United States District Court, N.D. California
GCCFC 2005-GG5 HEGENBERGER RETAIL LIMITED PARTNERSHIP, Plaintiff,
GEORGE A. ARCE, et al., Defendants.
ORDER GRANTING MOTION TO STRIKE WITH LEAVE TO AMEND
EQUITABLE AFFIRMATIVE DEFENSES RE: DKT., 53
ILLSTON United States District Judge
motion to strike defendants' affirmative defenses, Dkt.
No. 53, came on for hearing before this Court on Friday, May
11, 2018. Having considered the papers submitted, and the
arguments of counsel, the motion to strike is GRANTED with
leave to amend for the reasons set out below. Any amended
answer must be filed no later than June 21, 2018.
GCCFC 2005-GG5 Hegenberger Retail Limited Partnership filed
this breach of guaranty action against defendants George
Arce, Raquel Remedios, and Leslie Tuttle on July 7, 2017.
Complaint (Dkt. No. 1); see also First Amended
Compl. (“FAC”) (Dkt. No. 17).
alleges that defendants guaranteed, upon certain events, to
pay the amount due under a $10, 500, 000 Note issued to
nonparty borrowers Kera Oakland and Arce Oakland
(“Borrowers”). Events triggering the guarantee
included the Borrowers' filing of voluntary bankruptcy
petitions and failure to pay amounts due under the note.
to plaintiff, the borrowers stopped making payments on the
loan in or around October 2012. On July 8, 2013, each filed
separate voluntary Chapter 11 bankruptcy petitions. According
to plaintiff, these events triggered defendants'
liability under the guaranty contract. Plaintiff alleges that
defendants have not paid what is due under the note.
September 8, 2017, defendants filed a motion to dismiss the
complaint, Dkt. No. 22, which was denied. On February 27,
2018, defendants filed their respective Answers to the
Complaint. Defendant Arce asserts four affirmative defenses:
(1) statute of limitations; (2) unclean hands: (3) failure to
mitigate; and (4) unenforceability. Defendants Remedios and
Tuttle assert ten affirmative defenses: (1) failure to state
facts; (2) statute of limitations; (3) waiver; (4) estoppel;
(5) unclean hands; (6) laches; (7) mitigation of damages; (8)
cancellation; (9) novation, and (10) modification.
now moves to strike defendants' affirmative defenses on
the grounds that defendants waived their affirmative defenses
under the plain language of the guaranty. Plaintiff asks the
Court strike the affirmative defenses with prejudice.
Rule of Civil Procedure 12(f) provides that a court may, on
its own or on motion, “strike from a pleading an
insufficient defense or any redundant, immaterial,
impertinent, or scandalous matter.” The function of a
Rule 12(f) motion to strike is to avoid the expenditure of
time and money that arises from litigating spurious issues by
dispensing of those issues before trial. Fantasy, Inc. v.
Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993),
rev'd on other grounds, 510 U.S. 517 (1994).
However, motions to strike are generally disfavored.
Rosales v. Citibank, Fed. Sav. Bank, 133 F.Supp.2d
1177, 1180 (N.D. Cal. 2001). In most cases, a motion to
strike should not be granted unless “the matter to be
stricken clearly could have no possible bearing on the
subject of the litigation.” Platte Anchor Bolt,
Inc. v. IHI, Inc., 352 F.Supp.2d 1048, 1057 (N.D. Cal.
argues that the Court should strike defendants'
affirmative defenses because: (1) defendants waived their
affirmative defenses under the plain language of the guaranty
which “absolutely, unconditionally, and
irrevocably” guarantees prompt payment of the Note
issued to Kera Oakland, LLC and Arce Oakland, LLC; and (2)
defendants' affirmative defenses are insufficient based
on the Iqbal and Twombly standard.
argue their affirmative defenses should not be stricken
because the language of the guaranty is vague. In addition,
defendants argue that equitable defenses cannot be waived if
it would result in the lender's unjust enrichment.
Furthermore, defendants Remedios and Tuttle argue the
Discounted Payoff Agreement (“DPO”), dated
December 22, 2015, changed the definition of Guarantor from
all three Defendants to Defendant Arce.
Civil Code section 2856 lists the rights and defenses that
may be waived by a guarantor. Section 2856(b) requires that a
waiver provision “express an intent to waive”
any or all of the guarantor's rights and defenses.
Section 2856(b) does not require the use of any particular
language, phrases, or legal references for valid waiver.
Further, section 2856 was enacted to ameliorate the explicit
language requirements for a guarantor's waiver
established by Cathay Bank v. Lee, 14 Cal.App.4th
1533 (1993). River Bank America v. Diller, 38
Cal.App.4th 1400, 1418 ...