Say you are filing an Answer to a Complaint. NC Rule of Civil Procedure 8(c) lists a host of affirmative defenses you might raise. They are:
accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations, truth in actions for defamation, usury, waiver, and any other matter constituting an avoidance or affirmative defense.
Do you want to plead all of those, even though you don’t currently have a basis to support them, hoping that you will find some facts in discovery to support them?
That’s pretty much what the Plaintiffs did when responding to a crossclaim in National Financial Partners Corp. v. Ray, 2014 NCBC 49, decided on Wednesday by Judge Bledsoe. The Plaintiffs raised nearly fifty affirmative defenses, hoping that they would generate facts later on to support their myriad defenses.
Many of their defenses were not supported by any facts pertinent to the lawsuit, although the Plaintiffs argued that it was too premature in the litigation for their affirmative defenses to be dismissed and that discovery might yield facts to support their defenses.
The Defendants moved to strike per NCRCP 12(f). Judge Bledsoe wrote that:
‘[T]o survive a motion to strike, a defendant must offer more than a "bare-bones conclusory allegation which simply names a legal theory but does not indicate how the theory is connected to the case at hand."’
Op. ¶34 (quoting Villa v. Ally Fin., Inc., 2014 U.S. Dist. LEXIS 25624, at *6 (M.D.N.C. Feb. 28, 2014)(citation omitted).
It didn’t make a difference that the Plaintiffs had a good faith belief that discovery might provide a basis for the defenses stricken by Judge Bledsoe. He said that:
Plaintiffs’ professed good faith belief that their presently unsupported defenses will acquire the requisite factual support through the discovery stage of these proceedings does not alter the reality that these defenses were speculative at the time Plaintiffs asserted them in their responsive pleading.
Some of the arguments raised by the Plaintiffs in support of the defenses they had stated revealed their speculative nature on their face. For example, on their defense of accord and satisfaction, Plaintiffs said that:
‘[i]t is . . .far from certain that I Plaintiffs did not receive full and complete return of whatever funds they provided to Mr. Stokes’.
And the defense of "another action pending" was also quite imaginary. The Plaintiffs said that:
‘[n]o action is pending of which Plaintiffs are currently aware’ but noted that ‘[s]uit may have been filed against Defendants somewhere else or against Plaintiffs in some other jurisdiction.’
Op. ¶¶35(iv) and (ix).
If you are, like me, too critical to be an even-tempered Judge and are wondering if there are sanctions available against a party pleading a horde of defenses without any factual support for them, the answer is that there might be. Judge Bledsoe observed in a footnote that "Plaintiffs’ assertion of numerous affirmative defenses with little or no factual support can also raise concerns under Rule 11 of the North Carolina Rules of Civil Procedure." Op. ¶36 & n.7.
He also quoted a Third Circuit case for the proposition that: “the practice of ‘throwing in the kitchen
sink’ at times may be so abusive as to merit Rule 11 condemnation.”) Id. (quoting Mary Ann Pensiero, Inc. v. Lingle, 847 F.2d 90, 97 (3d Cir. 1988)).
But no sanctions were entered. Judge Bledsoe struck fifteen of the speculative defenses with leave to the Plaintiffs to plead them again in the event that they were able to develop evidence through discovery that the defenses could be properly asserted. Op. ¶36.