Commerce and Industry Insurance Company v. Newhall Contracting, Inc.
Filing
23
MEMORANDUM OPINION AND ORDER granting in part and denying in part plaintiffs' 8 MOTIONS to strike affirmative defenses [ECF 8 in case no. 2:13-cv-40360; ECF 9 in case no. 2:13-cv-30263] and STRIKES from Defendants' 5 Answers [ECF 5 in case no. 2:13-cv-40360; ECF 7 in case no. 2:13-cv-30263] the First Defense, Second Defense, and Third Defense; the Court will GRANT Defendants leave to amend the deficient affirmative defenses; Defendants are again ADVISED that their failure t o defend this action and to comply with this Court's Orders exposes them to a variety of sanctions, including the entry of default and a default judgment upon application or motion by Plaintiffs. Signed by Judge Thomas E. Johnston on 8/19/2014. (cc: attys; defendants Newhall Contracting (Newhall Contracting, Inc., PO Box 52, Newhall, WV 24866-0052), and Parsley Enterprises (Parsley Enterprises, Inc., PO Box 457, Lenore, WV 25676-0457)) (taq)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
COMMERCE AND INDUSTRY
INSURANCE COMPANY, et al.,
Plaintiffs,
v.
CIVIL ACTION NO. 2:13-cv-30260
NEWHALL CONTRACTING, INC., et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
By Order entered March 6, 2014, the Court granted (ECF 13) the consent motion to
consolidate (ECF 10) of Plaintiff Commerce and Industry Insurance Company (“Commerce and
Industry”) and Defendant Newhall Contracting, Inc. (“Newhall Contracting”) filed in case number
2:13-cv-30260, and the consent motion to consolidate (ECF 11) of Plaintiff National Union Fire
Insurance Company of Pittsburgh, PA‟s (“National Union”) and Defendant Parley Enterprises,
Inc. (“Parsley Enterprises”) filed in case number 2:13-cv-30263. The Court further ordered that
the consolidated cases bear the master case number 2:13-cv-30260.
Pending are Commerce and Industry‟s motion (ECF 8 in no. 2:13-cv-40360) to strike the
affirmative defenses in Defendant Newhall Contracting, Inc.‟s Answer and National Union‟s
motion (ECF 9 in no. 2:13-cv-30263) to strike the affirmative defenses in Parley Enterprises‟
Answer. Both motions as well as both Answers are similar (indeed, essentially identical). As
such, the Court considers them together for purposes of resolving Plaintiffs‟ motions. Defendants
did not file responses to the motions.1
Plaintiffs challenge Defendants‟ assertions of affirmative defenses in their respective
Answers. As pertinent here, each Answer asserts:
FIRST DEFENSE
1. Defendant assert [sic] all affirmative defenses set forth in the Rules
of Civil [P]rocedure, CR 8.03,2 which are asserted by the facts,
whether known or unknown at this time, and specifically reserve the
right to assert any and all affirmative defenses that arise or become
known to this Defendant through the course of discovery.
SECOND DEFENSE
2. The Defendant set forth [sic] and [sic] any and all affirmative
defenses known or unknown at this time.
THIRD DEFENSE
3. The Defendant reserve [sic] the right to assert any defenses that
might result as a result of additional discovery.
FORTH [sic] DEFENSE
4. That the Plaintiff states no cause of action against the Defendant and
their [sic] case should be dismissed pursuant to Civil Rule 12.3
(ECF 5 at 1 in no. 2:13-cv-30260; ECF 7 at 1 in no: 2:13-cv-30263.)
1
In this district, a party‟s failure to respond is not deemed to be a per se admission of the motion. Accordingly,
Plaintiffs must still demonstrate that their motions are meritorious. The Court observes, however, that Defendants‟
failure to respond is unhelpful and unnecessarily increases the burden on the Court.
2
Although not entirely clear, based on the citation it appears that Defendants might be referencing Kentucky Rule of
Civil Procedure 8.03, which rule concerns the pleading of affirmative defenses. See The Bluebook: A Uniform
System of Citation 43 (Columbia Law Review Ass‟n et al. eds., 19th ed. 2010) (providing that the Kentucky Rules of
Civil Procedure are cited as “Civil Rules” or “CR”). Of course, federal pleading standards apply to diversity cases.
See Fuller v. Aliff, 990 F. Supp. 2d 576, 580 (E.D. Va. 2013) (explaining that multiple district courts in this circuit
have noted that federal pleading standards are procedural rules that govern state law claims raised in diversity cases).
3
Again, this might be a reference to Kentucky Rule of Civil Procedure 12.
2
Plaintiffs first argue that Defendants‟ articulation of affirmative defenses are deficient
because they fail to satisfy the federal pleading standards as interpreted in Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 US. 662 (2009).
Plaintiffs cite no controlling authority from the Supreme Court or the Fourth Circuit (or for
that matter any other circuit court of appeals) holding that the pleading standards articulated in
Twombly and Iqbal apply to the pleading of affirmative defenses. Moreover, although Plaintiffs
are correct that some district courts have extended the Twombly/Iqbal standard to the pleading of
affirmative defenses, absent from their motions is recognition of the fact that many others have
not. See, e.g., Barrett v. Americast, Inc., 3:13-CV-163, 2014 WL 1689737, at *2 (N.D. W. Va.
