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IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

KELLY CRAWFORD, IN HIS CAPACITY

AS RECEIVER,

Plaintiff, 

v. 

MAGICSTAR ARROW 

ENTERTAINMENT, LLC, MAGICSTAR 

ARROW, INC., AND CARLOS CRUZ, 

Defendants. 

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CASE NO. 3:22-CV-01935-X 

PLAINTIFF’S MOTION TO STRIKE 

DEFENDANTS’ AFFIRMATIVE DEFENSES AND BRIEF IN SUPPORT 

Pursuant to FED. R. CIV. P. 12(f), Plaintiff Kelly Crawford, as the receiver of TMTE, Inc., 

etc. (the “Receiver”) respectfully moves the Court to strike certain affirmative defenses asserted 

by Defendants Magicstar Arrow Entertainment, LLC, Magicstar Arrow, Inc. (collectively, 

“Magicstar”) and Carlos Cruz (Magicstar collectively with Cruz are referenced as “Defendants”) 

[Dkt. 36] and in support respectfully shows the Court as follows: 

SUMMARY 

To avoid the prejudice and expense related to discovery, and because the defenses are 

insufficient as a matter of law and insufficiently pleaded as well, the Receiver moves the Court for 

an order striking each of Defendants’ affirmative defenses, except limitations and good 

faith/reasonably equivalent value (Third and Seventh defenses) which the Receiver will address 

on summary judgment. 

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BACKGROUND 

1. Pursuant to an order issued in Civil Action No. 3:20-cv-2910-X, CFTC v. TMTE, et 

al., (the “Underlying Lawsuit”), on September 22, 2020, Kelly Crawford was appointed as the 

Receiver for numerous entities (the “Receivership Entities”). See Underlying Lawsuit, Dkt. 16. 

2. Relying primarily on California’s Uniform Fraudulent Transfer Act, CAL. CIV.

CODE § 3439(a) et seq. (“CUFTA”),1 the Receiver seeks to recover Transfers made by the 

Receivership Entities to the Defendants in fraud of the Receivership Entities’ creditors, including 

the Investors who purchased Precious Metals Bullion from the Receivership Entities. See 

Amended Complaint, Dkt. 35. The factual basis for Defendants’ liability is receipt of Transfers 

made with actual or constructive fraudulent intent by the transferring Receivership Entity, or unjust 

enrichment based on the Transfers. Id. The Receiver contends Cruz individually is liable for 

Transfers made to Magicstar, based on an alter ego or single enterprise theory. 

3. In response to the Receiver’s CUFTA, unjust enrichment and money had and 

received claims, Defendants filed a motion to dismiss, contending the Receiver’s claims were not 

ripe, that the claims did not satisfy Rule 9(b), that the CUFTA claims were time-barred, that unjust 

enrichment was not a viable claim, that the Court lacked personal jurisdiction over Cruz, and that 

the Receiver had failed to plead sufficient facts justifying veil piercing/alter ego/single enterprise 

liability as to Cruz. Dkt. 9. The Court denied the Motion except with respect to the Receiver’s 

constructive fraud claim and five transfers made before January 24, 2018.” Dkt. 24.

4. Nonetheless, the Court granted the Receiver leave to file an Amended Complaint in 

which he clarified the basis for his standing. Dkt. 35. On August 11, 2023, Defendants filed their 

Answer to the Amended Complaint and asserted multiple affirmative defenses, most without any 

1

 The Receiver also asserts claims for unjust enrichment and money had and received. 

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factual support providing fair notice of the defense, and all but two of which are inapplicable or 

insufficient as a matter of law. Dkt. 35.

5. To avoid the cost and prejudice of discovery related to these defenses and eliminate 

the cost, necessity and therefore prejudice arising from addressing these inapplicable or otherwise 

deficient defenses in a summary judgment motion, the Receiver requests that the Court strike the 

affirmative defenses discussed below. 

