The Bank of Beaver City v. Southwest Feeders, L.L.C.

Filing 79

ORDER granting in part as explained in the memorandum accompanying this order 55 plaintiff's Motion to Strike ; sustaining 65 plaintiff's Objection; granting in part as explained in the memorandum accompanying this order 68 defendant& #039;s Motion for Leave to Amend its Affirmative Defenses; sustaining in part as explained in the memorandum accompanying this order 70 plaintiff's Objection to the defendant's motion for leave to amend; granting 74 defendant's Motion for Leave to Supplement its Affirmative Defenses. Ordered by Senior Judge Warren K. Urbom. (EJL)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
BANK OF BEAVER CITY, The,
Plaintiff,
v.
SOUTHWEST FEEDERS, L.L.C.,
Defendant.

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4:10CV3209
MEMORANDUM AND ORDER ON
PENDING MOTIONS

On October 26, 2010, Plaintiff The Bank of Beaver City (“the Bank”) filed a complaint
against Defendant Southwest Feeders, L.L.C. (“Southwest Feeders”), seeking to recover more than
$1 million in proceeds from the sale of cattle in which the Bank held a security interest. (See
generally Compl., ECF No. 1.) Southwest Feeders filed a second amended answer to the complaint
on May 5, 2011, which includes a number of affirmative defenses. (See generally Second Am.
Answer, ECF No. 51.)1 The Bank has moved to strike a number of Southwest Feeders’ affirmative
defenses, (ECF No. 55), and it has filed an objection to the evidence submitted by Southwest Feeders
in opposition to the Bank’s motion to strike, (ECF No. 65). Thereafter, Southwest Feeders moved
for leave to amend its affirmative defenses, (ECF No. 68), and the Bank filed an objection to
Southwest Feeders’ motion for leave to amend, (ECF No. 70). Then on September 20, 2011,
Southwest Feeders filed a motion for leave to supplement its affirmative defenses. (ECF No. 74.)2
Filing numbers 55, 65, 68, 70, and 74 are now ripe for resolution. For the following reasons, the
Bank’s objection to Southwest Feeders’ exhibits will be sustained, the Bank’s motion to strike will
be granted in part, Southwest Feeders’ motion for leave to amend will be granted, the Bank’s

1

The second amended answer is captioned “Amended Answer to Complaint.” (ECF No.
51.) In fact, however, it is the second amended answer. (See Answer, ECF No. 14; Am. Answer,
ECF No. 39; Second Am. Answer, ECF No. 51.)
2

Southwest Feeders represents that the Bank has no objection to its motion for leave to
supplement its defenses. (Mot. at 2, ECF No. 74.)
1

objection to Southwest Feeders’ motion to amend will be overruled, and Southwest Feeders’ motion
for leave to supplement its affirmative defenses will be granted.

I.

BACKGROUND

The plaintiff’s complaint alleges as follows. The Bank “is a state-chartered bank organized
and existing under the laws of the State of Oklahoma with its principal place of business in Beaver,
Oklahoma.” (Compl. ¶ 1, ECF No. 1.) Southwest Feeders “is a limited liability company organized
and existing under the laws of the State of Nebraska.” (Id. ¶ 2.) It “owns and operates a cattle
feedyard in Hayes County, Nebraska.” (Id. ¶ 4.)
Jon Dane Morris and Misty Morris are residents of Beaver County, Oklahoma, and are
shareholders of Lucky Moon Land and Livestock, Inc. (“Lucky Moon”). (Id. ¶¶ 5-7.) Jon Dane
Morris is also the President of Lucky Moon. (Id. ¶ 8.) Lucky Moon “is a corporation organized and
existing under the laws of the State of Oklahoma[,] with its principal place of business in Beaver
County, Oklahoma.” (Id. ¶ 6.)
The Bank has loaned money to Lucky Moon since April 2003, and Lucky Moon (through Jon
Dane Morris) executed promissory notes and security agreements in favor of the Bank. (Id. ¶¶ 9-10.)
These security agreements “granted to the Bank a security interest in . . . all livestock and proceeds
of livestock owned by Lucky Moon.” (Id. ¶ 11.) In addition, the Morrises, acting in their individual
capacities, executed “a Guaranty and Security Agreement in favor of the Bank” that “granted to the
Bank a security interest in . . . all livestock and proceeds of livestock owned by the Morrises.” (Id.
¶¶ 12-13.)
At all relevant times, Oklahoma and Nebraska have had “central filing systems” within the
meaning of the Food Security Act of 1985, 7 U.S.C. § 1631. (Id. ¶ 20.)3 Between April 2003 and
July 2009, the Bank filed a number of financing statements with the County Clerk of Oklahoma
County, Oklahoma. Specifically, it filed a UCC Financing Statement on August 5, 2004, and it filed

3

“The term ‘central filing system’ means a system for filing effective financing
statements or notice of such financing statements on a statewide basis and which has been
certified by the Secretary of the United States Department of Agriculture . . . .” 7 U.S.C. §
1631(c)(2).
2

a UCC Continuation Statement on July 10, 2009, “identifying as collateral . . . all livestock and
proceeds owned by Lucky Moon.” (Id. ¶ 14.) It filed a UCC Financing Statement on April 2, 2003,
and a UCC Financing Statement Amendment on February 12, 2008, “identifying as collateral . . . all
livestock and proceeds owned by Jon D. Morris and Dane Morris.” (Id. ¶ 16.) Also, it filed “a UCC
Financing Statement on or about September 8, 2003, and a UCC Financing Statement Continuation
on or about July 25, 2008, identifying as collateral . . . all livestock and proceeds owned by John D.
Morris and Misty Morris.” (Id. ¶ 18.)
The Bank also filed financing statements with the Oklahoma Secretary of State. Specifically,
it filed an Oklahoma Effective Financing Statement on August 9, 2004, and an Oklahoma Effective
Financing Statement Continuation on July 9, 2009, “describing the farm products subject to a
security interest as being all cattle and calves owned by Lucky Moon”; it filed a second Oklahoma
Effective Financing Statement on April 10, 2003, and a second Oklahoma Effective Financing
Statement Continuation on March 12, 2008, “describing the farm products subject to a security
interest as being all cattle and calves owned by Jon Dane Morris”; and it filed a third Oklahoma
Effective Financing Statement on September 8, 2003, and a third Oklahoma Effective Financing
Statement Continuation on August 6, 2008, “describing the farm product[s] subject to a security
interest as being all cattle and calves owned by Misty Morris.” (Id. ¶¶ 15, 17, 19.)
The Bank alleges that between November 2006 and August 2007, “Lucky Moon and/or the
Morrises caused [livestock] owned and possessed by Lucky Moon and/or the Morrises and subject
to the Bank’s security interest to be delivered from Lucky Moon’s and/or the Morrises’ possession
in Oklahoma to the possession and control of Southwest [Feeders].” (Id. ¶ 22.) Acting “as a selling
agent, commission merchant or otherwise,” Southwest Feeders then sold the aforementioned
livestock to third-party buyers, but it did not “register with the Oklahoma Secretary of State prior to
the [sale].” (Id. ¶¶ 23, 29.) Southwest Feeders deducted costs and expenses, including “feed costs,
processing costs, medication costs, brand inspection fees, insurance premiums, freight charges,
‘Hedge’ costs, ‘Put Option Contact’ costs, ‘Forward Contract’ costs[,] and interest,” from the
proceeds of the sale. (Id. ¶ 25.) After making these deductions, Southwest Feeders “drafted a check
payable only to Dane Morris,” and not “jointly payable to the Bank.” (Id. ¶¶ 27-28.) The Bank
claims that it did not authorize the sale of the livestock “free and clear” of its security interest. (Id.
3

