Geomc Co. v. Calmare Therapeutics, Inc.

• Decision Date: 19 October 2016
• Docket Number: CIVIL ACTION NO. 3:14-cv-01222 (VAB)
• Court: U.S. District Court — District of Connecticut
• Parties: GEOMC CO., LTD., Plaintiff, v. CALMARE THERAPEUTICS, INCORPORATED, Defendant.

GEOMC CO., LTD., Plaintiff, v. CALMARE THERAPEUTICS, INCORPORATED, Defendant.

CIVIL ACTION NO. 3:14-cv-01222 (VAB)

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

October 19, 2016

ORDER

Plaintiff, GEOMC Co., Ltd. ("GEOMC"), brought this lawsuit against Defendant, Calmare Therapeutics, Incorporated ("CTI"), alleging misconduct in connection with CTI's purchase of certain medical devices from GEOMC. Second Am. Compl., ECF No. 137. GEOMC now seeks to strike aspects of CTI's Answer to its Second Amended Complaint under Fed. R. Civ. P. 12(f), claiming that CTI improperly changed its responses from those stated in its original Answer and stated new affirmative defenses beyond the scope of permissible amendment. Pl. Mot. to Strike, ECF No. 139. For the reasons outlined below, GEOMC's Motion to Strike is GRANTED IN PART and DENIED IN PART.

I. PROCEDURAL HISTORY

GEOMC filed its initial complaint in August 2014 and then subsequently amended it, with the consent of all parties, in October 2014. Compl., ECF No. 1; Am. Compl., ECF No. 29. GEOMC's Amended Complaint describes five distinct causes of action against CTI: Replevin; Wrongful Detention in violation of Conn. Gen. Stat. § 52-515; Conversion; and violation of the Connecticut Unfair Trade Practices Act ("CUTPA"). Id. at ¶¶ 53-86. Each of these claims relates to a series of a specific kind of medical device allegedly purchased from GEOMC by CTI and for which CTI allegedly failed to make full payment. Id. CTI filed its Answer to GEOMC's Amended Complaint on December 31, 2014, including with its responses nine affirmative defenses and no counterclaims. Answer to Am. Compl., ECF No. 36.

In September 2015, over eight months after CTI filed its Answer to GEOMC's Amended Complaint, CTI sought leave to amend its Answer. Mot. for Leave to Am. Compl., ECF No. 109. CTI's proposed amendments included several additional affirmative defenses not alleged in its previous Answer, as well a new "third party complaint" asserting several counterclaims against GEOMC. Id. GEOMC opposed CTI's motion, arguing that a defendant should not be permitted to change its answers or broadly assert new counterclaims after its initial answers have already been filed. Pl. Mem. in Opp., ECF No. 121. GEOMC simultaneously filed a cross-motion of its own seeking leave to amend its Amended Complaint by adding a sixth claim for breach of contract. Cross Motion to Am., ECF 120.

After extensive briefing regarding whether GEOMC should be permitted to amend its answer, the Court denied CTI's motion for leave to amend, granted leave for GEOMC to file a Second Amended Complaint, and permitted CTI to file an amended Answer in response, subject to GEOMC's ability to file a motion to strike any components of CTI's answer that were impermissible. Order, ECF No. 136. Pl. Mem., ECF No. 121. In its Order, the Court rejected the "narrow approach" espoused by GEOMC, which would have prohibited CTI from filing any new defenses and/or counterclaims in its amended Answer in the absence of leave from the Court. Id.

GEOMC filed its Second Amended Complaint on June 15, 2016, adding three sentences to assert a sixth cause of action for breach of contract. Second Am. Compl., ¶¶ 87-79. CTI filed its amended Answer on June 30, 2016. Answer to Second Am. Compl., ECF No. 138. In itsamended Answer, CTI significantly increased its number of affirmative defenses, alleging the following additional defenses: GEOMC is liable for any medical devices that were defective ("Fourth Affirmative Defense"); GEOMC's damages were caused by their own negligence and misconduct as well as the negligence of third parties ("Sixth Affirmative Defense"); GEOMC has failed to join a necessary party ("Seventh Affirmative Defense"); any damages owed by CTI are offset by the amounts owed to CTI by GEOMC ("Eighth Affirmative Defense"); GEOMC failed to mitigate its damages ("Ninth Affirmative Defense"); and GEOMC never gave CTI reasonable notice as required by the agreement between the parties ("Tenth Affirmative Defense"). Id. at ¶¶ 93-99.

CTI's amended Answer also brings six new counterclaims against GEOMC. Id. at ¶¶ 131-159. CTI specifically alleges the following counterclaims: GEOMC breached an exclusive license agreement in which GEOMC agreed to manufacture certain medical devices exclusively for CTI by selling devices to a separate entity named Radiant Health Management Corp. ("Radiant") ("First Counterclaim"); GEOMC tortiously interfered with a separate manufacturing license agreement between CTI and another third party entity, Delta Research & Development S.R.L. ("Delta") ("Second Counterclaim"); GEOMC knew that it was entering into ultra vires agreements with one of CTI's officers, Johnie Johnson; ("Third Counterclaim"); CTI overpaid GEOMC by the amount of $32,000 ("Fourth Counterclaim"); GEOMC engaged in unfair competition and unlawful business acts in violation of the Lanham Act and "state law"; ("Fifth Counterclaim"); and both Radiant and GEOMC's Chief Executive Officer Young H. Lim tortiously interfered with CTI's contractual agreement with GEOMC regarding the manufacture of the medical devices at issue ("Sixth Counterclaim"). Id. CTI's amended Answer also reflectschanges in CTI's responses whereby various admissions were rewritten into denials. Id. at ¶¶ 19, 20, 27, 28, 40, 41, 42.