ARGUMENT 

A. Legal Standard 

On its own or pursuant to a motion asserted within 21 days after the pleading at issue is 

served, a court may “strike from a pleading an insufficient defense or any redundant, immaterial, 

impertinent, or scandalous matter.” FED. R. CIV. P. 12(f). “[A] plaintiff desiring early resolution 

of an affirmative defense may [invoke Rule 12(f)] to strike it[.]” C&C Inv. Properties, L.L.C. v. 

Trustmark Nat’l Bank, 838 F.3d 655, 660 (5th Cir. 2016). The court is given considerable 

discretion in deciding a motion to strike. US v. Cooney, 689 F.3d 365, 379 (5th Cir. 2012). 

Although the motion is generally disfavored, “a Rule 12(f) motion to dismiss a defense is 

proper when the defense is insufficient as a matter of law.” Rodriguez v. Physician Lab. Services, 

LLC, No. 7:13-CV-622, 2014 WL 847126, at *2 (S.D. Tex. Mar. 4, 2014) (quoting Kaiser 

Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1057 (5th Cir.1982)

(citations omitted)). In evaluating whether defenses are insufficient as a matter of law, a court 

generally considers whether the challenged defenses are inapplicable to the plaintiff’s claims and 

whether the challenged defenses are sufficiently pleaded to provide “fair notice” of their factual 

basis. Harrison Co. LLC v. A-Z Wholesalers, Inc., No. 3:19-CV-1057-B, 2021 WL 913286, at *2 

(N.D. Tex. Mar. 10, 2021); see also G&G Closed Circuit Events, LLC v. Tejanitos Y Mas, Inc., 

No. 3:20-CV-02836-X, 2021 WL 2377277, at *1 (N.D. Tex. June 10, 2021) (striking limitations 

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defense as “insufficient and incurable” where pleaded dates and docket demonstrated defense 

failed); Horizon AG-Products, Inc. v. Verdesian Life Scis., U.S., LLC, No. 3:19-CV-722-X, 2020 

WL 10895447, at *2-4 (N.D. Tex. Mar. 5, 2020) (striking defenses based on inapplicability and 

failure to plead such that fair notice was provided). 

Defenses pleaded without sufficient factual detail to provide “fair notice”2 of the factual 

basis for the defense may also be stricken. Woodfield v. Bowman, 193 F.3d 354, 362 (5th Cir. 

1999); Horizon, 2020 WL 10895447, at *4 (striking affirmative defenses of fair use, acquiescence 

and laches, each of which has elements, none of which was pleaded); Trevino v. RDL Energy 

Services, L.P., No. CV H-14-1936, 2017 WL 1167160, at *4 (S.D. Tex. Mar. 29, 2017) (simply 

listing defenses, such as waiver, release, unclean hands, and estoppel does not satisfy fair notice 

requirement). A ‘fact-specific inquiry’ governs the inquiry regarding whether an affirmative 

defense includes the ‘minimum particulars’ necessary to ensure fair notice. J&J Sports 

Productions, Inc. v. Willie Ray’s Private Room, Inc., No. 3:16-cv-1206-D, 2017 WL 514422, at 

*2 (N.D. Tex. Feb. 8, 2017). 

MOTION TO STRIKE 

A. Negative or “Non-Affirmative Defense” Defenses 

An affirmative defense is “a defendant’s assertion of facts and argument that, if true, will 

defeat the plaintiff's claim, even if all the allegations in the plaintiff’s complaint are true.” Salinas 

v. State Farm Fire & Cas. Co., No. CV B-10-194, 2011 WL 13254062, at *3 (S.D. Tex. Dec. 27, 

2 Woodfield was decided before the “plausibility” standard announced in Iqbal and Twombly, and courts are divided 

on the question of whether “fair notice” or “plausibility” provides the governing standard for affirmative defenses. 