¶ 24.) The Bank also claims that it never consented to Southwest Feeders’ use of proceeds from the
sale of the livestock; nor did it ever receive written notice from Southwest Feeders indicating that
it “was claiming or would claim a lien in any of the [livestock].” (Id. ¶¶ 25-26.)
According to the Bank, the livestock sold by Southwest Feeders had a market value of at least
$1,020,024 at the time of its sale, and Lucky Moon owes a debt to the Bank that exceeds this
amount. (Id. ¶¶ 30, 32.) The Bank alleges, “The unauthorized and wrongful dominion and control
exerted by Southwest [Feeders] over the [livestock] and the proceeds of [the livestock] in which the
Bank had a perfected security interest has deprived the Bank of its rights, as a secured party, in the
[livestock] and the proceeds from the [livestock].” (Id. ¶ 38.) It adds that Southwest Feeders “failed
to comply with the Food Security Act and the Uniform Commercial Code by not paying the Bank
the proceeds from the sale of the Lucky Moon or Morrises’ [livestock].” (Id. ¶ 39.)
On December 20, 2010, Southwest Feeders filed an answer to the Bank’s complaint and a
third party complaint against Lucky Moon, John Dane Morris, and Misty Morris. (ECF No. 14.)
Southwest Feeders’ third party complaint includes three causes of action.

Count I, titled

“Contribution,” alleges that if the Bank obtains a judgment against Southwest Feeders, “Southwest
Feeders is entitled to contribution and/or indemnification from [the Morrises] and Lucky Moon”
because they represented that the livestock was “free and clear of any and all liens and security
interests.” (Third Party Compl. ¶¶ 9, 12, ECF No. 14.) Count II, titled “Breach of Warranty,”
alleges that to the extent that the livestock in question was “subject to any security interest of [the
Bank], [the Morrises] and Lucky Moon breached the warranty of title under Neb. U.C.C. § 2-312 or
O.S. § 2-312 by making representations that [the livestock was] delivered free from any and all
security interest[s].” (Id. ¶ 14.) Count III, titled “Fraudulent Misrepresentation,” alleges that the
Morrises and Lucky Moon induced Southwest Feeders to purchase the relevant livestock by falsely
representing that the livestock was “free and clear of any security interests or liens.” (Id. ¶¶ 19-22.)
On March 18, 2011, Southwest Feeders moved for an entry of default against the third party
defendants. (Mot., ECF No. 37.) See also Fed. R. Civ. P. 55(a); NECivR 55.1(a). This motion was
granted, and the clerk entered the third party defendants’ default on March 22, 2011. (ECF No. 38.)

4

Southwest Feeders filed an amended answer on March 23, 2011, (ECF No. 39), and a second
amended answer on May 5, 2011, (ECF No. 51). In its second amended answer, Southwest Feeders
admits that it purchased livestock from “Dane Morris” during the fall of 2006, that it sold this
livestock to third party buyers, and that it deducted costs and expenses for the care of the livestock
from the proceeds of the sale. (Second Am. Answer ¶¶ 3-5, ECF NO. 51.) It denies, among other
things, that the Bank had rights in the livestock or the proceeds of the livestock through a security
interest, that the Bank did not authorize “the disposition of any proceeds of any [livestock] owned
by Lucky Moon and/or the Morrises free and clear” of any security interest held by the Bank, and
that Southwest Feeders’ actions were wrongful or unlawful. (Id. ¶¶ 7-8 (citing Compl. ¶¶ 33, 3540).)
The second amended answer also lists a number of affirmative defenses. (See id. ¶¶ 10-19.)
These include allegations that the Bank “authorized, consented to and acquiesced in the sale of the
[livestock]”; that defenses such as “implied consent and waiver through a course of conduct” are
available to Southwest Feeders; that Southwest Feeders “did nothing wrong in the purchase or sale
of the [livestock]”; that the Bank’s “claims are barred by the doctrine of avoidable consequences”;
that the Bank’s “claims are barred by the innocent two parties rule”; that the Bank “has been unjustly
enriched for the amount of costs incurred” by Southwest Feeders in connection with the sale of the
livestock; and that the Bank “failed to mitigate [its] claimed damages.” (Id. ¶¶ 12-14, 16-19.)
On May 31, 2011, the Bank filed a motion to strike the aforementioned affirmative defenses
pursuant to Federal Rule 12(f). (ECF No. 55.) On June 30, 2011, Southwest Feeders filed a
response to the Bank’s motion and an “Index of Evidentiary Materials” that includes five exhibits.
(See generally ECF Nos. 62-63.) None of these exhibits has been incorporated into the pleadings.
(Compare ECF Nos. 62-63 with ECF Nos. 1, 14, 39, 51.) The Bank then filed a reply brief in
support of its motion to strike and an objection to the exhibits filed by Southwest Feeders. (See
generally ECF Nos. 65-66.) On September 2, 2011, Southwest Feeders filed a motion for leave to
amend its affirmative defenses. (ECF No. 68.) The Bank responded by filing an objection to
Southwest Feeders’ motion for leave to amend on September 15, 2011. (ECF No. 70.) On
September 20, 2011, Southwest Feeders filed a motion for leave to supplement its affirmative
defenses. (ECF No. 74.) My analysis of these filings follows.
5

II.

