In Re: RFC and RESCAP Liquidating Trust Litigation

Filing 397

ORDER granting in part and denying in part without prejudice #148 Motion to Strike, or in the alternative, For Judgment on the Pleadings as to Ten of Defendants' Affirmative Defenses (Written Opinion). Signed by Judge Susan Richard Nelson on 04/28/2015. (SMD)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
In Re: RFC and ResCap Liquidating
Trust Litigation
_________________________________
This document relates to:
Residential Funding Company, LLC v.
Ark-La-Tex Financial Services, LLC,
No. 13-cv-3448 (DWF/TNL)
Residential Funding Company, LLC v.
Academy Mortgage Corporation, No. 13cv-3451 (SRN/BRT)
Residential Funding Company, LLC v.
First California Mortgage Company, No.
13-cv-3453 (SRN/JJK)
Residential Funding Company, LLC v.
Community West Bank, N.A., No. 13-cv3468 (JRT/JJK)
Residential Funding Company, LLC and
ResCap Liquidating Trust v. Provident
Funding Associates, L.P., No. 13-cv3485 (SRN/TNL)
Residential Funding Company, LLC v.
E*Trade Bank, No. 13-cv-3496
(JNE/HB)
Residential Funding Company, LLC v.
PNC Bank, N.A., No. 13-cv-3498
(JRT/BRT)
Residential Funding Company, LLC v.
Branch Banking & Trust Company, No.
13-cv-3513 (PJS/BRT)

Civ. No. 13-3451 (SRN/JJK/HB)
MEMORANDUM OPINION
AND ORDER

Residential Funding Company, LLC v.
T.J. Financial, Inc., No. 13-cv-3515
(SRN/SER)
Residential Funding Company, LLC v.
Universal American Mortgage Company,
LLC, No. 13-cv-3519 (SRN/JSM)
Residential Funding Company, LLC v.
BMO Harris Bank, N.A. d/b/a M&I
Bank, FSB, No. 13-cv-3523 (JNE/FLN)
Residential Funding Company, LLC v.
Wells Fargo Financial Retail Credit, Inc.,
No. 13-cv-3525 (SRN/JSM)
Residential Funding Company, LLC and
ResCap Liquidating Trust v. Standard
Pacific Mortgage, Inc., No. 13-cv-3526
(JRT/JJK)
Residential Funding Company, LLC v.
iServe Residential Lending, LLC, No.
13-cv-3531 (PJS/TNL)
Residential Funding Company, LLC v.
CTX Mortgage Company, LLC, No. 14cv-1710 (DSD/TNL)
Residential Funding Company, LLC v.
American Mortgage Network, LLC., No.
14-cv-1760 (PJS/TNL)
ResCap Liquidating Trust v. Freedom
Mortgage Corporation, No. 14-cv-5101
(MJD/HB)
Residential Funding Company, LLC v.
Homestead Funding Corp., No. 13-cv3520 (JRT/HB)

2

SUSAN RICHARD NELSON, United States District Judge
Before the Court is the Motion to Strike, or in the alternative, for Judgment on the
Pleadings as to Ten of Defendants’ Affirmative Defenses [Doc. No. 148] filed by
Residential Funding Company, LLC (“RFC”) and ResCap Liquidating Trust (“the
Trust”) (collectively, “Plaintiffs”). This motion was brought against the above-captioned
Defendants (collectively, “Defendants”). 1 For the reasons stated herein, Plaintiffs’
motion is granted in part and denied without prejudice in part.
I.

BACKGROUND
These lawsuits arise out of Defendants’ sale of allegedly defective mortgage loans

to RFC. (First Am. Compl. ¶ 1.) 2 Prior to May 2012, RFC was “in the business of

1

Plaintiffs in Residential Funding Company, LLC v. Homestead Funding Corp., 13-cv3520 (JRT/HB) (“Homestead”), separately moved to strike, or for judgment on the
pleadings [Doc. No. 65], regarding the same affirmative defenses raised by Defendants in
this Consolidated Action. The undersigned judge had previously recused from the
Homestead matter. (See Homestead, Am. Admin. Order of 2/5/15 [Doc. No. 83].) After
Plaintiffs filed the separate motion to strike in Homestead, Defendant Homestead
changed legal counsel, eliminating the prior conflict of interest with the undersigned
judge. (See Homestead, Order of 4/23/15 [Doc. No. 113].) Accordingly, because
Homestead may now be included within the Consolidated Action, the Court considers the
Homestead parties’ briefing in this Order, as the issues raised are identical to those raised
in the instant motion. (Id.)
2

There are individual underlying pleadings in each case to which this motion relates, but
for ease of reference, the Court simply refers to the First Amended Complaint in RFC’s
lawsuit against Academy Mortgage Corporation (Case No. 13-cv-3451 [Doc. No. 39]),
unless otherwise indicated. Case-specific references to the claims and defenses at issue
are found in the appendix attached as Exhibit A to the Declaration of Anthony P. Alden
[Doc. No. 151-1] (the “Citation Appendix”). Although references to Defendant
Homestead are not included in the Citation Appendix (see Footnote 1, above), the
Complaint and First Amended Complaint in Homestead are substantially similar to the
pleadings noted in the Citation Appendix filed in connection with the instant motion.
(Footnote Continued on Following Page)
3

acquiring and securitizing residential mortgage loans.” (Id. ¶ 2.) RFC acquired the loans
from “correspondent lenders,” such as Defendants, who were responsible for collecting
and verifying information from the borrower and underwriting the loans. (Id. ¶¶ 3, 20.)
RFC alleges that its relationship with each Defendant was governed by a Seller
Contract that incorporated the terms and conditions of the RFC Client Guide
(collectively, “the Agreements”). (Id. ¶¶ 17–18 & Exs. A, B; Citation App’x ¶¶ 7-8, Ex.
A to Alden Decl. [Doc. No. 151-1].) Those Agreements, or excerpts thereof, are attached
to the First Amended Complaint as Exhibits A and B, respectively. (See also GMAC
RFC Client Guide, Version 1-06-G01, 3/13/06, Ex. B to Alden Decl. [Doc. No. 151-2].)
Pursuant to the Agreements, Defendants made many representations and warranties
regarding the loans, including: (1) Defendants’ origination and servicing of the loans
were “legal, proper, prudent and customary;” (2) Defendants would “promptly notify”
RFC of any material acts or omissions regarding the loans; (3) all loan-related
information that Defendants provided to RFC was “true, complete and accurate;” (4) all
loan documents were “genuine” and “in recordable form;” (5) all loan documents were in
compliance with local and state laws; (6) there was “no default, breach, violation or event
of acceleration” under any note transferred to RFC; (7) each loan was “originated, closed,
and transferred” in compliance with all applicable laws; (8) none of the loans were “high-

(Footnote Continued from Previous Page)

(Cf. Homestead, 13-cv-3520 (JRT/HB), Comp. [Doc. No. 1]; First Am. Compl. [Doc. No.
28], Ex. A (“Client Contract”) [Doc. No. 28-1]; First Am. Compl. Exs. B-1 to B-15
(“Client Guide”) [ECF 28-2]; Ans. [Doc. No. 59] with Consolidated Action, 13-cv-3451
(SRN/JJK/HB), Citation App’x, Ex. A to Alden Decl. [Doc. No. 151-1]. )

