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OCEAN ATLANTIC WOODLAND CORP. v. DRH CAMBRIDGE HOMES INC.

March 28, 2003

OCEAN ATLANTIC WOODLAND CORPORATION, A VIRGINIA CORPORATION, PLAINTIFF,
v.
DRH CAMBRIDGE HOMES, INC. A CALIFORNIA COMPANY, COWHEY, GUDMUNDSON, LEDER, LTD., AN ILLINOIS CORPORATION, AND PUGSLEY & LAHAIE, LTD., AN ILLINOIS CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Ronald A. Guzman, United States Judge.

MEMORANDUM OPINION AND ORDER

Plaintiff', Ocean Atlantic Woodland Corp. ("Ocean Atlantic Woodland") brought this action against defendants DRH Cambridge Homes, Inc. ("Cambridge"), Cowhey, Gudmundson Leder, Ltd. ("Cowhey"), and Pugsley & LaHaie, Ltd. ("Pugsley") for copyright infringement arising under the Copyright Act of 1976, 17 U.S.C. § 101 et seq., for unfair competition and deceptive trade practices under the Illinois Uniform Deceptive Trade Practices Act, 815 ILL. COMP. STAT. 510/1 et seq., and the Consumer Fraud and Deceptive Business Practices Act, 815 ILL. COMP. STAT. 505/1 et seq., for false designation of origin under is U.S.C. § 1125(a), and for conversion and unjust enrichment. Defendants Cambridge and Pugsley have raised Affirmative Defenses I-XIII, defendant Cowhey has raised Affirmative Defenses I-XII, and before the Court is Ocean Atlantic Woodland's motion to strike the affirmative defenses raised by defendants pursuant to Federal Rule of Civil Procedure ("Rule") 12(f). For the reasons provided in this Memorandum Opinion and Order, the motion is granted in part and denied in part.

BACKGROUND FACTS*fn1

Ocean Atlantic Woodland's Development History of the Byzantio/Arnhold Property

On August 6, 1997, Ocean Atlantic Woodland, a Virginia real estate developer, entered into a contract of purchase and sale for two adjoining farms (the "Byzantio/Arnhold Property" or the "Property") respectively owned by Byzantio, L.L.C. ("Byzantio") and Elda Arnhold ("Arnhold") located in unincorporated Will County, Illinois. (Def. DRH Cambridge Homes' Verified Answer ¶ 8A ("Def. Cambridge's Answer").) The Byzantio/Arnhold Property was to be developed into a residential subdivision incorporated into the neighboring Village of Plainfield (the "Village"). (Id.)

To assist in its development efforts, Ocean Atlantic Woodland retained the engineering firm of Roake & Associates ("Roake") (who had previously been preparing a plan for the Byzantio/Arnhold Property for another developer) and the Lannert Group ("Lannert") to create a preliminary plat, preliminary engineering and landscape plans, and some additional plans to be used in the rezoning and annexation of the Byzantio/Arnhold Property (collectively, the "Roake/Lannert plans"). (Def. Cambridge's Answer ¶¶ 11-13.) In November 1997, Ocean Atlantic Woodland began submitting development proposals (which included preliminary versions of the Roake/Lannert plans) to the Village for its review and suggested revisions. (Def. Cambridge's Answer ¶ 14.) On August 17, 1998, the Village executed an agreement to annex the Byzantio/Arnhold Property to the Village for the purpose of developing that property (the "Annexation Agreement"). (Id. ¶ 16.) A preliminary plat was attached to the Annexation Agreement as Exhibit B and a landscape plan was attached as

Exhibit B-1. (Id.)