STANDARD OF REVIEW GOVERNING MOTIONS TO STRIKE

Federal Rule of Civil Procedure 12(f) states that a “court may strike from a pleading an
insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” “A motion
to strike a defense will 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.” Lunsford v. United States, 570 F.2d 221,
229 (8th Cir. 1977) (quoting 2A James Wm. Moore et al., Moore’s Federal Practice ¶ 12.21 at 2437
(2d ed. 1975)). Although “[j]udges enjoy liberal discretion to strike pleadings under rule 12(f),” the
Eighth Circuit has stated that “[s]triking a party’s pleading . . . is an extreme and disfavored
measure.” BJC Health System v. Columbia Casualty Co., 478 F.3d 908, 917 (8th Cir. 2007)
(citations omitted).4
“Generally, well pleaded facts are accepted as true” when a court analyzes a motion to strike,
“and matters outside the pleadings will not be considered in support of the motion.” Johnson v.
Metropolitan Sewer Dist., 926 F. Supp. 874, 875 (E.D. Mo. 1996) (citing 2A James Wm. Moore et
al., Moore’s Federal Practice ¶ 12.21[3] (2d ed. 1995)). See also 5C Charles Alan Wright & Arthur
R. Miller, Federal Practice & Procedure § 1380 (3d ed. 2011) (“Matter outside the pleadings
normally is not considered on a Rule 12(f) motion; for example, affidavits in support of or in
opposition to the motion typically may not be used.” (Footnotes omitted)).

4

District courts have harshly criticized motions to strike, stating,

Indeed, motions to strike can be nothing other than distractions. If a
defense is clearly irrelevant, then it will likely never be raised again by the
defendant and can be safely ignored. If a defense may be relevant, then there are
other contexts in which the sufficiency of the defense can be more thoroughly
tested with the benefit of a fuller record–such as on a motion for summary
judgment.
Morgan v. Midwest Neurosurgeons, LLC, No. 1:11-cv-37 (CEJ), 2011 WL 2728334, at *2 (E.D.
Mo. July 12, 2011) (quoting Van Schouwen v. Connaught Corp., 782 F. Supp. 1240, 1245 (N.D.
Ill 1991)).
6

III.
A.

ANALYSIS

The Plaintiff’s Objections to the Defendant’s Exhibits

The Bank objects to my consideration of the evidence submitted by Southwest Feeders in
opposition to the Bank’s motion to strike, arguing that the motion to strike should be “determined
upon the pleadings involved and not upon matters outside the pleadings, such as affidavits or other
documentary evidence.” (Objection at 1, ECF No. 65. See also Pl.’s Reply Br at 2, ECF No. 66.)
I agree with the Bank.
Rule 12(f) does not indicate whether matters outside the pleadings may be considered in
connection with a motion to strike, and it seems that the Eighth Circuit has not yet addressed this
question. As I noted above in Part II, however, courts generally do not consider matters outside the
pleadings when analyzing a motion to strike. See, e.g., 5C Charles Alan Wright & Arthur R. Miller,
Federal Practice & Procedure § 1380 (3d ed. 2011). In any case, I have reviewed Southwest Feeders’
exhibits, and I do not find them to be helpful in my analysis of the Bank’s motion to strike. I shall
therefore sustain the Bank’s objections to the exhibits.
B.

The Plaintiff’s Motion to Strike

The Bank moves to strike seven of Southwest Feeders’ affirmative defenses, arguing that
they are “insufficient and not plausible.” (Mot., ECF No. 55 at 1.)
Preliminarily, I must address the Bank’s argument that “the plausibility standards espoused
by Ashcroft v. Iqbal, . . . 129 S. Ct. 1937 (2009), [and] Bell Atl. Corp. v. Twombly, 550 U.S. 544
. . . (2007),” govern the pleading of affirmative defenses. (Pl.’s Br. at 1, ECF No. 56. See also id.
at 2-5.) In short, the Bank argues that I should apply the standard that is used to analyze Rule
12(b)(6) motions when I analyze its Rule 12(f) motion. I shall not do so.
In Iqbal and Twombly, the Supreme Court described and applied a “two-pronged approach”
that courts should use to analyze motions to dismiss brought pursuant to Federal Rule of Civil
Procedure 12(b)(6). Iqbal, 129 S. Ct. at 1950. First, the portions of the complaint that are “entitled
to the assumption of truth” should be identified. Id. More specifically, the veracity of “well-pleaded
factual allegations” should be assumed, while allegations that “are no more than conclusions” should
be disregarded. Id. Next, it must be determined whether the well-pleaded factual allegations
“plausibly give rise to an entitlement to relief.” Id. See also id. at 1949 (“To survive a [Rule
7

12(b)(6)] motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’”) (quoting Twombly, 550 U.S. at 570). “A claim
has facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly,
550 U.S. at 556). “[This] plausibility standard is not akin to a ‘probability requirement,’ but it asks
for more than a sheer possibility that a defendant has acted unlawfully.” Id. (citing Twombly, 550
U.S. at 556). “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s
liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’” Id.
(quoting Twombly, 550 U.S. at 557) (quotation marks omitted).
The plausibility standard described in Twombly and Iqbal is based upon the Supreme Court’s
analysis of the terms of Federal Rule of Civil Procedure 8(a)(2). Rule 8(a)(2) states that “a pleading
must contain ‘a short and plain statement of the claim showing that the pleader is entitled to relief.’”
Iqbal, 129 S. Ct. at 1949 (quoting Fed. R. Civ. P. 8(a)(2)) (emphasis added). Twombly and Iqbal
instruct that if “the well-pleaded facts do not permit the court to infer more than the mere possibility
of misconduct, the complaint has alleged–but it has not ‘shown’–‘that the pleader is entitled to
relief’” in accordance with Rule 8(a)(2). Iqbal, 129 S. Ct. at 1950 (quoting Fed. R. Civ. P. 8(a)(2))
(alteration brackets omitted) (emphasis added). See also Twombly, 550 U.S. at 557 (“The need at
the pleading stage for allegations plausibly suggesting . . . agreement [to engage in anticompetitive
conduct] reflects the threshold requirement of Rule 8(a)(2) that the ‘plain statement’ possess enough
heft to ‘sho[w] that the pleader is entitled to relief.’”) (emphasis added).
Rule 8(a) sets forth requirements applicable to “[a] pleading that states a claim for relief”;
it does not govern the pleading of affirmative defenses.. The pleading rules that apply to affirmative
defenses appear in Federal Rule of Civil Procedure 8(c), which states, “In responding to a pleading,
a party must affirmatively state any avoidance or affirmative defense . . . .” Fed. R. Civ. P. 8(c)(1).
There is a great distinction between the language of Rule 8(c)(1), which requires only that
affirmative defenses be “affirmatively state[d],” and the language of Rule 8(a)(2), which requires “a
short and plain statement of the claim showing that the pleader is entitled to relief.” The plain
language of the rules indicates not only that the Rule 8(a)(2) “entitlement requirement,” Twombly,
550 U.S. at 557, does not apply to Rule 8(c) pleadings, but also that the Supreme Court’s reasoning
8