4

cost” or “high-risk;” (9) there were no existing circumstances that could render the loans
an “unacceptable investment,” cause the loans to become “delinquent,” or “adversely
affect” the value of the loans; (10) the loans were underwritten in compliance with the
Client Guide; (11) appropriate appraisals were conducted when necessary; (12) the
market value of the premises was at least equal to the appraised value stated on the loan
appraisals; and (13) there was no fraud or misrepresentation by the borrower or
Defendants regarding the origination or underwriting of the loans. (First Am. Compl. ¶
24.)
RFC alleges it considered these representations and warranties to be material, and
any failure to comply constituted an “Event of Default” under the Agreements (Id. ¶¶ 25–
26.) It retained sole discretion to declare an Event of Default, and the available remedies
include repurchase of the defective loan, substitution of another loan, or indemnification
against liabilities resulting from the breach. (Id. ¶¶ 29–33.) RFC alleges that the
Agreements do not, however, require that RFC provide Defendants with notice or an
opportunity to cure, or demand repurchase within a particular amount of time. (Id.)
In the various operative Complaints, RFC alleges that, pursuant to these
Agreements, it purchased from each Defendant hundreds or, in some cases, thousands of
mortgage loans, with original principal balances ranging from several million dollars to
over $8 billion. See, e.g., Am. Compl. ¶ 4, Residential Funding Co., LLC v. Ark-La-Tex
Fin. Servs., LLC, No. 13-cv-3448 (DWF/TNL) [Doc. No. 29]; Am. Compl. ¶ 4. RFC
then either pooled those loans to sell into residential mortgage-backed securitization
(“RMBS”) trusts or sold them to whole loan purchasers. (First Am. Compl. ¶¶ 3, 36.)
5

RFC alleges, however, that, in many instances, Defendants violated their
representations and warranties. (Id.) According to RFC, many of the loans eventually
defaulted or became delinquent and sustained millions of dollars in losses. (Id. ¶ 39.)
After conducting an internal review, RFC determined that hundreds of loans sold by each
Defendant violated the Agreements and resulted in an Event of Default. (Id. ¶ 41.) The
types of alleged defects included income and employment misrepresentation, owner
occupancy misrepresentation, appraisal misrepresentations or inaccuracies, undisclosed
debt, insufficient credit scores, lien position, and/or missing or inaccurate documents,
among others. (Id. ¶ 42.) By May 2012, RFC had spent millions of dollars repurchasing
defective loans, including loans sold to it by Defendants. (Id. ¶ 61.)
On May 14, 2012, RFC filed for Chapter 11 bankruptcy in the Bankruptcy Court
for the Southern District of New York. (Id. ¶ 62); In re Residential Capital, LLC, No. 1212020 (MG) (Bankr. S.D.N.Y.). According to RFC, hundreds of proofs of claim related
to allegedly defective mortgage loans, including those sold to RFC by Defendants, were
filed in connection with the bankruptcy proceedings. (First Am. Compl. ¶ 63.) The
Bankruptcy Court eventually approved a global settlement that provided for resolution of
the RMBS-related liabilities for more than $10 billion. (Id. ¶ 67.) The Bankruptcy Court
confirmed the Chapter 11 Plan on December 11, 2013, and the Plan became effective on
December 17, 2013. (Id.); Findings of Fact at 1, In re Residential Capital, LLC, No. 1212020 (MG) (Bankr. S.D.N.Y. Dec. 11, 2013) [Doc. No. 6066]. Under the Plan, the
Trust succeeded to RFC’s rights and interests, including its claims against Defendants.
(First Am. Compl. ¶ 67.)
6

Accordingly, RFC and the Trust filed these lawsuits, asserting two causes of
action against each Defendant. In Count One, a claim for breach of contract, based on
alleged breaches of representations and warranties, RFC alleges that, although it
“complied with all conditions precedent, if any, and all of its obligations under the
Agreement[s]” (id. ¶ 72), Defendants materially breached the representations and
warranties they made to RFC because the mortgage loans they sold to RFC did not
comply with those representations and warranties (id. ¶¶ 71, 73). RFC asserts these
material breaches constitute Events of Default under the Agreements and have resulted in
losses and liabilities related to the defective loans, as well as losses associated with
defending the lawsuits and proofs of claim that stem from those loans. (Id. ¶¶ 74–75.) In
Count Two, RFC alleges it is entitled to indemnification from Defendants for those losses
and liabilities. (Id. ¶¶ 77–80.)
This motion challenges ten of the affirmative defenses asserted in the Answers
filed by Defendants. 3 Plaintiffs seek to strike or, alternatively, dismiss the following
affirmative defenses: (1) reliance- and knowledge-based defenses that RFC either knew
of Defendants’ breaches of representations or warranties at the time of entering into the
parties’ contracts or did not rely on Defendants’ representations or warranties; (2)
equitable defenses of unclean hands, laches, and in pari delicto; and (3) defenses based
on the satisfaction of conditions precedent prior to imposing upon Defendants liability for
breach of contract or indemnification. (Pls.’ Mem. Supp. Mot. to Strike at 2-3 [Doc. No.
3

As noted, citations to the case-specific underlying Answers are set forth in the Citation
Appendix, Exhibit A to Alden Declaration §§ 7-21 [Doc. No. 151-1].

7

150].)
Defendants assert that Plaintiffs’ motion should be denied for three reasons. First,
Defendants contend that the motion improperly relies on misleading excerpts from the
Client Guide and information from outside the pleadings. (Defs.’ Opp’n Mem. at 1 [Doc.
No. 253].) Furthermore, they assert that the motion improperly discounts the allegations
in Defendants’ Answers and misconstrues the parties’ multiple agreements (which, for
some Defendants, include multiple versions of the Client Guide as well as commitment
letters and certificates). (Id.) Second, Defendants argue that Plaintiffs are required to
show that they would be prejudiced if Defendants were permitted to develop the ten
affirmative defenses in dispute. (Id. at 2) (citing Connell v. City of New York, 230 F.
Supp. 2d 432, 438 (S.D.N.Y. 2002)). Third, Defendants contend that all of the
affirmative defenses raise questions of fact or law that are not properly stricken at this
stage in the proceedings. (Id.)
II.

DISCUSSION
A.

Standard of Review

Federal Rule of Civil Procedure 12(f) permits the Court to “strike from a pleading
an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.”
As this Court has noted, a motion to strike a defense should be denied if the defense “is
sufficient as a matter of law or if it fairly presents a question of law or fact which the
court ought to hear.” U.S. Bank Nat’l Ass’n v. Educ. Loans Inc., No. 11-cv-1445
(RHK/JJG), 2011 WL 5520437, at *5 (D. Minn. Nov. 14, 2011) (denying motion to strike
an estoppel defense to a breach of contract claim). Because Rule 12(f) relief is
8

