Federal Deposit Ins. Corp. v. Main Hurdman

Decision Date03 March 1987
Docket NumberNo. CIV S-85-552 LKK.,CIV S-85-552 LKK.
PartiesFEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff, v. MAIN HURDMAN, Defendant and Third-Party Plaintiff, v. HOLT LEASING COMPANY, et al., Third-Party Defendants, Counterclaimants, and Fourth-Party Plaintiffs, v. KMG MAIN HURDMAN, et al., Counterdefendants, and Continental Illinois National Bank and Trust Company of Chicago, Fourth-Party Defendants.
CourtU.S. District Court — Eastern District of California

William Alsup, Patrick J. Flinn, Laurie S. Hane, Morrison & Foerster, San Francisco, Cal., Theodore H. Livingston, Robert J. Kriss, Barbara Bertok, Lynne M. Raimondo, George A. Martinez, Mayer, Brown & Platt, Chicago, Ill., for Federal Deposit Ins. Corp.

Thomas G. Redmon, Matthew W. Powell, Wilke, Fleury, Hoffelt, Gould & Birney, Sacramento, Cal., Robert J. Kheel, Michael R. Young, David Welch, Willkie, Farr & Gallagher, Richard I. Miller, Gen. Counsel, New York City, for defendant & third-party plaintiff KMG Main Hurdman.

William A. Wineberg, Robert H. Sloss, John E. Rumel, Broad, Schulz, Larson & Wineberg, San Francisco, Cal., for fourth-party defendants Continental Illinois Nat. Bank and Trust Co. of Chicago.

James A. Askew, Neumiller & Beardslee, Stockton, Cal., for Holt Leasing Co., Parker M. Holt, Harry D. Holt, Jarmir F. Marek, Victor C. Wykoff, Jr. and Ronald E. Monroe.


KARLTON, Chief Judge.

The Federal Deposit Insurance Corporation ("FDIC") has sued KMG Main Hurdman ("KMG") in three counts: fraud, negligent misrepresentation, and accountant malpractice. It premises the jurisdiction of this court on 12 U.S.C. § 18191, and seeks compensatory and punitive damages in the approximate sum of 140 Million Dollars.

In essence, the FDIC claims that KMG was the accounting firm for Holt Leasing Company and pursuant to that employment provided financial statements which it knew or should have known were to be used by Holt in obtaining credit. It further alleges that those financial statements were false, but were reasonably and detrimentally relied upon by Continental as a basis for the extension of credit to the Holt Companies.

The plaintiff alleges at paragraph 2 of the complaint that "the FDIC brings this action in its capacity as assignee of all rights, interests and claims of Continental Illinois National Bank and Trust Company of Chicago "Continental" under, or in any way related to or arising in connection with, certain loans made by Continental to Holt Leasing Company "Holt" during 1981 and 1982."

In response, among other things, "defendant denies the allegations of paragraph 2 of the complaint." In addition, defendant alleges two "affirmative defenses":

The claims set forth in the complaint are not assignable, and by reason thereof plaintiff is not the real party in interest.
Plaintiff's permanent assistance program for Continental Bank was in excess of plaintiff's statutory authority. The purported assignment of the claim set forth in the complaint to plaintiff pursuant to said permanent assistance program was therefore invalid, and by reason thereof plaintiff is not the real party in interest.

This opinion disposes of plaintiff's motion to strike these two defenses. Both plaintiff and defendant treat the motion as raising essentially the same issue, whether defendant has "standing" to raise the defenses. As I explain below, I believe that the motion requires consideration of somewhat different issues as to each of the affirmative defenses.

I first examine the distinction between affirmative defenses and negative averments. I then turn to the standards applicable to a motion to strike. Finally, I examine the defenses in light of the substantive law and dispose of the motions. I determine herein that the sixth affirmative defense should be stricken because defendant's contention concerning the assignable nature of the claim is surplusage and its assertion that plaintiff is not the real party in interest is without merit. As to the seventh affirmative defense, the court concludes that the contention is a true affirmative defense, but that defendant lacks standing to assert that plaintiff's conduct is ultra vires.


Federal Rule of Civil Procedure 8(c) requires the affirmative pleading of 19 separate defenses, and of "any matter constituting an avoidance or affirmative defense." Historically, the rule is derived from the common law practice of confession and avoidance, 5 C. Wright & A. Miller, Federal Practice and Procedure § 1270, at 289 (1969), and that derivation defines the function of the pleading. Affirmative defenses plead matters extraneous to the plaintiff's prima facie case, which deny plaintiff's right to recover, even if the allegations of the complaint are true. Gomez v. Toledo, 446 U.S. 635, 640-41, 100 S.Ct. 1920, 1923-24, 64 L.Ed.2d 572 (1980). As a general matter then, the pleading of an affirmative defense puts the plaintiff on notice that matters extraneous to his prima facie case are in issue and ordinarily allocates the burden of proof on the issue. Kouba v. Allstate Ins. Co., 691 F.2d 873 (9th Cir.1982).2 On the other hand, the Federal Rules also recognize a species of facts which, although raising matters concerning alleged deficiencies in the plaintiff's prima facie case, nevertheless must be pled by the defendant. Fed.R. Civ.P. 9(a).3 See 5 Wright & Miller, supra, § 1294, at 393. As to such matters, plaintiff retains the burden of proof.

The matters at bar raise an instance of a true "affirmative defense" and an instance requiring specific negative averment. As I explain below, the sixth so-called "affirmative defense," because it deals with the capacity to sue, raises issues controlled by Fed.R.Civ.P. 9(a), whereas the seventh affirmative defense, because it alleges matters extraneous to the plaintiff's prima facie case, falls within the ambit of Fed.R. Civ.P. 8(c).

