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Estate of Marjory Gail v. Ameriprise Financial Services, Inc.

United States District Court, D. Oregon, Portland Division

January 3, 2019

AMERIPRISE FINANCIAL, INC., a Delaware corporation; AMERIPRISE FINANCIAL SERVICES, INC., a Delaware corporation; and RIVERSOURCE LIFE INSURANCE COMPANY, a Minnesota corporation, Defendants.



         Plaintiff, the Estate of Marjory Gail Thomas Osborn-Vincent (“the Estate”), moves to dismiss or strike defendants' counterclaim for attorney's fees and moves to strike all of defendants' affirmative defenses. ECF #96. Defendants Ameriprise Financial Services, Inc. (“AFSI”) and RiverSource Life Insurance Company (“RiverSource”) (collectively “defendants”) oppose the motions. For the reasons set forth below, the motion to dismiss or strike defendants' counterclaim for attorney's fees should be denied and the motion to strike defendants' affirmative defenses should be granted in part and denied in part.[1]

         I. Motion to Dismiss or Strike Counterclaim for Attorney's Fees

         Defendants' counterclaim reads: “To the extent that plaintiff's claims against defendants are deemed meritless or lack an objectively reasonable basis, defendants seek attorneys' fees pursuant to ORS 20.105 and this Court's inherent equitable power to award fees due to the lack of objectively reasonable basis for the claims.” Ans. ¶ 63, ECF #90. Plaintiff moves to dismiss this counterclaim under FRCP 12(b)(1) for lack for subject matter jurisdiction and under FRCP 12(b)(6) for failure to state a claim. Plaintiff also moves to strike the counterclaim under FRCP 12(f) as immaterial or insufficient. However, the court need not reach any of the parties' arguments to resolve these motions.

         A federal court sitting in diversity must apply the substantive law of the state in which it sits. Harmsen v. Smith, 693 F.2d 932, 946 (9th Cir. 1982). Attorney-fee awards in federal actions brought under state law are a substantive matter to which state law applies. Rodriguez v. Cty. of Los Angeles, 891 F.3d 776, 809 (9th Cir. 2018); In re Larry's Apartment, L.L.C., 249 F.3d 832, 838 (9th Cir. 2001) (“a federal court sitting in diversity applies state law in deciding whether to allow attorney's fees when those fees are connected to the substance of the case”).

         ORS 20.105(1) requires the court to award reasonable attorney's fees to the prevailing party if it finds there was no objectively reasonable basis for asserting a claim.[2] The Oregon Rules of Civil Procedure require a party seeking attorney's fees under ORS 20.105 to allege the basis for such an award in a pleading. ORCP 68 C(2)(a). The Federal Rules of Civil Procedure, which govern this proceeding, contain no such requirement.[3] “In contrast to Or. R. Civ. P. 68C(2)(a), the Federal Rules do not require a party specifically to plead entitlement to attorneys' fees.” Principal Life Ins. Co. v. Robinson, No. CV 00-1345-BR, 2003 WL 27383315, at *1 (D. Or. Mar. 21, 2003).[4]

         However, nothing in the Federal Rules prohibits pleading a request for attorney's fees. Thus, the question is whether plaintiff's superfluous counterclaim should stand.

         Considering this exact issue on two separate occasions, District Judge Ann Aiken declined to grant a plaintiff's motion to dismiss a counterclaim for attorney's fees, finding the “issue to be of semantics rather than substance.” See Amort v. NWFF, Inc., No. 6:11-CV-6396-AA, 2012 WL 3756330, at *4 (D. Or. Aug. 27, 2012) (declining to dismiss counterclaim for attorney's fees); Silliman v. Hawes Fin. Grp., Inc., No. 6:15-CV-00285-AA, 2015 WL 5056353, at *4 (D. Or. Aug. 26, 2015) (same). “Regardless of whether pled as a remedy or independent claim, neither party is entitled to attorney fees without first prevailing and then filing a separate motion.” Silliman, 2015 WL 5056353, at *4 (citing Romani v. N.W. Tr. Servs., Inc., 3:11-cv- 00382-PA, 2014 WL 1072698, *1 (D. Or. Mar. 17, 2014)); see alsoFRCP 54(d)(2) (a “claim for attorney's fees . . . must be made by motion unless the substantive law requires those fees to be proved at trial as an element of damages”). “As such, defendants' fee-related claims merely furnish notice that they will seek recovery of fees if they prevail [and] establish that plaintiffs' state law claims are frivolous.” Id. (citing Amort, 2012 WL 3756330, at *4).

         The same analysis applies in this case. Irrespective of whether defendants have filed a “counterclaim” for attorney's fees, they cannot obtain them without first prevailing on a motion under FRCP 54(d)(2). At most, the counterclaim serves as notice of defendants' intention to seek attorney's fees. All of the parties' arguments to the contrary are inapposite, and plaintiff's motions to dismiss or strike defendants' counterclaim for attorney's fees therefore should be denied.

         II. Motion to Strike Defendants' Affirmative Defenses Under Rule 12(f)

         Plaintiff moves to strike all ten of defendants' affirmative defenses pursuant to Rule 12(f). Each defense is addressed individually below, after the applicable law is discussed.

         A. Applicable Law

         Federal Rule of Civil Procedure 12(f) provides that “[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” The decision to grant or deny a Rule 12(f) motion to strike is within the court's discretion. Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 963 (9th Cir. 2018).