considered an “extreme measure,” motions under Rule 12(f) are infrequently granted.
E.E.O.C. v. Product Fabricators, Inc., 873 F. Supp. 2d 1093, 1097 (D. Minn. 2012)
(citing Stanbury Law Firm, P.A. v. Internal Revenue Serv., 221 F.3d 1059, 1063 (8th Cir.
2000); Daigle v. Ford Motor Co., 713 F. Supp. 2d 822, 830 (D. Minn. 2010)). Under the
permissive language of the rule, however, the Court has “liberal discretion” to strike,
Stanbury, 221 F.3d at 1063, and a motion to strike should be granted “if the result is to
make a trial less complicated or otherwise streamline the ultimate resolution of the
action.” Daigle, 713 F. Supp.2d at 830. While the non-movant’s well-pleaded facts are
admitted as true on a motion to strike, the district judge need not similarly admit
conclusions of law, Barnidge v. United States, 101 F.2d 295, 297 (8th Cir. 1939), or
conclusions drawn from the facts. 5C Charles A. Wright & Arthur R. Miller, Federal
Practice and Procedure § 1380 at 403-04 (3d ed. 2004). Matters outside the pleadings
are generally not considered. Id. at 404.
As an alternative to moving to strike under Rule 12(f), Plaintiffs move for partial
judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c). Rule 12(c) provides that a
party may move for judgment on the pleadings after the pleadings are closed, but early
enough not to delay trial, where “no material issue of fact remains to be resolved and the
movant is entitled to judgment as a matter of law.” Faibisch v. Univ. of Minn., 304 F.3d
797, 803 (8th Cir. 2002). Courts therefore apply to Rule 12(c) motions the same standard
of review applicable to Rule 12(b)(6) motions to dismiss. Ginsburg v. InBev NV/SA,
623 F.3d 1229, 1233, n.3 (8th Cir. 2010). The court accepts as true all facts pleaded by
the non-moving party and grants all reasonable inferences from the pleadings in the non9

moving party’s favor. Faibisch, 304 F.3d at 803 (citing United States v. Any & All Radio
Station Transmission Equip., 207 F.3d 458, 462 (8th Cir. 2000)). As with a Rule 12(f)
motion, “[w]hen considering a motion for judgment on the pleadings (or a motion to
dismiss under Fed. R. Civ. P. 12(b)(6)), the court generally must ignore materials outside
the pleadings, but it may consider ‘some materials that are part of the public record or do
not contradict the complaint,’ as well as materials that are ‘necessarily embraced by the
pleadings.’” Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999)
(quoting Missouri ex rel. Nixon v. Coeur D’Alene Tribe, 164 F.3d 1102, 1107 (8th Cir.);
Piper Jaffray Cos. v. National Union Fire Ins. Co., 967 F. Supp. 1148, 1152 (D. Minn.
1997)). See also 5B Wright & Miller, supra, §1357 at 376 (court may consider “matters
incorporated by reference or integral to the claim, items subject to judicial notice, matters
of public record, orders, items appearing in the record of the case, and exhibits attached
to the complaint whose authenticity is unquestioned”).
Defendants argue that Plaintiffs cannot prevail under the demanding standard
required to strike an affirmative defense under Rule 12(f). (Defs.’ Opp’n Mem. at 5
[Doc. 253].) In addition, they contend that Plaintiffs have failed to establish the likely
existence of prejudice, which, Defendants argue, is required before affirmative defenses
may be stricken under Rule 12(f). (Id.) (citing Collette v. Zenith Dredge Co., 11 F.R.D.
594, 595 (D. Minn. 1951); Scribner v. McMillan, No. 06-cv-4460 (DWF/RLE), 2007 WL
685048, at *5 (D. Minn. Mar. 2, 2007)). Finally, Defendants argue that under either Rule
12(c) or 12(f), Plaintiffs improperly rely on material outside the pleadings.
The Court finds Plaintiffs’ motion appropriate under Rule 12(f). Since the 1948
10

amendment of Rule 12(f), that provision has served as an acceptable remedy to “dispose
of a wholly insufficient defense at the pleading stage” and a plaintiff need not instead
move to dismiss an answer under Rule 12(c). 5C Wright & Miller, supra, §1381 at 40809; see also Aaron v. Martin, No. 4:11CV1661 FRB, 2013 WL 466242, at *2 (E.D. Mo.
Feb. 7, 2013) (noting that the federal rules “provide two ways for a party to challenge the
sufficiency of an affirmative defense: a motion for judgment on the pleadings under Rule
12(c), or a motion to strike under Rule 12(f)”). Rule 12(f) is the “primary procedure for
objecting to an insufficient defense.” 5C Wright & Miller, supra, § 1380 at 390. As to
whether a plaintiff moving to strike an affirmative defense must demonstrate prejudice,
courts have found that where a challenged defense fails as a matter of law or is
immaterial to the matter, the resources and time expended to counter such a defense
constitute per se prejudice. See Panzella v. Cnty. of Nassau, No. 13-CV-5640 (SFJ)
(SIL), 2015 WL 224967, at *2 (E.D.N.Y. Jan. 15, 2015) (requiring the plaintiff to defend
against immaterial defenses would be prejudicial to the plaintiff); Specialty Minerals, Inc.
v. Pluess-Staufer AG, 395 F. Supp. 2d 109, 114 (S.D.N.Y. 2005) (striking unclean hands
defense and finding that the increased time and expense to try the issue would constitute
prejudice to the plaintiff). The Court finds that similar prejudice exists here. Therefore,
finding that Rule 12(f) is a procedurally proper means of disposing of affirmative
defenses, the Court does not address Plaintiffs’ alternative basis for the motion under
Rule 12(c).
As to the documents that the Court may properly consider on a Rule 12 motion,
the materials in question are a particular complete version of the Client Guide (Ex. B to
11

Alden Decl. [Doc. No. 151-2]), and excerpts from the Client Guides (Exs. B-A200 to
Alden Decl. [Doc. No. 151-3 to 151-34]), as well as the Citation Appendix, which
identifies the specific provisions at issue in the underlying complaints and answers.
(Citation App’x, Ex. A to Alden Decl. [Doc. No. 151-1].) As documented in the Citation
Appendix, “Client Guides” were attached to the underlying complaints. (See id. ¶ 2.) In
general, courts may consider a contract on a Rule 12 motion because contracts on which a
claim is based are embraced by the pleadings. Gorog v. Best Buy Co., 760 F.3d 787, 791
(8th Cir. 2014); see also Stahl v. United States Dep’t of Agric., 327 F.3d 697, 700 (8th
Cir. 2003) (stating that in a Rule 12 motion in a case involving a contract, the court could
consider the contract documents). Defendants, however, argue that many of the Client
Guide versions cited in the Citation Appendix were not attached to the operative
complaints. (Defs.’ Opp’n Mem. at 12-13 [Doc. No. 253].) Where reference to the
Client Guides may be necessary to resolve a particular ground on which the instant
motion is based, the Court addresses this below in its legal analyses. To the extent that
Defendants challenge the Court’s consideration of the Citation Appendix, it is properly
before the Court. The Citation Appendix merely provides citations to specific paragraphs
in the pleadings themselves and does not contradict the pleadings.
Finally, for purposes of the instant motion, based on the choice-of-law provisions
in the parties’ Agreements, it appears that Minnesota and New York law apply. (Citation
App’x ¶ 15, Ex. A to Alden Decl. [Doc. No. 151-1]) (citing applicable choice-of-law
provisions).

12

B.

