Harrison Co. v. A-Z Wholesalers, Inc.

• Decision Date: 10 March 2021
• Docket Number: CIVIL ACTION NO. 3:19-CV-1057-B
• Parties: HARRISON COMPANY LLC, Plaintiff, v. A-Z WHOLESALERS, INC. and BARKAT G. ALI, Defendants.
• Court: U.S. District Court — Northern District of Texas

HARRISON COMPANY LLC, Plaintiff, v. A-Z WHOLESALERS, INC. and BARKAT G. ALI, Defendants.

CIVIL ACTION NO. 3:19-CV-1057-B

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

March 10, 2021

MEMORANDUM OPINION AND ORDER

Before the Court is Plaintiff Harrison Company LLC ("Harrison")'s Motion to Clarify and Reconsider (Doc. 79). Upon review, the Court GRANTS IN PART and DENIES IN PART Harrison's motion.

I.BACKGROUND

This is a contract dispute involving Harrison, a food distributor, Defendant A-Z Wholesalers, Inc. ("A-Z"), a wholesaler, and Defendant Barkat G. Ali ("Ali"), the guarantor of A-Z's payment for the goods it purchased from Harrison.¹ In sum, Harrison claims that A-Z breached its credit agreement with Harrison by accruing and ultimately failing to pay an outstanding balance in excess of $2.5 million. Doc. 76, Mem. Op. & Order, 2. Likewise, Harrison claims that Ali breached his guaranty agreement by failing to pay A-Z's debts. Id. The debt at issue was accrued between October22, 2018, and March 4, 2019. Doc. 1, Compl., 2. A-Z does not deny that it incurred and failed to pay this balance but claims that payment is owed to Harrison's parent company—Imperial Trading Company LLC ("Imperial")—rather than to Harrison. Doc. 76, Mem. Op. & Order, 2. Essentially, Defendants claim that after Imperial's acquisition of Harrison in 2014, "all future sales [involving Defendants] were conducted through Imperial" and thus not subject to the credit agreement with Harrison or the guaranty with Ali. Doc. 57, Defs.' Br., 12. Based primarily upon this contention, Defendants assert a variety of affirmative defenses. Doc. 50, Am. Answer, 4-7.

In June 2020, Harrison moved for summary judgment on its breach-of-contract claim, breach-of-guaranty claim, and Defendants' affirmative defenses. Doc. 52, Pl.'s Br., 16. Defendants filed a cross-motion for summary judgment (Doc. 54), seeking dismissal of Harrison's claims based on Defendants' defenses of standing, novation and modification, and judicial estoppel. Doc. 57, Defs.' Br., 10-13. Harrison then filed objections (Doc. 69) to Defendants' summary-judgment evidence. The Court issued a Memorandum Opinion and Order ("the Order") denying both parties' summary-judgment motions and finding Harrison's objections moot. Doc. 76, Mem. Op. & Order, 1.

On November 4, 2020, Harrison filed the present motion (Doc. 79) to clarify and reconsider the Order. Harrison again asks the Court to dismiss all of Defendants' affirmative defenses, sustain Harrison's objections to Defendants' summary-judgment evidence, and grant summary judgment on Harrison's breach-of-contract and breach-of-guaranty claims. Doc. 80, Pl.'s Br., 5. In the alternative, Harrison asks the Court to strike Defendants' affirmative defenses pursuant to Federal Rule of Civil Procedure 12(f). Doc. 83, Pl.'s Reply, 5 n.1. Defendants filed a response (Doc. 82) to the motion, and Harrison filed a reply in support (Doc. 83). After reviewing the briefing, the Court ordered Defendants to provide evidentiary support for the affirmative defenses (Doc. 88), which they did ina response filed on January 11, 2021 (Doc. 89). Harrison's motion is ripe for review.

II.LEGAL STANDARDS

A. Federal Rule of Civil Procedure 56(a)

Federal Rule of Civil Procedure 56(a) provides that summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The substantive law governing a matter determines which facts are material to a case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The summary-judgment movant bears the burden of proving that no genuine issue of material fact exists. Latimer v. Smithkline & French Lab'ys, 919 F.2d 301, 303 (5th Cir. 1990). Usually, this requires the movant to identify "those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quotation marks omitted). But if the non-movant ultimately bears the burden of proof at trial, the summary-judgment movant may satisfy its burden by pointing to the mere absence of evidence supporting an essential element of the non-movant's claim. See Austin v. Kroger Tex., L.P., 864 F.3d 326, 335 n.10 (5th Cir. 2017). Once the summary-judgment movant has met this burden, the burden shifts to the non-movant to "go beyond the pleadings and designate specific facts" showing that a genuine issue exists. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (per curiam) (citing Celotex, 477 U.S. at 325).