See Davis v. Ocwen Loan Servicing LLC, No. 3:18-CV-2720-B-BN, 2020 WL 1910137, at *3 (N.D. Tex. Jan. 27, 

2020), report and recommendation adopted, No. 3:18-CV-2720-B-BN, 2020 WL 880855 (N.D. Tex. Feb. 24, 2020), 

aff'd sub nom. Davis v. Ocwen Loan Servicing, L.L.C., 855 Fed. Appx. 907 (5th Cir. 2021). This Court, however, has 

treated Woodfield’s holding that affirmative defenses are subject to the same pleading standards governing complaints, 

as encompassing the Twombly and Iqbal standard. See Horizon AG-Products, Inc., 2020 WL 10895447, at *4 

(“Regardless, ‘[a]n affirmative defense is subject to the same pleading requirements as is the complaint.’”) (quoting 

Woodfield)). 

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2011). Defenses that merely deny the existence of an element of the Plaintiff’s claim, for instance 

the absence of damages or no entitlement to attorney’s fees, do not qualify as affirmative defenses, 

and moreover, are redundant of other denials in an answer. Twin Rivers Eng’g, Inc. v. Fieldpiece 

Instruments, Inc., No. 2:15-CV-1838-JRG, 2016 WL 7042232, at *2 (E.D. Tex. Apr. 6, 2016); 

FTC v. Think All Pub. LLC., 564 F. Supp. 2d 663, 666 (E.D. Tex. 2008). As discussed below, 

Defendants’ first and second affirmative defenses, which assert failure to state a claim and the 

absence of standing are not defenses and should be stricken. 

1. “Failure to State a Claim” 

“Failure to state a claim” is nothing more than “an expression of the name of a defense.” 

Horizon AG-Products, Inc. 2020 WL 10895447, at *3; see also EEOC v. Courtesy Bldg. Services, 

Inc., No. 3:10-CV-1911-D, 2011 WL 208408, at *3 (N.D. Tex. Jan. 21, 2011) (striking “failure to 

state a claim” pleaded as an affirmative defense). Moreover, with the exception of five transfers 

not recoverable pursuant to the Receiver’s constructive fraud claim based on limitations, the Court 

has already denied Defendants’ motion to dismiss. Dkt. 24. The Court should strike Defendants’ 

12(b)(6) “defense.” 

2. Absence of Standing 

Similarly, the absence of standing is not an affirmative defense. Miraglia v. Supercuts, Inc., 

No. CV 15-3017, 2015 WL 7451208, at *3 (E.D. La. Nov. 23, 2015). Instead, the Receiver bears 

the burden of demonstrating standing.3Id. Well-settled law, coupled with the Order Appointing 

the Receiver, demonstrate the Receiver’s unquestionable standing to assert claims for the benefit 

of the Receivership Entities’ creditors to recover funds transferred by the Receivership Entities. 

3

 Standing is a component of the “case” and “controversy” requirement for federal jurisdiction. Tenth St. Residential 

Ass'n v. City of Dallas, Tex., 968 F.3d 492, 499 (5th Cir. 2020).

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Janvey v. Democratic Senatorial Campaign Comm., Inc., 712 F.3d 185, 192 (5th Cir. 2013); 

Zacarias v. Stanford Int’l Bank, Ltd., 945 F.3d 883, 899 (5th Cir. 2019) (“There is no dispute that 

“the receiver . . . had standing to bring their claims . . . [which are] only the claims of the Stanford 

entities—not of their investors—alleging injury to the Stanford entities, including the 

unsustainable liabilities inflicted by the Ponzi scheme.”); see also Dkt. 35 ¶ 1 (“Standing in the 

Receivership Entities’ shoes for purposes of the claims asserted below and for the benefit of the 

Receivership Entities’ defrauded creditors. . . the Receiver seeks to recover the funds fraudulently 

transferred to the MagicStar Defendants.”). The Court should strike Defendants’ second 

affirmative defense. 

