in his motion to strike, argues that he is merely seeking enforcement of the oral contract which, as mentioned, allegedly included a provision requiring the partnership units to be offered as security. Because the allegations of the answer must be taken as true for the purpose of this 12(f) motion, this affirmative defense will not be stricken. Connaught denies even the existence of a settlement contract, let alone any terms involving posting partnership units as bond.
H. Second Affirmative Defense to Count V
In count V, Van Schouwen alleges that Connaught owes him approximately $ 600,000 in order to indemnify him for liability arising from the Gal-Con litigation. The indemnity provision of the Stock Agreement stated:
Connaught and MDN do hereby agree to indemnify and save Van Schouwen harmless from and against any and all claims, obligations, liabilities, lawsuits, judgments, liens, or losses relating to, arising from, or in connection with any and all liabilities, undertakings, obligations, or debts of Connaught, MDN and/or any and all affiliate companies or entities or either, whether past, present, or future, in general, and, in particular, with regard to arising from any personal guarantees which Van Schouwen may have heretofore executed, whether solely or jointly with others, relating to any transactions in which Connaught and/or MDN and/or any of their affiliates are or were a party or may have been involved.
Van Schouwen was subsequently named as one of the party defendants in the Gal-Con lawsuit in Circuit Court of Milwaukee County, Wisconsin. Van Schouwen faced liability due to a personal guaranty he had executed relating to Connaught. The parties agree that the claims made against Van Schouwen in the Gal-Con litigation are within the scope of the indemnification clause of the Stock Agreement.
By a Stipulation filed in April, 1990 in the Circuit Court of Milwaukee County, Wisconsin, the parties involved agreed to settle the Gal-Con litigation. Paragraph 8 of the Stipulation included Connaught's acknowledgment of its obligation to indemnify Van Schouwen against judgment entered in the Gal-Con litigation. Paragraph 8 states that:
The Connaught Corporation stipulates and agrees that it will indemnify and hold Neil Van Schouwen harmless from and against the judgment entered in this action pursuant to the October 18, 1989 Agreement to Sell Shares of Stock between Neil Van Schouwen, Connaught and MDN Holding Company, and nothing herein shall affect the rights of any party pursuant to the Agreement to Sell Shares of Stock. Connaught and Van Schouwen stipulate and agree that the Court in this case shall retain jurisdiction to enforce the indemnification provisions of the Agreement to sell shares of stock.
The parties agree further that in July of 1990, an order for a deficiency judgment was entered in the Gal-Con litigation pursuant to which the defendants, including Van Schouwen, were held to be jointly and severally liable for the sum of $ 598,997.60 plus interest. Van Schouwen alleges that by a letter dated January 29, 1991, the plaintiff in the Gal-Con litigation made a demand against him for payment of the total deficiency judgment. Count V amounts to Van Schouwen seeking indemnification from Connaught.
While Connaught's admissions in its answer establish that Van Schouwen is entitled to indemnification for the Gal-Con liability Van Schouwen has incurred, Connaught has also raised two affirmative defenses to count V. The first, that the Stock Agreement should be entirely rescinded, will be struck as discussed in part B, above. The second affirmative defense to count V argues first that Van Schouwen has suffered no damages for which Connaught can be deemed liable. Next it suggests that this court lacks jurisdiction because the Gal-Con litigation arose in the Wisconsin state court and because the parties agreed that the Wisconsin court would "retain jurisdiction to enforce the indemnification provision of the [Stock] Agreement."
The second affirmative defense is insufficient. Van Schouwen has alleged legal harm in his complaint. He alleged that he has received a demand for approximately $ 600,000 from the Gal-Con plaintiff and that he has incurred expenses deserving indemnification in defending the Gal-Con litigation. Connaught is apparently concerned that Van Schouwen has not alleged that it has actually paid anything yet to the Gal-Con plaintiff. As mentioned, however, Count V requests inter alia indemnification for the reasonable attorneys' fees and costs incurred in the Gal-Con litigation. Those expenses presumably have already been paid out. In addition, even if he has not yet properly requested it, Van Schouwen's allegations clearly make a statement for sufficient harm warranting the issuance of a declaratory judgment. See 28 U.S.C. § 2201. Van Schouwen could comply with 28 U.S.C. § 2201 and make a request for a declaratory judgment regarding an entitlement for reimbursement of the approximately $ 600,000 Gal-Con liability in an amended complaint.
Finally, Connaught's suggestion that this court lacks jurisdiction is incorrect. Even though the Wisconsin court may still have jurisdiction over the dispute, concurrent jurisdiction is an everyday reality in our federal system that Connaught should be aware of. This court, sitting in diversity, has the jurisdiction and authority to hear Van Schouwen's claim for indemnity based upon a judgment entered against him in a Wisconsin state court.
Plaintiff Van Schouwen's 12(b)(6) motion to dismiss Defendant Connaught's counter-claim will be granted inasmuch as the counterclaim seeks a rescission. It is denied inasmuch as the counterclaim seeks reformation. Consequently, this court orders stricken paragraph A of the prayer for relief of Defendant Connaught's counter-claim.
Plaintiff Van Schouwen's 12(f) motion to strike various affirmative defenses is granted in part and denied in part. To the extent it is granted, the following portions of Defendant Connaught's Answer are ordered stricken: First Affirmative Defense to Count II, Third Affirmative Defense to Count II, First Affirmative Defense to Count III, Third Affirmative Defense to Count III, Fifth Affirmative Defense to Count III, Third Affirmative Defense to Count IV, First Affirmative Defense to Count V and the Second Affirmative Defense to Count V.