United States Liability Insurance Company v. Global Acquisitions, LLC et al
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Global Acquisitions, LLC's Motion to Strike Allegations in Plaintiff's Amended Complaint # 12 is DENIED. Signed by District Judge Rodney W. Sippel on 5/15/15. (JWD)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
UNITED STATES LIABILITY
GLOBAL ACQUISITIONS, LLC,
No. 4:14 CV 1887 RWS
MEMORANDUM AND ORDER
On March 13, 2013, defendant Global Acquisitions, LLC (“Global”) submitted an
insurance claim to plaintiff United States Liability Insurance Company (“USLI”) for damages to
three of its properties. Global claimed that the properties had been damaged by a February 2013
windstorm as well as by vandalism. On November 21, 2014, USLI brought suit, seeking
declaratory judgment that Global’s claims are not covered by the insurance policy. USLI alleges
that Global failed to comply with its duties after loss and engaged in material misrepresentations
in making its claims for property damage, which voids and/or excludes coverage under the
policy. Global now moves to strike paragraphs 56-58, 60-62, and 65, 68, 76 and 77 of USLI’s
Amended Complaint under Federal Rules of Civil Procedure 12(f) and 9(b). For the reasons that
follow, I will deny Global’s motion to strike.
Under Federal Rule of Civil Procedure 12(f), “the court may strike from a pleading an
insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” “Liberal
discretion is enjoyed by the district court in ruling on a motion to strike.” Stanbury Law Firm v.
I.R.S., 221 F.3d 1059, 1063 (8th Cir.2000). However, striking a party's pleadings is an extreme
and disfavored measure. Lunsford v. United States, 570 F.2d 221, 229 (8th Cir.1977). There is
general judicial agreement that a motion to strike should be denied unless the challenged
allegations have no possible relation or logical connection to the subject matter of the
controversy. N. Face Apparel Corp. v. Williams Pharmacy, Inc., 4:09 CV 2029 RWS, 2010 WL
546928, at *1 (E.D.Mo. Feb. 9, 2010). Matters that are not strictly relevant to the principle claim
should not necessarily be stricken if they provide “important context and background” to claims
asserted. Stanbury Law Firm, 221 F.3d at 1063. Moreover, “even when technically appropriate
and well-founded, Rule 12(f) motions are not granted in the absence of a showing of prejudice to
the moving party.” Am. Home Assur. Co. v. Pope, 2 4057 CV C SOW, 2005 WL 1312975, at
*1 (W.D. Mo. June 1, 2005) (internal citations omitted).
A. Paragraphs 56-58, 60-61, and 65
Global seeks to strike paragraphs 56-58, 60-61, and 65 from the complaint, arguing that
they incorrectly imply and/or assert that Global never made Global properties available for
inspection when, in fact, Global made numerous efforts to schedule property inspections. These
56. The inspection was set for March 18, 2013, which was the first date Mr. Khan
stated he could make the properties available for inspection.
57. On March 18, 2013, neither Mr. Khan, nor anyone on behalf of Global
Acquistions, LLC showed up for the inspection as scheduled, and Mr. Hoffman
was unable to inspect the properties and evaluate any claimed damage and source
of damage for Plaintiff.
58. Thereafter, Mr. Khan refused to allow Plaintiff, or any representative on its
behalf, inspect and evaluate the damage at the properties, and Plaintiff was
unsuccessful after several attempts to inspect the three properties to evaluate the
damages and source of damages following the reported loss.
60. Plaintiff was unable to inspect 2208 Alberta, and/or 4259 W. Cook because
Defendant Global Acquisitions had sold the properties.
61. To date, Plaintiff has never been able to secure an inspection of 2208 Alberta
or 4259 W.Cook to evaluate any damages alleged by Defendant Global
65. Defendant Global Acquisitions has failed to comply with Policy conditions
making properties available for inspection following the reported loss.
Amd. Compl. [#3].
