Page 1 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

C. Robert Steringer, OSB #983514 

bob.steringer@harrang.com 

HARRANG LONG GARY RUDNICK P.C. 

1001 SW Fifth Avenue, 16th Floor 

Portland, OR 97204 

Telephone: 503.242.0000 

Facsimile: 503.241.1458 

Marjorie A. Elken, OSB #073368 

marjorie@zupgroup.com 

ZUPANCIC RATHBONE LAW GROUP, P.C. 

4949 Meadows Road, Suite 600 

Lake Oswego, OR 97035 

Telephone: 503-968-8200 

Facsimile: 503-968-8017 

Of Attorneys for Plaintiff MALBCO HOLDINGS, LLC, 

a Washington limited liability company 

UNITED STATES DISTRICT COURT 

DISTRICT OF OREGON 

PORTLAND DIVISION 

MALBCO HOLDINGS, LLC, a 

Washington limited liability company,

Plaintiff, 

vs. 

BHUPENDRA R. PATEL and NILA B. PATEL, 

husband and wife; HEETAN B. PATEL; 

HEETAL B. PATEL-MANANI; and 

MUKESH PATEL, 

Defendants. 

Case No. 3:14-cv-947-PK

PLAINTIFF’S MOTION TO 

STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES 

AND SUPPORTING 

MEMORANDUM 

Case 3:14-cv-00947-PK Document 31 Filed 12/12/14 Page 1 of 19
Page 2 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

LR7.1(a) CERTIFICATION 

Pursuant to Local Rule 7.1(a), counsel for Plaintiff Malbco Holdings, LLC certifies that 

she has conferred with Defendants Heetan B. Patel, Heetal B. Patel and Mukesh Patel’s counsel 

on this matter through telephone conference, but the parties were unable to reach an agreement 

on the topics that are the subject of this motion to strike. Plaintiff’s counsel certifies that she 

called counsel for Defendants Bhupendra R. Patel and Nila B. Patel on December 10, 2014 and 

December 11, 2014, in attempts to confer on this matter. Plaintiff’s counsel left Defendants 

Bhupendra R. Patel and Nila B. Patel’s counsel detailed voicemail messages on the matters 

presented herein and followed up both messages with emails. As of the filing of this motion, 

Plaintiff’s counsel had not received a return call or email. 

MOTION 

Plaintiff Malbco Holdings, LLC moves the court under Fed. R. Civ. P. 12(f) to strike the 

following defenses: (a) affirmative defense numbers 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 in 

the Answer, Affirmative Defenses, and Counterclaim of Defendants Bhupendra R. Patel and Nila 

B. Patel to Plaintiff’s First Amended Complaint (“B. Patel Answer”); (b) affirmative defense 

numbers 3, 5, 6, 7, 8, 9, 10, 11 and 12 in Defendants Heetan B. Patel and Heetal B. Patel’s 

Answer and Affirmative Defenses to Plaintiff’s First Amended Complaint (“H. Patel Answer”); 

and (c) the affirmative defenses set out in paragraphs 28 and 30 of Defendant Mukesh Patel’s 

Answer to Amended Complaint with Affirmative Defenses (“M. Patel Answer”). 

This motion is supported by the records and files herein and the Memorandum in Support 

of Plaintiff’s Motion to Strike Affirmative Defenses set out below. 

 

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Page 3 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

MEMORANDUM 

CERTIFICATE OF COMPLIANCE 

This brief complies with the applicable word-count limitations under Local Rule 7-2(b) 

because it contains 5292 words, including headings, footnotes, and quotations, but excluding the 

caption, signature block, exhibits, and any certificates of counsel. 

I. Introduction 

Plaintiff Malbco Holdings, LLC (“Malbco”) filed an amended complaint on November 4, 

2014. Defendants Bhupendra R. Patel, Nila B. Patel, Heetan B. Patel and Heetal B. Patel filed 

their answers on November 21, 2014. Defendant Mukesh Patel filed his answer on November 

24, 2014. Each of the defendants have asserted numerous boilerplate affirmative defenses in 

their answers. Malbco now moves to strike several of the defenses pursuant to Federal Rule of 

Civil Procedure 12(f), because they are both factually and legally insufficient. 

II. Argument 

Rule 12(f) of the Federal Rules of Civil Procedure allows a court to strike any affirmative 

defense that presents “an insufficient defense or any redundant, immaterial, impertinent, or 

scandalous matter.” A defense is insufficient if it fails to give the plaintiff fair notice of the 

nature of the defense, or if the defense is clearly invalid as a matter of law. Wyshak v. City Nat'l 

Bank, 607 F.2d 824, 827 (9th Cir. 1979); Cyber Acoustics, LLC v. Belkin Int'l, Inc., 988 F. Supp. 

