In Bobbit v, Victorian House, Inc., Judge Shadur set forth three factors that a court should
consider in assessing the sufficiency of an affirmative defense. 532 F. Supp. 734, 737 (N.D. Ill. 1982)
(cited with approval by Heller Fin., Inc. v. Midwhey Powder Co., Inc,, 883 ¥.2d 1286, 1295 (7th Cir.
1989)). First, a court should assess whether the matter is appropriately pled as an affirmative defense,
“Only matters that deserve a clear ‘no’ answer will be stricken to make the pleadings more concise,”
Id. Second, a court should consider whether the defense has been adequately pled pursuant to the
requirements of Federal Rules of Civil Procedure 8 and 9. Ifa party fails to meet these basic pleading
requirements, a court should dismiss the defense with leave to amend, Finally, a court should evaluate
the sufficiency ofthe defense pursuant to the standard followed in assessing 12(b)(6) motions, i.., the
defense should be stricken only if the defendant cannot prove any set of facts in support of the defense
that would defeat the complaint. Jd. Builders Bank’s central arguments regarding the affirmative
detenses in this case go to the second factor in the Bobbitt test, the issue of whether the defenses mect

the pleading requirements of Rules 8 and 9. We therefore focus our attention primarily on that issue.

I. Defenses 1, 5, 6, 7, & 8: Failure to State a Claim

In its first, fifth, sixth, seventh and eighth defenses, First Bank essentially asserts that Builders
Bank’s complaint has failed to state a claim upon which relicf can be granted. Builders Bank objects
to these defenses on the ground that they do not meet even the liberal notice pleading standards of
Federal Rule of Civil Procedure 8(a). Because the defenses are mercly legal conclusions, Builders Bank
argues, they do not satisfy Rule 8(a)’s requirement that the pleader set forth a short and plain statement
of the rationale behind the defense.

There has been some disagrcement within the Northern District of Illinois about whether a party

may properly assert “failure to state a claim” as an affirmative defense or whether that defense must be


Builders Bank charges that the statute of limitations defense should be struck pursuant to Rule 8(a)
because it is nothing more than a bare bones legal conclusion.

Tn the past, several courts have struck statute of limitations defenses where the parties have not
provided any specific information as to why the statute of limitations bars the claim. See, e.g., Surface
Shields, Inc, v. Poly-Tak Protections Sys., Inc., 213 F.R.D. 307, 308 (N.D. Ill. 2003). However, Kirst
Bank asserts that it cannot at this point determine when the plaintiff knew of its claims against the
defendant and that it will not become informed on that point until discovery has been completed. This
is a reasonable argument given that any information pertaining to Builders Bank’s subjective knowledge
is most likely in Builders Bank’s own hands. Cif Cohn v. Taco Bell Corp., No. 92-C-5852 1995 WL
247996, * 5 (N.D. Ill, April 24, 1995) (refusing to strike a failure to mitigate damages defense because
it would have been unreasonable to expect the defendant to have detailed information about mitigation
at the early stages of litigation). It is only through discovery that First Bank can find out whether
Builders Bank’s claims are barred by the statute of limitations. Furthermore, First Bank waives its right
to present evidence regarding the statute of limitations if it does not raise it as an affirmative defense in
its answer, Bobbit, 532 F. Supp, at 736. It would be unjust to tell First Bank that it could not raise a
matter as an affirmative defense because it does not have sufficient evidence to support that defense at
this point and then to later bar First Bank {rom presenting evidence on that defense for failure to include
il in its answer, We thus find that First Bank's statute of limitations defense comports with the
requirements of Rule 8(a) and deny the motion to strike with regard to that defense.

If. Defense 4: Equitable Relief

As stated above, First Bank’s fourth affirmative defense states that: “Plaintiff is barred under the

doctrine of unclean hands, and other equitable doctrines, including waiver, estoppel, and laches, from

seeking relicf against First Bank.” Once again, Builders Bank argues that this defense does not provide


Surface Shields, Inc. v. Poly-Tak Protection Sys., Inc., 213 F.R.D, 307, 308 (N.D, Ill. 2003); Renalds
y. S.R.G. Restaurant Group, 119 F, Supp.2d 800, 803 (N.D. Ili. 2000); Fleer Bus. Credit Corp. v.
National City Leasing Corp., 191 F.R.D, 568, 569 (N.D. Til. 1999). First Bank’s first affirmative defense
is nothing morc than a legal conclusion in that it specifies no reason why Builders Bank failed to state
a claim, It fails to even pinpoint which of the five claims asserted against First Bank is legally
insufficient.