in Twombly and Iqbal does not apply to the pleading of affirmative defenses. In other words,
because the Court’s plausibility standard “reflects the threshold [entitlement] requirement of Rule
8(a)(2),” Twombly, 550 U.S. at 557, and because Rule 8(c) lacks this “threshold requirement,” the
Supreme Court’s opinions in Twombly and Iqbal should not be read to govern the pleading of
affirmative defenses under Rule 8(c).
The Eighth Circuit has not yet addressed specifically the question of whether the
Twombly/Iqbal plausibility standard should be used to analyze Rule 12(f) motions. It has, however,
addressed the rules governing the pleading affirmative defenses, stating, “The rules do not require
a party to plead every step of legal reasoning that may be raised in support of its affirmative defense;
they only require a defendant to state in short and plain terms its defenses to a plaintiff’s claims.”
Wisland v. Admiral Beverage Corp., 119 F.3d 733, 737 (8th Cir. 1997) (citing Fed. R. Civ. P. 8(c)).
The Eighth Circuit has also held that a statute of limitations defense is sufficiently raised–and the
requirements of Rule 8(c) are satisfied–“by [the] bare assertion” of the defense. Zotos v. Lindbergh
School Dist., 121 F.3d 356, 361 (8th Cir. 1997) (quoting Daingerfield Island Protective Society v.
Babbitt, 40 F.3d 442, 445 (D.C. Cir. 1994)). It seems to me that the rule advocated by the Bank,
which effectively extends the Rule 8(a) pleading requirements to Rule 8(c) pleadings, is
incompatible with the Eighth Circuit’s holdings in Wisland and Zotos. I am mindful of the fact that
these cases predate Twombly and Iqbal, but I see nothing in Twombly or Iqbal indicating that cases
such as Wisland and Zotos are no longer valid, and I am not free to fashion a rule that stands in
tension with the Eighth Circuit’s opinions.
In support of its argument that I should apply the plausibility standard when analyzing its
motion to strike, the Bank emphasizes that Federal Rules of Civil Procedure 8(a) and 8(b) contain
some similar terms. (See Pl.’s Br. at 4-5, ECF No. 56.) As the Bank correctly notes, Rule 8(b) states
that “[i]n responding to a pleading, a party must . . . state in short and plain terms its defenses to each
claim asserted against it . . . .” Fed. R. Civ. P. 8(b)(1)(A). The Bank submits that because Rules 8(a)
and 8(b) “both require a ‘short and plain’ statement,” the “Twombly/Iqbal plausibility standard”
should apply to the pleading of both claims and defenses. (Pl.’s Br. at 4, ECF No. 56.) I am not
persuaded. In the first place, it is Rule 8(c), not Rule 8(b), that sets forth the rules for pleading
affirmative defenses. Thus, any similarity between the language of Rules 8(a) and 8(b) does not
9

avail the Bank insofar as it seeks to have me apply the Rule 8(a) plausibility standard to pleadings
governed by Rule 8(c). Furthermore, although it is true that Rules 8(a)(2) and 8(b)(1)(A) each share
the words “short and plain,” Rule 8(b) lacks the “entitlement requirement” that is central to the
Supreme Court’s reasoning in Twombly and Iqbal. The plain language of Rule 8 does not favor the
extension of the plausibility standard to either Rule 8(b) defenses or Rule 8(c) affirmative defenses.
The Bank also argues that “applying the same [plausibility] standard to claims and defenses
promotes fairness,” adding that “what is good for the goose is good for the gander.” (Pl.’s Br. at 5,
ECF No. 56 (quoting Racick v. Dominion Law Assoc., 270 F.R.D. 228, 233 (E.D.N.C. 2010)).) I
disagree with this notion. The separate rules governing the pleading of claims, defenses, and
affirmative defenses use materially different language; thus, whether fair or not, there is no basis in
law for applying the same standard to each pleading. Setting that point aside, I question whether it
is truly fair to hold Rule 8(b) and 8(c) pleadings to the standards applicable to Rule 8(a) pleadings.
As one district court has noted,
Pleading standards that account for the differences between the pleading of
claims and defenses make sense. Knowledge at the pleading stage is often
asymmetrical, disproportionately favoring the pleading of a claim by a plaintiff who
has had the opportunity to time its filing. While the plaintiff often can conduct an
investigation before filing the complaint to ensure its allegations are adequately
supported, the defendant must respond quickly after being served. See Fed. R. Civ.
P. 12(a)(1)(A) (requiring a defendant to respond within twenty-one days of being
served with the complaint, unless the defendant has waived service). Thus, the
primary purpose of Rule 8(c) is to ensure that the plaintiff has adequate notice that
a defense will be raised at trial or in a subsequent dispositive motion, and not to
“show” the court or the plaintiff that the defendant is entitled to the defense.
Odyssey Imaging, LLC v. Cardiology Associates of Johnston, LLC, 752 F. Supp. 2d 721, 726 (W.D.
Va. 2010). See also 2 James Wm. Moore et al., Moore’s Federal Practice § 8.08[1] (3d ed. 2011).
The Bank also refers me to several cases wherein courts required affirmative defenses to
satisfy the plausibility standard or Rule 8(a) pleading standards. (See Pl.’s Br. at 4-5 & n.2, ECF No.
56 (citing cases); Pl.’s Reply Br. at 4, ECF No. 66 (citing Creative Food Products, LLC, v. Dickinson
Frozen Foods, Inc., Civil No. 09-5118, 2011 WL 900677 (W.D. Ark. March 2, 2011)).) I accept that
my view might be the minority one–though I note that other district courts in this circuit do share it.
See Ash Grove Cement Co. v. MMR Contstructors, Inc., No. 4:10-CV-04069, 2011 WL 3811445

10

(W.D. Ark. Aug. 29, 2011); Wells Fargo & Co. v. United States, 750 F. Supp. 2d 1049 (D. Minn.
2010). There is no controlling authority on point, and I respectfully disagree with those courts that
have chosen to extend the plausibility standard or the requirements of Rule 8(a) to pleadings that do
not state claims for relief.
In summary, I shall not apply the plausibility standard or Rule 8(a) pleading standards to
Southwest Feeders’ affirmative defenses. Instead, when analyzing the Bank’s motion to strike, I
shall follow the framework outlined in Rule 8(c), Rule 12(f), and the Eighth Circuit’s opinions about
the operation of those rules. See, e.g., Wisland, 119 F.3d at 737 (explaining that affirmative defenses
need only be stated in short and plain terms to satisfy Rule 8(c)); Lunsford, 570 F.2d at 229 (“A
motion to strike a defense will 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.” (citation omitted); Stanbury Law
Firm, P.A. v. Internal Revenue Service, 221 F.3d 1059 (8th Cir. 2000) (noting that motions to strike
are “viewed with disfavor and are infrequently granted” (quoting Lunsford, 570 F.2d at 229)); Fed.
R. Civ. P. 12(f) (stating that a “court may strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous matter”).
As noted previously, the Bank has moved to strike seven of Southwest Feeders’ affirmative
defenses. Restated in the order in which they appear in the Bank’s brief, the relevant affirmative
defenses are 1) that Southwest Feeders “did nothing wrong”; 2) the “innocent two parties rule”; 3)
“implied waiver”; 4) “implied consent”; 5) “unjust enrichment”; 6) the “doctrine of avoidable
consequences”; and 7) “mitigation of damages.” (Pl.’s Br. at 5-9, ECF No. 56.) I find that all of
these affirmative defenses are stated with sufficient clarity to satisfy Rule 8(c), and, as explained
above, I shall disregard the Bank’s arguments that the affirmative defenses fail to satisfy the
plausibility standard. I will now analyze the remaining arguments offered by the Bank in support
of its motion to strike.
1.

