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General Electric Capital Corp. v. Lanmann

July 24, 2006


The opinion of the court was delivered by: Judge Gregory L. Frost

Magistrate Judge Mark R. Abel


This matter is before the Court for consideration of a Motion to Strike and Dismiss Affirmative Defenses (Doc. # 8) and a corresponding memorandum in support of Plaintiff's motion (Doc. # 9) filed by Plaintiff, General Electric Capital Corporation ("GECC"), a memorandum in opposition (Doc. # 20) filed by Defendants, Jeffrey L. Lanmann ("Lanmann") and Jeffery A. Beaver ("Beaver"), and a reply memorandum (Doc. # 21) filed by GECC. For the reasons that follow, the Court finds the motion to strike and dismiss not well taken.

I. Background

Given the type of motion addressed in this Opinion and Order, the Court need not and does not set forth the facts in much detail here. Of import for present purposes is that this case is an action brought by GECC against Lanmann and Beaver. GECC is a Delaware corporation with its principle place of business in the state of Connecticut, while Defendants are both citizens of the state of Ohio. Defendants served as Guarantors of a Master Lease Agreement ("Agreement") that non-party Torymac Investments, Inc. ("Torymac") had with GECC. At the time of the Agreement, Lanmann was Vice President for Torymac and Beaver was a principal of Torymac.

Defendants signed the Agreement on April 17, 2000, and each executed Guarantees on the same date in writing promising full and prompt payment for all present and future obligations of Torymac to GECC, and all costs and expenses associated with enforcing the Guarantees in consideration for GECC delivering and leasing equipment to Torymac. Both parties signed a Modification Agreement ("Modification") on October 15, 2002 that clarified the terms of the original Agreement. In reliance on Defendants' Guarantees, GECC extended credit to Torymac and delivered agreed-upon equipment. Torymac later declared bankruptcy and returned the equipment to GECC, which then sold it for $454,448.80, in mitigation of the alleged total damages of $727,376.22.

GECC asserts that Defendants breached their Guarantees in failing to pay the requested sum of $319,097.29. Accordingly, the company filed the instant suit on December 16, 2005 to obtain payment and damages resulting from Defendants' alleged breach of contract. GECC also claims "interest of 18% per annum on the principal amount of $727,376.22" and all attorneys' fees and costs. (Doc. # 1, ¶ 24.)

Defendants filed an Answer on February 17, 2006 that asserted seven affirmative defenses: payment, novation, accord and satisfaction, waiver, release, estoppel, and bankruptcy/discharge. (Doc. # 4, at ¶ ¶ 15-21.) On March 29, 2006, GECC filed a motion to strike and dismiss all seven affirmative defenses. (Doc. # 8.) The parties have completed briefing, and GECC's motion is ripe for disposition.

II. Analysis

A. Standard Involved

GECC attacks Defendants' affirmative defenses under Federal Rule of Civil Procedure 12(f), which states:

Upon motion made by a party before responding to a pleading, or, if no responsive pleading is permitted by these rules, upon motion made by a party within 20 days after the service of the pleading upon the party or upon the court's own initiative at any time, the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.

Fed. R. Civ. P. 12(f).

Motions to strike defenses are generally disfavored. A motion to strike an affirmative defense under Rule 12(f) "is proper if the defense is insufficient; that is, if 'as a matter of law, the defense cannot succeed under any circumstances.'" United States Sec. & Exch. Comm'n. v. Thorn, No. 2:01-CV-290, 2002WL 31412440, at *2 (S.D. Ohio Sept. 30, 2002) (quoting Ameriwood Industries Int'l Corp. v. Arthur Andersen & Co., 961 F. Supp. 1078, 1083 (W.D. Mich. 1997)). See also United States v. Pretty Products, Inc., 780 F. Supp. 1488, 1498 (S.D. Ohio 1991) (stating that motions to strike may be appropriate where they "serve a useful purpose by eliminating insufficient defenses and saving the time and expense which would otherwise be spent in litigating issues which would not affect the outcome of the case") (quoting United States v. Marisol, Inc., 725 F. Supp. 833, 836 (M.D. Pa. 1989) (internal quotation marks omitted)). Such a motion is also proper "if it aids in eliminating spurious issues before trial, thereby streamlining the litigation." Thorn, 2002WL 31412440, at *2.

However, [t]he Sixth Circuit has held that "because of the practical difficulty of deciding cases without a factual record it is well established that the action of striking a pleading should be sparingly used by the courts." Thus, such a motion should only be granted "when the pleading to be stricken has no possible relation to the controversy."

Id. (quoting Brown & Williamson Tobacco Corp. v. United States, 201 F.2d 819, 822 (6th Cir. 1953)). Generally, a 12(f) "motion to strike will not be granted if the insufficiency of the defense is not clearly apparent, or if it raises factual issues that should be determined on a hearing on the merits." Pretty Products, 780 F. Supp. at 1498. Additionally, "this Court may only strike those defenses 'so legally insufficient that it is beyond cavil that defendants could not prevail on them.'" Id. (citing United States v. Kramer, 757 F. Supp. 397, 410 (D. N.J. 1991)). The decision whether to strike an affirmative defense is wholly discretionary. Conocophillips Co. v. Shaffer, No. 3:05 CV 7131, 2005 WL 2280393, at *2 (N.D. Ohio Sept. 19, 2005) ("Rule 12(f) permits the Court to act with ...

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