IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

WILLIAM J. PAATALO, 

Plaintiff, 

vs. 

JPMORGAN CHASE BANK, 

Defendant. 

John A. Cochran 

Pacific Property Law, LLC 

10121 SE Sunnyside Rd., Ste. 300 

Clackamas, OR 97015 

Attorney for plaintiff 

Frederick B. Burnside 

Davis Wright Tremaine, LLP 

1201 Third Avenue, Ste. 2200 

Seattle, WA 98101 

Kaley L. Fendall 

Kevin H. Kono 

Davis Wright Tremaine, LLP 

1300 SW Fifth Avenue, Ste. 2400 

Portland, OR 97201 

Attorneys for defendant 

PAGE 1 - OPINION AND ORDER 

Case No. 6:15-cv-01420-AA 

OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 21 Filed 02/24/16 Page 1 of 8
AIKEN, Chief Judge: 

Plaintiff William J. Paatalo seeks a declaratory judgment 

deeming null and void the 2009 foreclosure of his home loan ("the 

loan") and trustee's sale of the residential property ("the 

property") securing the loan. Plaintiff obtained the loan from 

Washington Mutual Bank, F.A. ("WaMu"). Plaintiff alleges he 

informed WaMu in 2008 he intended to rescind the loan. After WaMu 

failed during the global financial crisis, the Federal Deposit 

Insurance Corporation transferred to defendant JPMorgan Chase a 

number of WaMu's assets and liabilities. Defendant also purchased 

the property at the trustee's sale, and then later resold it to a 

third party. 1 

Plaintiff filed this lawsuit after the Supreme Court decided 

Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790 (2015). In 

Jesinoski, a unanimous Supreme Court interpreted the provisions of 

the Truth in Lending Act ("TILA") governing a borrower's right to 

rescind a loan to hold "rescission is effected" at the time the 

borrower gives notice of intent to rescind, so long as the notice 

is given within the statutory time period. Jesinoski, 135 S. Ct. 

at 792. Plaintiff argues Jesinoski made clear the loan was 

rescinded in 2008; WaMu's security interest in the property was 

1 The facts are set out more fully in this court's opinion 

and order denying defendant's motion to dismiss. Paatalo v. 

JPMorgan Chase Bank, - F. Supp. 3d -, 2015 WL 7015317, *l-*2 (D. 

Or. Nov. 12, 2015). 

PAGE 2 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 21 Filed 02/24/16 Page 2 of 8
voided at that time; and, as a result, defendant never obtained a 

valid interest in the property through the trustee's sale. On 

November 12, 2015, this court issued an opinion and order 

("November 12 Opinion") denying defendant's motion to dismiss 

because "if - as plaintiff alleges - WaMu failed to provide the 

required disclosures and plaintiff delivered written notice of 

rescission in March 2008, the rescission was effected and the 

security interest in plaintiff's property voided at that time." 

Paatalo, 2015 WL 7015317 at *3. 

After the court issued the November 12 Opinion, defendant 

filed an answer. Plaintiff then filed a motion to strike 

defendant's affirmative defenses, deem answers admitted, and for 

judgment on the pleadings (doc. 16) . Defendant next filed an 

amended answer, prompting plaintiff to file a second motion to 

strike, deem answers admitted, and for judgment on the pleadings 

(doc. 18). For the reasons set forth below, two of defendant's 

affirmative defenses are stricken, but plaintiff's motions are 

otherwise denied. 

A. The November 12 Opinion Does Not Entitle Plaintiff to 

Judgment as a Matter of Law 

Throughout both motions, plaintiff asserts the November 12 

Opinion was tantamount to a grant of summary judgment in his favor. 

Nearly all plaintiff's other arguments rest on this assertion. As 

a threshold matter, therefore, the court clarifies the November 12 

PAGE 3 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 21 Filed 02/24/16 Page 3 of 8
Opinion does not entitle plaintiff to judgment as a matter of law. 

As the opinion makes clear, questions of material fact remain as to 

(1) whether WaMu provided plaintiff deficient notice of his right 

to rescind, triggering the three-year rescission period; and (2) 

whether plaintiff communicated his intent to rescind within that 

period. 

B. Motion to Strike 

A court may "strike from a pleading any insufficient defense 

or any redundant, immaterial, impertinent, or scandalous matter." 

Fed. R. Civ. P. 12 (f). When considering a motion to strike, a 

court must view the challenged pleading in the light most favorable 

to the pleader. Wanke Cascade Distribution, Ltd. v. Forbo 

Flooring, Inc., No. 3:13-cv-00768-AC, 2015 WL 1757151, *4 (D. Or. 

2015) . "Motions to strike are generally viewed with disfavor and 

are not frequently granted." 

grant a Rule 12(f) motion" 

Id. Nonetheless, "[a] court should 

when doing so will "'avoid the 

expenditure of time and money that must arise from litigating 

spurious issues by dispensing with those issues prior to trial.'" 

Brooks v. Caswell, No. 3:14-cv-01232-AC, 2015 WL 5178080, *2 (D. 

Or. Sept. 3, 2015). 

