United States District Court, N.D. Illinois, Eastern Division
September 14, 2004.
IVANHOE FINANCIAL, INC., a Delaware corporation, Plaintiff,
HIGHLAND BANC CORP, an Illinois corporation and WIESLAW DOMARADZKI, Defendants.
The opinion of the court was delivered by: PAUL PLUNKETT, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff has sued defendants under various theories for their
alleged submission to plaintiff of fraudulent mortgage loan
packages. The case is before the Court on plaintiff's combined
motion to strike defendants' affirmative defenses and dismiss
their counterclaim. For the reasons set forth below, the motion
is granted in part and denied in part.
Motion to Dismiss Counterclaim
On a Rule 12(b)(6) motion to dismiss, the Court accepts as true
all well-pleaded factual allegations of the complaint, drawing
all reasonable inferences in plaintiff's favor. Forseth v.
Village of Sussex, 199 F.3d 363, 368 (7th Cir. 2000). No claim
will be dismissed unless "it is clear that no relief could be granted under any set of facts that could be
proved consistent with the allegations." Hishon v. King &
Spalding, 467 U.S. 69, 73 (1984).
In Count I of their counterclaim, defendants allege that
plaintiff breached a duty it owed to them "to verify and
investigate" the loan information they provided to it.
(Countercl., Count I ¶¶ 23-24.) Plaintiff says those allegations
are squarely contradicted by the parties' contract, and thus,
this claim must be dismissed.
The Court agrees with plaintiff. The broker/lender agreement
executed by the parties expressly vests defendants with
responsibility for verifying and investigating loan information.
The agreement states that defendants "shall be responsible for
the accurate preparation and execution of a complete property and
credit loan application package on each loan request submitted,
including . . . [o]riginal appraisal of the subject property."
(Defs.' Second Am. Answer, Affirmative Defenses & Countercl., Ex.
A, Broker/Lender Agreement ¶ 1e.) It also requires defendants to
"obtain an appraisal from an Ivanhoe approved appraiser . . .
and . . . ensure that such appraisal is acceptable in form and
content to Ivanhoe." (Id. ¶ 2.) Further, by signing the
agreement defendants "represent[ed] and warrant[ed]" that "[a]ll
documents [they] submitted . . . in connection with each loan
package . . . including, but not limited to, the credit report
and appraisal, . . . [were] complete, true and accurate." (Id.
¶ 5d.) Finally, defendants warranted that "[n]o fraudulent or
intentionally misleading information ha[d] been provided to
Ivanhoe with respect to [any] loan application. . . . including,
but not limited to, the credit report and appraisal." (Id. ¶
5f.) In short, the contract clearly creates a duty to verify
appraisals, but it vests that duty in defendants, not plaintiff.
Defendants argue, however, that the duty shifted to Ivanhoe
when it: (1) told defendants that its underwriters would "would
verify all information [they] provided"; and (2) required them to
use an Ivanhoe-approved appraiser. (Defs.' Second Am. Answer,
Affirmative Defenses & Countercl. ¶¶ 10-15, 18.) In other words,
defendants say Ivanhoe voluntarily assumed the duty of
verification, even if that duty would otherwise have been theirs.
Under certain circumstances, one person's voluntary action can
create a duty to another. The voluntary undertaking doctrine, as
it is called, "imposes liability upon one who gratuitously
undertakes to render services to another and fails to perform
those services with due care." Weisblatt v. Chicago Bar Ass'n,
684 N.E.2d 984, 987 (Ill.App. Ct. 1997). The doctrine applies,
however, only if the voluntary undertaking caused "physical
injury or damage." Id. Defendants allege that plaintiff's
breach of its duty to verify caused economic damage, not physical
harm. Thus, the voluntary undertaking doctrine does not apply.
Id.; see Martin v. State Farm Mut. Auto. Ins. Co.,
308 N.E.2d 47, 54 (Ill.App. Ct. 2004) (holding that voluntary
undertaking doctrine was inapplicable when there was no
allegation of "bodily injury or property damage").
Moreover, even if the voluntary undertaking doctrine did apply,
defendants' negligence claim would still be barred by Moorman
Mfg. Co. v. National Tank Co., 435 N.E.2d 443 (Ill. 1982). In
that case, the Illinois Supreme Court held that economic loss,
which is all that defendants are claiming, is generally not
recoverable in tort. Id. at 450-51. Thus, defendants could not
pursue their negligence claim against Ivanhoe, even if it had
voluntarily assumed the duty to verify. Plaintiff's motion to
dismiss Count I of the counterclaim is, therefore, granted.
In Count II of their counterclaim, defendants allege that
Ivanhoe, through its appraiser-agent, fraudulently misrepresented
the value of the Spicak and Ruptash properties. To state a
fraudulent misrepresentation claim, plaintiff must allege that:
(1) Ivanhoe made a statement of material fact that it knew or
believed to be false; (2) Ivanhoe intended to induce defendants
to rely on the statement; and (3) defendants acted in reasonable reliance on the
truth of the statement and were damaged. Neptuno Treuhand-Und
Verwaltungsgesellschaft Mbh v. Arbor, 692 N.E.2d 812, 815 (Ill.
App. Ct. 1998).*fn2
Ivanhoe first attacks the agency allegations. In its view, the
alleged facts of this case establish that the appraiser was not
its agent. The appraiser's fraud, if that is what it was, was
perpetrated not only on defendants but on Ivanhoe as well.