Apr. 29, 2014) (“[T]he Fourth Circuit Court of Appeals has not addressed the issue of whether the
Twombly/Iqbal analysis should be applied to answers. Although, several district courts within the
Fourth Circuit have addressed the issue, there is a split of authority.”) (collecting cases); Flame
S.A. v. Indus. Carriers, Inc., 2:13-CV-658, 2014 WL 2871432, at *2 (E.D. Va. June 24, 2014)
(noting that there exists a “substantial difference in the [Fourth] Circuit‟s constituent district
courts” and concluding that “Twombly/Iqbal do not apply to the pleading of affirmative
defenses”).
The Court need not venture into this dispute at this time, however, because Plaintiffs
alternatively contend that even if Twombly and Iqbal do not apply to the pleading of affirmative
defenses Defendants‟ Answers fail to satisfy the minimal pleading standards of Federal Rule of
Civil Procedure 8 because they do not affirmatively state any specific defense. Overall, the Court
agrees with Plaintiffs.
3
Under Federal Rule of Civil Procedure 12(f), a court “may order stricken from any
pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous
matter.” As a district court in the Northern District of West Virginia recently explained:
To determine whether a defense was sufficiently pled, the Court
applies Federal Rule of Civil Procedure 8. Rule 8(b) requires that a
party, in responding to a pleading, must “state in short and plain
terms its defenses to each claim asserted against it; and admit or
deny the allegations asserted against it by an opposing party.” Fed.
R. Civ. P. 8(b)(1)(A−B). Rule 8(c) requires that a party, in
responding to a pleading, must “affirmatively state any avoidance or
affirmative defense.” Fed. R. Civ. P. 8(c)(1).
Barrett, 2014 WL 1689737 at *3.
“„An affirmative defense may be pleaded in general terms and will be held to be sufficient
. . . as long as it gives plaintiff fair notice of the nature of the defense.‟” Clem v. Corbeau, 98 F.
App‟x 197, 203 (4th Cir. 2004) (unpublished) (citing and quoting 5 Charles Allan Wright &
Arthur R. Miller, Federal Practice & Procedure § 1274, at 455–56 (2d ed.1990)).
With respect to Defendants‟ First Defense, the Court cannot conclude that the pleading of a
defense or defenses in such broad and general terms provides Plaintiffs with fair notice of the
nature of the defense or defenses contemplated by Defendants. This is particularly true in
consideration of the fact that this defense also forces Plaintiffs (and the Court) to speculate as to
which affirmative defenses it even purports to incorporate by reference through its assertion of “all
affirmative defenses set forth in the Rules of Civil [P]rocedure, CR 8.03.” To the extent that this
citation might be a citation to a Kentucky Rule of Civil Procedure, the Court observes that Civil
Rule 8.03 is not identical to Fed. R. Civ. P. 8(c), and, in fact, contains at least one named defense
(discharge in bankruptcy) not included in Fed. R. Civ. P. 8(c). Such discrepancies further
undermine a finding that this amounts to fair notice of the defense or defenses asserted, and the
4
Court further finds that such uncertainty creates the risk of prejudice to the Plaintiffs. See Villa v.
Ally Fin., Inc., 1:13CV953, 2014 WL 800450, at *1 (M.D.N.C. Feb. 28, 2014) (explaining that in
moving to strike an affirmative defense, “the moving party must show prejudice: for instance,
where an „irrelevant affirmative defense . . . result[s] in increased time and expense of trial,
including the possibility of extensive and burdensome discovery‟”). Accordingly, the First
Defense is STRICKEN to the extent that it asserts “all affirmative defenses set forth in the Rule of
Civil [P]rocedure, CR 8.03.”
To the extent that the First and Third Defenses both reserve the right to add defenses,
district courts appear to have stricken such broadly-worded and speculative assertions in
consideration of the fact that additional defenses may be raised in an amended Answer pursuant to
Fed. R. Civ. P. 15. See, e.g., Cnty. Vanlines Inc. v. Experian Info. Solutions, Inc., 205 F.R.D. 148,
157 (S.D.N.Y. 2002) (striking defense that “reserve[ed] the right to assert additional affirmative
defenses at such time and to such extent, as warranted by discovery and factual developments in
this case”); Boss Prods. Corp. v. Tapco Int’l Corp., No. 00 Civ. 0689, 2001 WL 135819, at *3
(W.D.N.Y. Feb. 16, 2001) (striking a defendant‟s affirmative defense that sought to reserve “the
right to add additional Affirmative Defenses as discovery proceeds in this case”); see also Arroyo
v. Milton Acad., 5:10-CV-117, 2011 WL 65938, at *1 (D. Vt. Jan. 10, 2011) (noting that Rule
15(a) applies where a proposed amendment seeks to add affirmative defenses that might otherwise
be waived) (citing United States v. Continental Ill. Nat. Bank & Trust Co. of Chicago, 889 F.2d
1248, 1253 n. 4 (2d Cir. 1989) (noting that Rule 8, which requires all affirmative defenses to be
pled in a responsive pleading, is modified by Rule 15 with respect to the amendment of
pleadings)); cf. Bryant Real Estate, Inc. v. Toll Bros., Inc., 106 F. App‟x 182, 188 (4th Cir. 2004)
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(unpublished) (discussing amendments under Fed. R. Civ. P. 15(b) and determining that the
defendant‟s answer had been constructively amended). Accordingly, the broad reservation of
hypothetical future defenses in the First and Third Defenses is STRICKEN, subject to Defendants
asserting additional affirmative defenses consistent with Fed. R. Civ. P. 15 as the case progresses.