2d 1236, 1240 (D. Or. 2013). 

The granting of motions to strike is generally disfavored; however where a defense is 

clearly insufficient, the motion should be granted “to avoid unnecessary time and money in 

litigating invalid, spurious issues.” Id.; see also Hart v. Baca, 204 F.R.D. 456, 457 (C.D. Cal. 

2001) (“While disfavored, where [a] motion [to strike] may have the effect of making the trial of 

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Page 4 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

the action less complicated, or have the effect of otherwise streamlining the ultimate resolution 

of the action, the motion to strike will be well taken.” (Internal citations omitted)). Here, most of 

defendants’ affirmative defenses are clearly insufficient, and the Court should strike them to 

streamline this case. 

A. Defendants’ Affirmative Defenses are Legally Insufficient. 

An affirmative defense is legally insufficient if it lacks merit under any set of facts the 

defendant might allege. Cyber Acoustics, LLC v. Belkin Int'l, Inc., 988 F. Supp. 2d 1236, 1240 

(D. Or. 2013). Here, defendants are using their affirmative defenses to collaterally attack an 

underlying state court judgment and re-litigate the state court case.1

 Defendants cannot do that. 

Their defenses need to relate to the claims involved in this lawsuit. If they do not, they should be 

struck. 

The facts of the state court litigation are set out in the First Amended Complaint. In 

brief, they are as follows. In March 2012, Malbco purchased a distressed loan from Wells Fargo 

Bank, N.A. (“Wells Fargo”). First Am. Compl. ¶ 14. The loan was secured by a hotel property 

located at 800 South Allen Street, Meridian, Idaho 83643 (the “Property”). First Am. Compl. ¶ 

10. The loan was also secured by several personal guaranties, including guaranties from 

 

1

 All of the challenged affirmative defenses are boilerplate recitations of legal principles. See 

Section II(C), below. Accordingly, it is impossible to know the grounds of each defense. 

However, in a December 9, 2014, letter to the Court, Defendants Heetan B. Patel and Heetal B. 

Patel revealed that at least some of their defenses were aimed at challenging an underlying state 

court judgment. See Letter from L. Caldera Taylor to Honorable P. Papak, p. 3 (Dec. 9, 2014). 

Malbco asks the Court to strike all affirmative defenses that seek to attack the state court 

judgment. Malbco believes that would include, at a minimum: (a) Defendants Bhupendra R. 

Patel and Nila B. Patel’s third, fourth, fifth, sixth, seventh, ninth, tenth, eleventh, twelfth and 

fourteenth affirmative defenses; (b) Defendants Heetan B. Patel and Heetal B. Patel’s third, fifth, 

sixth, seventh, ninth, tenth, eleventh and twelfth affirmative defenses; and (c) Defendant Mukesh 

Patel’s affirmative defenses set out in paragraphs 28 and 30 of his answer to the amended 

complaint. 

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Page 5 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

Defendants Bhupendra R. Patel and Nila B. Patel. First Am. Compl. ¶ 11. After purchasing the 

loan, Malbco foreclosed on the Property. First Am. Compl. ¶ 15. Malbco was the sole bidder at 

the sale, and it purchased the property for $1,525,000.00. First Am. Compl. ¶ 15. It then filed a 

complaint in Ada County, Idaho, against the guarantors of the loan, including Bhupendra R. 

Patel and Nila B. Patel, for breach of the personal guaranties (the “Idaho Lawsuit”). First Am. 

Compl. ¶ 16. Malbco won the Idaho Lawsuit on summary judgment. First Am. Compl. ¶ 17. On 

December 20, 2013, the Ada County Circuit Court entered judgment against Bhupendra R. Patel 

and Nila B. Patel in the amount of $3,903,294.12, plus post-judgment interest (the “Idaho 

Judgment”). First Am. Compl. ¶ 18. 

At some time between January 1, 2011 and December 31, 2012, Defendants Bhupendra 

R. Patel and Nila B. Patel gifted several assets to their children, Defendants Heetan B. Patel and 

Heetal B. Patel. First Am. Compl. ¶ 24. Malbco brought the instant lawsuit to recover those 

assets or for a judgment for the value of those assets. In response to Malbco’s claims, defendants 

have asserted a laundry list of affirmative defenses most of which are aimed at challenging 

Malbco’s claims in the Idaho Lawsuit, not this lawsuit. Defendants’ attempt to attack the Idaho 

Judgment and re-litigate the Idaho Lawsuit are improper. 