Plaintiff moves to strike all eight affirmative defenses 

asserted in the amended answer. The court strikes two affirmative 

defenses. Defendant's fifth affirmative defense alleges res 

judicata or collateral estoppel bars plaintiff from asserting he 

PAGE 4 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 21 Filed 02/24/16 Page 4 of 8
rescinded the loan because that claim or issue either already was 

or could have been litigated in prior lawsuits. In Oregon, 2 

however, "courts usually do not apply the rule of res judicata in 

a situation in which there has been an intervening change in the 

law between the first and second judgments which creates an altered 

situation." State ex rel. Huntington Rubber Mills v. Sulmonetti, 

557 P.2d 641, 643 (Or. 1976); see also Pub. Util. Dist. No. 1 of 

Snohomoish Cnty. v. Dep't of Revenue, 18 Or. Tax 199, 205 (Or. Tax 

Ct. 2005) ("[T]he law in Oregon is that a judgment on one claim 

does not preclude a later claim where there has been a change in 

the law.") Jesinoski, an intervening change in the law, bars a 

preclusion defense here. The seventh affirmative defense, 

estoppel, fails for a similar reason: plaintiff's pre-Jesinoski 

actions suggesting he did not subjectively believe he rescinded the 

loan do not estop him from arguing, post-Jesinoski, that he did 

rescind. Thus, plaintiff's motion to strike the fifth and seventh 

affirmative defenses is granted. 3 

2 Federal courts sitting in diversity apply state preclusion 

rules. Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 

508 (2001). 

3 Defendant requested leave to amend in the event the court 

granted plaintiff's motion to strike any of their affirmative 

defenses. Def.'s Resp. Mot. Strike at 9. In light of the 

Jesinoski decision, any amendment of the fifth affirmative 

defense (res judicata/claim preclusion) would be futile; 

accordingly, that defense is stricken with prejudice. In re 

Rogstad, 126 F.3d 1224, 1228 (9th Cir. 1997) (listing "futility 

of amendment" as a reason for denying leave to amend) . It may 

be, however, that defendant could plead facts sufficient to 

PAGE 5 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 21 Filed 02/24/16 Page 5 of 8
The motion to strike is denied as to the remaining affirmative 

defenses.' The first affirmative defense (statute of limitations) 

and second affirmative defense (laches) relate to whether plaintiff 

had a three-year right to rescind and, if so, whether and when he 

exercised that right. As explained above, those are unresolved 

questions of fact. The third affirmative defense (release) and the 

fourth affirmative defense (waiver) relate to plaintiff's purported 

written release in 2012 of all claims against defendant related to 

this property. Even assuming the questions of fact related to 

rescission are resolved in plaintiff's favor, such a release might 

bar plaintiff from asserting his claims in this action. The sixth 

affirmative defense, failure to join the subsequent third-party 

purchasers of the property, survives the motion to strike because 

plaintiff has made no legal argument regarding whether those 

purchasers are necessary or indispensable parties pursuant to Fed. 

support their defense of equitable estoppel. The seventh 

affirmative defense is therefore stricken without prejudice. 

4 The parties disagree over whether the pleading standards 

set out in Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell 

Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), apply to 

affirmative defenses. Neither the Supreme Court nor the Ninth 

Circuit has answered this question, and this court has issued 

conflicting decisions on the issue. Compare Trustmark Ins. Co. 

v. C & K Market, Inc., No. CV 10-465-MO, 2011 WL 587574, *l (D. 

Or. Feb. 10, 2011) (lower notice pleading standard applies to 

affirmative defenses) with Gessele v. Jack in the Box, Inc., No. 

3:10-cv-960-ST, 2011 WL 3881039, *2 (D. Or. Sept. 2, 2011) 

(higher plausibility pleading standard applies to affirmative 

defenses) . It is not necessary to resolve this question here, 

however, because the surviving affirmative defenses meet the 

higher Iqbal/Twombly standard. 

PAGE 6 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 21 Filed 02/24/16 Page 6 of 8
R. Civ. P. 19. Finally, the eighth affirmative defense (unjust 

enrichment) adequately states a claim by asserting reinstatement of 

plaintiff's title to the property would unfairly confer on him the 

benefit of loan proceeds he has not repaid. See Volt Servs. Grp., 

Div. of Volt Mgmt. Corp. v. Adecco Employment Servs., Inc., 35 P.3d 

329, 337 (Or. Ct. App. 2001) (reciting the elements of unjust 

enrichment) . 

C. Motion for Judgment on the Pleadings 

A judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) 

"is properly granted when, taking all the allegations in the nonmoving party's pleadings as true, the moving party is entitled to 

judgment as a matter of law." Faiardo v. Cnty. of L.A., 179 F.3d 

698, 699 (9th Cir. 1999). As explained above, a number of factual 

questions would have to be resolved before the court could rule on 

plaintiff's claims or defendant's remaining affirmative defenses. 

Thus, plaintiff's motion for judgment on the pleadings is denied. 5 

CONCLUSION 

Plaintiff's motions to strike the amended answer and 

affirmative defenses, deem answers admitted, and for judgment on 

5 Plaintiff's motion to deem defendant's amended answers 

admitted also is denied. Plaintiff cites no legal authority for 

his contention a denial based on a lack of knowledge should be 

deemed an admission under these circumstances. Moreover, 

contrary to plaintiff's argument, it is well-established that a 

plaintiff may deny the allegations of the complaint and, in the 

alternative, assert affirmative defenses. See Fed. R. Civ. P. 

8(b)-(c). 

PAGE 7 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 21 Filed 02/24/16 Page 7 of 8
the pleadings (docs. 16 and 18) are GRANTED in part and DENIED in 

part as follows: 

1. Defendant's fifth affirmative defense (res 

judicata/collateral estoppel) is STRICKEN with prejudice; 

2. Defendant's seventh affirmative defense (estoppel) is 

STRICKEN without prejudice; 

3. Plaintiff's motion to strike the amended answer and 

affirmative defenses is otherwise DENIED; 

4. Plaintiff's motion to deem answers admitted is DENIED; and 

5. Plaintiff's motion for judgment on the pleadings is DENIED. 

Defendant's request for oral argument is DENIED as 

unnecessary. 

Dated this c{~f February, 2016. 

Ann Aiken 

United States District Judge 

PAGE 8 - OPINION AND ORDER 

Case 6:15-cv-01420-AA Document 21 Filed 02/24/16 Page 8 of 8