First Bank argues that we should read the first affirmative defense in conjunction with its fifth,
sixth, seventh, and eighth defenses, each of which specifies a reason why Builders Bank’s complaint
should be dismissed, First Bank alleges with these defenses that Builders Bank failed to meet the basic
pleading requirements for asserting a RICO claim by omitting certain information from its complaint.
To survive a motion to dismiss ona RICO claim, a plaintiff must allege with particularity the 1) conduct;
2) of an enterprise; 3) through a pattern 4) of racketecring activity. Richmond v. Nationwide Cassel,
L.P., 52 ¥.3d 640, 644 (7th Cir. 1995) (citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985)).
In defenses five though seven, First Bank argues that Builders Bank failed to properly allege the
existence of an enterprise or a pattern of racketeering activity. In its cight defense, Builders Bank
challenges First Bank’s standing to bring a RICO claim on the ground that it failed to allege a
tedressable injury.

We find that these allegations are sufficient under Rule 8(a) to survive a motion to strike
because they put Builders Bank on notice of the exact reasons why First Bank believes that the
complaint fails to state aclaim, See Richmond y. Nationwide Cassle, L. P., 52 F.3d 640, 644 (7th Cir.
1995) (noting that the primary purpose of Rule 8(a) is to provide fair notice to the other party of the

claims or defenses asserted against him).


raised in a separate motion pursuant to Rule 12(b)(6). Compare Instituto Nacional de Comercializacion
Agricola (Indeca) v. Continental Ilinois Nat'l Bank and Trust Co., 576 F, Supp. 985, 991 (N.D. Ul.
1983) (striking the affirmative defense of failure to state a claim because a true affirmative defense raises
matters outside of the plaintiff's complaint); with Mendrala v. Crown Mortgage Co., No. 88-C-7386,
1990 WL 60705, * 3 (N.D. TIL April 23, 1990) (“[I]t is also well settled that the failure-to-state-a-claim
defense is a perfectly appropriate affirmative defense to include in the answer.”). Certainly, the failure
to state a claim defense does not fit within the traditional definition of an affirmative defense as a
defense in which the defendant admits to the matters in a complaint but states nonetheless that the
plaintiff is precluded from recovering for some reason, Bobbit, 532 F. Supp. at 736. It has been
recognized by several judges in this district, however, that this technical difficulty is overcome by Form
20 of the Federal Rules of Civil Procedure’s Appendix of Forms, which sets forth a list of model
defenses. See, e.g, Van Horn y. Chicago Roller Skate Co., 15 F.R.D. 22, 23 (N.D. Til. 1953). The first
model defense included in Form 20 is: “The complaint fails to state a claim against defendant upon
which relief can be granted.” Federal Rule of Civil Procedure 84 specifically authorizes the use of such
defenses in pleadings, stating that, “[t]he forms contained in the Appendix of Forms are sufficient under
the rules and are intended to indicate the simplicity and brevity of state ment which the rules
contemplate.” We find that Form 20, read in light of Rule 84, constitutes an express authorization under
the rules to plead an affirmative defense of failure to state a claim.

Even those courts that have allowed a party to assert a defense of failure to state a claim,
however, have not read the Federal Rules so liberally as to alfow the bare recitation of the legal standard
(“failure to state a claim”) without a short and plain statement of the basis for the defense, as is required
by Rule 8(a). Defenses which are no more than bare bones legal conclusions are not sufficient to survive

a motion to strike. Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1295 (7th Cir. 1989);


2000, backing up the loan by issuing a letter of credit to SCI IMlinois Services, Inc. (“SCI”). In 2001,
Builders Bank purchased the loan from First Bank. To ensure that First Bank would be reimbursed if
it had to make good on its letter of credit to SCI, Builders Bank issued another letter of credit to First
Bank. Indeed, SCI drew upon its letter of credit in June 2003 and Kirst Bank was required to pay SCI
$3.5 million. First Bank then allegedly presented its letter of credit to Builders Bank so that it would
be reimbursed for the payment it made to SCJ. Builders Bank refused to pay and instead brought the
present complaint against First Bank. First Bank thus responded with a counterclaim requesting specific
performance of the letter of credit.