The preclusive effect of the Idaho Judgment and any collateral attack on that judgment 

are governed by Idaho law. Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380, 

(1985). Idaho courts have not addressed whether a transferee in a fraudulent transfer case is 

bound by an underlying judgment against the debtor; however, several other courts have 

addressed this issue and have concluded that transferees are bound to such judgments and can 

only collaterally attack them on jurisdictional grounds or to show the judgment was procured by 

fraud. See e.g., Mansfield v. Pierce, 153 F.3d 721, 1998 WL 433304 * 5 (4th Cir. 1998) 

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Page 6 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

(adopting the rule that “[a] judgment which has been obtained by a defrauded creditor is, as 

against the transferee of the property, conclusive as to the fact of indebtedness on which it is 

based, provided that the judgment has been rendered by a court of competent jurisdiction, and 

that there is nothing to show fraud or collusion”); Giove v. Stanko, 977 F.2d 413, 418 (8th Cir. 

1992) (holding that transferees of fraudulent conveyances had no due process right to attack 

directly a judgment against the debtor-transferor because none of their own property was at risk; 

the action was against the debtor-transferor's property, not the property of the transferees); Valley 

Bank v. Malcolm, 23 Ariz. 395 (1922) (“In the ordinary creditor's suit a judgment is not only 

admissible in evidence for the purpose of establishing the plaintiff's debt, but in the absence of 

fraud or collusion is conclusive, not only upon the parties to it, but other creditors or transferees 

of the judgment debtor.”); Apollo Real Estate Investment Fund, IV, L.P. v. Gelber, 403 Ill. App. 

3d 179, 188 (2010) (stating that by arguing that they were not bound by the underling judgment 

“defendants impermissibly have made a collateral attack on the Ohio judgment”); Dillon Tire 

Serv., Inc. v. Pope, 243 S.C. 293, 297-98 (1963) (“Such judgment regular upon its face is 

immune from attack in any action other than that in which it was rendered except upon proof of 

fraud or want of jurisdiction; and is conclusive, whether rendered on default or after contest, as 

to the relation of debtor and creditor between the parties and the amount of indebtedness and 

cannot be collaterally impeached by the grantee of the debtor in a suit to set aside the 

conveyance as fraudulent.” (Internal citations omitted)); Stephenson v. Naumann, 195 N.Y.S. 

768, 771 (Sup. Ct.) aff'd, 204 A.D. 891, 197 N.Y.S. 951 (App. Div. 1922) (“A judgment is 

conclusive evidence, in actions between creditors relating to property of the debtor, as to the 

latter's indebtedness and the amount thereof, although the other litigant was not a party to the 

action in which the judgment was obtained. It is also such conclusive evidence against the 

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Page 7 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

grantee of real property from the debtor, where the conveyance is claimed to have been in fraud 

of the grantor's creditors.” (Internal citations omitted)); Nelson v. Boe, 226 Ala. 582, 587 (1933) 

(“This court is committed to the proposition that a judgment against the donor, or grantor, 

whether rendered prior, or subsequent to the gift or conveyance, is competent evidence of the 

debt, of the fact that the party in whose favor it was rendered, stands in a relation to be injured 

and affected by the gift or conveyance. When rendered by a court of competent jurisdiction, in 

the regular course of judicial proceedings, in the absence of fraud or collusion, it is conclusive 

evidence of a debt existing at the time of its rendition.” (Internal quotations omitted)). 

The case of Commerce Bank of Lebanon v. Halladale A Corp., 618 S.W.2d 288 (Mo. Ct. 

App. 1981) is instructive because it is factually similar to this case. In Commerce Bank of 

Lebanon, a bank had obtained a judgment against a guarantor based on breach of a personal 

guaranty. Id. at 289. The guarantor then transferred assets to the transferees. Id. The bank sued 

the transferees for fraudulent transfers. Id. The transferees tried to defend the suit by going 

behind the judgment to challenge the sufficiency of the guaranty. Id. The court rejected the 

transferee’s argument stating: 

Where, as in the instant action, the judgment in favor of the bank against 

the [guarantor] was rendered by a court of competent jurisdiction, and there 

is no claim that the judgment was obtained by fraud or collusion, the 

judgment is conclusive as to the relation of debtor or creditor between the 

bank and [the guarantor] and the amount of the indebtedness, and these 

matters cannot be collaterally impeached by transferees of [the guarantor] 

in this action to set aside the transfers as fraudulent; the transferees, 

defendants here, are not permitted to set up defenses which the judgment 

debtor (transferor) interposed unsuccessfully or failed to interpose. ... 