Reliance- and Knowledge-Based Defenses

As noted, Plaintiffs seek to strike six defenses that essentially assert that (1) RFC
did not rely on Defendants’ representations or warranties, or (2) RFC knew of
Defendants’ breaches of representations and warranties when it entered into the parties’
contracts. (Pls.’ Mem. Supp. Mot. to Strike at 2-3 [Doc. No. 150].) Specifically,
Plaintiffs identify the following assertions of Defendants that Plaintiffs’ claims are
barred, in whole or in part, by the following reliance- and knowledge-based defenses: (1)
“the doctrine of assumption of the risk” (Citation App’x ¶ 8, Ex. A to Alden Decl. [Doc.
No. 151-1]); (2) “because [RFC] would have purchased the loans . . . even if it knew the
alleged deficiencies in the loan documents, and any alleged deficiencies were not
material.” (id. ¶ 9); (3) “because [RFC] did not rely on the representations and warranties
on which Plaintiff[s] [are] suing, and to the extent [RFC] did rely on such representations
and warranties, [RFC]’s reliance was not reasonable or justified.” (id. ¶ 10); (4) by “the
doctrine of estoppel” (id. ¶ 11); (5) by “the doctrines of consent, acquiescence, and/or
ratification” (id. ¶ 12); and (6) “because [RFC] failed to perform adequate due diligence
regarding the underlying mortgage loan sales” (id. ¶ 13).
Article A200 of the Client Guide states that “the Client is fully liable for any
misrepresentation or breach of warranty regardless of whether it or GMAC-RFC actually
had, or reasonably could have been expected to obtain, knowledge of the facts giving rise
to such misrepresentation or breach of warranty.” (Ex. B to Alden Decl. [Doc. No. 131-2
at 37].) Also in Article A200, Defendants “acknowledge[d] that GMAC-RFC
purchase[d] Loans in reliance upon the accuracy and truth of the Client’s warranties and
13

representations and upon the Client’s compliance with the agreements, requirements,
terms and conditions set forth in the Client Contract and this Client Guide.” (Id.)
In opposition to Plaintiffs’ motion, Defendants argue that their defenses based on
knowledge and reliance properly apply to Plaintiffs’ indemnification claim, pointing to
other language in the Client Guide that supports their defenses. (Defs.’ Opp’n Mem. at 17
[Doc. No. 253].) Specifically, Defendants note that language in the Client Guide states
that Defendants would indemnify Plaintiffs “ʻfor any losses from any claim, demand,
defense or assertion against or involving [RFC] based on or grounded upon, or resulting
from such misstatement or omission or a breach of any representation, warranty or
obligation made by [RFC] in reliance upon such misstatement or omission.’” (Id.) (citing
PNC First Am. Compl. ¶ 33) (quoting Client Guide A202(II)). In addition, Defendants
contend that Plaintiffs improperly group together the distinct defenses of ratification,
acquiescence, and consent among the reliance- and knowledge-based defenses that they
move to strike. (Id.) Furthermore, Defendants contend that they are entitled to plead
reliance- and knowledge-based defenses against Plaintiffs’ breach of warranty claim. (Id.
at 19.)
The Court finds that questions of fact preclude relief under Rule 12(f) for certain
reliance- and knowledge-based defenses. 4 Defendants assert that many Client Guide

4 Specifically, the Court denies without prejudice Plaintiffs’ motion with respect to the
following reliance- and knowledge-based defenses: (1) “because [RFC] would have
purchased the loans . . . even if it knew the alleged deficiencies in the loan documents,
and any alleged deficiencies were not material” (Citation App’x ¶ 9, Ex. A to Alden Decl.
[Doc. No. 151-1]); (2) “because [RFC] did not rely on the representations and warranties
(Footnote Continued on Following Page)
14

versions cited in Plaintiff’s Citation Appendix were not attached to the operative
complaints and that newly produced versions of the Client Guide supplement the excerpts
attached to the Complaint. (Defs.’ Opp’n Mem. at 12-13 [Doc. No. 253].) Moreover,
Plaintiffs acknowledge that at least one Defendant has not received all versions of the
Client Guide. (Pls.’ Mem. Supp. Mot. to Strike at 7, n.3 [Doc. No.150].) In addition,
Defendants assert that “Plaintiffs also fail to address that the terms of the Client Guide
are altered and superseded by any conflicting terms in the parties’ seller contracts and/or
commitment letters, which are ignored in both Plaintiffs’ complaints and their motion.”
(Defs.’ Opp’n Mem. at 13 [Doc. No. 253].) Finally, with respect to estoppel, Defendants
note that the Court will be required to examine RFC’s conduct. (Id. at 25) (citing MultiTech Sys., Inc. v. Floreat, Inc., No. 01-cv-1320 (DDA/FLN), 2002 WL 432016, at *4 (D.
Minn. Mar. 18, 2002)) (stating that equitable estoppel is a defense to a contract when the
defendant “has altered his position for the worse in good faith reliance upon the conduct
of the party seeking to enforce the contract.”) Given the limited development of the
record at this point, the Court is unable to rule that no genuine issues of fact remain in
dispute as to defenses based on knowledge and reliance. Accordingly, the Court denies
without prejudice Plaintiffs’ motion to strike these particular affirmative defenses.

(Footnote Continued from Previous Page)

on which Plaintiff[s] [are] suing, and to the extent [RFC] did rely on such representations
and warranties, [RFC]’s reliance was not reasonable or justified” (id. ¶ 10); (3) estoppel
(id. ¶ 11); and (4) “because [RFC] failed to perform adequate due diligence regarding the
underlying mortgage loan sales” (id. ¶ 13). The Court separately addresses the defenses
of assumption of the risk, and consent, acquiescence, and/or ratification.

15

C.

Assumption of the Risk

In addition to arguing that assumption of the risk should be stricken as a
knowledge- and reliance-based defense, Plaintiffs also argue that it should be stricken for
the independent reason that it applies only to claims sounding in tort, not in contract.
(Pls.’ Mem. Supp. Mot. to Strike at 12 [Doc. No. 150].)
As Plaintiffs correctly note, assumption of the risk is a defense to a tort claim and
is not applicable to breach of contract or indemnification claims. See Leawood
Bancshares Inc. v. Alesco Preferred Fundings X, Ltd., No. 10 Civ. 5637 (JSR), 2011 WL
1842295, at *4 (S.D.N.Y. May 9, 2011) (stating that, as a matter of law, assumption of
the risk is not a proper defense to a breach of contract action); Goblirsch v. Western Land
Roller Co., 246 N.W.2d 687, 691 (Minn. 1976) (referring to the “tort defense of
assumption of risk”); Hagberg v. Colonial & Pac. Frigidways, Inc., 157 N.W.2d 33, 37
(Minn. 1968) (finding that defenses such as contributory negligence and assumption of
risk were not available where the action was not an action for common-law negligence).
While Defendants cite Powers v. Siats, 70 N.W.2d 344, 349-50 (Minn. 1955), arguing
that assumption of the risk may arise by contract or by conduct of the promisor, Powers
did not involve an “assumption of the risk” defense. Instead, the court found that the
defendant could not assert an “impossibility of performance” defense because the
defendant learned of the impossibility in time to rectify the situation but failed to do so.
Id. at 349. Moreover, as Plaintiffs note, the court in Powers relied on Corbin on
Contracts, which states that the assumption of risk defense “is not so popular in the law
of torts that it should be imported into the field of contract.” 4-14 Corbin on Contracts §
16

14.3 (2014). The Court agrees with Plaintiffs that “[c]ontracting parties may ‘assume’
risks by allocating them, but that is a question of contract interpretation, not an
‘assumption of risk’ defense.” (Pls.’ Mem. Supp. Mot. to Strike at 14 [Doc. No. 334])
(citing 27 Williston on Contracts § 70:80). Moreover, the Court notes that three
Defendants in this consolidated action, and a fourth in a similar but unconsolidated action
in this District, have stipulated to dismiss their assumption of risk defense for this reason.
See Residential Funding Co. v. Standard Pac. Mortg., Inc., No. 13-cv-3526 (D. Minn.
Dec. 15, 2014), Stipulation of Dismissal [Doc. No. 125]; Residential Funding Co. v. T.J.
Fin., Inc., No. 13-cv-3515 (D. Minn. Dec. 15, 2014) , Stipulation of Dismissal [Doc. No.
99]; Residential Funding Co. v. Univ. Am. Mortg. Co., 13-cv-3519 (D. Minn. Dec. 15,
2014), Stipulation of Dismissal [Doc. No. 111]; Residential Funding Co. v. Homestead
Funding Corp., No. 13-cv-3520 (D. Minn. Feb. 11, 2015), Stipulation of Dismissal [Doc.
No. 85].
For all of these reasons, the Court grants Plaintiffs’ motion to strike the
assumption of the risk defense because it is inapplicable in a breach of contract action.
D.