         A matter is redundant if it is superfluous and can be omitted without a loss of meaning. See Wilkerson v. Butler, 229 F.R.D. 166, 170 (E.D. Cal. 2005) (noting that a redundant matter is one that constitutes “needless repetition”). A matter is immaterial if it “has no essential or important relationship to the claim for relief or the defenses being plead.” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 974 (9th Cir. 2010) (quoting Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds, 510 U.S. 517 (1994)). A matter is impertinent if it “consists of statements that do not pertain, and are not necessary, to the issues in question.” Id. (quoting Fantasy, 984 F.2d at 1527). A matter is scandalous if it “unnecessarily reflects on the moral character of an individual or states anything in repulsive language that detracts from the dignity of the court.” 2 Moore's Federal Practice § 12.37[3] (Bender 3d ed.).

         Federal Rule of Civil Procedure 8(c)(1) requires that “[i]n responding to a pleading, a party must affirmatively state any avoidance or affirmative defense.” In Wyshak v. City Nat'l Bank, the Ninth Circuit held that “[t]he key to determining the sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of the defense.” 607 F.2d 824, 827 (9th Cir. 1979).

         After the Supreme Court's decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), courts across the country are split on whether the pleading standard articulated in those cases applies to affirmative defenses. See Charles Alan Wright & Arthur R. Miller, Fed. Prac. & Proc. § 1274 (3d ed. 2018) (citing cases and summarizing different holdings). Since Twombly and Iqbal were decided, the Ninth Circuit issued Kohler v. Flava Enterprises, Inc., in which it held that “the ‘fair notice' required by the pleading standards only requires describing [affirmative] defense[s] in ‘general terms.'” 779 F.3d 1016, 1019 (9th Cir. 2015) (quoting Wright & Miller, Fed. Prac. & Proc. § 1274 (3d ed. 1998)). Subsequent to its decision in Kohler, the Ninth Circuit has applied the Wyshak fair-notice test in two other cases, Simmons v. Navajo Cty., Ariz., 609 F.3d 1011, 1023 (9th Cir. 2010), and Schutte & Koerting, Inc. v. Swett & Crawford, 298 Fed.Appx. 613, 615 (9th Cir. 2008) (cited pursuant to Ninth Circuit Rule 36-3). Some courts have concluded this signifies that the Wyshak fair-notice standard still applies to affirmative defenses.[5] Other courts have concluded that because the Ninth Circuit has not expressly sanctioned a more lenient pleading standard, Twombly and Iqbal apply.[6]

         Cases in this district are also split on the issue. Some cases hold that the Wyshak fair-notice standard remains applicable to affirmative defenses:

McDonald v. Alayan, No. 3:15-CV-02426-MO, 2016 WL 2841206, at *2-*3 (D. Or. May 13, 2016) (finding that “‘fair notice' is a different, less stringent standard than the factual plausibility standard articulated in Twombly and Iqbal” and that “the Ninth Circuit has continued to recognize, unchanged, the ‘fair notice' standard of affirmative defense pleading”) (citing Simmons, 609 F.3d at 1023; Schutte, 298 Fed.Appx. at 615).
Fathers & Daughters Nevada, LLC v. Moaliitele, No. 3:16-CV-926-SI, 2016 WL 7638187, at *3 (D. Or. Dec. 19, 2016) (finding that Rule 8(c)(1) requires a party simply to “affirmatively state any . . . affirmative defense, ” and that “[a]pplying the same standard of pleading to claims and affirmative defenses, despite this clear distinction in the rules' language, would run counter to the Supreme Court's warning in Twombly that legislative action, not ‘judicial interpretation,' is necessary to ‘broaden the scope' of specific federal pleading standards”).
Adidas Am., Inc. v. TRB Acquisitions LLC, No. 3:15-CV-2113-SI, 2017 WL 337983, at *3 (D. Or. Jan. 23, 2017) (recognizing that “even after the Supreme Court issued its decisions in Iqbal and Twombly, the Ninth Circuit continued to hold that affirmative defenses need only provide “fair notice” and be alleged “in general terms”) (citing Kohler and Simmons).
Unigestion Holding, S.A. v. UPM Tech., Inc., 305 F.Supp.3d 1134, 1140 (D. Or. 2018) (citing Kohler, Simmons, and Wyshak, and applying the fair notice test).
Fed. Trade Comm'n v. Adept Mgmt., Inc., No. 1:16-CV-00720-CL, 2017 WL 1055959, at *1 (D. Or. Mar. 20, 2017) (applying “less stringent” fair notice standard).
Trustmark Ins. Co. v. C & K Market, Inc., No. CV-10-465-MO, 2011 WL 587574 (D. Or. Feb. 10, 2011) (holding the court remains bound by Ninth Circuit precedent until Wyshak is overruled).
Jane Doe ex rel. J.M. v. Phoenix-Talent Sch. Dist. No. 4, No. CIV. 10-3119-CL, 2011 WL 704877, at *2 (D. Or. Feb. 18, 2011) (declining to apply heightened standard, noting that the Ninth Circuit has not held that Twombly and Iqbal govern the pleading standard for affirmative defenses).

         Other cases hold that the heightened pleading standard under Twombly and Iqbal applies:

Nyberg v. Portfolio Recovery Assocs., LLC, No. 3:15-CV-01175-PK, 2016 WL 3176585, at *2 (D. Or. June 2, 2016) (holding the Twombly and Iqbal pleading standard applies to affirmative defenses).
Gessele v. Jack in the Box, Inc., No. 3:10-CV-960-ST, 2011 WL 3881039, at *2 (D. Or. Sept 2, 2011) (same).
Peterson v. Acumed, LLC, No. CV-10-586-HU, 2010 WL 5158542, at *3 (D. Or. Dec. 14, 2010) (same).
Tannerite Sports, LLC v. Jerent Enterprises, LLC, No. 6:15-CV-00180-AA, 2016 WL 1737740, at *13 (D. Or. May 2, 2016) (applying Twombly/Iqbal standard ...

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