In November 1999, Arnhold and Byzantio filed a lawsuit against Ocean Atlantic Woodland seeking to terminate its contract to sell the Byzantio/Arnhold Property to Ocean Atlantic Woodland. (Def. Cambridge's Answer ¶ 20.) On October 26, 2000, the parties entered into a settlement agreement to proceed with the purchase and sale of the Byzantio/Arnhold Property by January 25, 2001 ("Settlement Agreement"). (Id. ¶ 21.) However, Ocean Atlantic Woodland disastrously did not close by January 25, 2001 and thus failed to follow the terms of the Settlement Agreement. (Id.) Arnhold and Byzantio consequently terminated the contract (Id. ¶ 22.) In response, Ocean Atlantic moved on February 5, 2001 to enforce the Settlement Agreement (Id.) On February 28, 2001, the United States District Court for the Northern District of Illinois denied Ocean Atlantic Woodland's motion and ruled that the corporation had breached the Settlement Agreement and thus the Agreement was terminated and, on March 21, 2002, the Seventh Circuit affirmed the district court ruling.*fn2 (Id. ¶ 23-24.) Pursuant to these rulings, Ocean Atlantic Woodland lost any and all rights to purchase the Byzantio/Arnhold Property. (Id. at ¶¶ 6-7.) See Arnhold v. Ocean Atl. Woodland Corp., 132 F. Supp.2d 662, 674 (N.D. Ill. 2001), aff'd, 284 F.3d 693, 710 (7th Cir. 2002).

Cambridge's Purchase and Proposed Development of the Byzantio/Arnhold Property

On December 29, 2000, Ocean Atlantic Woodland had entered into a contract with Cambridge, a California developer, for the sale of a portion of the Byzantio/Arnhold Property contingent on Ocean Atlantic Woodland's acquisition of the property. (Def. Cambridge's Answer ¶ 25.) During this time, Cambridge received from Ocean Atlantic Woodland certain design and engineering documents related to the proposed development for their review. (Def. Cambridge's Answer ¶ 26.) However, after the Ocean Atlantic's failure to acquire the property, Cambridge independently entered into an agreement on April 12, 2001 to acquire the property and ultimately purchased the Byzantio/Arnhold Property on July 19, 2001 with the intent to develop the land for residential use. (Id. ¶¶ 28-29.) Cambridge then hired Cowhey, an Illinois engineering firm, and Pugsley, an Illinois landscape architecture firm, for the engineering plans and plats of their development of the Arnhold/Byzantio Property. (See id. ¶¶ 32-33; Def Cambridge's Affirmative Defenses ¶¶ 20-24.) On November 14, 2001 and October 21, 2001, Cambridge submitted a preliminary engineering plan and development design and engineering plan to the Village, listing Pugsley and Cowhey as the drafters. (Def. Cambridge's Answer ¶¶ 37-38.)

Ocean Atlantic Woodland's Acquisition of the Roake/Lannert Plans' Copyright

In February 2002, Roake and Lannert assigned to Ocean Atlantic Woodland all right, tide, and interest, including the copyright, in the plans for the Byzantio/Arnhold Property (landscape plans, development design, engineering plans and schematics). (Def. Cambridge's Answer 6 30.) Also in February 2002, Ocean Atlantic Woodland registered the engineering and landscape plans it was assigned by Roake and Lannert with the Copyright Office. (Def. Cambridge's Answer ¶ 30.)

DISCUSSION

In a motion to strike, pursuant to Rule 12(f), "the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." FED. R Civ. P. 12(f). "A movant bears the burden of demonstrating that the challenged allegations are so unrelated to plaintiffs claim as to be devoid of merit, unworthy of consideration and unduly prejudicial." Vakharia v. Little Co. of Mary Hosp. & Health Care Ctrs., 2 F. Supp.2d 1028, 1033 (N.D. Ill. 1998).

Courts in this district, following Bobbitt v. Victorian House, Inc., have traditionally utilized a three-part inquiry when examining affirmative defenses subject to a motion to strike: (1) whether the matter is appropriately pleaded as an affirmative defense — only matters that deserve a clear "no" answer will be stricken to make the pleadings more concise; (2) if it is adequately pleaded under the requirements of Rules 8 and 9- if inadequately pleaded, the affirmative defense will be dismissed without prejudice to enable defendants to correct that technical deficiency; (3) whether the affirmative defense meets the Rule 12(b)(6) standard — if it is impossible for defendants to prove a set of facts in support of the affirmative defense that would defeat the complaint, the matter will be stricken as legally insufficient 532 F. Supp. 734, 737 (N.D. Ill. 1982); see H.R.R. Zimmerman Co. v. Tecumseh Prods. Co., No. 99 C 5437, 2002 WL 31018302, at *2.3 (N.D. Ill. Sep. 9, 2002); Ocean Atl. Dev. Corp. v. Willow Tree Farm, L.L.C., No. 01 C 5014, 2002 WL 485387, at *2 (N.D. Ill. Mar. 29, 2002).