Southwest Feeders “Did Nothing Wrong”
Southwest Feeders’ second amended answer includes an affirmative defense stating,

“[Southwest Feeders] [s]pecifically alleges that the Defendant did nothing wrong in the purchase of
or sale of the cattle and/or calves that are the subject matter of this dispute.” (Second Am. Answer
¶ 14, ECF No. 51.) The Bank argues that this defense is “legally insufficient” within the meaning
11

of Federal Rule of Civil Procedure 12(f). (Pl.’s Br. at 6, ECF No. 56.) More specifically, the Bank
argues that the defense “is not a recognized affirmative defense to a claim of conversion,” adding
that it “is merely a conclusory statement” that “fails to provide the Bank with fair notice of the basis”
for the alleged defense. (Id. at 5-6.)
In response to the Bank’s argument, Southwest Feeders submits that in order to prevail on
its conversion claim, the Bank must show that Southwest Feeders “wrongfully exerted” dominion
over the Bank’s property “in denial of or inconsistent with the [Bank’s] rights therein.” (Def.’s
Response Br. at 7, ECF No. 62 (citing Polley v. Shoemaker, 266 N.W.2d 222 (Neb. 1978);
Steenbergen v. First Federal Savings & Loan of Chickasha, 753 P.2d 1330 (Okla. 1987)).)
Southwest Feeders then argues that it did not act “wrongfully” for two separate reasons. (Id. at 7-9.)
First, Southwest Feeders claims that the Bank “either expressly or impliedly consented to the
sale[s].” (Id. at 8.) Second, Southwest Feeders argues that it “is . . . protected from any conversion
liability” by federal statues, by a federal regulation, and “by the failure of Plaintiff to file an
[Effective Financing Statement] in the Nebraska central filing system.” (Id. at 9.)
In reply, the Bank argues that if wrongful conduct is indeed an element of its conversion
claim (as Southwest Feeders asserts), then Southwest Feeders’ defense is not an affirmative defense;
rather it is “an attempt to negate one of the elements of proof [of] the Bank’s claim for conversion.”
(Pl.’s Reply Br. at 5, ECF No. 66.)
I agree with the Bank that a defense that negates an element of a claim generally should not
be designated as an “affirmative defense.” See Black’s Law Dictionary 55 (deluxe 5th ed. 1979)
(defining “affirmative defense” as “new matter which, assuming the complaint to be true, constitutes
a defense to it”). Thus, Southwest Feeders erred by listing its “did nothing wrong” defense among
its affirmative defenses. It does not follow, however, that the defense must be stricken due to its
mistaken designation. On the contrary, such errors are routinely disregarded. See 5 Charles Alan
Wright & Arthur R. Miller, Federal Practice & Procedure § 1269 (3d ed. 2011) (“The federal courts
have accepted the notion of treating a specific denial that has been improperly denominated as an
affirmative defense as though it were correctly labeled. This is amply demonstrated by the fact that
research has not revealed a single reported decision since the promulgation of the federal rules in
which an erroneous designation resulted in any substantial prejudice to the pleader.”). Despite its
12

erroneous designation, the defense puts the plaintiff on notice that it will be put to its proof on the
issue of the wrongfulness of the defendant’s conduct. The defense is not insufficient as a matter of
law.
The Bank also argues in its reply brief that the defense is “redundant,” and therefore eligible
to be stricken under Rule 12(f), because the answer raises “express or implied consent” as a separate
affirmative defense. (Pl.’s Reply Br. at 5-6.) Although it is true that Southwest Feeders has offered
the Bank’s express or implied consent as one reason for denying that it acted wrongfully, it also
argues that its denial is appropriate because Southwest Feeders “is . . . protected from any conversion
liability” by certain laws and “by the failure of Plaintiff to file an EFS in the Nebraska central filing
system.” (Def.’s Response Br. at 9, ECF No. 62.) I am not persuaded that the defense ought to be
stricken on the ground that it is redundant.
2.

The “Innocent Two Parties Rule”
The second amended answer alleges “that the Plaintiff’s claims are barred by the innocent

two parties rule.” (Second Am. Answer ¶ 17, ECF No. 51.) The Bank argues that this allegation
must be stricken because it “is not a recognized affirmative defense to a claim of conversion” and
is “legally insufficient under Rule 12(f).” (Pl.’s Br. at 6, ECF No. 56.)
Southwest Feeders argues that the “Two Innocent Parties Rule”5 operates in Nebraska under
the following circumstances: “where one of two innocent parties must suffer, he must bear the loss
whose act put it in the power of the third party to commit the wrong.” (Def..’s Response Br. at 10,
ECF No. 62 (quoting Smith v. Armour Packing Co., 158 F. 86, 88 (8th Cir. 1907)). See also id.
(citing Oleson v. Albers, 266 N.W. 632, 635 (Neb. 1936) (“Whenever one of two innocent persons
must suffer by the acts of a third, he who has enabled such third person to occasion the loss must
sustain it.”) (citation omitted)).) Southwest Feeders adds that “[i]n Oklahoma, the Two Innocent
Parties Rule[] serves to stop a party from attaching liability to another for the tortious conduct of a
third person, when the party seeking to impose the liability created the opportunity for the third
person to commit the tort.” (Def.’s Response Br. at 10, ECF No. 62 (citing Joy v. Farmers’ National
Bank of Chickasha, 11 P.2d 1074 (Okla. 1932); Adkisson v. Waitman, 213 P.2d 465 (Okla. 1949)).)
5

It its brief, Southwest Feeders refers to the rule as the “Two Innocent Parties Rule,” as
opposed to the “innocent two parties rule.”
13