“Solemn adjudications would be of little force if judgment debtors, 

owning property to which the lien of the judgment did not attach, 

could donate it and the donee could then compel the judgment 

creditor to relitigate questions which were appropriately triable in 

the original proceeding. This, in effect, would be an improper 

method of securing a new trial without resorting to the usual 

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Page 8 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

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MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

legitimate course of filing a motion for new trial in the original 

proceeding. There is no validity in the argument, which instant 

defendants make, that they are not bound by the judgment because 

they are not in privity with the judgment debtors. Defendants claim 

the property in controversy under the judgment debtors and thus are 

in privity with them.” 

Commerce Bank of Lebanon, 618 S.W.2d at 291. The Court should adopt a similar rule here and 

find that the Idaho Judgment is binding on defendants, and that their defenses aimed at 

challenging that judgment must be struck. 

Defendants’ defenses should also be struck because defendants are barred by res judicata

from re-litigating the Idaho Lawsuit. Whether or not parties are bound to the underlying 

judgment is a question of Idaho law. See Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 

U.S. 373, 380 (1985) (A federal court determining the preclusive effect of a state court judgment 

“refer[s] to the preclusion law of the State in which judgment was rendered.”). Under Idaho law, 

a judgment has preclusive effect if five factors are satisfied: “(1) the party against whom the 

earlier decision was asserted had a full and fair opportunity to litigate the issue decided in the 

earlier case; (2) the issue decided in the prior litigation was identical to the issue presented in the 

present action; (3) the issue sought to be precluded was actually decided in the prior litigation; 

(4) there was a final judgment on the merits in the prior litigation; and (5) the party against 

whom the issue is asserted was a party or in privity with a party to the litigation.” Waller v. 

State, 146 Idaho 234, 238 (2008) (internal citation omitted). 

In their December 9, 2014, letter to the Court, Defendants’ Heetan B. Patel and Heetal B. 

Patel revealed that at least some of their affirmative defenses are based on the theory that the 

Idaho Judgment was wrong and that their parents owe Malbco less money than reflected in the 

judgment. Letter from L. Caldera Taylor to Honorable P. Papak, p. 3 (Dec. 9, 2014). The 

amount Defendants Bhupendra R. Patel and Nila B. Patel owe Malbco was already litigated in 

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Page 9 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

the Idaho Lawsuit and incorporated into a final judgment on the merits. B. Patel Answer ¶¶ 16-

18. Defendants Bhupendra R. Patel and Nila B. Patel were parties to the Idaho Litigation, see B. 

Patel Answer ¶ 16-18, so they are clearly barred from re-litigating that issue. 

Defendants Heetan B. Patel and Heetal B. Patel are also barred from re-litigating the 

Idaho Lawsuit because they were in privity with their parents in the lawsuit. Under Idaho law, a 

person is in privity with a party to a judgment if the person derives his interest in the outcome of 

the former litigation from the prior defendant. Gubler By & Through Gubler v. Brydon, 125 

Idaho 107, 110 (1994). Here, Defendants Heetan B. Patel and Heetal B. Patel’s only interest in 

the outcome of the Idaho Lawsuit is to reduce their parents’ liability, which reduces the cap on 

their liability in this lawsuit. They have no independent interests in the Idaho Lawsuit. 

Accordingly, they are privies with their parents, and they are barred from re-litigating the issues 

already decided in the Idaho Lawsuit. 

In sum, defendants’ cannot use their affirmative defenses to attack the Idaho Judgment or 

re-litigate the Idaho Litigation. Their defenses aimed at doing that must be struck. 

B. Defendants’ Unclean Hands Defenses are Legally Insufficient. 

In their December 9, 2014, letter to the Court, Defendants Heetan B. Patel and Heetal B. 

Patel said that their unclean hands defense was based, in part, on their belief that the Idaho 

Judgment was fraudulently obtained. Letter from L. Caldera Taylor to Honorable P. Papak, p. 3 

(Dec. 9, 2014). As “evidence” of this, they allege that the successor receiver that Malbco 

appointed over the Property may not have been disinterested and that they believe that Malbco 

obtained the Property for an unfair price. Id. at 2-3. Neither fact can support an unclean hands 

defense. 

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Page 10 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

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MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

Oregon law is clear that an unclean hands defense needs to allege improper behavior that 

is related to the transaction at issue. N. Pac. Lumber Co. v. Oliver, 286 Or. 639, 653 (1979). 