Conditions Precedent

Plaintiffs move to strike any defense based on the failure to comply with any
conditions precedent, arguing that none of the contracts at issue include conditions
precedent. Moreover, Plaintiffs contend that Defendants fail to state any conditions
precedent with the particularity required by Fed. R. Civ. P. 9(c). (Pls.’ Mem. Supp. Mot.
to Strike at 17-18 [Doc. No. 150].) In response, Defendants argue that the terms and
elements of the parties’ agreements are in dispute. (Defs.’ Opp’n Mem. at 33-35 [Doc.
17

No. 253].) They also assert that they have satisfied the particularity requirement in their
pleading. (Id.)
As an initial matter, Defendants contend that Plaintiffs waived any challenge to
the conditions precedent defense because Plaintiffs did not include this challenge in preconsolidation briefing. (Id. at 34, n. 24.) The Court disagrees. This Court itself has the
authority to strike material from the pleadings sua sponte pursuant to Fed. R. Civ. P.
12(c), and will consider Plaintiffs’ motion as to this defense.
Here, as noted, there is a factual dispute about the terms and contracts that govern
the parties’ relationships. In support of Defendants’ argument that this defense should
not be stricken, they contend that “the specific terms and contracts governing the loan
sales at issue here are in dispute and cannot be determined at this point in the proceedings
without a properly developed record.” (Defs.’ Opp’n Mem. at 34 [Doc. No. 253].)
However, under New York and Minnesota law, a conditions precedent defense requires
the contract in question to clearly and unambiguously provide for this defense.
Toyomenka Pacific Petroleum, Inc. v. Hess Oil Virgin Islands Corp., 771 F. Supp. 63, 67
(S.D.N.Y. 1991) (“Under New York law, a contractual duty will not be construed as a
condition precedent absent clear language showing that the parties intended to make it a
condition.”); Schneider v. U.S.G. Interiors, Inc., No. C5-98-1650, 1999 WL 171499, at
*3 (Minn. Ct. App. Mar. 30, 1999) (“A condition precedent to performance of an
obligation will not be inferred absent unequivocal contract language.”) In addition, under
Fed. R. Civ. P. 9(c), a party denying that a condition precedent has occurred or been
performed, must plead this defense with particularity. Because, as Defendants
18

themselves contend, the contracts and terms are in dispute, a conditions precedent
defense – which requires both specific reference to contractual language and particularity
in pleading – fails at this time. Accordingly, the Court grants Plaintiffs’ motion to strike
this defense. Defendants may re-plead a conditions precedent defense, however, should
the particular agreements in question contain such language and assuming that the
pleading of the defense satisfies the particularity requirements of Rule 9(c).
E.

Equitable Defenses

Plaintiffs move to strike the affirmative defenses of unclean hands, laches, and in
pari delicto, arguing that they are inapplicable to Plaintiffs’ claims as a matter of law
because Plaintiffs’ claims are legal, contractual claims. (Pls.’ Mem. Supp. Mot. to Strike
at 13-17 [Doc. No. 150].) Defendants contend, however, that these defenses are
applicable to Plaintiffs’ claims for three reasons: (1) Plaintiffs seek the remedy of
declaratory judgment in their prayer for relief; (2) Plaintiffs may seek the equitable
remedy of specific performance; and (3) Plaintiffs may seek to amend the complaints to
include equitable claims or remedies. (Defs.’ Opp’n Mem. at 28-29 [Doc. No. 253].)
The Court addresses these general arguments first, then discusses the particular equitable
defenses separately.
The fact that Plaintiffs seek declaratory relief among their remedies is not, on its
own, determinative of whether their claims sound in law or equity. While “declaratory
relief per se is neither equitable nor legal,” see Northgate Homes, Inc. v. City of Dayton,
126 F.3d 1095, 1099 (8th Cir. 1997), “[r]equesting monetary relief to compensate the
injured party for a breach of contract and to restore the injured party to the place that it
19

would have been but for the breach is quintessential legal relief.” Rexam Inc. v. United
Steelworkers of America, No. 03-cv-2998 (ADM/AJB), 2005 WL 2128939, at *3 (D.
Minn. Aug. 10, 2005) (citing Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S.
204, 213-15; White v. Martin, No. 99-1447, 2002 U.S. Dist. LEXIS 6899, at *11 (D.
Minn. April 12, 2002)); see also N.Y. Dist. Council of Carpenters Pension Fund v.
Savasta, No. 99-cv-11362, 2005 WL 22872, at *3 (S.D.N.Y. Jan. 4, 2005) (stating that a
claim for money damages “arising from a contractual obligation is ‘quintessentially an
action at law’”); Moore v. Medtronic, Inc., No. 99-cv-2066 (ADM/AJB), 2001 WL
1636248, at *3 (D. Minn. July 30, 2001) (granting summary judgment on defendant’s
laches defense because “Moore’s sole cause of action is breach of contract, a legal
remedy. . .”); United Prairie Bank-Mountain Lake v. Haugen Nutrition & Equip., LLC,
813 N.W.2d 49, 57 (Minn. 2012) (“[W]e conclude that a claim for a monetary payment
under a contractual indemnity provision is a legal claim . . .”); Hudson View II Assocs. v.
Gooden, 644 N.Y.S.2d 512, 516 (App. Div. 1996) (“A cause of action seeking money
damages for breach of contract is quintessentially an action at law.”) Here, the fact that
declaratory relief is among Plaintiffs’ requested remedies does not determine whether
Plaintiffs’ claims sound in equity or law. In fact, when the specific relief is examined,
Plaintiffs’ request for monetary damages in compensation for the alleged contractual
breaches is a request for legal relief.
Defendants also contend that their equitable defenses should not be stricken
because Plaintiffs may, at some unspecified time, seek specific performance or otherwise
seek to amend their claims to assert equitable relief. (Defs.’ Opp’n Mem. at 28-29 [Doc.
20

No. 253]) (emphasis added). These arguments, however, are speculative. At this point in
the litigation, the Court’s focus is not on hypothetical possibilities, but on the Complaints
as currently pleaded, in which Plaintiffs do not seek equitable remedies. Moreover, to the
extent that Plaintiffs seek to amend the pleadings to assert equitable remedies,
Defendants may similarly seek leave to amend their answers. Based on the current
pleadings, however, Defendants’ arguments are unavailing.
1.

