United States District Court, M.D. Florida, Tampa Division
VIRGINIA M. HERNANDEZ COVINGTON, UNITED STATES DISTRICT JUDGE
this Court is Plaintiff Securities and Exchange
Commission's Motion to Strike Defendants' Affirmative
Defenses (Doc. # 51), filed on July 5, 2019. Defendants
Spartan Securities Group, LTD, Island Capital Management,
Carl Dilley, Micah Eldred, and David Lopez responded on July
18, 2019. (Doc. # 56). For the reasons that follow, the
Motion is denied.
brings this civil enforcement action against Defendants for
their alleged roles in creating nineteen undisclosed blank
check companies in violation of the Securities Act of 1933
(Securities Act) and the Securities Exchange Act of 1934
(Exchange Act). (Doc. # 1). Defendant Eldred filed a motion
to dismiss the Complaint on April 22, 2019. (Doc. # 22). The
remaining Defendants jointly filed a separate motion to
dismiss that same day. (Doc. # 23). All Defendants argued,
among other things, that most of the SEC's claims were
time-barred. (Docs. ## 22 at 27; 23 at 31). The Court
disagreed and denied both motions on June 5, 2019. (Doc. #
filed a joint answer to the action on June 14, 2019, wherein
they deny all nineteen counts and assert six affirmative
defenses: (1) statute of limitations; (2) waiver/estoppel;
(3) unclean hands/bad faith; (4) disgorgement not proper
remedy; (5) good faith reliance; and (6) any additional
affirmative defenses that might develop. (Doc. # 46 at
69-70). On July 5, 2019, the SEC filed its Motion to Strike
all six affirmative defenses. (Doc. # 51). Defendants
responded in opposition on July 18, 2019 (Doc. # 56), and the
Motion is ripe for review.
argues that the Court “should strike Defendants'
affirmative defenses because the majority of those arguments
were already considered and dismissed by the Court in
[Defendants'] Motion to Dismiss [or] . . . are simply
wrong as a matter of law.” (Doc. # 51 at 1). According
to the SEC, “an affirmative defense must give the
plaintiff ‘fair notice' of the nature of the
defense and the grounds upon which it rests.”
(Id. at 4). According to the SEC, none of
Defendants' affirmative defenses allege facts in support
and are legally insufficient. (Id. at 5).
Court has previously held that affirmative defenses are not
subject to the pleading standard described in Bell Atlantic
Corp. v. Twombly, 550 U.S. 544 (2007), and
Ashcroft v. Iqbal, 556 U.S. 662 (2009). See
Hamblen v. Davol, Inc., No. 8:17-cv-1613-T-33TGW, 2018
WL 1493251, at *2 (M.D. Fla. Mar. 27, 2018)(“[T]his
Court finds persuasive the logic of those district courts in
the Eleventh Circuit that have found that affirmative
defenses should not be held to the Twombly pleading
standard.”). As such, the SEC's “arguments
based upon Twombly and its progeny are roundly
“affirmative defenses are . . . evaluated against the
touchstone of Rule 12(f), Fed. R. Civ. P.” Grasso
v. Grasso, No. 8:13-cv-3186-T-33AEP, 2015 WL 12843863,
at *1 (M.D. Fla. Feb. 18, 2015). Rule 12(f) allows courts to
“strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous
matter.” Fed.R.Civ.P. 12(f). Motions to strike are
generally disfavored due to their drastic nature.
Id.; see also Hamblen, 2018 WL 1493251, at *3;
Royal Ins. Co. of Am. v. M/Y Anastasia, No.
95-cv-30498, 1997 WL 608722, at *3 (N.D. Fla. Jan. 30, 1997).
in this District have held that “[a]n affirmative
defense will only be stricken . . . if the defense is
‘insufficient as a matter of law.'” Hamblen,
2018 WL 1493251, at *3 (quoting Microsoft Corp. v.
Jesse's Computs. & Repair, Inc., 211 F.R.D. 681,
683 (M.D. Fla. 2002)). An affirmative defense is insufficient
as a matter of law if: (1) on the face of the pleadings, it
is patently frivolous, or (2) it is clearly invalid as a
matter of law. Jesse's Computs. & Repair, Inc., 211
F.R.D. at 683.
argues that Defendants' first affirmative defense - that
the SEC's claims and recovery are barred by the
applicable statute of limitations set forth in 28 U.S.C.
§ 2462 - should be stricken because the Court already
ruled on the issue. Indeed, the Court previously ruled that
the relief sought by the SEC in this matter is not barred by
the statute of limitations contained within Section 2462.
(Doc. # 44 at 20-22).
as the SEC acknowledges, “motions to strike defenses
are generally not favored.” (Doc. # 51 at 3). Such
motions “will usually be denied unless the allegations
have no possible relation to the controversy and may cause
prejudice to one of the parties.” Poston v.
American President Lines, Ltd., 452 F.Supp. 568, 570
(S.D. Fla. 1978)(citing Augustus v. Board of Public
Instruction, 306 F.2d 862 (5th Cir. 1962)). Given that
Defendants' first affirmative defense relates directly to
the SEC's claims and that the SEC has failed to show it
would experience undue prejudice if the Court did not strike
the defense, the Court declines to strike Defendants'
first affirmative defense.
next argues that Defendants' second affirmative defense
of waiver/estoppel should be stricken because estoppel claims
against the government “only lie in the most extreme
circumstances.” Gibson v. Resolution Trust
Corp., 51 F.3d 1016, 1025 (11th Cir. 1995). However, it
does not follow that Defendants' second affirmative
defense is insufficient as a matter of law simply because
such defense is only available in extreme circumstances. As
such, the Court declines to strike Defendants' second
similarly argues that Defendants' third affirmative
defense - that the SEC's claims are barred by the
doctrine of unclean hands or bad faith - should be stricken
because the defense is “only available in strictly
limited circumstances.” SEC v. KPMG LLP, No.
03 Civ. 671(DLC), 2003 WL 21976733, at *3 (S.D.N.Y. Aug. 20,
2003). Again, Defendants' affirmative defense is not
insufficient as a matter of law merely because ...