Opinion
Docket No. 04-144-P-H.
October 12, 2004
DANIEL L. CUMMINGS, NORMAN, HANSON DETROY, PORTLAND, ME, for Plaintiff.
ROBERT J. KEACH, DANIEL J. MURPHY, BERNSTEIN, SHUR, SAWYER, NELSON, PORTLAND, ME, for Defendant, MARC CABOT, as Trustee of the AGNES VERRO CABOT QUALIFIED PERSONAL RESIDENCE TRUST.
MEMORANDUM DECISION ON PLAINTIFF'S MOTION TO STRIKE AFFIRMATIVE DEFENSES AND RECOMMENDED DECISION ON PLAINTIFF'S MOTION TO DISMISS COUNTERCLAIM
The plaintiff, Chittenden Trust Company, moves to dismiss the defendants' counterclaim and to strike the affirmative defenses numbered 4, 6 and 7 set forth in the defendants' answer. Plaintiff's Motion to Dismiss Defendants' Counterclaim, etc. (Docket No. 10). I deny the motion to strike and recommend that the court deny the motion to dismiss.
I. Applicable Legal Standard
The motion invokes Fed.R.Civ.P. 12(b)(6) and (f). Id. "[I]n ruling on a motion to dismiss [under Rule 12(b)(6)], a court must accept as true all the factual allegations in the [counterclaim] and construe all reasonable inferences in favor of the [defendant]." Alternative Energy, Inc. v. St. Paul Fire Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001). The plaintiff is entitled to dismissal for failure to state a claim only if "it appears to a certainty that the [defendants] would be unable to recover under any set of facts." State St. Bank Trust Co. v. Denman Tire Corp., 240 F.3d 83, 87 (1st Cir. 2001); see also Wall v. Dion, 257 F. Supp.2d 316, 318 (D. Me. 2003). See also In re Colonial Mortgage Bankers Corp., 324 F.3d 12, 16 (1st Cir. 2003) (same standard applicable to motion to dismiss affirmative defense).
A motion to strike a defense under Rule 12(f) is disfavored, Nelson v. University of Me. Sys., 914 F. Supp. 643, 646-47 (D. Me. 1996), and should be granted only if the insufficiency of the defense is clearly apparent, 5C C. Wright A. Miller, Federal Practice and Procedure § 1381 at 428 (3d ed. 2004). A defense is "legally insufficient" if it appears that the movant "would succeed despite any state of facts which could be proved in support of the defense." FDIC v. Eckert Seamans Cherin Mellott, 754 F. Supp. 22, 23 (E.D.N.Y. 1990) (citation and internal quotation marks omitted).
II. Factual Background
The plaintiff seeks to recover from the defendants, including Agnes Cabot, as guarantors of certain loans extended to Cabot Hosiery Mills, Inc. Complaint (attached to notice of removal (Docket No. 1)) ¶¶ 8-12. In the only counterclaim asserted in the defendants' answer to the complaint, Agnes Cabot seeks declaratory and equitable relief under the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691 et seq. Defendants' Answer, Affirmative Defenses, and Counterclaim Against Chittenden Trust Company ("Answer") (Docket No. 3) at [10]-[12]. The affirmative defenses that are the subject of the pending motion assert that the plaintiff's claims are barred by the doctrine of recoupment and by the ECOA. Id. at [9] (Fourth, Sixth and Seventh Defenses).
The defendants state that the seventh affirmative defense is asserted "only with respect to the claims against Agnes Cabot." Defendants' Opposition to Plaintiff's Motion to Dismiss, etc. ("Opposition") (Docket No. 12) at 15 n. 8. This limitation on the scope of that affirmative defense is not apparent on the face of the answer. My discussion of the motion to dismiss this affirmative defense will correspond to the defendants' representation concerning its scope.
III. Discussion
The plaintiff contends, Motion at 4, that the counterclaim is barred by the two-year statute of limitations included in the ECOA, 15 U.S.C. § 1691e(f). Federal courts have differed on the question whether this statute of limitations bars counterclaims under the ECOA when the counterclaim would have been untimely if asserted directly. Compare, e.g., Stern v. Espirito Santo Bank of Fla., 791 F. Supp. 865, 868-69 (S.D. Fla. 1992) (dismissing ECOA counterclaim as time-barred), with Silverman v. Eastrich Multiple Investor Fund, L.P., 51 F.3d 28, 29 (3d Cir. 1995) (time-barred ECOA claim may be asserted as defense to attempt to collect on loan guarantee). However, the First Circuit has spoken to this issue. Bolduc v. Beal Bank, SSB, 167 F.3d 667, 672 (1st Cir. 1999) (spouse alleging that signature on loan guarantee violated ECOA would be allowed to assert that defense under recoupment doctrine if bank sued to collect on notes).The plaintiff suggests that this court should not follow Bolduc because the First Circuit addressed the issue only in dicta and "did not analyze the true nature of the claims at issue or whether the defendant had actually asserted claims that might serve to support a credit against the liability asserted." Motion at 9 n. 4. That is an argument best directed to the First Circuit. It does not provide a persuasive reason for this court to disregard the First Circuit's clear statement on point. The First Circuit's statement also governs the seventh affirmative defense, which explicitly invokes the ECOA.
Since the First Circuit's statement is based on the "recoupment doctrine," Bolduc, 167 F.3d at 667, it should apply to the affirmative defenses invoking that doctrine as well. See FDIC v. Notis, 602 A.2d 1164, 1165-66 (Me. 1992). Again, the plaintiff's contention that the cited case law "does not recognize the inherent limitations on a recoupment defense, and is therefore not persuasive," Plaintiff's Reply Memorandum in Support of Motion to Dismiss, etc. (Docket No. 14) at 3, would be more appropriately addressed to the First Circuit. It does not provide sufficient basis for this court to depart from the First Circuit's statement in Bolduc.