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Snow Covered Capital, LLC v. Weidner

United States District Court, D. Nevada

December 3, 2019

SNOW COVERED CAPITAL, LLC, Plaintiffs,
v.
WILLIAM WEIDNER, et al., Defendants.

          REPORT & RECOMMENDATION (DOCKET NO. 53)

          NANCY J. KOPPE UNITED STATES MAGISTRATE JUDGE

         Pending before the Court is Plaintiff's motion to strike Defendants William Weidner and David Jacoby's (“Defendants”) answer at Docket No. 21. Docket No. 53. The Court has considered Plaintiff's motion, Defendants' response, and Plaintiff's reply. Docket Nos. 53, 63, 86. The motion is properly resolved without a hearing. See Local Rule 78-1. For the reasons stated below, the Court RECOMMENDS that the motion be GRANTED in part and DENIED in part.

         I. BACKGROUND

         This case arises from a loan by Plaintiff to Defendant Lucky Dragon LP (LDLP) to build a new hotel and casino. Docket No. 1 at 2. Defendants Andrew Fonfa, Weidner, and Jacoby signed a guaranty for the loan. Docket No. 53 at 2. Plaintiff sues Defendants because, it alleges, Defendant “LDLP did not repay the loan, the Guarantor Defendants refused to [honor] the Guaranty, and” Plaintiff, upon selling the hotel and casino, “incurred a substantial deficiency.” Id. Plaintiff alleges breach of contract and deficiency claims against Defendants. Id.

         II. ANALYSIS

         Courts “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). The rule's aim is “to avoid the expenditure of time and money that [arises] from litigating spurious issues by dispensing with” them before trial. Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993).

         Whether to grant a motion to strike is within the district court's discretion. See Nurse v. United States, 226 F.3d 996, 1000 (9th Cir. 2000). However, such motions are usually disfavored. Nevada Fair Hous. Ctr., Inc. v. Clark County, 565 F.Supp.2d 1178 (D. Nev. 2008) (citations omitted). “[C]ourts often require a showing of prejudice by the moving party before granting the requested relief.” Roadhouse v. Las Vegas Metro. Police Dep't, 290 F.R.D. 535, 543 (D. Nev. 2013) (internal quotation marks omitted). Further, “[u]nless it would prejudice the opposing party, courts freely grant leave to amend stricken pleadings.” Kohler v. Islands Restaurants, LP, 280 F.R.D. 560, 564 (S.D. Cal. 2012) (citing Wyshak v. City Nat't Bank, 607 F.2d 824, 826 (9th Cir. 1979)).

         Plaintiff asks the Court to strike “paragraphs 40 and 50 and [all] the affirmative defenses” in Defendants' answer. Docket No. 53 at 3. The Court addresses the paragraphs and affirmative defenses in turn.

         A. Paragraphs 40 and 50

         Paragraphs 40 and 50 of Plaintiff's complaint allege that it had “performed all conditions required of it” under “the Construction Loan Agreement, Secured Promissory Note, and Secured Lined of Credit[]” and under the “Guaranty and the Loan Documents.” Docket No. 1 at 8, 9. Defendants' answer to paragraph 40 states that:

[Defendant LDLP] borrowed money from Plaintiff. Defendants deny any allegations that are inconsistent with the terms of the Construction Loan, the Secured Promissory Note, the Secured Line of Credit and the course of dealing between the parties. Defendants further assert that any liability on the part of [Defendant LDLP] in relation to the Construction Loan[, ] the Secured Promissory Note, [or] the Secured Line of Credit is subject to all defenses, offsets and counterclaims that [Defendant LDLP] and/or the Defendants may have against Plaintiff. Defendants are without knowledge to admit or deny the remaining allegations contained therein and therefore deny the same.

Docket No. 21 at 8. Defendants' answer to paragraph 50 states that they “deny” the allegations. Id. Plaintiff submits that these responses violate Fed.R.Civ.P. 9(c) and fail to give it fair notice and thus should be stricken.

         Rule 9(c) requires a party “denying that a condition precedent has occurred or been performed” to do “so with particularity.” The Ninth Circuit has not interpreted that requirement. See Ghorbanian v. Guardian Life Ins. Co. of Am., 2016 WL 4467941, at *3 (W.D. Wash. Mar. 2, 2016). However, other courts in this Circuit have looked to the Seventh Circuit for guidance. See, e.g., id. (collecting cases). The Seventh Circuit has held that Rule 9(c) requires the pleading party to “specifically allege” that a particular condition precedent has not been performed. Smith v. Wal-Mart Stores, 2006 WL 2711468, at *7 (N.D. Cal. Sept. 20, 2006) (citing Runnemede Owners, Inc. v. Crest Mortg. Corp., 861 F.2d 1053, 1057-58 (7th Cir. 1988)).

         The Court finds that Defendants' answers violate Rule 9(c). Neither answer specifically alleges that a particular condition precedent has not occurred or been performed. Because Defendants' answers violate Rule 9(c), the Court need not decide whether they otherwise fail to give Plaintiff fair notice. Accordingly, the Court RECOMMENDS that Plaintiff's motion to strike be GRANTED as to paragraphs 40 and 50 of Defendants' answer. The Court further RECOMMENDS that Defendants be granted leave to amend to cure the noted deficiencies.

         B. Affirmative Defenses

         Defendants' answer contains twenty-nine affirmative defenses. Docket No. 21 at 11-13. Plaintiff submits that, for several reasons, all twenty-nine should be stricken. Docket No. 53 at 7- 18. The Court analyzes Defendants' affirmative defenses in ...


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