And, that improper conduct must have sufficiently affected the equitable relations between the 

parties. Id. at 659. The transaction at issue is the fraudulent transfer. Even if that can be 

extended to include the foreclosure of the Property or the Idaho lawsuit, the defense still fails 

because there is no legal connection between the receivership and the Idaho Lawsuit. A receiver 

does not foreclose property. It protects the property from waste while a mortgagor or trustee 

forecloses. Idaho Code Ann. S. 8-601(2). Nor are receivers involved in deficiency lawsuits. So, 

even if the receiver was interested, that would not support a claim that Malbco obtained the 

Idaho Judgment by fraud. Similarly, defendants’ disappointment in the price Malbco paid for the 

Property does not support a claim that Malbco obtained the Idaho Judgment by fraud. 

Defendants also claim Malbco has unclean hands based on a racial discrimination theory. 

Defendants allege as follows: 

Malbco may be engaged in a business practice of targeting small hotel 

businesses owned by families of Indian descent by purchasing and 

foreclosing on distressed debt owned by these families. By doing this, 

Malbco can substantially increase its portfolio by foreclosing on one 

distressed property, purchasing that property out of the foreclosure at an 

artificially deflated price, and then pursuing an artificially inflated 

deficiency against the guarantors and taking other hotels owned by the 

family – which is what Malbco is attempting to do to the Patel family here. 

Letter from L. Caldera Taylor to Honorable P. Papak, p. 3 (Dec. 9, 2014). However, Malbco’s 

alleged racial targeting is not related to the transaction at issue, which is the fraudulent transfer, 

and therefore even if it was true, it could not support an unclean hands defense in this lawsuit. 

Further, Malbco’s alleged conduct did not have affected the equitable relations between the 

parties. Defendants were already in breach of their personal guaranties when Malbco purchased 

the loan, and Malbco’s predecessor-in-interest had already started taking steps based on the 

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Page 11 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

defaulted note. Malbco simply continued the enforcement actions already in place, which it had 

a legal right to do. Defendants’ unclean hands affirmative defense is creative, but it is legally 

insufficient, and it should be stuck. 

C. Defendants’ Affirmative Defenses Have Not Been Plead Sufficiently. 

The Court should also strike defendants’ affirmative defenses because they have not been 

plead in a manner that gives Malbco any notice of what they are actually about. 

The Ninth Circuit has not decided whether the plausibility pleading standard set forth in 

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 

(2009), applies to affirmative defenses. However, most judges within this District have been 

applying the standard. See e.g., Gessele v. Jack in the Box, Inc., No. 3:10-CV-960-ST, 2011 WL 

3881039, at *1 (D. Or. Sept. 2, 2011) (applying Twombly to affirmative defenses and stating that 

“the majority of district courts across the country have extended Twombly's plausibility standard 

to affirmative defenses”); A & B Asphalt, Inc. v. Humbert Asphalt, Inc., No. 2:13-CV-00104-SU, 

2014 WL 3695480, at *2 (D. Or. May 8, 2014) (applying Twombly to affirmative defenses); 

Peterson v. Acumed, LLC, No. CV–10–586–HU, 2010 WL 5158542, at *3 (D Or Dec. 14, 2010) 

(applying Twombly to affirmative defenses); but see Trustmark Ins. Co. v. C & K Market, Inc., 

No. CV–10–465–MO, 2011 WL 587574 (D. Or. Feb. 10, 2011) (declining to extend Twombly to 

affirmative defenses). 

Under the plausibility standard, a plaintiff must do more than allege mere legal 

conclusions: 

A claim has facial plausibility when the plaintiff pleads factual content that 

allows the court to draw the reasonable inference that the defendant is liable 

for the misconduct alleged. The plausibility standard is not akin to a 

‘probability requirement,’ but it asks for more than a sheer possibility that 

a defendant has acted unlawfully. Where a complaint pleads facts that are 

merely consistent with a defendant's liability, it stops short of the line 

between possibility and plausibility of entitlement to relief. 

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MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570 (internal quotations and 

citations omitted)). Even if Iqbal and Twombly do not apply here, defendants’ pleadings must, at 

a minimum, give plaintiff fair notice of the defense they are asserting. Wyshak v. City Nat’l 

Bank, 607 F.2d 824, 827 (9th Cir. 1979) (citing Conley v. Gibson, 355 U.S. 41 (1957)) (emphasis 

added). Under the fair notice standard, a pleading need not be supported by detailed factual 

allegations, but it must at least give notice of the “grounds upon which it rests.” Conley, 355 U.S. 

at 47. 

The following affirmative defenses are nothing more than boilerplate assertions of legal 

principles: (a) Defendants Bhupendra R. Patel and Nila B. Patel’s affirmative defense numbers 3, 

4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14; (b) Defendants Heetan B. Patel’s and Heetal B. Patel’s 

affirmative defense numbers 3, 5, 6, 7, 8, 9, 10, 11 and 12; and (c) Defendant Mukesh Patel’s 

affirmative defenses set out in paragraphs 28 and 30 of his answer to the amended complaint. 