As stated above, First Bank’s second affirmative defense states that, “Plaintiff seeks relief that
is barred by the Builders Bank Letter of Credit (as defined in the Counterclaim) and other agreements
between the parties.” (Answer, at 14.) Aside from the inclusion of the extremely vague phrase “and
other agreements between the parties,” this is the exact same allegation as First Bank makes in its
counterclaim against Builders Bank. A court may reject an affirmative defense if it is superfluous.
Campania Management Co. v. Rooks, Pitts & Poust, 290 F.3d 843, 850 (7th Cir. 2002). Accordingly,
courts routinely strike affirmative defenses that raise essentially the exact same matters as are raised by
the same party in a counterclaim or denial. See, e.g, Menchaca y, American Med, Response of Illinois,

6 F. Supp.2d 971, 972 (N.D. Ill, 1998), First Bank’s second defense is therefore stricken as redundant.

. Defense 3: Statute of Limitations
Federal Rule of Civil Procedure 8(c) requires a party to affirmatively set forth the defense that
the plaintiff's claim is barred by the applicable statute of limitations. First Bank’s affirmative defense

does make such an allegation but does not explain why the statute applies to bar the claims in this case.


Minuit Quer Form (0?)

United States District Court, Northern District of Illinois

Name of Assigned Judge vi Sitting Judge if Oth
or Magistrate Jude Marvin Aspen than Assigned Sudge
CASE NUMBER 03 C4959 DATE 3/24/2004

MAR 2.5 2004

date duckeved

Notified counsel by telephane.

Dweketing to mail notices

Mail AQ 450 orm fey _docketing deputy initials

Copy (0 judge/magistrate judge

sr24rt008
date ied notice
courtroom wate
deputy’s
initials

GL Gl.

Date/time received in
central Clerk's Office

amaling depuy ile

CASE Builders Bank vs. First Bank & Trust Co,, et al
TITLE
[bv che following box (a) indicate the party filing the mation, ¢.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: ‘of the motion being presented.)
DOCKET ENTRY:
qd) oO Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due
(3) Q Answer brief to motion due. _ » Reply to answer briefdue__, _.
(4) Qo Ruling/Hearing on setfor_ al.
(5) oO Status hearing[held/continued to] [set for/re-set for] on setfor_ se at__.
(6) C] Pretrial confcrence[held/continued to] [set for/re-set for] on setfor at
(7) o Trial{set for/re-set for] on at
(8) o [Bench/Jury trial] [Hearing] held/continned to at
(9) oO This case is dismissed [with/without] prejudice and without costs[by/agrecment/pursuant to}
CUFRCP4(m) Ci Local Rule 41.1 C]FRCP4l(ay(1) OC) FRCP41(a)(2).
(10) ‘MM (Other docket entry} Enter Memorandum Opinion and Order: Builders Bank’s motion to strike (7+
1) First Bank’s affirmative defenses is granted in part and denied in part.

al {For further detail see order attached to the original minute order,]

‘No notices required. advised in open court, Document

No notices required Number

suher of wutices

ao | Notices mailed by judge's staff



example, the defendant must at least allege that 1) the other party acted; 2) the defendant reasonably
relicd on the act; and 3) changed its position for the worse based on that reliance. Bobbit, $32 F. Supp.
at. 738. \irst Bank fails even to pinpoint what act forms the basis of its estoppel defense. Similarly, a
laches defense in Illinois requires at least a basic allegation that the plaintiffs delay in filing suit caused
some harm to the defendant. Ja. at 739. First Bank does not allege that it suffered any harm as a result
of Builders Bank’s alleged delay in filing suit. Finally, waiver is the intentional relinquishment of a
known right. Pantle v. Industrial Comm'n, 335 N.E. 2d 491, 496 (ill. 1975). In this case, we do not
even know what right Builders Bank allegedly relinquished. In short, Builders Bank knows nothing
about the factual underpinnings of any of First Bank’s equitable defenses, We thus find thai First Bank’s
fourth affirmative defense fails 10 comply with the notice pleading standards of the federal rules and
strike it {rom First Bank’s answer,
CONCLUSION

For the foregoing reasons, we deny Builders Bank’s Motion to Strike First Bank’s third, fifth,
sixth, seventh, and eighth affirmative defenses, We grant the Motion to Strike First Bank’s first,
second, and fourth affirmative defenses, but grant lcave to amend within 20 days of the issuance of

this opinion; if it so chooses. It is so ordered.

Marvin E. Aspen —
United States District Judge

lt


cnough information to put it on notice of the nature of the defenses against it and thus that it does not
comply with Rule 8(a). We agree.