A. Assignability of Claims

As noted above, plaintiff alleges that it sues in its capacity as assignee of Continental Bank. In addition to denying the allegation, the defendant in its sixth so-called "affirmative defense" alleges in effect that the claims sued on are tortious in character and nonassignable. By virtue thereof, defendant alleges that it is not being sued by the real party in interest, i.e., that the plaintiff has no capacity to sue it.4 Since plaintiff to prevail must demonstrate that it has a right to recover for the injury it alleges was suffered because of defendant's conduct, it has the burden of proof on the issue.5 Under the pleading configuration noted above, it seems relatively clear that defendant's assertion that the claim is nonassignable falls within the parameters of Fed.R.Civ.P. 9(a), and not Fed.R.Civ.P. 8(c). As has been observed, "although Rule 9(a) gives a denial of capacity some of the attributes of an affirmative defense, it should not be so classified, and the matter is not governed by Rule 8(c)." 5 Wright & Miller, supra, § 1294, at 394.

B. Violation of the Statute

The seventh affirmative defense, on the other hand, appears to truly raise matters which constitute an affirmative defense. Therein defendant asserts that even if everything plaintiff alleges in its complaint is true, plaintiff may not prevail because under its authorizing statute, plaintiff could not rescue Continental Bank in the manner that it did. This defense raises entirely different questions from those tendered by the sixth affirmative defense. It does not suggest that there is some defect inherent in the relationship of plaintiff and its assignor, or plaintiff and defendant. Rather, it alleges that the law authorizing plaintiff to act at all has been violated, and in defendant's words, "the FDIC should be held accountable to the limitations in the FDIC Act." KMG Memorandum in Opposition to FDIC's Motion to Strike, p. 24. Put another way, the seventh affirmative defense does not raise FDIC's capacity to sue because of some defect in its status as a party, but seeks to deprive FDIC of the benefits it acquired in the reorganization of Continental Bank because of its alleged violation of its organic statute.

Because as a general matter a plaintiff does not have an affirmative duty to plead lawful conduct as a prerequisite to suit, it seems relatively clear that if defendant has standing, it bears the burden of pleading and of persuasion that plaintiff did not act lawfully. Under this analysis, allegations of unlawful conduct on the plaintiff's part, alleged to defeat the plaintiff's claim, constitute a true affirmative defense falling within the ambit of Fed.R.Civ.P. 8(c).


Rule 12(f) of the Federal Rules of Civil Procedure permits a court to order stricken any insufficient defense. For reasons that are not apparent to this judge, motions which attack the legal sufficiency of an asserted defense are not viewed hospitably. It has been said that such motions are "viewed with disfavor," 5 Wright & Miller, supra, § 1380, at 783, and it has been held that the motion should be denied unless the "questions of law are clear and settled, and that under no circumstances could the defense prevail." Green Mountain Power Corp. v. General Electric Corp., 496 F.Supp. 169, 171 (D.Vt.1980).6 As a sensible matter, however, it appears appropriate that some mechanism exist for disposing of an insufficient defense. The federal rulemakers determined that a motion to strike was the appropriate vehicle. However rigorous the standard for disposition may be (see footnote 6), it is settled that the motion is restricted to legal questions, and may not be granted where resolution is dependent upon disputed questions of fact. Thus, "a defense that might confuse the issues in the case and would not, under the facts alleged, constitute a valid defense to the action can and should be deleted." 5 Wright & Miller, supra, § 1381, at...

To continue reading

Request your trial
137 cases
    • United States
    • U.S. District Court — Northern District of Texas
    • October 17, 1990
    ...110 S.Ct. 75, 107 L.Ed.2d 41 (1989); FDIC v. La Rambla Shopping Center, Inc., 791 F.2d 215, 219 (1st Cir.1986); FDIC v. Main Hurdman, 655 F.Supp. 259, 268-71 (E.D. Cal.1987). The court discerns no basis to depart from the cases that recognize the FDIC's actions are subject to judicial B The......
  • Federal Deposit Ins. Corp. v. Bank of Boulder
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • August 20, 1990
    ...and ... tort law claims are assignable, although state law would not allow it". Hudson, 643 F.Supp. at 498. In FDIC v. Main Hurdman, 655 F.Supp. 259 (E.D.Cal.1987), the court held that a tort claim was assignable to the FDIC pursuant to a rescue without reference to state law. The court poi......
  • Lake Hills Invs. LLC v. Rushforth Constr. Co.
    • United States
    • Washington Court of Appeals
    • September 14, 2020
    ...even if all the allegations in the complaint are true.").22 Erickson, 417 F. Supp. 3d at 1386 (quoting Fed. Deposit Ins. Corp. v. Main Hurdman, 655 F. Supp. 259, 262 (E.D. Cal. 1987) ).23 See Main Hurdman, 655 F. Supp. at 262 ("[A]n affirmative defense puts the plaintiff on notice that matt......
  • Aldridge v. Cain
    • United States
    • U.S. District Court — Southern District of Mississippi
    • March 30, 2022
    ... ... (b)(1) [ 1 ] and 12(b)(6) [ 2 ] of the Federal Rules of Civil ... Procedure, contending ... make three main arguments for dismissal of this lawsuit under ... v. Mortgage Investors Corp ., ... (a case with a long history and ... Deposit Ins. Corp. v. Main Hurdman , 655 F.Supp. 259, ... ...
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT