West Star Yacht LLC v. Seattle Lakes Cruises LLC

Filing 93

ORDER denying Plaintiff's 81 Motion to Reclassify Defendant's Counterclaim as an Affirmative Defense. Signed by Judge Ricardo S. Martinez. (SB)

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Case 2:21-cv-00223-RSM Document 93 Filed 11/16/21 Page 1 of 3   1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 8 9 10 WEST STAR YACHT, LLC, Plaintiff, 11 12 13 v. 14 ORDER DENYING PLAINTIFF’S MOTION TO RECLASSIFY DEFENDANT’S COUNTERCLAIM AS AN AFFIRMATIVE DEFENSE SEATTLE LAKES CRUISES, LLC and ARGONAUT INSURANCE COMPANY, 15 Case No. C21-223RSM Defendants. 16 This matter comes before the Court on Plaintiff’s Motion to reclassify Defendant’s 17 18 counterclaim as an affirmative defense. Dkt. #81. 19 Generally speaking, counterclaims are claims that arise out of the transaction or 20 occurrence that is the subject matter of the opposing party’s claim. See Fed. R. Civ. P. 13(a)(1). 21 An affirmative defense is “a defendant’s assertion of facts and arguments that, if true, will 22 23 24 defeat the plaintiff’s… claim even if all the allegations in the complaint are true.” Defense, Black’s Law Dictionary 451 (8th Ed. 2004). “If a party mistakenly designates a defense as a 25 counterclaim, or a counterclaim as a defense, the court must, if justice requires, treat the 26 pleading as though it were correctly designated, and may impose terms for doing so.” Fed. R. 27 Civ. P. 8(c)(2). 28 ORDER DENYING PLAINTIFF’S MOTION TO RECLASSIFY DEFENDANT’S COUNTERCLAIM AS AN AFFIRMATIVE DEFENSE - 1 Case 2:21-cv-00223-RSM Document 93 Filed 11/16/21 Page 2 of 3   On June 6, 2021, Plaintiff, West Star Yacht, LLC (“West Star”), filed its Second 1 2 Amended Complaint against Seattle Lakes Cruises, LLC (“Seattle Lakes”) and Argonaut 3 Insurance Company (“Argonaut”) alleging various causes of action arising from damage to a 4 leased vessel owned by West Star. Dkt. #67. On June 30, 2021, Seattle Lakes filed an Answer 5 6 7 with affirmative defenses and a counterclaim alleging that an “actual controversy exists between the parties regarding the allocation of insurance proceeds pursuant to the 8 Agreement…” Dkt. # 72. Seattle Lakes requests that the Court declare “any insurance proceeds 9 obtained by West Star from any insurer providing coverage for the vessel… offset or reduce 10 Seattle Lake’s liability for damages to West Star.” Id. 11 West Star argues this counterclaim seeks to limit Seattle Lakes’ liability through an 12 13 offset. Dkt. #81 at 2. West Star points to cases where offset has been interpreted as an 14 affirmative defense. Id. at 3 (citing Rahman v. San Diego Accounts Services, Inc., 2017 WL 15 1387206 (S.D. Cal. 2017); Jacobson v. Persolve, LLC, 2014 WL 4090809, at 9 (N.D. Cal. 16 2014)). 17 18 In Response, Seattle Lakes argues it cannot bring an affirmative defense for offset yet 19 because West Star has not yet received insurance proceeds and that its counterclaim for 20 declaratory relief is procedurally proper. Dkt. #83. 21 22 23 24 25 26 27 On Reply, West Star states: Here, Seattle Lakes’ second Affirmative Defense asserts that West Star’s “claims are barred and/or limited by contract.” [Dkt. No. 72, p. 9]. Paragraph 6 of Seattle Lakes’ purported Counterclaim alleges that its Agreement with West Star requires an offset in the amount of “any insurance proceeds obtained by West Star from any insurer.” [Dkt. No. 72, p. 10]. Seattle Lakes’ counterclaim is entirely encompassed within its affirmative defense that West Star’s contractual damages must be limited by contract. The counterclaim, therefore, seeks nothing more than a declaration that 28 ORDER DENYING PLAINTIFF’S MOTION TO RECLASSIFY DEFENDANT’S COUNTERCLAIM AS AN AFFIRMATIVE DEFENSE - 2 Case 2:21-cv-00223-RSM Document 93 Filed 11/16/21 Page 3 of 3   Seattle Lakes should prevail on the second Affirmative Defense it pleads one page earlier. 1 2 3 4 Dkt. #85 at 2. The Court is convinced by Seattle Lakes’ argument that its counterclaim is an 5 independent cause of action because an affirmative defense of offset cannot be pled prior to 6 West Star receiving insurance proceeds. Although it appears that this counterclaim may have 7 8 9 some overlap with the “limited by contract” affirmative defense, such is not immediately obvious from the pleading, West Star failed to make this argument in its motion, and West Star 10 has failed to show any significant burden to responding to the counterclaim or why “justice 11 requires” granting the requested relief. 12 13 Having reviewed the relevant briefing and the remainder of the record, the Court hereby finds and ORDERS that Plaintiff West Star’s Motion to reclassify Defendant’s counterclaim as 14 15 an affirmative defense, Dkt. #81, is DENIED. 16 17 DATED this 16th day of November, 2021. 18 19 20 21 22 A RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE 23 24 25 26 27 28 ORDER DENYING PLAINTIFF’S MOTION TO RECLASSIFY DEFENDANT’S COUNTERCLAIM AS AN AFFIRMATIVE DEFENSE - 3

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