Even under the liberal notice pleading standards of the Federal Rules of Civil Procedure, a
defense must include some direct or inferential allegations as to each element of the defense asserted.
Renalds v. S.R.G. Restaurant Group, 119 F. Supp.2d 800, 802 (N.1D. Ill. 2000) (citations omitted). Bare
bones legal conclusions are not sufficient to survive a motion to strike. Heller Fin., Inc. v. Midwhey
Powder Co., Inc, 883 F.2d 1286, 1295 (7th Cir. 1989).

Courts have held time and time again that stringing together a long list of legal defenses is not
sufficient to satisfy Rule 8(a)’s short and plain statement requirement. “It is unacceptable for a party's
attorney simply to mouth ADs in formula-like fashion (‘laches,’ ‘estoppel,’ ‘statute of limitations’ or
what have you), for that does not do the job of apprising opposing counsel and this Court of the predicate
for the claimed defense - which after all is the goal of notice pleading.” State Farm Mut, Auto. Ins. Co.
v. Riley, 199 F.R.D, 276, 279 (N.D. Ill. 2001).

Furthermore, courts have set forth very specific pleading standards for the defenses of waiver,
estoppel, and laches and have consistently struck those defenses where they are insufficiently pled. To

survive a motion to strike an estoppel! claim brought in defense of an Mlinois state law claim,’ for

*First Bank does not specify which of the claims brought by Builders Bank are barred by the
equitable defenses, its state law claims or its federal law claims. Although the general pleading
requirements of the federal rules apply to both types of actions, the substance of the defenses themselves
may differ under Illinois and federal law. Our citations in the text of this opinion are to diversity cases in
which federal courts evaluated the sufficiency of affirmative defenses asserted against Illinois state law
claims. Citation to those cases is meant only to provide an example of what First Bank would have to
plead to survive a motion to strike on its state law claims. Federal actions may require that First Bank
prove slightly different elements. See, ¢.g., United States v. Philip Morris, Inc., No. Civ.A. 99-2496,
2004 WL 111820 (D, D.C. January 23, 2004) (discussing the elements of laches, estoppel, and waiver
defenses in a RICO action), This confusion over whether state or federal law would apply is yct another
reason why First Bank’s fourth affirmative defense is insufficient to put the plaintiff on notice of the
defenses asserted against it.

10


Builders Bank argues that these statements are nothing more than legal conclusions, but it
is difficult lo see how First Bank could have provided any more information. An affirmative defense
for failure to state a claim necessarily requires the person bringing the defense to point to the absence
of some crucial fact or allegation from a complaint, Aside from noting the absence of certain facts,
there is little other information a defendant possibly could include to strengthen his defense.
(Notably, Builders Bank does not pinpoint the absence of any specific information that would
mandate dismissal of the defenses). We thus deny the motion to strike with regard to defenses five
though cight.

The question remains whether the allegations made in aflirmative defenses five through eight
are sufficient to redcem First Bank’s first defense, which provides only the legal conclusion that
plaintiffs have failed to state a claim. We find that they are not. If the first defense is merely
included as a catch-all restatement of the principles elaborated in the fifth through eighth defenses,
then it is redundant matter and may be struck as such. See Fed. R. Civ. P. 12(f) (allowing a court
to strike “any redundant, immaterial, impertinent, or scandalous matter.”). If, on the other hand, the
first defense encompasses other (unnamed) reasons why Builders Bank has failed to state a claim, then
the defense must be struck for failing to meet the basic pleading requirements of Rule 8(a) because it
does not put the plaintiff on notice of the legal reasons for the deficiencies in its complaint. We
therefore strike the first affirmative defense with leave to amend,

Defense 2; Relief is Barred by Letter of Credit

In its second affirmative defense, First Bank alleges that Builders Bank is precluded from

obtaining any judgment because it owes First Bank $3.5 million pursuant toa letter of credit. According

to First Bank’s Answer and Counterclaim, First Bank made a loan to developer James Letchinger in