Defendant‟s Second Defense is a global assertion of any and all defenses known or
unknown. To the extent that this Second Defense simply duplicates the right to assert currently
unknown defenses that may arise in the future it is STRICKEN for the same reasons previously
discussed. To the extent that it is a general assertion of any “known” defense, by asserting
everything Defendants have asserted nothing and the Court cannot conclude that this provides
Plaintiffs fair notice of the nature of the defense or defenses pled by Defendants. As such, this
Defense is also STRICKEN.
Finally, Defendants‟ Fourth Defense asserts that Plaintiffs fail to state a claim on which
relief can be granted. Although not specifically directed at either or both of the two counts
asserted in Plaintiffs‟ Complaints, it is not unreasonable to presume that this statement is asserted
as to both counts. And, although Defendants again appear to cite a state rule of civil procedure,
the Court concludes that this pleading at least sufficiently provides fair notice to Plaintiffs. See,
e.g., Erickson Beamon Ltd. v. CMG Worldwide, Inc., 12 CIV. 5105 NRB, 2014 WL 3950897, at *4
(S.D.N.Y. Aug. 13, 2014) (“[I]t is well settled that the failure-to-state-a-claim defense is a
perfectly appropriate affirmative defense to include in the answer. Although the defense is
arguably redundant in that it is essentially a general denial, there is no prejudicial harm to plaintiff
and the defense need not be stricken.”) (quotations and citation omitted); Villa, 2014 WL 800450
at *3 (collecting cases where some district courts have stricken such failure-to-state-a-claim
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defenses as not being an actual affirmative defense while others have declined to strike such
defenses and characterized them as merely mislabeled and concluding that striking such a pleading
was unnecessary and that the failure of defendant “to include any detail as to the basis for its
defense of failure to state a claim causes Plaintiff no prejudice because the Court will take no
action on the defense unless and until [defendant] makes a proper motion”). Accordingly,
Defendants‟ Fourth Defense may remain.
For these reasons, the Court GRANTS IN PART and DENIES IN PART Plaintiffs‟
pending motions to strike affirmative defenses [ECF 8 in case no. 2:13-cv-40360; ECF 9 in case
no. 2:13-cv-30263] and STRIKES from Defendants‟ Answers [ECF 5 in case no. 2:13-cv-40360;
ECF 7 in case no. 2:13-cv-30263] the First Defense, Second Defense, and Third Defense.
The Court will, however, GRANT Defendants leave to amend the deficient affirmative
defenses. See, e.g., Flame S.A. v. Indus. Carriers, Inc., 2:13-CV-658, 2014 WL 2871432, at *3
(E.D. Va. June 24, 2014) (permitting defendant to amend deficiently pled affirmative defenses “in
light of the general practice to grant leave to amend when a motion to strike is granted”); Palmer v.
Oakland Farms, Inc ., No. 5:10cv29, 2010 WL 2605179, at *2 (W.D. Va. June 24, 2010) (noting
that whenever a motion to strike affirmative defenses is granted, “the defendant should generally
be given leave to amend”).
The Court observes, however, that this disposition may be of little effect in light of the fact
that Defendants have failed to retain counsel in accordance with Local Rule of Civil Procedure
83.3 and this Court‟s prior orders (ECF 18; ECF 21).4 Nonetheless, if new counsel appears
counsel may file an amended Answer contemporaneous with counsel‟s notice of appearance and
4
Although Plaintiffs have advised the Court that Defendants have retained alternate counsel in this matter (ECF 19 at
3), to date no counsel for Defendants have entered an appearance in this civil action.
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response to the Court‟s prior Order (ECF 21). Defendants are again ADVISED that their failure
to defend this action and to comply with this Court‟s Orders exposes them to a variety of sanctions,
including the entry of default and a default judgment upon application or motion by Plaintiffs.
IT IS SO ORDERED.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record for
Plaintiffs Commerce and Industry Insurance Co. and National Union Fire Insurance Company of
Pittsburgh, PA, to Defendant Newhall Contracting at the following last-known address (Newhall
Contracting, Inc., PO Box 52, Newhall, WV 24866-0052), and to Defendant Parsley Enterprises at
the following last-known address (Parsley Enterprises, Inc., PO Box 457, Lenore, WV
25676-0457).
ENTER:
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August 19, 2014
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