Southwest Feeders submits that because the Bank “was in a far better position than Southwest
[Feeders] to monitor its debtor (Dane Morris) and enforce its obligation,” the two innocent parties
rule is a proper affirmative defense in this case. (Id.)
In reply, the Bank criticizes Southwest Feeders’ reliance upon Smith v. Armour Packing Co.,
arguing that the Eighth Circuit’s 1907 decision does not indicate that “Nebraska substantive [law]
applied to the case.” (Pl.’s Reply Br. at 6, ECF No. 66.) I agree; however, the remaining cases cited
by Southwest Feeders do indicate that the two innocent parties rule has been applied in both
Nebraska and Oklahoma. (See Def.’s Response Br. at 10 (citing Oleson v. Albers, 266 N.W. 632,
635 (Neb. 1936); Joy v. Farmers’ National Bank of Chickasha, 11 P.2d 1074 (Okla. 1932); Adkisson
v. Waitman, 213 P.2d 465 (Okla. 1949)).) Though Southwest Feeders’ cases were decided long ago,
the Bank refers me to no authority specifically stating that the rule is no longer viable.
The Bank also argues that Southwest Feeders’ reliance on the rule “presupposes [Southwest
Feeders’] innocence,” stating, “if Southwest [Feeders] is found to be liable to the Bank for
conversion, Southwest can hardly argue that it is an innocent party to which the purported ‘two
innocent parties’ rule should apply.” (Pl.’s Reply Br. at 6, ECF No. 66.) It then refers me to a
Nebraska case suggesting that “innocence”–or more precisely, good faith–is no defense to a
conversion claim. (See id. (quoting State Securities Co. v. Svoboda, 110 N.W.2d 109, 112 (Neb.
1961)).) See also Svoboda, 110 N.W.2d at 114 (“It follows that the auctioneers who assisted in the
conversion by sale of the mortgaged property are liable to the plaintiff mortgagee therefor. Their
good faith and lack of knowledge of the plaintiff’s mortgage are not a defense to the action. Neither
is it a defense that the mortgagor was present and was identified as the seller.”). In essence, this
amounts to an argument that the alleged affirmative defense fails on its merits.
Although it is not yet clear whether Nebraska or Oklahoma law will apply in this case, there
appears to be some authority in support of each party’s position about the significance of Southwest
Feeders’ good faith and/or the Morrises’ fraud. The facts must be developed further and the
applicable law must be identified before I attempt to resolve this dispute. To resolve the plaintiff’s
motion to strike, however, I need only determine whether the affirmative defense raises a question
of law that the court ought to hear. It does; therefore, I shall not strike the affirmative defense.

14

3.

Implied Waiver
The second amended answer alleges that the Food Security Act “allows . . . buyers or sellers

[of farm products] to either take farm products free from a security party’s [sic] interest or, if a
proper Effective Filing Statement is filed by a secured party of farm products, to take such farm
products ‘subject to’ the security interest, unless by performing any payment obligation ‘or
otherwise,’ which includes ALL common law defenses, including implied consent and waiver
through a course of conduct.” (Second Am. Answer ¶ 13, ECF No. 51.) Though its wording could
be clearer, this allegation raises the possibility that Southwest Feeders will rely upon the theory of
implied waiver.
Recognizing this, the Bank has moved to strike the affirmative defense of implied waiver,
arguing that the defense was “barred as a matter of law” in AG Services of America, Inc. v. United
Grain, Inc., 75 F. Supp. 2d 1037 (D. Neb. 1999). (Pl.’s Br. at 6-7, ECF No. 56.) In AG Services,
the court held that “United Grain, as a corn buyer, cannot raise the implied waiver defense because
valid Effective Financing Statements had been filed within the meaning of 7 U.S.C. § 1631 and the
underlying Nebraska law.” 75 F. Supp. 2d at 1050. As Southwest Feeders correctly notes, however,
there is no indication that the Bank filed an Effective Financing Statement in Nebraska. Southwest
Feeders argues further that under these circumstances, the defense of implied waiver is available in
both Nebraska and Oklahoma–though it admits that there are authorities holding to the contrary.
(Def.’s Response Br. at 12 & n.6, ECF No. 62.) The Bank replies that Southwest Feeders “can cite
no case law applying Revised Article 9 of the U.C.C. which states that an implied waiver defense
does apply,” and it adds that revisions to the Oklahoma U.C.C. should be interpreted to bar defenses
such as implied waiver. (Pl.’s Reply Br. at 7-8, ECF No. 66.)
As I noted previously, I need not settle the parties’ legal dispute in order to resolve the Bank’s
motion to strike. For present purposes, I need only determine whether the defendant’s pleading of
“implied waiver” fairly presents a question of law that the court ought to hear. I find that I must hear
the parties’ arguments about the applicability of the implied waiver theory before disposing of it on
its merits, and therefore I shall not strike the theory from the pleading.

15

4.

Implied Consent
The second amended answer “alleges that the Plaintiff authorized, consented to and

acquiesced in the sale of the cattle or calves.” (Second Am. Answer ¶ 12, ECF No. 51.) The Bank
interprets this language as an “implied consent” affirmative defense, (Pl.’s Br. at 8, ECF No. 56),
though it seems to me that it also raises the issue of “express consent.” In any event, the Bank argues
that the affirmative defense of implied consent is legally insufficient because “mere consent to the
sale of collateral is not, in and of itself, consent to the disposition of the collateral free and clear of
a security interest or consent to the disposition of the proceeds of the collateral to someone other than
the Bank.” (Id. at 7-8.) In other words, the Bank argues that the pleading is insufficient because it
does not conclude with the words “free and clear of the Bank’s perfected security interest.” (Id. at
7 (emphasis omitted).)
In response, Southwest Feeders “concedes that it should have expressed this defense better
by also saying that Plaintiff not only consented, authorized and acquiesced to the sale of cattle
collateral, but that Plaintiff consented, authorized, and acquiesced . . . to the payment of both
purchase and sale proceeds by means of non-jointly payable checks written directly to Dane Morris
as payee by Southwest [Feeders].” (Def.’s Response Br. at 13, ECF No. 62.) It adds, “To that
extent, Southwest [Feeders] requests, and will make a future motion, to amend its affirmative
defenses accordingly.” (Id.) Indeed, as I noted previously, Southwest Feeders has moved for leave
to amend its affirmative defenses, (see ECF No. 68), and it proposes to amend the relevant allegation
to state,
[Southwest Feeders] [s]pecifically alleges that the Plaintiff not only
consented, authorized, and acquiesced to the sale of the collateral, but also that the
Plaintiff consented, authorized, and acquiesced to the payment of both cattle purchase
and sale proceeds checks by the Defendant and non-jointly payable checks paid
directly to Dane Morris as sole payee.
(Def.’s Index, Attach. 1, ¶ 4, ECF No. 69-1.)

