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Sundby v. Marquee Funding Group, Inc.

United States District Court, S.D. California

November 13, 2019

Dale Sundby, Trustee, Plaintiff,
Marquee Funding Group, Inc.; Salomon Benzimra, Trustee; Stanley Kesselman, Trustee; Jeffrey Myers; Kathleen Myers; Andres Salsido, Trustee; Benning Management Group 401(k) Profit Sharing Plan; Christopher Myers; Vickie McCarty; Dolores Thompson; Kimberly Gill Rabinoff; Steven M. Cobin, Trustee; Susan L. Cobin, Trustee; Equity Trust Company, Custodian FBO Steven M. Cobin Traditional IRA; Todd B. Cobin, Trustee; Barbara A. Cobin, Trustee; Fasack Investments LLC; and Does 1-X, Defendants.



         On May 8, 2019, Plaintiff filed an amended complaint against the above-captioned Defendants. ECF No. 13. Plaintiff sued for damages under the Truth in Lending Act, 15 U.S.C. § 1601 et seq., and for clarification as to the parties' rights and obligations flowing from a loan disbursed in 2017. Id. After the Court denied Defendants' motion to dismiss, ECF No. 44, Defendants filed three answers: (1) an answer by Salomon Benzimra and Stanley Kesselman, ECF No. 45 (the “First Answer”); (2) an answer by Marquee Funding Group, Inc. (“MFG”), ECF No. 48 (the “Second Answer”); and (3) an answer by the remaining Defendants. ECF No. 49 (the “Third Answer”). These Answers contain twenty, twenty, and fourteen affirmative defenses, respectively. See ECF No. 45 at 15-18; ECF No. 48 at 13-17; ECF No. 49 at 19-22.

         On September 24, 2019, Plaintiff filed the instant motion to strike all the affirmative defenses in each answer. ECF No. 54. On October 18, Defendant MFG filed an opposition to Plaintiff's motion regarding the Second Answer. ECF No. 59. On October 18, Mr. Benzimra, Mr. Kesselman, and the remaining Defendants jointly filed a second opposition to Plaintiff's motion regarding the First and Third Answers. ECF No. 58. On November 1, 2019, Plaintiff filed two replies addressing Defendants' oppositions. ECF No. 60, 61.

         The question presented for the Court to decide is whether Defendants' First, Second, and Third Answers “give[] plaintiff fair notice of” the fifty-four affirmative defenses contained therein. Wyshak v. City Nat'l Bank, 607 F.2d 824, 827 (9th Cir. 1979), overruled on other grounds by Castro v. County of Los Angeles, 833 F.3d 1060 (9th Cir. 2016) (en banc).

         I. Legal Standard

         A court may, by motion or on its own initiative, strike “an insufficient defense or any redundant, immaterial, impertinent or scandalous” matter from the pleadings. Fed.R.Civ.P. 12(f). The purpose of Rule 12(f) is “to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial.” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (quoting Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds, Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) (quotations omitted). Motions to strike are generally “disfavored, ” Petrie v. Elec. Game Card, Inc., 761 F.3d 959, 965 (9th Cir. 2014), and “should not be granted unless it is clear that the matter to be stricken could have no possible bearing on the subject matter of the litigation.” Loi Nguyen v. Durham Sch. Servs., L.P., 358 F.Supp.3d 1056, 1058 (C.D. Cal. 2019) (quotation omitted).

         In the Ninth Circuit, “[t]he key to determining the sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of the defense.” Simmons v. Navajo County, Ariz., 609 F.3d 1011, 1023 (9th Cir. 2010) (quoting Wyshak, 607 F.2d at 827), overruled in part by Castro, 833 F.3d 1060. “Fair notice generally requires that the defendant state the nature and grounds for the affirmative defense.” Roe v. City of San Diego, 289 F.R.D. 604, 608 (S.D. Cal. 2013). In other words, Plaintiff must be afforded the “opportunity to rebut [the asserted] defense[s] or to alter [his] litigation strategy” based on the pleadings. Simmons, 609 F.3d at 1023 (quoting In re Gayle Sterten, 546 F.3d 278, 285 (3d Cir. 2008)). Fair notice, however, does not “require a detailed statement of facts.” Roe, 289 F.R.D. at 608.

         The Court must view the pleading in the light most favorable to the pleader when ruling on a motion to strike. In re, Inc. Sec. Litig., 114 F.Supp.2d 955, 965 (C.D. Cal. 2000) (citing California v. United States, 512 F.Supp. 36, 39 (N.D. Cal. 1981)). If a claim is stricken, leave to amend should be freely given when doing so would not cause prejudice to the opposing party. Vogel v. Huntington Oaks Delaware Partners, LLC, 291 F.R.D. 438, 440 (C.D. Cal. 2013) (citing Wyshak, 607 F.2d at 826).

         II. Analysis

         a. Fair Notice Pleading Standard

         Plaintiff urges the Court to review the pleaded defenses for plausibility pursuant to Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009). ECF No. 54-2 at 3-5. Defendants contend that the Court should only review the pleadings for fair notice. ECF No. 58 at 8-11; ECF No. 59 at 3-5.

         The Court declines to apply the plausibility standard here as neither the Ninth Circuit nor the Supreme Court have instructed the courts to depart from the notice-pleading standard applied in evaluating the sufficiency of an affirmative defense. See Kohler v. Flava Enterprises, Inc., 779 F.3d 1016, 1019 (9th Cir. 2015) (applying notice pleading); Simmons, 609 F.3d at 1023 (same); Wyshak, 607 F.2d at 827 (same). Moreover, as has been articulated by other district courts in this circuit, there is ample reason to doubt that the plausibility requirements of Twombly and Iqbal should be extended to affirmative defenses. See Loi Nguyen, 358 F.Supp.3d at 1058-60 (C.D. Cal. 2019); Kohler v. Islands Restaurants, LP, 280 F.R.D. 560, 566 (S.D. Cal. 2012); but see Rahman v. San Diego Accounts Serv., No. 16-CV-2061-JLS, 2017 WL 1387206, at *2 (S.D. Cal. Apr. 18, 2017).

         Consequently, the Court assesses Defendants' affirmative defenses under the “fair notice” pleading standard. Wyshak, 607 F.2d at 827. Plaintiff's arguments that proceed on the heightened “plausibility” standard are inapposite. See generally ECF Nos. 60, 61.

         b. Defenses in the First and Second Answers ...

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