B. Insufficiently Pleaded Defenses 

Most of Defendants’ affirmative defenses lack factual explanation or assertions regarding 

how or why they apply. Dkt. 36, pp. 19-21. Although a few of the defenses arguably require no 

factual support to provide “fair notice,” and therefore plausibility, laches,4 waiver, 5 estoppel,6 and 

res judicata/collateral estoppel7 have elements and thus require some factual basis to satisfy Rule 

8. 

4 Rogers v. Ricane Enterprises, Inc., 772 S.W.2d 76, 80 (Tex. 1989) (“Two essential elements of laches are (1) 

unreasonable delay by one having legal or equitable rights in asserting them; and (2) a good faith change of position 

by another to his detriment because of the delay.”); Barfield v. Howard M. Smith Co. of Amarillo, 426 S.W.2d 834, 

840 (Tex. 1968) (application of laches requires “extraordinary circumstances”). 

5 Tenneco Inc. v. Enter. Products Co., 925 S.W.2d 640, 643 (Tex. 1996) (“waiver” requires intentional relinquishment 

of a known right, though intentional conduct inconsistent with claiming that right or silence or inaction, for “so long 

a period as to show an intention to yield the known right.”). 

6 Shields, LP v. Bradberry ̧ 526 S.W.3d 471, 486 (Tex. 2017) (“The elements of equitable estoppel are “(1) a false 

representation or concealment of material facts; (2) made with knowledge, actual or constructive, of those facts; (3) 

with the intention that it should be acted on; (4) to a party without knowledge or means of obtaining knowledge of the 

facts; (5) who detrimentally relies on the representations.”).

7Oreck Direct, LLC v. Dyson, Inc., 560 F.3d 398, 401 (5th Cir. 2009) (“Four elements must be met for a claim to be 

barred by res judicata: “(1) the parties must be identical in the two actions; (2) the prior judgment must have been 

rendered by a court of competent jurisdiction; (3) there must be a final judgment on the merits; and (4) the same claim 

or cause of action must be involved in both cases.”) (internal quotation omitted)); Kariuki v. Tarango, 709 F.3d 495, 

506 (5th Cir. 2013) (“Collateral estoppel is appropriate where four conditions are met: (i) The issue under 

consideration in a subsequent action must be identical to the issue litigated in a prior action; (ii) The issue must have 

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“Simply alleging that Plaintiff’s hands are unclean or identifying a category of misconduct, 

without explaining what the specific misconduct alleged was, does not give fair notice of the 

grounds for the defense or explain how the defense might apply in this case.” Gomez v. J. Jacobo 

Farm Labor Contractor, Inc., 188 F. Supp. 3d 986, 994 (E.D. Cal. 2016). Thus, even if such 

defenses were not also legally defective or otherwise inapplicable as discussed below, they are 

subject to dismissal based on a failure to satisfy Rule 8. See Woodfield, 193 F.3d at 362 (“baldly 

‘naming’ the broad affirmative defenses of “accord and satisfaction” and “waiver and/or release” 

falls well short of the minimum particulars” required to satisfy the pleading standard); Horizon, 

2020 WL 10895447, at *4 (striking affirmative defenses of fair use, acquiescence and laches, each 

of which has elements, none of which was pleaded); Trevino, 2017 WL 1167160, at *4 (simply 

listing defenses, such as waiver, release, unclean hands, and estoppel does not satisfy fair notice 

requirement); Rickman v. Moore, No. 7:16-CV-00025-O, 2016 WL 9527985, at *2 (N.D. Tex. 