In support of its argument, Global attaches selected portions of emails between counsel
for the parties. The selected portions of the emails suggest that counsel communicated about
scheduling an inspection. This information, however, does not establish that the paragraphs
contain redundant, immaterial, impertinent, or scandalous information, as required by Rule 12(f).
Instead, Global’s argument and the email attachment merely indicate that Global disagrees with
the veracity of USLI’s allegations in the complaint.
Furthermore, it is clear that the allegations in these paragraphs relate to USLI’s claim that
Global failed to comply with its duties after loss, including the requirement to make the
properties available for inspection. As a result, these allegations do not fall within the category
of materials appropriately stricken pursuant to Rule 12(f). Moreover, for these same reasons,
Global’s argument that it will be prejudiced by the inclusion of these allegations fails. Having to
defend against claims properly related to the controversy at issue is not prejudicial to Global.
B. Paragraph 62
Global argues that paragraph 62 should be striken from the complaint because it
incorrectly alleges that Global concealed and/or misrepresented material facts pertaining to the
ownership of the properties. Paragraph 62 provides:
62. On or about December 18, 2013, Mr. Khan, on behalf of Defendant,
submitted to an Examination Under Oath, during which Defendant concealed
and/or misrepresented material facts pertaining to ownership of the properties,
damages sustained at the properties, inspection of the properties, value of the
properties, cause(s) of loss to the properties, and/or repair(s) to the properties for
Amd. Compl. [#3]. Global attaches a portion of Mr. Khan’s Examination Under Oath; online
search results for what appear to be real estate records from the City of St. Louis Assessor’s
website; and Sheriff’s Deeds, which Global argues establish Global’s ownership of the properties
at the time in question. However, even if taken as true, the exhibits do not conclusively establish
Global’s ownership at the time in question. Moreover, Global’s argument merely amounts to a
dispute about the veracity of USLI’s factual allegations, which is not a proper basis for excluding
material under Rule 12(f).
Furthermore, the allegations relate to USLI’s claim that Global misrepresented material
facts and/or failed to comply with its duties after loss, including potentially misrepresenting the
ownership of the properties. As a result, these allegations are not redundant, immaterial,
impertinent, or scandalous and therefore do not fall within the category of materials
appropriately stricken pursuant to Rule 12(f). Additionally, Global has not shown that it would
be prejudiced by the inclusion of paragraph 62.
C. Paragraph 68
Global also argues that paragraph 68 of the complaint should be striken because it is
unfounded as a matter of law and therefore immaterial. Paragraph 68 provides:
68. Defendant Global Acquisitions has sustained no damage to properties, 2208
Alberta and 4259 W. Cook, in that Defendant has sold these properties for a profit
following the alleged loss.
Amd. Compl. [#3]. Global argues that the policy language provides for a loss settlement
procedure that contradicts the measure of damages that USLI sets forth in paragraph 68.
According to the complaint, the policy provides, “Loss Settlement. Covered property losses are
settled at actual cash value at the time of loss but not more than the amount required to repair or
replace the damaged property.” Amd. Compl. [#3]. Global argues that, because the policy
purports to measure damages at the time of loss, whether Global profited from a later sale of the
property is immaterial. USLI argues that this paragraph relates to the issue of whether Global
misrepresented material facts at the Examination Under Oath because it alleges that the damage
calculation Global submitted to USLI was excessive and unsupported.