First, Rule 8(c) lists nineteen named affirmative defenses but the list is not considered exhaustive and includes a catch-all reference to "any other matter constituting an avoidance or affirmative defense." Fed.R.Civ.P. 8(c); see Ocean Atl. Dev. Corp. v. Willow Tree Farm, L.L.C, 2002 WL 485387, at *2. It is therefore encouraged that pleaders allege affirmatively anything that could be considered an affirmative defense because of the possibility of waiver. Ocean Atl. Dev. Corp. v. Willow Tree Farm, 2002 WL 485387, at *2 (citing Bobbitt, 532 F. Supp. at 736). "[T]he basic concept of an affirmative defense is an admission of the facts alleged in the complaint, coupled with the assertion of some other reason defendant is not liable." Instituto Nacional de Comercializacion Agricola v. Cont'l Ill. Nat'l Bank & Trust Co., 576 F. Supp. 985, 989 (N.D. Ill. 1983) (emphasis in original).

Second, affirmative defenses are subject to all the pleading requirements of the Federal Rules of Civil Procedure. FED. R. CIV. P. 8(c); Renalds v. S.R.G. Rest. Group, 119 F. Supp.2d 800, 802 (N.D. Ill. 2000). However, even under the liberal notice pleading standard of the Federal Rules of Civil Procedure, an allegation must include either direct or inferential allegations respecting all material elements of the claim asserted. MAN Roland Inc. v. Quantum Color Corp., 57 F. Supp.2d 576, 578 (N.D. Ill. 1999).

Last, under Rule 12(b)(6), the court must accept all factual allegations as true and draw all reasonable inferences in favor of the pleader. Fed.R.Civ.P. 12(b)(6); Renalds, 119 F. Supp.2d at 802 (citing Gomez v. Ill. St. Bd. of Educ., 811 F.2d 1030, 1039 (7th Cir. 1987)). As a general rule, a court will strike an affirmative defense only if it is insufficient on the face of the pleadings. Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1294 (7th Cir. 1989).

A. Affirmative Defenses I, V, VII, IX, and X

Plaintiff has moved to strike Affirmative Defenses I (Adequate Remedy at Law), V (Failure to State a Claim), VII (Innocent Infringement), IX (Lack of Standing), and X (Failure to Satisfactorily Allege Causation). The Court grants the motion to strike these purported defenses.

First, with regard to Affirmative Defense I, defendants argue that plaintiff has an "adequate remedy at law" in response to Ocean Atlantic Woodland's claim for injunctive relief in its complaint. In considering a preliminary or temporary injunction, the burden of proof is normally on the moving party to prove they are entitled to injunctive relief as demonstrated by four factors: (1) likelihood of prevailing on the merits; (2) an inadequate remedy at law; (3) the irreparable harm the nonmovant will suffer if preliminary relief is granted, balanced against the irreparable harm to the movant if relief is denied; and (4) the injunction is not inconsistent with the public interest Erickson v. Trinity Theatre, Inc., 13 F.3d 1061, 1067 (7th Cir. 1994).

The burden of proof is on plaintiff Ocean Atlantic Woodland to prove that no adequate remedy at law exists in seeking injunctive relief. Accordingly, the argument that Ocean Atlantic Woodland has an adequate remedy at law is merely a denial of one of the elements plaintiff is required to prove. See, e.g., Household Fin. Servs., Inc. v. Northeastern Mortgage Inv. Co., No. 00 C 667, 2000 WL 816795, at *1 (N.D. Ill. June 22, 2000) (stating adequate remedy of law is not an affirmative defense because it is an assertion that the party cannot establish a prima facie case, not a negation or avoidance of a cause of action.) The ...


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