Defendants have provided no factual support or explanation behind these defenses, and Malbco 

has no idea what most of the defenses are actually about. Defendants’ conclusory allegations fail 

to meet the notice pleading standard, let alone the plausibility pleading standard. The defenses 

should be struck. See e.g., Hadar v. Wilson, No. CV 10-796-PK, 2011 WL 2600442, at *10 (D. 

Or. June 28, 2011) (striking affirmative defenses of waiver, estoppel and third parties’ wrongful 

acts and a reservation of unspecific affirmative defenses because they failed to give fair notice to 

plaintiffs); Kohler v. Staples the Office Superstore, LLC, 291 F.R.D. 464, 470 (S.D. Cal. 2013) 

(striking several conclusory affirmative defenses because they did not provide plaintiff with 

notice of the nature and bases of the defenses); Gessele, 2011 WL 3881039, at *7 (striking 

several affirmative defenses that failed to meet the pleading requirements). Each defense is 

briefly addressed. 

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MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

1. Failure to Mitigate 

In a diversity action, federal law controls the sufficiency of the manner in which a 

defense is pleaded, but state substantive law determines the legal sufficiency of a defense. 

Wyshak, 607 F.2d at 827; 5C Wright & Miller, Federal Practice & Procedure, § 1381 (3d ed.). 

Each of the defendants alleges that Malbco has failed to mitigate its damages. See B. 

Patel Answer ¶ 65; H. Patel Answer ¶ 60; M. Patel Answer ¶ 30. However, none of the 

defendants have plead facts supporting the defense. At most, Defendants Heetan B. Patel and 

Heetal B. Patel have alleged that a property sold at an underlying foreclosure sale was not sold 

for fair market value. H. Patel Answer ¶ 15. That allegation is not applicable to defendants’ 

affirmative defense. Under Oregon law, the mitigation doctrine requires a plaintiff to take action 

to prevent further loss after the injury has occurred. Dippold v. Cathlamet Timber Co., 111 Or. 

199, 208, 225 P. 202, 205 (1924) (“The carelessness or indifference of the plaintiff in the matter 

of lessening damages is successive and subsequent to the carelessness of the defendant.”). Here, 

the injury was the fraudulent transfer. Thus, defendants would need to show that Malbco took 

some action, or failed to take some action, after it discovered the fraudulent transfer, which 

increased its damages. Defendants have failed to do that. Defendants’ mitigation defenses are 

insufficient and should be struck. 

2. Laches 

Each of the defendants have asserted a laches affirmative defenses. See B. Patel Answer 

¶ 58; H. Patel Answer ¶ 62; M. Patel Answer ¶ 28. Again, defendants have plead no facts to 

support their defense. Under Oregon law, the doctrine of laches requires a showing of the 

following elements: “(1) that plaintiffs delayed in asserting their claim for an unreasonable 

length of time; (2) that plaintiffs had full knowledge of all of the relevant facts; and (3) that the 

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Page 14 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

delay resulted in such substantial prejudice to defendant that it would be inequitable to grant 

plaintiffs the relief requested.” Vossen v. Forrester, 155 Or. App. 323, 327, 963 P.2d 157, 159 

(1998). Where a “defendant raises a defense of laches, but the analogous statute of limitations 

for an action at law has not run, the defendant bears the burden of proving that laches applies.” 

Id. Defendants have failed to allege any facts to support a laches defense. The defense should 

be struck. 

3. Estoppel 

Each of the defendants has raised an estoppel defense. See B. Patel Answer ¶ 60; H. 

Patel Answer ¶ 64; M. Patel Answer ¶ 28. Defendants have failed to specify the type of estoppel 

they are asserting, let alone any facts to support an estoppel defense. Assuming the defendants 

are asserting an equitable estoppel defense, the defense is insufficient. “In order to establish 

equitable estoppel, defendant must prove that plaintiff made a false representation to defendant 

with knowledge of facts of which defendant was ignorant, that plaintiff made the representation 

with the intent that defendant act on it, and that defendant reasonably acted upon it to his 

detriment.” Pfaendler v. Bruce, 195 Or. App. 561, 569, 98 P.3d 1146, 1151 (2004). Defendants’ 

boilerplate defenses provide no notice of what representations Malbco allegedly made, or what 

actions defendants took in reliance on those representations. The defense should be struck. 

4. Waiver 

Each of the defendants has raised a waiver defense. See B. Patel Answer ¶ 63; H. Patel 

Answer ¶ 65; M. Patel Answer ¶ 28. Waiver is the voluntary relinquishment of a known right. 