vii. Plaintiff seeks relief that is barred by the Builders Bank Letter of Credit (as defined in
the Counterclaim) and other agreements between the parties.
viii. Plaintiffs [sic] claims are barred in whole or in part by the applicable statute(s) of
limitations.
ix. Plaintiff is barred under the doctrine of unclean hands, and other equitable doctrines,
including waiver, estoppel, and laches, from secking relief against First Bank,
x. Plaintiff has failed to allege an “enterprise” within the meaning of 18 U.S.C. § 1961(4).
xi. Plaintiff has failed to allege a “person” that is separate and distinct from an “enterprise.”
xii. Plaintiff has failed to allege a “pattern of racketeering activity” as required by 18 U.S.C,
§ 1961(5).
xiii,  Plaintiff_has failed to allege an injury that is redressable under the RICO statute.
ANALYSIS
Federat Rule of Civil Procedure 8(c) requires parties to set forth any affirmative defenses in their
responsive pleadings and specifically lists nineteen defenses that are required to be pled “affirmatively.”
A motion to strike made pursuant to Rule 12(f) is the appropriate means of removing “impertinent or
redundant matter in any pleading and is the primary procedure for objecting to an insufficient defense.”
Van Schouwen v. Connaught Corp., 782 F, Supp. 1240, 1245 (N.D. TIL. 1991). Motions to strike
affirmative defenses are generally disfavored because of their potential to delay proceedings. United
States v. 416.81 Acres of Land, 514 F.2d 627, 631 (7th Cir. 1975) (citations omitted), Thus, such a
motion should not be granted unless the defense is “patently defective.” Heller Fin., Inc. v. Midwhey
Powder Co., Inc., 833 F.2d 1286, 1294 (7th Cir. 1989), Nonetheless, a motion to strike can be a useful

means of removing “unnecessary clutter” from a case. Heller Fin., 833 F.2d at 1294.



defenses for failure to comply with the basic pleading requirements of Federal Rule of Civil Procedure

8(a).! For the reasons set forth below, we grant in part and deny in part the Motion to Strike?

BACKGROUND

In its complaint, Plaintiff Builders Bank alleges that the defendants, including First Bank,
wrongfully induced Builders Bank to purchase loans that were in default or otherwise non-performing.
‘The defendants allegedly convinced Builders Bank that the loans were good by extending their due dates
so that they would not appear to be in default. Builders Bank has now brought the present action against
First Bank to recoup some of the losses it incurred in dealing with the defaulted loans. Specifically,
Builders Bank’s complaint includes state law conspiracy and fraudulent misrepresentation charges
against First Bank as well as allegations that First Bank violated the federal Racketeer Influcnced and
Corrupt Organizations Act (“RICO”) 18 U.S.C. § 1961, et seg.

First Bank*s Answer contained the following affirmative defenses, all of which Builders Bank
now moves to strike:

vi. Plaintiff fails to state a claim upon which relief can be granted.

‘Motions to strike must be filed within twenty days after service of the pleading upon the party.
Fed. R. Civ. P. 12(f). In this case, plaintiffs received service of the Answer on August 11, 2003 and the
Motion to Strike was filed on Scptember 18, 2003. The plaintiff is technically time-barred from bringing
its motion because it was filed 38 days after plaintiffs received service of the Answer. However, this
court has discretion to consider a motion to strike on its own initiative at any time, so we will consider
the merits of plaintiff's motion, See Williams v. Jader Fuel Co., Inc., 944 F.2d 1388, 1400 (7th Cir.
1991) (noting that a district court may, in its discretion, consider a motion to strike that has been filed
afler the twenty day deadline).

?Subject matter jurisdiction over this matter is premised on 28 U.S.C. § 1331 because several of
the claims “arise under” the laws of the United States. Specifically, three of the claims alleged are
brought pursuant to the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §
1961, et seg.



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TLLINOIS
EASTERN DIVISION

BUILDERS BANK, an Illinois state chartered
bank,
Plaintiff,

Vv.

FIRST BANK & TRUST COMPANY OF
ILLINOIS, an Hlinois state chartered bank,
MICHAEL WINTER, and ROBERT
HERSHENHORN,

Defendants.
Case No. 03 C 4959

FIRST BANK & TRUST COMPANY OF ILJ.TNOIS,
an Illinois state chartered bank,

Counter-claimant,
v.
BUILDERS BANK, an Illinois state chartered bank,

Counter-defendant.

Oe Oe

MEMORANDUM OPINION AND ORDER

MARVIN E. ASPEN, District Judge:
Plaintiff Builders Bank filed a complaint against Defendant First Bank and Trust Company of
Illinois (“First Bank”). First Bank answered the complaint, brought a counter-claim against Builders

Bank, and asserted eight affirmative defenses. Builders Bank now moves to strike the affirmative

ix