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RESOLUTION TRUST CORP. v. KPMG PEAT MARWICK

February 25, 1994

RESOLUTION TRUST CORPORATION, in its corporate capacity, Plaintiff, KPMG PEAT MARWICK, PEAT MARWICK MAIN & CO., PEAT, MARWICK, MITCHELL & CO., and RONALD L. FRISKE, Defendants.

ALESIA


The opinion of the court was delivered by: JAMES H. ALESIA

 Peat Marwick's Answer contains ten affirmative defenses, of which the following six are in dispute:

 
2. Plaintiff's claims are barred by the doctrine of estoppel, waiver, and laches.
 
3. Plaintiff's claims are barred or diminished by its own sole or contributory negligence and assumption of risk.
 
4. Plaintiff's claims are barred by the doctrine of inequitable conduct, unclean hands, and in pari delicto.
 
5. Plaintiff's claims are barred or diminished by its failure to mitigate damages.
 
7. Plaintiff's claims are barred or diminished by the doctrines of causation in fact, proximate cause, intervening cause, supervening events and impossibility of performance.
 
8. Plaintiff's claims are barred or diminished by Peat Marwick's reasonable reliance upon the decisions and actions of government agencies, plaintiff's officers, directors, employees and agents; the officers, directors, employees and agents of its audits clients; appraisals; business advisors; borrowers; accountants; attorneys; and others.

 The RTC now moves to strike the above affirmative defenses under Federal Rule of Civil Procedure 12(f).

 Rule 12(f) states that "the court may order stricken from any pleading any insufficient defense." FED. R. Civ. P. 12(f). An affirmative defense may be stricken if it is insufficient as a matter of law. In re Sunrise Sec. Litig., 818 F. Supp. 830, 840 (E.D. Pa. 1993). "An affirmative defense is insufficient if as a matter of law it cannot succeed under any circumstances." Id.

 I. Affirmative Defenses 3 and 5

 Defense 3 is that "plaintiff's claims are barred or diminished by its own sole or contributory negligence and assumption of risk." Defense 5 is that "plaintiff's claims are barred or diminished by its failure to mitigate damages." (emphases added) Defendants' sweeping statement that "Peat Marwick's defenses relate to the pre-receivership conduct of Horizon Federal Savings Bank ("Horizon"), in whose shoes, the RTC, as receiver stands" (Defendants' Memorandum in Opposition to Plaintiff's Motion to Strike Affirmative Defenses at 2), is simply untrue by the plain language of Defenses 3 and 5. The referent of the word "its" in those defenses could only be the word "Plaintiff's." And the "Plaintiff" here is "Resolution Trust Corporation, in its corporate capacity."

 Defendants concede much ground based on their reading of their affirmative defenses, choosing to concentrate primarily on arguing that the RTC, having stepped into the shoes of Horizon, is susceptible to all affirmative defenses to which Horizon was susceptible. That argument is considered below as to those defenses to which it is relevant. On Defenses 3 and 5, it is only relevant whether the RTC's contributory negligence and failure to mitigate damages may be pleaded by defendants as affirmative defenses. The Seventh Circuit has answered that question -- these affirmative defenses may not be asserted against the RTC regarding the RTC's conduct. FDIC v. Bierman, 2 F.3d 1424, 1438-41 (7th Cir. 1993). ...


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