Alderman v. Davidson, 326 Or. 508, 513, 954 P.2d 779 (1998). Defendants have not shown in 

what way Malbco may have knowingly waived any right. Without any factual support, these 

defenses are insufficient and should be struck. 

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Page 15 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

5. Unjust Enrichment 

Defendants Bhupendra R. Patel, Nila B. Patel, Heetan B. Patel and Heetal B. Patel allege 

that Malbco’s recovery on its claim is barred, in whole or in part, by the doctrine of unjust 

enrichment. See B. Patel Answer ¶ 61; H. Patel Answer ¶ 66. To prevail on this defense, 

defendants will need to show, among other things, that they conferred some benefit on Malbco. 

L.S. Henriksen Const., Inc. v. Shea, 155 Or. App. 156, 158, 961 P.2d 295, 297 (1998). The 

pleadings contain absolutely no allegations showing that any of the defendants have conferred a 

benefit on Malbco. Malbco does not have fair notice of the grounds upon which these defenses 

rest. The defenses should be struck. 

6. Satisfaction 

Defendants Bhupendra R. Patel, Nila B. Patel, Heetan B. Patel and Heetal B. Patel allege 

that “Plaintiff’s claims have been satisfied, in whole or in part, by Plaintiff’s recovery against 

security and third parties.” See B. Patel Answer ¶ 59; H. Patel Answer ¶ 63. Malbco’s claims in 

this lawsuit are fraudulent transfer claims. The pleadings contain no facts showing that there is 

security from which Malbco can satisfy its fraudulent transfer claim. Defendants’ defenses are 

factually insufficient and should be struck. 

7. Anti-Deficiency 

Defendants Heetan B. Patel and Heetal B. Patel claim that “Plaintiff’s claims are barred, 

in whole or in part, by applicable anti-deficiency statutes. H. Patel Answer ¶ 68. Defendants’ 

pleadings do not specify what anti-deficiency statutes defendants believe are applicable. The 

defense is insufficient and should be struck. 

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Page 16 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

8. Public Policy

Defendants Bhupendra R. Patel, Nila B. Patel, Heetan B. Patel and Heetal B. Patel allege 

that Malbco’s recovery on its claim is barred, in whole or in part, because recovery on those 

claims could be contrary to public policy, including without limitation the public policy of the 

states of Oregon, Idaho, Washington and California. See B. Patel Answer ¶ 69; H. Patel Answer 

¶ 69. Defendants fail to assert any specific public policy applicable to their defense, and they fail 

to state any facts supporting their defense. Defendants’ “public policy” defenses do not provide 

“fair notice” to Malbco, and they should be struck. 

9. Discharge/Unclean Hands 

Defendants Bhupendra R. Patel, Nila B. Patel, Heetan B. Patel and Heetal B. Patel allege 

that Malbco’s conduct has discharged defendants from any obligation to pay on Malbco’s claims, 

in whole or in part. See B. Patel Answer ¶ 62; H. Patel Answer ¶ 67. The defense is factually 

insufficient because defendants have plead no facts in support of it. Defendants’ defenses fail to 

meet the Rule 8 pleading standards, and they should be struck. 

10. Defenses of Om Namah Laxmi 

Defendants Bhupendra R. Patel and Nila B. Patel allege that “Plaintiff’s claims are 

barred, in whole or in part, by the defenses available to Om Namah Laxmi, LLC, including 

without limitation the Fourth through Tenth affirmative defenses set forth above. See B. Patel 

Answer ¶ 66. This is a mere reservation of affirmative defenses, which should be struck. 

DCIPA, LLC v. Lucile Slater Packard Children's Hosp. at Stanford, 868 F. Supp. 2d 1042, 1060 

(D. Or. 2011) (striking defendant’s “reservation” of additional affirmative defenses because the 

reservation had no basis in law); E.E.O.C. v. Timeless Investments, Inc., 734 F.Supp.2d 1035, 

Case 3:14-cv-00947-PK Document 31 Filed 12/12/14 Page 16 of 19
Page 17 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

1055 (E.D.Cal.2010) (“The mere reservation of affirmative defenses is not an affirmative 

defense.”) (Internal citations and quotations omitted). 

11. Defenses of Alleged Guarantors 

Defendants Bhupendra R. Patel and Nila B. Patel allege that “Plaintiff’s claims are 

barred, in whole or in part, by the defenses available to Defendants as alleged guarantors under 

Exhibits 1 and 2 to the Complaint, including without limitation the Fourth through Tenth 

affirmative defenses set forth above. See B. Patel Answer ¶ 67. Again, this defense is a 

reservation of affirmative defenses, which should be struck. DCIPA, LLC, 868 F. Supp. 2d at 

1060. 