Unclean Hands

The equitable maxim that “he who comes into equity must come with clean
hands” is “a self-imposed ordinance that closes the doors of a court of equity to one
tainted with inequitableness or bad faith relative to the matter in which he seeks relief,
however improper may have been the behavior of the defendant.” Precision Instrument
Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806, 814 (1945). Thus,
under both New York and Minnesota law, a defense of unclean hands applies to claims
that arise in equity and are not legal in nature. See Uto v. Job Site Servs. Inc., 269 F.R.D.
209, 213 (E.D.N.Y. 2010) (“[I]t is black-letter law that ‘[u]nclean hands is an equitable
defense’ … [and] ‘can only be asserted with respect to equitable—not legal—claims.’”);
Progressive Techs., Inc. v. Shupe, No. A04-1110, 2005 WL 832059, at *4 (Minn. Ct.
App. Apr. 12, 2005) (stating that unclean hands is an equitable defense and not a defense
to a contractual claim) (citing Fred O. Watson Co. v. U.S. Life Ins. Co., 258 N.W.2d 776,
778 (Minn. 1977)); Bieter Co. v. Blomquist, 848 F. Supp. 1446, 1450-51 (D. Minn. 1994)
(finding that “unclean hands “is not a valid defense to a claim for damages in
Minnesota”). Courts have recognized an exception to this rule, stating, “This rule applies
21

to equitable actions unless it can be shown that the delay would result in substantial
injury to innocent parties.” In re WCAL Charitable Trust, No. A09-703, 2009 WL
5092650, at *5 (Minn. Ct. App. Dec. 29, 2009) (citing Aronovitch v. Levy, 56 N.W.2d
570, 574 (1953)) (emphasis in original).
Here, however, this action does not arise in equity or invoke an equitable remedy,
nor is there “substantial injury to innocent parties.” Accordingly, as a matter of law,
there is no legal basis for the assertion of an unclean hands defense. To the extent that
Plaintiffs’ motion seeks to strike this defense, it is granted.
2.

Laches

Plaintiffs argue that they should not be required to litigate a laches defenses in
tandem with a statute of limitations defense. 5 (Pls.’ Mem. in Supp. Mot. to Strike at 1415 [Doc. No. 150].) The doctrine of laches is defined as “[t]he equitable doctrine by
which a court denies relief to a claimant who has unreasonably delayed in asserting the
claim, when that delay has prejudiced the party against whom relief is sought.” Black’s
Law Dictionary (9th ed. 2009); accord Martin v. Dicklich, 823 N.W.2d 336, 340 (Minn.
2012) (citations omitted). Laches applies to equitable claims, but not to purely legal
claims. See Medinol Ltd. v. Boston Scientific Corp., 346 F. Supp. 2d 575, 609 (S.D.N.Y.
2004); Bongard v. Bongard, 380 N.W.2d 592, 595 (Minn. Ct. App. 1986) (noting that

5

Currently under advisement with the Court is a motion filed by Defendant Decision
One Mortgage Company, LLC, and joined by certain other Defendants, in which they
seek the dismissal of portions of Plaintiffs’ breach of contract claim based on, among
other things, expiration of the statute of limitations. (See Decision One Mem. Supp. Mot.
to Dismiss at 29-36 [Doc. No. 217].)

22

laches is inapplicable where legal rights alone are in dispute) (citations omitted). As the
Supreme Court has explained, laches was developed by courts of equity and “its principal
application was, and remains, to claims of an equitable cast for which the Legislature has
provided no fixed time limitation.” Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct.
1962, 1973 (2014). Thus, where an applicable statute of limitations applies, “laches
cannot be invoked to bar legal relief . . . .” Id. at 1974; see also Advanced Cardiovascular
Systems, Inc. v. Scimed Life Sys., Inc., 988 F.2d 1157, 1161 (Fed. Cir. 1993) (“When a
limitation on the period for bringing suit has been set by statute, laches will generally not
be invoked to shorten the statutory period.”)
Again, Plaintiffs assert legal claims for breach of contract and indemnification, to
which statutes of limitation apply. Accordingly, as a matter of law, a defense of laches is
inapplicable to this action, which involves purely legal claims. Plaintiffs’ motion to
strike Defendants’ laches defense is therefore granted.
3.

In Pari Delicto

Plaintiffs contend that the defense of in pari delicto – or “equal fault” – is
inapplicable because it only applies in breach of contract actions involving an illegal
contract or where the performance of the contract contemplates illegal conduct. (Pls.’
Mem. Supp. Mot. to Strike at 16 [Doc. No. 150].) Defendants argue, however, argue that
there is no such requirement. (Defs.’ Opp’n Mem. at 30-31 [Doc. No. 253].)
Furthermore, they contend that this is a fact-intensive defense, inappropriate for
resolution on a motion to dismiss. (See id.)
Under Minnesota law, courts have applied the defense of in pari delicto in three
23

circumstances:
(1) preventing enforcement of a contract the performance of which is
illegal; (2) preventing enforcement of an equitable remedy when the parties
have been involved in mutually unlawful activity; or (3) use as a defense in
a tort claim of one party against another.
Brubaker v. Hi-Banks Resort Corp., 415 N.W.2d 680, 684 (Minn. Ct. App. 1987).
Notably, the court in Brubaker stated, “We find no cases where the doctrine was used to
defeat the performance of a contract which was in itself not illegal.” See also Katun
Corp. v. Clarke, 484 F.3d 972, 978 (8th Cir. 2007) (noting that “Minnesota courts will
not apply the doctrine ‘to defeat the performance of a contract which was in itself not
illegal’ either on its face or in its enforcement.”) New York law similarly applies in pari
delicto to illegal conduct. See ImagePoint, Inc. v. JPMorgan Chase Bank, Nat. Ass’n, 27
F. Supp. 3d 494, 515 (S.D.N.Y. 2014) (stating that “parties to a fraudulent or illegal
transaction who are in pari delicto may not invoke judicial aid to undo the consequences
of their illegal acts.”) (citation omitted).
Defendants do not assert that the contracts were illegal, nor do Plaintiffs seek the
enforcement of an equitable remedy or assert a tort claim. See Brubaker, 415 N.W.2d at
684. While Defendants cite Minnesota legal authority for the proposition that an illegal
contract is not required under Minnesota law for application of the in pari delicto defense
(Defs.’ Opp’n Mem. at 30-31 [Doc. No. 253]), the Court finds Defendants’ authority
inapposite. For example, Deephaven Capital Mgmt., LLC v. Schnell, No. 06-cv-844
(JRT/FLN), 2007 WL 101821, at * 3-4 (D. Minn. Jan. 8, 2007), which Defendants cite
for the proposition that Plaintiffs cannot “seek indemnity for their own fraud” (Defs.’

24

Opp’n Mem. at 30-31 [Doc. No. 253]), does not even refer to in pari delicto. Rather, in
Deephaven, the court rejected an implied indemnity claim for federal securities
violations, 2007 WL 101821, at *3-4, while Plaintiffs here assert a claim for indemnity
based on express contract terms. Another of Defendants’ authorities, In re Hansel, Nos.
02–93495 & 08–3177, 2012 WL 3113849 (Bankr. D. Minn. June 15, 2012), is similarly
inapplicable. In re Hansel involved a legal malpractice claim in a bankruptcy adversary
proceeding where both the debtor and the attorney acted fraudulently. Id. at *1. Not
surprisingly, the court in In re Hansel relied on authorities recognizing the application of
in pari delicto as a tort defense. Id. at * 9-12. Similarly, State v. AAMCO Automatic
Transmissions, Inc., 199 N.W.2d 444, 445-46 (Minn. 1972), concerned the cross-claim
and counterclaim of two co-defendants who were jointly sued for the same deceptive
advertising and sales practices. There, the Minnesota Supreme Court applied in pari
delicto to actions for tortious fraud or other intentional wrongdoing. Id. Finally, the
Court also finds Christians v. Grant Thornton LLP, 733 N.W.2d 803, 814 (Minn. Ct.
App. 2007), inapplicable. Christians was a case brought by a debtor’s trustee against the
debtor’s auditor for malpractice and breach of contract based on the auditor’s
overestimation of the debtor’s equity. Id. at 806-07. The auditor overestimated the
debtor’s equity because the debtor had withheld information from the auditor. Id.
The Court acknowledges that, in many circumstances, factual disputes concerning
the mutual fault of the parties might render Rule 12(b)(6) dismissal of in pari delicto
inappropriate. See Stephenson v. Deutsche Bank AG, 282 F. Supp. 2d 1032, 1066 (D.
Minn. 2002); Index Fund, Inc. v. Hagopian, 107 F.R.D. 95, 101 (S.D.N.Y. 1985). Here,
25

however, nothing about the nature of the parties’ agreements is alleged to have been
illegal, nor have Plaintiffs asserted tort claims against Defendants. Accordingly, because
the Court finds in pari delicto is inapplicable as matter of law, Plaintiffs’ motion to strike
this defense is granted.
THEREFORE, IT IS HEREBY ORDERED THAT:
1.