While Global’s argument that the policy forecloses consideration of an ultimate sale price
may have merit in a motion to dismiss or motion for summary judgment, a motion under Rule
12(f) is not a substitute for such a motion. Here, it cannot be said that the allegation that Global
sold the property for a profit has no possible relation or logical connection to the subject matter
of the controversy, or that it does not provide important context and background to the claims
asserted. See N. Face Apparel Corp. v. Williams Pharmacy, Inc., 4:09 CV 2029 RWS, 2010 WL
546928, at *1 (E.D.Mo. Feb. 9, 2010); Stanbury Law Firm, 221 F.3d at 1063. As a result,
paragraph 68 does not fall within the category of materials appropriately stricken pursuant to
D. Paragraphs 76 and 77
Finally, Global argues that paragraphs 76 and 77 should be striken because they are
allegations of fraud and were not pleaded with particularity as required by Federal Rule of Civil
Procedure 9(b). Paragraphs 76 and 77 provide:
76. Defendant Global Acquisition has misrepresented, concealed and/or engaged
in fraudulent conduct in its presentation of Claim 2 for this loss and such actions
have prejudiced Plaintiff.
77. Misrepresentation, concealment, and/or fraud are recognized as special
circumstances in Missouri, which entitles a prevailing party in a declaratory
judgment action to recover its costs and expenses, including attorney fees.
Therefore, should Judgment be entered in favor of Plaintiff and against
Defendant, Plaintiff respectfully requests its right to a separate hearing regarding
any damages sustained by Plaintiff.
Amd. Compl. [#3].
Allegations of fraud are subject to a heightened pleading requirement under Federal Rule
of Civil Procedure 9(b). “In alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). To meet Rule 9(b)
requirements, a pleading must include “such matters as the time, place and contents of the false
representations, as well as the identity of the person making the misrepresentations and what was
obtained or given up thereby.” Abels v. Farmers Commodities Corp., 259 F.3d 910, 920 (8th Cir.
2001). That said, “[t]he special nature of fraud does not necessitate anything other than notice of
the claim; it simply necessitates a higher degree of notice, enabling the defendant to respond
specifically, at an early stage of the case, to potentially damaging allegations of immoral and
criminal conduct.” Id., 259 F.3d at 920.
USLI disputes that Rule 9(b) applies, but argues that even if it does apply, its allegations
meet the requirements of Rule 9(b) because it has alleged the circumstances constituting the
fraud or material misrepresentation with sufficient particularity. Reviewing the complaint as a
whole, I agree that USLI’s allegations meet the requirements of Rule 9(b) because the complaint
contains allegations of the time, place and contents of the false representations, as well as the
identity of the person making the misrepresentations. Abels, 259 F.3d at 920. Indeed, USLI
pleaded that Mr. Khan, Global’s agent and owner, concealed and misrepresented facts pertaining
to ownership of its properties during the examination under oath (See ¶68); that Global has
represented damages to the properties to be in excess of $101,800.00 (See ¶ 53); that Global has
concealed and/or misrepresented material facts pertaining to the damages to the properties (See ¶
62); that Global has failed to produce documents to support a claim for damages, despite requests
by USLI (See ¶¶ 63 & 64); that Global would not allow an inspection to take place at the
properties following the loss claimed (See ¶¶ 57, 58 and 610); and, finally, that the Missouri
property did not sustain the damages as alleged by Global as a result of any windstorm, but
rather was the result of wear and tear (See ¶ 59).
Additionally, Paragraph 77 merely serves as USLI’s prayer for its costs and expenses
should it succeed on its allegations in the complaint relating to Global’s alleged fraud or material
misrepresentation. Because I have already found that the allegations in the complaint meet the
requirements of Rule 9(b), there is no basis to strike USLI’s related prayer for relief.
A motion to strike under Rule 12(f) is a very narrow remedy used only to strike “from
any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous
matter.” Because the challenged paragraphs relate to the controversy at issue, they do not fall
within the category of materials appropriately stricken pursuant to Rule 12(f). Likewise,
paragraphs 76 and 77 meet the pleading requirements of Fed. R. Civ. P. 9(b). As a result, I will
deny Global’s motion to strike in its entirety.
IT IS HEREBY ORDERED that Global Acquisitions, LLC’s Motion to Strike
Allegations in Plaintiff’s Amended Complaint # is DENIED.
RODNEY W. SIPPEL
UNITED STATES DISTRICT JUDGE
Dated this 15th day of May, 2015.
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