16

In reply, the Bank argues that the proposed amendment6 does not render the affirmative
defense sufficient as a matter of law. More specifically, it claims that the affirmative defense is
“irrelevant” because the U.C.C. lacks “language indicating an implied consent defense [is available]
with regard to the proceeds of collateral,” and it repeats its argument that the defendant’s failure to
allege that the Bank authorized the disposition of the livestock free of the security interest is fatal
to the affirmative defense. (Pl.’s Reply Br. at 9, ECF No. 66.)
In paragraphs 27, 28, and 37 of its complaint, the Bank alleges that Southwest Feeders
remitted “the proceed[s] from the sale of the [livestock] to Lucky Moon and/or the Morrises without
including the Bank’s name on the check,” and thereby exerted “unauthorized and wrongful”
dominion and control “over the [livestock] and the proceeds of the [livestock] in which the Bank had
a security interest.” The defendant’s proposed amended affirmative defense amounts to a denial of
these allegations. For the reasons explained below, the defendant will be granted leave to amend its
affirmative defenses, and the “consent” language at issue here will not be stricken merely because
it might not be appropriate to designate it as an affirmative defense. (See supra Part III.B.1
(explaining that the court will not strike a denial that was improperly designated as an affirmative
defense).)
5.

Unjust Enrichment
The second amended answer states,
[Southwest Feeders] [s]pecifically alleges that if the Defendant is liable to the
Plaintiff for any loss, the same being specifically denied, that the Plaintiff has been
unjustly enriched for the amount of costs incurred by the Defendant to feed, doctor,
hedge, processing medication, brand inspection fees, insurance premiums, freight,
put option contract costs, forward contract costs and interest.

(Second Am. Answer ¶ 18, ECF No. 51.) Though Southwest Feeders concedes that this sentence
could be “better stated,” (Def.’s Response Br. at 15, ECF No. 62), it raises plainly the issue of unjust
enrichment.

6

The Bank did not have the proposed amendment before it when it submitted its reply
brief; however, the proposed amendment tracks the language used by Southwest Feeders in its
response brief. (Compare Def.’s Response Br. at 13, ECF No. 62, with Def.’s Index, Attach. 1, ¶
4, ECF No. 69-1.)
17

The Bank argues that this paragraph must be stricken because “unjust enrichment is generally
considered [a] legal claim and not an affirmative defense.” (Pl.’s Br. at 8, ECF No. 56. See also
Pl.’s Reply Br. at 10 (citing Ag Services of America, Inc. v. Empfield, 587 N.W.2d 871 (Neb.
1999)).) I shall not strike the “unjust enrichment” theory solely on the ground that it may have been
mistakenly designated as an affirmative defense. See Fed. R. Civ. P. 8(c)(2) (“If a party mistakenly
designates . . . a counterclaim as a defense, the court must, if justice requires, treat the pleading as
though it were correctly designated . . . .”).
The Bank also argues that unjust enrichment is not available to Southwest Feeders in this
case because the defendant “has not alleged in its answer any facts to suggest that an implied contract
existed between Southwest [Feeders] or the Bank with regard to the feed and care of the [relevant
livestock].” (Pl.’s Br. at 9, ECF No. 56.) It adds, “Similarly, Southwest [Feeders] has failed to
articulate any legal basis for which the Bank would not be entitled to the full, fair market value of
the cattle in which it held a perfected security interest. Southwest [Feeders] has further failed to
allege how, if at all, its feed and care expenses, which were incorporated into the value of the
[livestock], was superior to the Bank’s security interest in the [livestock].” (Id. (citation omitted).)
As I have explained previously, Rule 8(c) does not require the defendant’s pleading to include this
level of detail. Paragraph 18 will not be stricken on the ground that it does not incorporate “every
step of legal reasoning that may be raised in support of [the] affirmative defense.” Wisland v.
Admiral Beverage Corp., 119 F.3d 733, 737 (8th Cir. 1997).
Both the Bank and Southwest Feeders cite Day v. Case Credit Corp., 427 F.3d 1148, 1154
(8th Cir. 2005), which contains the following discussion of unjust enrichment (based on Arkansas
cases):
“The phrase ‘unjust enrichment’ does not describe a theory of recovery, but
an effect: the result of a failure to make restitution under circumstances where it is
equitable to do so.” Sparks Regional Medical Center v. Blatt, 55 Ark. App. 311, 935
S.W.2d 304, 317 (1996 (citations omitted). The party claiming unjust enrichment
must prove another’s receipt of “something of value to which he is not entitled and
which he should restore. There must be some operative act, intent, or situation to
make the enrichment unjust and compensable.” Smith v. Whitener, 42 Ark. App.
225, 856 S.W.2d 328, 329 (1993). It is not necessary to show the party unjustly
enriched committed any wrongdoing–even an innocent party “may be compelled to
surrender the fruits to a more deserving party.” Id. at 330. Rather, “[i]f one has
18

money belonging to another, which, in equity and good conscience, he ought not to
retain, it can be recovered although there is no privity between the parties.” Id.
Parties seeking to invoke the court’s equitable powers, however, must be themselves
deserving of equity. “The clean hands maxim bars relief to those guilty of improper
conduct in the matter as to which they seek relief.” Merchants & Planters Bank &
Trust Co. of Arkadelphia v. Massey, 302 Ark. 421, 790 S.W.2d 889, 891 (1990).
(See Pl.’s Br. at 8, ECF No. 56; Def.’s Response Br. at 15, ECF No. 62.) It seems to me that the
facts must be established, and the Bank’s claim must be resolved, before it can be determined
whether it would be equitable to require the Bank to make restitution to Southwest Feeders for the
costs and expenses associated with the sale of the livestock. See, e.g., Stark v. Soteria Imaging
Services, Inc., 276 F. Supp. 2d 989, 994 (D. Neb. 1993) (“Whether a defendant has been unjustly
enriched is a question of fact.” (citing Hoffman v. Reinke Mfg. Co., 227 Neb. 66, 416 N.W.2d 216,
219 (1987)).)7 I should hear the parties’ arguments about unjust enrichment at a more appropriate
point in the progression of this case, and I will not strike the matter from the second amended
answer.
The court notes in passing that Southwest Feeders argues that “an affirmative defense of
estoppel by silence” also may be applicable in this case. (Def.’s Response Br. at 17, ECF No. 62.)
“Estoppel by silence” was not pleaded in the second amended answer, but it has been proposed for
inclusion in the third amended answer. (See Def.’s Index, Attach. 1, ¶ 4, ECF No. 69-1.) Southwest
Feeders’ motion for leave to amend its answer will be addressed below.

7

The Bank cites Stark for the proposition that “where a third person benefits from a
contract entered into between two other persons, in the absence of some misleading act by the
third person, the mere failure of performance by one of the contracting parties does not give rise
to a right of restitution against the third person.” 276 F. Supp. 2d at 994 (quoting Haggard
Drilling, Inc. v. Greene, 236 N.W.2d 841, 846 (Neb. 1975)). (See also Pl.’s Br. at 8, ECF No.
56; Pl.’s Reply Br. at 11, ECF No. 66.) Casting itself in the position of a third party beneficiary
of a contract between Southwest Feeders and the Morrises, the Bank argues that the Morrises’
failure of performance does not give rise to an unjust enrichment claim against the Bank. (See
Pl.’s Br. at 8-9, ECF No. 56; Pl.’s Reply Br. at 11, ECF No. 66.) As the court noted in Stark,
however, it would be premature for me to conclude that the Bank was no more than a third party
beneficiary of a contract between the Morrises and Southwest: the pleadings raise the question of
whether there was a quasi-contract between the Bank and Southwest. See 276 F. Supp. 2d at
994.
19

6.

