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Nigro v. Encompass Indemnity Co.

United States District Court, D. Colorado

February 26, 2015

JOSEPH NIGRO, and TERRY NIGRO, Plaintiffs,
v.
ENCOMPASS INDEMNITY COMPANY, Defendant.

ORDER ON MOTION TO STRIKE

MICHAEL E. HEGARTY, Magistrate Judge.

Before the Court is Plaintiffs' Motion to Dismiss Designated Affirmative Defenses pursuant to Fed.R.Civ.P. 12(b)(6), which is construed by the Court as a motion to strike pursuant to Fed.R.Civ.P. 12(f) [filed January 8, 2015; docket #13]. The motion is fully briefed and the Court finds that oral argument will not assist in its adjudication of the motion. Based on the record herein and for the reasons that follow, the Court grants in part and denies in part the Plaintiff's motion.

BACKGROUND

Plaintiffs initiated this action in Weld County District Court on or about November 25, 2014, alleging essentially that Defendant "refused to complete performance of the settlement agreement" governing the total economic loss of a 1975 Corvette following its collision with road debris on Interstate Highway 76 on August 16, 2014. Complaint, docket #3. Defendant removed the action to this Court on December 23, 2014 asserting the Court's diversity jurisdiction. Docket #1. At the same time, Defendant filed an Answer to the Complaint asserting 14 affirmative defenses. Docket #4.

In the present motion, Plaintiffs move to strike nine of the affirmative defenses pled in Defendant's answer: (1) failure to mitigate damages; (3) Plaintiffs are not the real parties in interest; (4) comparative negligence and/or pro rata share of fault; (5) set off; (6) comparative bad faith; (9) obligations discharged under policy; (12) claim barred by fraud; (13) claim barred by doctrine of payment, release or waiver; and (14) penalties under Colo. Rev. Stat. § 13-17-102. Plaintiffs contend that eight of these defenses are inapplicable to their action seeking to impose and assess statutory penalties, and that Defendant fails to comply with Fed.R.Civ.P. 9(b) in asserting affirmative defense #12.

Defendant counters by first withdrawing its affirmative defenses #3 and #13, then arguing that Plaintiff has incorrectly stated the law regarding consideration of an insured's conduct for defenses ## 1, 4, 5, 6 and 12, and each of these defenses goes to whether the Defendant had a reasonable basis for denying or delaying insurance benefits. Defendant also contends that defense #14, although not an affirmative defense listed in Fed.R.Civ.P. 8(c)(1), is properly pled as simply a defense pursuant to Fed.R.Civ.P. 12. Finally, Defendant asserts that Plaintiffs' arguments regarding the sufficiency of defense #12 "contain numerous inaccuracies and misstatements."

Plaintiffs reply that defense #5 for setoff is improper in this case as they seek statutory penalties, not "property damages" as suggested by Defendant. Likewise, Plaintiffs argue that defense #1 for failure to mitigate damages is improper in an action seeking not damages, but statutory penalties. Plaintiffs also contend that Defendant cannot assert an affirmative defense based upon its own refusal to respond to Plaintiffs' request for a reasonable basis for investigation of the claim. Further, Plaintiffs assert that defense #6 for comparative bad faith is not recognized as an affirmative defense, and defense #4 for comparative negligence is a defense related to tort claims, which are not raised in this case. Finally, Plaintiffs argue that Defendant has failed to establish grounds for defense #12 for fraud or material misrepresentation.

LEGAL STANDARDS

Rule 12(f) permits the Court to "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." "The purpose of Rule 12(f) is to save the time and money that would be spent litigating issues that will not affect the outcome of the case." Kimpton Hotel & Rest. Group, LLC v. Monaco Inn, Inc., No. 07-cv-01514-WDM, 2008 WL 140488, at *1 (D. Colo. Jan. 11, 2008) (citing United States v. Smuggler-Durant Min. Corp., 822 F.Supp. 873, 875 (D. Colo. 1993)). However, striking a portion of a pleading is a drastic remedy; the federal courts generally view motions to strike with disfavor and infrequently grant such requests. Id.; see also 5C Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1380 (3d ed. 2011). Whether to strike an affirmative defense rests within the discretion of the trial court. Anderson v. Van Pelt, No. 09-cv-00704-CMA, 2010 WL 5071998, at *1 (D. Colo. Dec. 7, 2010) (citing Vanderhurst v. Colo. Mountain Coll. Dist., 16 F.Supp.2d 1297, 1303 (D. Colo. 1998)).

"A motion to strike an affirmative defense as insufficient is adjudicated under the same standard as a motion to dismiss: namely, the Court must strike the defense only if it cannot be maintained under any set of circumstances." S.E.C. v. Nacchio, 438 F.Supp.2d 1266, 1287 (D. Colo. 2006) (citing Unger v. U.S. West, Inc., 889 F.Supp. 419, 422 (D. Colo. 1995)). The standard articulated in Nacchio/Unger continues to be the appropriate standard. See Quick v. Grand Junction Lodging, LLC, No. 13-cv-02917-RBJ, 2014 WL 7205417, at *2 n.2 (D. Colo. Dec. 18, 2014) (listing cases). For the following reasons, the Court holds that an affirmative defense is sufficient if stated "in short and plain terms" pursuant to Rule 8(b)(1)(A), and if the movant fails to demonstrate that the defense cannot succeed under any circumstance.

ANALYSIS

As set forth above, Plaintiffs state in their motion that they seek to strike nine affirmative defenses, including ##1, 3, 4, 5, 6, 9, 12, 13 and 14; however, the motion contains no argument concerning defense #9 and, thus, the Court will deny the motion as to this defense. Further, the Defendant has withdrawn defenses ## 3 and 13, and the Plaintiffs do not rebut Defendant's argument supporting defense #14; therefore, the Court will deny the motion as to these defenses as well and order Defendant to file an Amended Answer omitting affirmative defenses ## 3 and 13.

Accordingly, the challenged defenses remaining for adjudication are ## 1, 4, 5, 6, and 12. With the aforementioned legal principles in mind, the Court will ...


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