Plaintiffs’ Motions to Strike, or in the Alternative, for Judgment on the

Pleadings as to Ten of Defendants’ Affirmative Defenses (Consolidated Action, 13-cv3451 (SRN/JJK/HB) [Doc. No. 148] & Residential Funding Co., LLC v. Homestead
Funding Corp., No. 13-cv-3520 (JRT/HB) [Doc. No. 65]) are GRANTED IN PART and
DENIED IN PART WITHOUT PREJUDICE, as set forth herein.
2.

With respect to Residential Funding Company, LLC and ResCap

Liquidating Trust v. Ark La-Tex Financial Services, LLC, No. 13-cv-3448 (DWF/TNL):
a.

Defendant Ark La-Tex Financial Services, LLC’s affirmative defense
of assumption of risk (contained in Defendant’s Eleventh Affirmative
Defense, ECF No. 67) is STRICKEN/DISMISSED WITH
PREJUDICE;

b.

Defendant Ark La-Tex Financial Services, LLC’s affirmative defense
of unclean hands (contained in Defendant’s Ninth Affirmative
Defense, ECF No. 67) is STRICKEN/DISMISSED WITH
PREJUDICE;

26

c.

Defendant Ark La-Tex Financial Services, LLC’s affirmative defense
of laches (contained in Defendant’s Ninth Affirmative Defense, ECF
No. 67) is STRICKEN/DISMISSED WITH PREJUDICE; and

d.

Defendant Ark La-Tex Financial Services, LLC’s affirmative defense
that Plaintiffs’ causes of action are barred by failure to satisfy a
condition precedent (contained in Defendant’s Twelfth Affirmative
Defense, ECF No. 67) is STRICKEN WITHOUT
PREJUDICE/DISMISSED WITHOUT PREJUDICE.

3.

With respect to Residential Funding Company, LLC v. Academy Mortgage

Corporation, No. 13-cv-3451 (SRN/BRT):
a.

Defendant Academy Mortgage Corporation’s affirmative defense of
laches (contained in Defendant’s Third Affirmative Defense, ECF
No. 78) is STRICKEN/DISMISSED WITH PREJUDICE; and

b.

Defendant Academy Mortgage Corporation’s affirmative defenses of
assumption of risk, unclean hands, and in pari delicto (contained in
Defendant’s Ninth Affirmative Defense, ECF No. 78) are
STRICKEN/DISMISSED WITH PREJUDICE.

4.

With respect to Residential Funding Company, LLC v. First California

Mortgage Company, No. 13-cv-3453 (SRN/JJK):
a.

Defendant First California Mortgage Company’s affirmative defense
of laches (contained in Defendant’s Second Affirmative Defense,

27

ECF No. 83) is STRICKEN/DISMISSED WITH PREJUDICE;
and
b.

Defendant First California Mortgage Company’s affirmative defense
of unclean hands (contained in Defendant’s Tenth Affirmative
Defense, ECF No. 83) is STRICKEN/DISMISSED WITH
PREJUDICE.

5.

With respect to Residential Funding Company, LLC and ResCap

Liquidating Trust v. Community West Bank, N.A., No. 13-cv-3468 (JRT/JJK):
a.

Defendant Community West Bank N.A.’s affirmative defense of
unclean hands (contained in Defendant’s Twelfth Affirmative
Defense, ECF No. 61) is STRICKEN/DISMISSED WITH
PREJUDICE; and

b.

Defendant Community West Bank N.A.’s affirmative defense of
assumption of risk (contained in Defendant’s Twentieth Affirmative
Defense, ECF No. 61) is STRICKEN/DISMISSED WITH
PREJUDICE.

6.

With respect to Residential Funding Company, LLC and ResCap

Liquidating Trust v. Provident Funding Associates, L.P., No. 13-cv-3485 (SRN/TNL):
a.

Defendant Provident Funding Associates, L.P.’s affirmative defense
of assumption of the risk (contained in Defendant’s Seventh
Affirmative Defense, ECF. No. 85) is STRICKEN/DISMISSED
WITH PREJUDICE;
28

b.

Defendant Provident Funding Associates, L.P.’s affirmative defense
of laches (contained in Defendant’s Eighth Affirmative Defense,
ECF. No. 85) is STRICKEN/DISMISSED WITH PREJUDICE;

c.

Defendant Provident Funding Associates, L.P.’s affirmative defense
of unclean hands (contained in Defendant’s Ninth Affirmative
Defense, ECF. No. 85) is STRICKEN/DISMISSED WITH
PREJUDICE; and

d.

Defendant Provident Funding Associates, L.P.’s affirmative defense
that Plaintiffs had failed to comply with one or more contractual
conditions precedent to bringing suit (contained in Defendant’s
Seventeenth Affirmative Defense, ECF. No. 85) is STRICKEN
WITHOUT PREJUDICE/DISMISSED WITHOUT
PREJUDICE.

7.

With respect to Residential Funding Company, LLC and ResCap

Liquidating Trust v. PNC Bank, N.A., as successor in interest to National City Mortgage
Co., NCMC Newco, Inc., and North Central Financial Corporation, No. 13-cv-3498
(JRT/BRT):
a.

Defendant PNC Bank’s affirmative defense of assumption of risk
(contained in Defendant’s Twenty-Second Affirmative Defense,
ECF No. 85) is STRICKEN/DISMISSED WITH PREJUDICE;

29

b.

Defendant PNC Bank’s affirmative defense of laches (contained in
Defendant’s Twenty-Fourth Affirmative Defense, ECF No. 85) is
STRICKEN/DISMISSED WITH PREJUDICE;

c.

Defendant PNC Bank’s affirmative defense that Plaintiffs’ claims
are barred because Plaintiffs have failed to comply with one or more
contractual conditions precedent (contained in Defendant’s Twenty
Seventh Affirmative Defense, ECF No. 85) is STRICKEN
WITHOUT PREJUDICE/DISMISSED WITHOUT
PREJUDICE;

d.

Defendant PNC Bank’s affirmative defense of unclean hands
(contained in Defendant’s Twenty-Ninth Affirmative Defense, ECF
No. 85) is STRICKEN/DISMISSED WITH PREJUDICE; and

e.

Defendant PNC Bank’s affirmative defense of in pari delicto
(contained in Defendant’s Twenty-Ninth Affirmative Defense, ECF
No. 85) is STRICKEN/DISMISSED WITH PREJUDICE.

8.

With respect to Residential Funding Company, LLC v. Branch Banking &

Trust Co., No. 13-cv-3513 (PJS/BRT):
a.

Defendant Branch Banking & Trust Co.’s affirmative defense of
laches (contained in Defendant’s First and Seventeenth Affirmative
Defenses, ECF No. 65) is STRICKEN/DISMISSED WITH
PREJUDICE;

30

b.