The Doctrine of Avoidable Consequences and the Mitigation of Damages
The second amended answer states, “[Southwest Feeders] [s]pecifically alleges that

Plaintiff’s claims are barred by the doctrine of avoidable consequences” and “[s]pecifically alleges
that if the Plaintiff sustained any damages, the same being specifically denied, that the Plaintiff failed
to mitigate such claimed damages.” (Second Am. Answer ¶¶ 16, 19, ECF No. 51.)
The Bank argues that “the doctrine of avoidable consequences is merely another name for
the failure to mitigate damages,” and therefore one of the defenses must be stricken on the ground
that it is redundant. (Pl.’s Br. at 9-10, ECF No. 56 (citing Borley Storage & Transfer Co. v. Whitted,
710 N.W.2d 71, 80 (Neb. 2006)); Pl.’s Reply Br. at 12, ECF No. 66 (quoting Whitted, 710 N.W.2d
at 80).) Citing the Second Restatement of Torts, section 918, Southwest Feeders argues in response
that there is a distinction between the two defenses. (Def.’s Response Br. at 18-19, ECF No. 62.)
More specifically, the defendant claims that “the [d]octrine of [m]itigation of [d]amages requires that
the party against whom it is used [must] have knowledge of the harm caused before the requirement
to mitigate damages takes effect,” while “the [d]octrine of [a]voidable [c]onsequences does not . .
. require [such knowledge] . . . where a party ‘heedlessly failed to protect his own interest.’” (Id. at
19 (emphasis omitted).) This alleged distinction evidently is not recognized under Nebraska law,
however, see Whitted, 710 N.W.2d at 80 (stating that the doctrine of avoidable consequences is
another name for the failure to mitigate damages); Gottsch Feeding Corp v. Red Cloud Cattle Co.,
429 N.W.2d 328, 333 (Neb. 1988) (same), and Southwest Feeders cites no authority suggesting that
it is recognized under Oklahoma law, (see generally Def.’s Response Br., ECF No. 62). I find that
paragraph 19 of the second amended answer, which alleges that the plaintiff failed to mitigate its
damages, is redundant, and it shall be stricken.
The Bank also argues that Southwest Feeders “cannot allege, as it did in its answer, that the
Bank’s claim for conversion is completely barred” because the doctrine concerns only the extent of
the plaintiff’s damages–not the defendant’s liability for conversion. (Pl.’s Br. at 10, ECF No. 56.)
In essence, the Bank objects to Southwest Feeders’ use of the word “barred” in paragraph 17 of its
second amended answer (at least insofar as “barred” is coupled with the word “claims” rather than
“damages”). Though the Bank’s reading of the answer is not unreasonable, 12(f) does not require
parties to write with perfect grammar or phrasing, and it does not cast courts in the role of copy
20

editors. The doctrine of avoidable consequences has been pleaded sufficiently, and it shall not be
stricken on the ground that the defendant may have overstated its potential effect on the plaintiff’s
claims.
Finally, the Bank argues that the doctrine of avoidable consequences is inapplicable in this
case because “no further damage occurred after the commission of the tort.” (Pl.’s Br. at 10, ECF
No. 56.) More specifically, the Bank claims that “the conversion occurred, . . . the Bank suffered
damages when . . . Southwest [Feeders] failed to pay to the Bank the proceeds from the sale of . . .
[the] cattle,” and “there was nothing for the Bank to attempt to mitigate” following “this act of
conversion” by the defendant. (Id. at 10-11.) The Bank’s argument depends on an assumption that
a single transaction, payment, or conversion caused all of the Bank’s damages. This has not been
established. On the contrary, Southwest Feeders argues that a series of transactions occurred, and
the Bank was well aware that the transactions were occurring.

The doctrine of avoidable

consequences will not be stricken
In summary, Southwest Feeders’ allegation that the Bank failed to mitigate its damages,
which appears in paragraph 19 of the second amended answer, will be stricken on the ground that
it is redundant. In all other respects, the Bank’s motion to strike is denied.
C.

The Defendant’s Motion for Leave to Amend Its Affirmative Defenses

Southwest Feeders has moved for leave to amend its affirmative defenses. (ECF No. 68.)
The Bank has objected to Southwest Feeders’ motion, arguing that because the proposed amended
pleading “repeats most of the affirmative defenses which are the subject of the Plaintiff’s Motion to
Strike Affirmative Defenses,” “the Defendant should not be allowed to [amend its affirmative
defenses] until the Court has ruled upon the pending Motion to Strike.” (Pl.’s Objection at 1, ECF
No. 70.) I have now resolved the Bank’s motion to strike, and in light of the analysis set forth above
in Part III.B., I shall sustain part of the Bank’s objection to the proposed amended pleading. To the
extent that the proposed pleading attempts to re-assert both the doctrine of avoidable consequences
and the failure to mitigate damages, Southwest Feeders’ motion for leave to amend its affirmative
defenses is denied. Conversely, I shall grant Southwest Feeders leave to file a redacted version of
the proposed pleading that conforms with my analysis of the Bank’s motion to strike.

21

D.

The Defendant’s Motion for Leave to Supplement Its Affirmative Defenses

Southwest Feeders claims that it inadvertently omitted the affirmative defense appearing in
paragraph 13 of the second amended answer from its proposed third amended answer. (Compare
Second Am. Answer, ECF No. 51, with Def.’s Index, Attach. 1, ECF No. 69-1.) The defendant
seeks leave to re-assert this affirmative defense when it files its new amended answer, and it advises
me that the Bank has no objection to this request. (See Def.’s Mot. at 1-2, ECF No. 74.) The
defendant’s motion is granted, and the defense may be incorporated into Southwest Feeders’ new
amended pleading.
IT IS ORDERED that:
1.

the plaintiff’s motion to strike, (ECF No. 55), is granted in part as explained in the
memorandum accompanying this order;

2.

the plaintiff’s objection to the defendant’s evidence, (ECF No. 65), is sustained;

3.

the defendant’s motion for leave to amend its affirmative defenses, (ECF No. 68), is
granted in part as explained in the memorandum accompanying this order;

4.

the plaintiff’s objection to the defendant’s motion for leave to amend, (ECF No. 70),
is sustained in part as explained in the memorandum accompanying this order; and

5.

the defendant’s motion for leave to supplement its affirmative defenses, (ECF No.
74), is granted.

Dated October 4, 2011.
BY THE COURT
s/ Warren K. Urbom
United States Senior District Judge

22