B. Federal Rule of Civil Procedure 12(f)(1)

"The court may strike . . . insufficient defense[s] or any redundant, immaterial, impertinent, or scandalous matter[s]" sua sponte at any time or upon a party's motion. Fed. R. Civ. P. 12(f)(1);see also EEOC v. Rock-Tenn Servs. Co., 901 F. Supp. 2d 810, 831 (N.D. Tex. 2012); GE Cap. Com., Inc. v. Worthington Nat'l Bank, 2011 WL 5025153, at *2 (N.D. Tex. Oct. 20, 2011); Acadian Diagnostic Lab'ys, LLC v. Quality Toxicology, LLC, 2017 WL 9439103, at *4 (M.D. La. Nov. 17, 2017). Although generally disfavored, striking an affirmative defense "is proper when the defense is insufficient as a matter of law." Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1057 (5th Cir. 1982) (citations omitted). To determine whether defenses are insufficient as a matter of law, "the court may . . . consider: (1) whether the defenses are applicable, and (2) whether the defenses are sufficiently pled as to give [p]laintiffs fair notice." GE Cap., 2011 WL 5025153, at *2 (citation omitted); see Acadian Diagnostic, 2017 WL 9439103, at *4-5 (striking a defense sua sponte where it was not pleaded with the required particularity); see also Kaiser Aluminum, 677 F.2d at 1061 (striking a defense as insufficient as a matter of law because it did not apply to the underlying action). While "in some cases, merely pleading the name of the affirmative defense . . . may be sufficient," affirmative defenses generally must be pleaded "with enough specificity or factual particularity to give the plaintiff 'fair notice' of the defense that is being advanced." Woodfield v. Bowman, 193 F.3d 354, 362 (5th Cir. 1999) (citation omitted).

III.ANALYSIS

A. Harrison's Objections and Motion to Strike Defendants' Summary-Judgment Evidence

Harrison filed its Objections to and Motion to Strike Defendants' Summary Judgment Evidence (Doc. 63), seeking to strike certain statements made by Amar Ali and Barkat Ali. Doc. 64, Pl.'s Obj. Br., 1-5. Because the Court did not rely on the objected-to evidence or statements in reaching its last decision, the Court found that Harrison's objections and motion to strike were moot.Doc. 76, Mem. Op. & Order, 12. Now, Harrison asks the Court to reconsider this ruling, sustain the objections, and grant its motion to strike. Doc. 80, Pl.'s Br., 5. Because the Court again reaches its conclusion without relying upon the objected-to evidence, the Court finds Harrison's Objections and Motion to Strike Defendants' Summary Judgement Evidence MOOT and DENIES Harrison's request to reconsider this finding.

B. Defendants' Affirmative Defenses

In the Order, the Court denied Defendants' motion for summary judgment on their affirmative defenses regarding standing, judicial estoppel, and the doctrine of novation and modification. Doc. 76, Mem. Op. & Order, 5-10. However, the Court did not clearly address Harrison's request that all of Defendants' affirmative defenses be dismissed. See generally id. Below, the Court discusses Harrison's motion and addresses each defense in turn.

Harrison argues that the Court should grant its motion for summary judgment and dismiss Defendants' affirmative defenses "[b]ecause Defendants did not present any evidence in support of all elements of any of these affirmative defenses[.]" Doc. 80, Pl.'s Br., 9. While the Court generally agrees with Harrison that Defendants have not presented evidence in support of most of their affirmative defenses, Harrison has not pointed to any specific elements of the defenses that Defendants are unable to prove. See Austin, 864 F.3d at 335 n.10 ("[A] mere conclusory statement that the other side has no evidence is not enough to satisfy a movant's burden. . . . [A] movant may support a motion for summary judgment by pointing out that there is no evidence to support a specific element of the nonmovant's claim." (citations omitted) (emphasis in original)). While Defendants have the burden to prove their affirmative defenses at trial, the burden at the summary judgment stage has not shifted to Defendants to "go beyond the pleadings and designate specific facts" showing that agenuine issue exists as to their affirmative defenses. Little, 37 F.3d at 1075; see Austin, 364 F.3d at 335 n10.

However, in addition to its request for summary judgment, Harrison asks the Court to strike Defendants' affirmative defenses pursuant to Rule 12(f). Doc. 83, Pl.'s Reply, 5 n.1. Upon review, the Court finds that most of Defendants' affirmative defenses are redundant, immaterial, and legally insufficient and strikes them pursuant to Rule 12(f). Fed. R. Civ. P. 12(f). Each affirmative defense is discussed below.

1. Standing

Defendants allege that Harrison lacks standing in this action because the unpaid debt is owed to Imperial, not Harrison. Doc. 57, Defs.' Br., 11-12. As the Court explained in the Order, "there is conflicting evidence" as to whether A-Z's debt is owed to Harrison or Imperial due to the merger of Harrison and Imperial. Doc. 76, Mem. Op. & Order, 7. Therefore, the Court found "a genuine dispute of material fact as to whether [Harrison] has contractual standing" and denied summary judgment on Defendants' standing defense. Id. at 8. The Court's finding remains unchanged. Accordingly, ...