
IV.

Conclusion
For

the

foregoing

reasons,

Plaintiffs’

motion

to

strike

affirmative defenses will be granted in part and denied in part.
EMC will be permitted to file a motion for leave to amend its
answer in accordance with this Opinion.

A separate Order will

follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

13