GEOMC now moves to strike several of CTI's new answers, affirmative defenses and counterclaims under Rule 12(f). Mot. to Strike, ECF No. 139.

II. STANDARD OF REVIEW

Rule 12(f) of the Federal Rules of Civil Procedure provides that a court "may strike from a pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). Resolution of a Rule 12(f) motion is within the discretion of the district court, and such motions are generally disfavored and should be infrequently granted. Tucker v. Am. Int'l Grp., Inc., 936 F. Supp. 2d 1, 15-16 (D. Conn. 2013). The Second Circuit has long held that courts "should not tamper with the pleadings unless there is a strong reason for so doing," and that a motion to strike under Rule 12(f) should be denied "unless it can be shown that no evidence in support of the allegation would be admissible." Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir. 1976). Thus, the party moving to strike "bears a heavy burden" and ordinarily must show that "(1) no evidence in support of the allegations would be admissible; (2) the allegations have no bearing on the issues in the case; and (3) permitting the allegations to stand would result in prejudice to the movant." Tucker, 936 F. Supp. at 16.

With respect to affirmative defenses and counterclaims, in order for a motion to strike to be granted, there must be some showing of prejudice to the moving party. Walters v. Performant Recovery, Inc., 124 F. Supp. 3d 75, 80 (D. Conn. 2015) ("Plaintiff does not identify, nor can the Court ascertain, any 'prejudicial harm to plaintiff' arising from the inclusion of this defense, and thus, 'the defense need not be stricken.'") (citing Cnty. Vanlines Inc. v. Experian Info. Solutions, Inc., 205 F.R.D. 148, 153 (S.D.N.Y. 2002)); see also Balk v. New York Inst. of Tech, No. CV11-509 (JFB) (AKT), 2013 WL 6990767, at *10 (E.D.N.Y. Sept. 30, 2013) (permitting the assertion of new affirmative defenses, explaining that "the Court is not convinced that Plaintiff would be prejudiced by the assertion of these two affirmative defenses"); Coach, Inc. v. Kmart Corps., 756 F. Supp. 2d 421, 425-26 (S.D.N.Y. 2010) ("If a court determines that a defense is legally insufficient, the court must next determine whether inclusion of the defense would prejudice the plaintiff"). "Striking a pleading has been described as a 'drastic remedy' and 'to prevail on a motion to strike, the movant must clearly show that the challenged matter has no bearing on the subject matter of the litigation and that its inclusion will prejudice the movant.'" Lamoureux v. AnazaoHealth Corp., 250 F.R.D. 100, 102 (D. Conn. 2008) (citing 2 Moore's Federal Practice, §§ 12.37[1], 12.37[3] (3d ed. 2007)).

III. DISCUSSION

GEOMC argues that the changes reflected in CTI's amended Answer are impermissibly disproportionate to the changes reflected in GEOMC's Second Amended Complaint. Pl. Mem. in Supp., ECF No. 139-1. Specifically, GEOMC argues that CTI should not be permitted to (1) change prior admissions to denials; (2) allege six additional affirmative defenses; and (3) bring five of its six new counterclaims against GEOMC. Id. With respect to CTI's Sixth and Seventh Affirmative Defenses as well as CTI's First, Second, Fifth and Sixth Counterclaims only, the Court agrees with GEOMC.

When a motion to strike is based on arguments regarding the proper scope of amendments to pleadings, the court is guided by Rule 15, which provides that leave to amend pleadings should be freely given "when justice so requires." Fed. R. Civ. P. 15(a)(2). Before the 2009 amendments to the Federal Rules of Civil Procedure, the proper scope of amendments to pleadings was also informed by former Rule 13(f), which required the court's leave in order toadd new allegations to an answer. See Southern New England Tel. Co. v. Global NAPS, Inc., No. 3:04-cv-2075 (JCH), 2007 WL 521162 (D. Conn. Feb. 14, 2007) (holding that, based on the interplay between Rule 13(f) and Rule 15, courts should apply a "narrow approach" requiring that any new counterclaims relate specifically to changes made to the complaint). This rule was abrogated in 2009, leaving only Rule 15 to govern the proper scope of amendments to pleadings. See Virginia Innovation Scis., Inc. v. Samsung Elecs. Co., 11 F. Supp. 3d 622, 629-630 (E.D. Va. 2014) (holding that, based on the abrogation of Rule 13(f) in 2009, the "narrow approach" was no longer appropriate and a "moderate approach" should be applied instead, allowing amendments to the answer as of right if similar in scope to amendments to the complaint).

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