Apr. 25, 2016) (striking “independent cause” defense pleaded without any facts that could support 

the defense); O’Hanlon v. J.P. Morgan Chase Bank, N.A., No. CV1506640DDPPJWX, 2016 WL 

777859, at *4 (C.D. Cal. Feb. 25, 2016) (striking “independent or superseding cause” as an 

affirmative defense, where pleadings provided no factual basis for who or what such cause was 

alleged to be). Because these defenses are inadequately pleaded, Defendants’ Fourth (laches), 

Fifth (waiver), Sixth (estoppel) and Ninth (res judicata) affirmative defenses should be stricken. 

been fully and vigorously litigated in the prior action; (iii) The issue must have been necessary to support the judgment 

in the prior case; and (iv) There must be no special circumstance that would render [estoppel] inappropriate or unfair,” 

although the fourth element applies only to “offensive (non-mutual) collateral estoppel by the plaintiff.”) (internal 

quotations omitted)). 

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C. Defenses Dependent In Pari Delicto 

As noted above, Defendants’ laches, waiver, and estoppel defenses are inadequately 

pleaded. More importantly, however, these defenses have no application to the Receiver’s claims. 

Because each defense implicitly relies upon an assertion that the Receivership Entities’ 

conduct contributed to the harm or bars the Receiver’s recovery, estoppel, laches, and failure to 

mitigate,8 are species of in pari delicto.

9

See Jones v. Wells Fargo Bank, N.A., 666 F.3d 955, 965 

(5th Cir. 2012) (“[D]octrine of in pari delicto . . . embodies the common-law notion that a plaintiff's 

recovery may be barred by his own wrongful conduct, and is undergirded by the concerns, first, 

that courts should not lend their good offices to mediating disputes among wrongdoers; and 

second, that denying judicial relief to an admitted wrongdoer is an effective means of deterring 

illegality.” (internal quotation omitted)); Janvey v. Willis of Colo. Inc., No. 3:13-CV-3980-N, 2014 

WL 12670763, at *4 (N.D. Tex. Dec. 5, 2014), amended sub nom. Official Stanford Inv’rs Comm. 

v. Willis of Colo., Inc., No. 3:13-CV-3980-N, 2015 WL 13742125 (N.D. Tex. Feb. 4, 2015) (“The 

in pari delicto defense ‘is based on the common law notion that a plaintiff's recovery may be barred 

by his own wrongful conduct.’”) (quoting In re Royale Airlines, Inc., 98 F.3d 852, 855 (5th Cir. 

1996)). 

Such defenses, however, are not applicable against a receiver. SEC v. Am. Capital 

Investments, Inc., 99 F.3d 1146 (9th Cir. 1996) (Equitable defenses are inapplicable against a 

receiver because he acts for third parties and was not privy to the insolvent institution’s inequitable 

conduct); Jones, 666 F.3d at 966 (“Application of in pari delicto would undermine one of the 

8

 Of course, the Receiver could not have mitigated the damages at issue here. The conduct underling the Transfers and 

the Transfers themselves were made by the persons operating the Receivership Entities before the Receiver’s 

appointment. Complaint, ¶ 1. 

9

 To the extent any Defendant intended these defenses to rest upon the Receiver’s conduct, they have pleaded no 

supporting facts making any such distinction. 

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primary purposes of the receivership established in this case, and would thus be inconsistent with 

the purposes of the doctrine.”); see also FDIC v. O’Melveny & Myers, 61 F.3d 17, 19 (9th Cir. 

1995) (In pari delicto and equitable defenses do not apply to Receiver as successor in interest 

because Receiver was “neither a party to the original inequitable conduct nor is it in a position to 

take action prior to assuming the bank’s assets to cure any associated defects or force the bank to 

pay for incurable defects.”); Resolution Tr. Corp. v. Sands, 863 F. Supp. 365, 373 (N.D. Tex. 1994) 

(striking affirmative defenses premised on the conduct of the predecessor entities in whose shoes 

the plaintiff-conservator stood while asserting the claims); FDIC v. Isham, 782 F. Supp. 524, 531 

(D. Colo. 1992) (striking various affirmative defenses, including failure to mitigate damages, 

because such damages are not valid against the FDIC in any capacity, including as receiver). The 

Court should strike Defendants’ equitable affirmative defenses of laches, waiver, estoppel and 

failure to mitigate damages as inapplicable and legally insufficient. 

D. Defenses Dependent on Conduct of the Beneficiaries of the Receiver’s Claims 

Defendants’ Eighth (express contract), Tenth (conduct of others), Eleventh (failure to 

mitigate) and Twelfth (assumption of the risk) defenses rely on conduct of the creditors and 

investors for whose benefit the Receiver asserts his claims. Dkt. 36, p. 20. No authority suggests 

that the conduct of persons whose claims are not asserted has any bearing on the viability of the 

claims. None of the investors or creditors contracted with Defendants and no conduct of the 

investors or creditors caused, contributed to, or failed to lessen the Transfers made by the 

Receivership Entities to Defendants, which the Receiver seeks to recover through his claims. Nor 

does the existence of any express (although potentially unenforceable) contract between any 

Receivership Entity and any investor or creditor have any bearing whatsoever on whether 

Defendants were unjustly enriched by Transfers they received from the Receivership Entities. Any 

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affirmative defense that relies on conduct of the beneficiaries of the Receiver’s claims is 

insufficient as a matter of law. See Kaiser Aluminum & Chem. Sales, Inc., 677 F.2d at 1061 

(affirming order striking inapplicable affirmative defense); Blount v. Johnson Controls, Inc., 328 

F.R.D. 146, 152 (S.D. Miss. 2018) (striking “employment at will” affirmative defense to ADA 

claims, where “the Court fails to see how this defense is material or could become so.”). 

E. “Reservation of Rights” Has No Role as an “Affirmative Defense 

Finally, in their Thirteenth defense, Defendants reserve their right to supplement and assert 

additional defenses. Dkt. 36, p. 21. As this Court stated previously when addressing the same 

“defense,” “Verdesian cites no authority that it can take the Court’s power to rule on a later motion 

for leave to add an affirmative defense and keep that power to itself.” Horizon AG-Products, Inc. 

2020 WL 10895447, at *5. The same is true here, and as in Horizon, the Court should strike or 

otherwise dismiss this affirmative defense. 

WHEREFORE, Plaintiff Kelly Crawford requests all of Defendant’s affirmative defenses 

except their Third and Seventh defenses, be stricken, and requests such other and further relief to 

which he may show himself entitled. 

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Respectfully submitted, 

BROWN FOX PLLC 

By: /s/ Charlene C. Koonce 

CHARLENE C. KOONCE 

State Bar No. 11672850 

charlene@brownfoxlaw.com

Cortney C. Thomas 

State Bar No. 24075153 

cort@brownfoxlaw.com

8111 Preston Road, Suite 300 

Dallas, Texas 75225 

(214) 327-5000 Telephone 

(214) 327-5001 Facsimile 

SCHEEF & STONE, LLC, 

PETER LEWIS 

State Bar No. 12302100 

peter.lewis@solidcounsel.com

500 North Akard, Suite 2700 

Dallas, Texas 75201 

(214) 706-4200 Telephone 

(214) 706-4242 Facsimile 

ATTORNEYS FOR KELLY CRAWFORD, 

RECEIVER

CERTIFICATE OF CONFERENCE 

The undersigned confirms that on August 21st and August 23rd counsel for the Receiver 

conferred with counsel regarding the Motion. Defendants stated they would review the Receiver’s 

position and state whether they were opposed no later than 5:00 p.m. on August 22, 2023, but did 

not provide such position on the 22nd, or respond to a further email on August 23rd, asking for the 

same information. The motion is accordingly presumed to be opposed. 

 /s/ Charlene C. Koonce 

CHARLENE C. KOONCE 

CERTIFICATE OF SERVICE 

Pursuant to FED. R. CIV. P. 5(d)(1)(B), as amended, no certificate of service is necessary, 

because this document is being filed with the Court’s electronic-filing system. 

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