12. Claim Preclusion 

Defendants Bhupendra R. Patel and Nila B. Patel allege that “Plaintiff’s claims are 

barred, in whole or in part, by the claim preclusive effect of the ‘Idaho Judgment.’” See B. Patel 

Answer ¶ 68. Defendants assert no facts, context or justification for how the Idaho Judgment 

precludes Malbco’s claim in this case. In fact, Oregon law provides that the judgment creates a 

basis for a fraudulent transfer claim. See ORS 95.260 (“If a creditor has obtained a judgment on 

a claim against the debtor and if the court so orders, the creditor may levy execution on the asset 

transferred or its proceeds.”). This defense is insufficient and should be struck. 

CONCLUSION 

For the reasons set forth above, the Court should strike any affirmative defense aimed at 

attacking the Idaho Judgment or re-litigating the Idaho Lawsuit, including, without limitation, (a) 

Defendants Bhupendra R. Patel and Nila B. Patel’s affirmative defense numbers 3, 4, 5, 6, 7, 9, 

10, 11, 12 and 14; (b) Defendants Heetan B. Patel and Heetal B. Patel’s affirmative defense 

Case 3:14-cv-00947-PK Document 31 Filed 12/12/14 Page 17 of 19
Page 18 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

numbers 3, 5, 6, 7, 9, 10, 11 and 12; (c) Defendant Mukesh R. Patel’s affirmative defenses set 

out in paragraphs 28 and 30 of his answer to the amended complaint. 

The Court should also strike the following defenses because they do not give Malbco fair 

notice of the grounds of the defense: (a) Defendants Bhupendra R. Patel and Nila B. Patel’s 

affirmative defense numbers 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14; (b) Defendants Heetan B. 

Patel’s and Heetal B. Patel’s affirmative defense numbers 3, 5, 6, 7, 8, 9, 10, 11 and 12; and (c) 

Defendant Mukesh Patel’s affirmative defenses set out in paragraphs 28 and 30 of his answer to 

the amended complaint. 

 

DATED this 12th day of December, 2014. 

ZUPANCIC RATHBONE LAW GROUP, P.C. 

By: s/ Marjorie A. Elken 

Marjorie A. Elken, OSB #073368 

Marjorie@zupgroup.com 

Telephone: 503-968-8200 

Facsimile: 503-968-8017 

Of Attorneys for Plaintiff MALBCO HOLDINGS, 

LLC, a Washington limited liability company 

Case 3:14-cv-00947-PK Document 31 Filed 12/12/14 Page 18 of 19
Page 19 – PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING 

MEMORANDUM 

Zupancic Rathbone Law Group, P.C. 

4949 Meadows, Ste. 600 

Lake Oswego, OR 97035 

Tel: 503-968-8200 Fax: 503-968-8017 

CERTIFICATE OF SERVICE 

I certify that on December 12, 2014, I served or caused to be served a true and complete 

copy of the foregoing PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ 

AFFIRMATIVE DEFENSES AND SUPPORTING MEMORANDUM on the party or parties 

listed below as follows: 

 Via CM / ECF Filing 

 Via First Class Mail, Postage Prepaid 

 Via Email 

 Via Personal Delivery 

Zachary W L Wright, OSB #941615 

Tonkon Torp LLP 

888 SW Fifth Avenue, Suite 1600 

Portland, OR 97204 

Of Attorneys for Defendants Bhupendra R. 

Patel and Nila B. Patel 

Laura Caldera Taylor, OSB #993786 

Thomas L. Hutchinson, OSB #994896 

Bullivant Houser Bailey PC 

888 SW Fifth Avenue, Suite 300 

Portland, OR 97204 

Of Attorneys for Defendants Heetan Patel 

and Heetal Patel-Manani 

Nicholas J. Henderson, OSB #074027 

Motschenbacher & Blattner LLP 

117 SW Taylor Street, Suite 200 

Portland, OR 97204 

Of Attorneys for Defendant Mukesh Patel 

ZUPANCIC RATHBONE LAW GROUP, P.C. 

By: s/ Marjorie A. Elken 

Marjorie A. Elken, OSB #073368 

Marjorie@zupgroup.com 

Telephone: 503-968-8200 

Facsimile: 503-968-8017 

Of Attorneys for Plaintiff MALBCO 

HOLDINGS, LLC, a Washington limited 

liability company 

Case 3:14-cv-00947-PK Document 31 Filed 12/12/14 Page 19 of 19