Defendant Branch Banking & Trust Co.’s affirmative defense that
Plaintiff has failed to comply with one or more contractual
obligations and/or contractual conditions precedent (contained in
Defendant’s Eighth Affirmative Defense, ECF No. 65) is
STRICKEN WITHOUT PREJUDICE/DISMISSED WITHOUT
PREJUDICE; and

c.

Defendant Branch Banking & Trust Co.’s affirmative defense of
unclean hands (contained in Defendant’s Ninth Affirmative Defense,
ECF No. 65) is STRICKEN/DISMISSED WITH PREJUDICE.

9.

With respect to Residential Funding Company, LLC v. BMO Harris Bank,

N.A. d/b/a M&I Bank, FSB, No. 13-cv-3523 (JNE/FLN):
a.

Defendant BMO Harris Bank, N.A.’s affirmative defense of
assumption of risk (contained in Defendant’s Fourteenth Affirmative
Defense, ECF No. 75) is STRICKEN/DISMISSED WITH
PREJUDICE;

b.

Defendant BMO Harris Bank, N.A.’s affirmative defense of laches
(contained in Defendant’s Sixteenth Affirmative Defense, ECF No.
75) is STRICKEN/DISMISSED WITH PREJUDICE;

c.

Defendant BMO Harris Bank, N.A.’s affirmative defense that
Plaintiff’s claims are barred because Plaintiff failed to comply with
one or more conditions precedent (contained in Defendant’s
Nineteenth Affirmative Defense, ECF No. 75) is STRICKEN
31

WITHOUT PREJUDICE/DISMISSED WITHOUT
PREJUDICE;
d.

Defendant BMO Harris Bank, N.A.’s affirmative defense of unclean
hands (contained in Defendant’s Twenty-First Affirmative Defense,
ECF No. 75) is STRICKEN/DISMISSED WITH PREJUDICE;
and

e.

Defendant BMO Harris Bank, N.A.’s affirmative defense of in pari
delicto (contained in Defendant’s Twenty-First Affirmative Defense,
ECF No. 75) is STRICKEN/DISMISSED WITH PREJUDICE.

10.

With respect to Residential Funding Company, LLC v. Wells Fargo

Financial Retail Credit, Inc., No. 13-cv-3525 (SRN/JSM):
a.

Defendant Wells Fargo Financial Retail Credit, Inc.’s affirmative
defense of laches (contained in Defendant’s Seventh Affirmative
Defense, ECF No. 101) is STRICKEN/DISMISSED WITH
PREJUDICE;

b.

Defendant Wells Fargo Financial Retail Credit, Inc.’s affirmative
defense of assumption of risk (contained in Defendant’s Fourteenth
Affirmative Defense, ECF No. 101) is STRICKEN/DISMISSED
WITH PREJUDICE; and

c.

Defendant Wells Fargo Financial Retail Credit, Inc.’s affirmative
defense that Plaintiff’s claims are barred because Plaintiff has failed
to comply with one or more contractual conditions precedent
32

(contained in Defendant’s Nineteenth Affirmative Defense, ECF No.
101) is STRICKEN WITHOUT PREJUDICE/DISMISSED
WITHOUT PREJUDICE;
11.

With respect to Residential Funding Company, LLC and ResCap

Liquidating Trust v. Standard Pacific Mortgage, Inc., No. 13-cv-3526 (JRT/JJK):
a.

Defendant Standard Pacific Mortgage Inc.’s affirmative defense of
laches (contained in Defendant’s Fifteenth Affirmative Defense,
ECF No. 83) is STRICKEN/DISMISSED WITH PREJUDICE.

12.

With respect to Residential Funding Company, LLC and ResCap

Liquidating Trust v. iServe Residential Lending, LLC, as successor to United Residential
Lending, LLC, No. 13-cv-3531 (PJS/TNL):
a.

Defendant iServe Residential Lending, LLC’s affirmative defense of
assumption of risk (contained in Defendant’s Thirteenth Affirmative
Defense, ECF No. 75) is STRICKEN/DISMISSED WITH
PREJUDICE; and

b.

Defendant iServe Residential Lending, LLC’s affirmative defense of
laches (contained in Defendant’s Fifteenth Affirmative Defense,
ECF No. 75) is STRICKEN/DISMISSED WITH PREJUDICE.

13.

With respect to Residential Funding Company, LLC v. CTX Mortgage

Company, No. 14-cv-1710 (DSD/TNL):

33

a.

Defendant CTX Mortgage Company’s affirmative defense of
assumption of risk (contained in Defendant’s Tenth Affirmative
Defense, 13-cv-3451 ECF No. 141) is STRICKEN/DISMISSED
WITH PREJUDICE; and

b.

Defendant CTX Mortgage Company’s affirmative defense that
Plaintiff’s claims are barred because it failed to comply with one or
more contractual conditions precedent (contained in Defendant’s
Fifteenth Affirmative Defense, 13-cv-3451 ECF No. 141) is
STRICKEN WITHOUT PREJUDICE/DISMISSED
WITHOUT PREJUDICE.

14.

With respect to Residential Funding Company, LLC v. American Mortgage

Network, LLC f/k/a American Mortgage Network, Inc., d/b/a Vertice and AMNET
Mortgage LLC, f/k/a AMNET Mortgage, Inc., f/k/a American Residential Investment
Trust, Inc. and Wells Fargo Bank, N.A., No. 14-cv-1760 (PJS/TNL):
a.

Defendants American Mortgage Network, LLC, Amnet Mortgage
LLC, and Wells Fargo Bank, N.A.’s affirmative defense of laches
(contained in Defendants’ Seventh Affirmative Defense, ECF No.
33) is STRICKEN/DISMISSED WITH PREJUDICE;

b.

Defendants American Mortgage Network, LLC, Amnet Mortgage
LLC, and Wells Fargo Bank, N.A.’s affirmative defense of
assumption of risk (contained in Defendants’ Fourteenth Affirmative

34

Defense, ECF No. 33) is STRICKEN/DISMISSED WITH
PREJUDICE; and
c.

Defendants American Mortgage Network, LLC, Amnet Mortgage
LLC, and Wells Fargo Bank, N.A.’s affirmative defense that
Plaintiff’s claims are barred because Plaintiff failed to comply with
one or more contractual conditions precedent (contained in
Defendants’ Nineteenth Affirmative Defense, ECF No. 33) is
STRICKEN WITHOUT PREJUDICE/DISMISSED WITHOUT
PREJUDICE;

15.

With respect to Residential Funding Company, LLC v. Homestead Funding

Corp., No. 13-cv-3520 (JRT/HB):
a.

Defendant Homestead Funding Corp.’s Affirmative Defense of
laches (contained in Defendant’s Sixth Affirmative Defense) is
STRICKEN/DISMISSED WITH PREJUDICE;

b.

Defendant Homestead Funding Corp.’s Affirmative Defense of
unclean hands (contained in Defendant’s Sixth Affirmative Defense)
is STRICKEN/DISMISSED WITH PREJUDICE;

c.

Defendant Homestead Funding Corp.’s Affirmative Defense of
assumption of risk (contained in Defendant’s Sixth Affirmative
Defense) is STRICKEN/DISMISSED WITH PREJUDICE; and

35

d.

Defendant Homestead Funding Corp.’s Affirmative Defense of
failure to satisfy conditions precedent (contained in Defendant’s
Eighth Affirmative Defense) is STRICKEN WITHOUT
PREJUDICE/DISMISSED WITHOUT PREJUDICE.

Date: April 28, 2015

s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge

36