Conduct that defrauds the principal, Ivanhoe says, could not
possibly be within the scope of the appraiser's employment.
Even if the appraiser's alleged fraud was within the scope of
his employment, however, defendants would still falter on the
last element of their claim: reasonable reliance. Any allegation
of reasonable reliance is belied by the contract defendants
signed, which clearly and repeatedly states that defendants are
responsible for ensuring the accuracy of the appraisal
information. (See Defs.' Second Am. Answer, Affirmative
Defenses & Countercl., Ex. A, Broker/Lender Agreement ¶¶ 1e, 2,
5d, 5f.) In light of those provisions, defendants' alleged blind
faith in the appraisal reports cannot constitute reasonable
reliance. Consequently, plaintiff's motion to dismiss Count II of
the counterclaim is granted.
Motion to Strike Affirmative Defenses
Federal Rule of Civil Procedure ("Rule") 12(f) permits this
Court to strike any insufficient affirmative defense from any
pleading. Motions to strike, however, are generally disfavored
and may only be granted if "the defense [asserted] is patently
defective and could not succeed under any set of circumstances." Carpenter v. Ford Motor Co.,
761 F. Supp. 62, 65 (N.D. Ill. 1991). Defendants can defeat
plaintiff's motion to strike if each of their defenses: (1) is properly
raised as an affirmative defense; (2) meets the pleading requirements of
Rules 8 and 9; and (3) withstands a Rule 12(b)(6) challenge. Bobbit v.
Victorian House, Inc., 532 F. Supp 734, 737 (N.D. Ill. 1982).
With these principles in mind, we turn to the defendants'
fourteen affirmative defenses.
The first affirmative defense is failure to state a claim.
Whether failure to state a claim is an appropriate affirmative
defense is a subject of some debate in this district. Compare,
e.g., Ring v. Bd. of Educ. Cmty. Sch. Dist. No. 60, No. 03 C
7397, 2004 WL 1687009, at *3 (N.D. Ill. July 27, 2004) (failure
to state a claim is properly pled as an affirmative defense)
with Instituto Nacional De Comercializacion Agricola (Indeca)
v. Continental Ill. Nat. Bank & Trust Co., 576 F. Supp. 985, 991
(N.D. Ill. 1983) (striking failure to state a claim affirmative
defense because "a true affirmative defense raises matters
outside the scope of plaintiff's prima facie case and such matter
is not raised by a negative defense") (internal quotation marks
and citation omitted). Because failure to state a claim is listed
as a defense on Form 20 of the Appendix to the Federal Rules, a
form that Rule 84 deems "sufficient under the [R]ules," we agree
with defendants and the Ring court that it may properly be
asserted as an affirmative defense.
To the extent the defense is asserted to Counts II and III of
plaintiff's complaint, however, it must be stricken. The Court
has already determined, by denying defendants' Rule 12(b)(6)
motion to dismiss those claims, that they are viable. But, if the
defense is asserted to Counts I or IV, the sufficiency of which
have not been tested via motion to dismiss, it may stand
In their second affirmative defense, defendants allege that
plaintiff failed to mitigate its damages. Defendants do not,
however, identify what mitigating measures plaintiff failed to
take. Plaintiff assumes the defense is based on its failure to verify
independently the loan information, a duty the contract does not
impose on them. Thus, plaintiff argues, the defense must be
To the extent the second affirmative defense is, indeed, based
on plaintiff's failure to verify, it must be stricken. As
discussed above, the contract lodges the verification obligation
solely with defendants. Thus, plaintiff had no duty to mitigate
in that fashion. To the extent the defense is based on some other
acts or omissions, however, it may be viable. Therein lies the
problem. Defendants have pled the second affirmative defense too
generally to alert plaintiff to the conduct they challenge or to
allow the Court to test its worth. Accordingly, the Court strikes
the second affirmative defense, but gives defendants leave to
replead it, if they can do so and remain in compliance with Rule
Defendants' third affirmative defense, which is asserted only
as to the contract claim, is laches. Under Florida law, which
governs the contract claim, laches applies only if: (1)
plaintiff, after having knowledge of defendants' conduct and an
opportunity to file suit, unreasonably delayed asserting its
rights; (2) defendants did not know that plaintiff would assert
its rights; and (3) defendants would be prejudiced if plaintiff
were allowed to do so. Winston v. Dura-Tred Corp.,
268 So. 2d 426, 427 (Fla.App. Ct. 1972) (citing Van Meter v. Kelsey,
91 So. 2d 327, 331-32 (Fla. 1956)). "In determining whether delay
constitutes a bar to a claim, the court must look to whether the
delay has resulted in injury, embarrassment or disadvantage to
any person . . ., whether the delay has been such as practically
to preclude the court from arriving at a safe conclusion as to
the truth of the matters in controversy, and whether, during the
delay, there has occurred a change in conditions that would
render it inequitable to enforce the right asserted." Brumby v.
Brumby, 647 So. 2d 330, 331 (Fla.App. Ct. 1994). Defendants allege that plaintiff waited three months after
learning that the Ruptash and Spicak loan information was false
to file suit against them. They also allege that the time lapse
prejudiced them. They do not, however, explain how a three-month
lapse, on a claim with a five-year statute of limitations, see
FLA. STAT. § 95.11, prejudiced them. Absent that explanation,
defendants have not adequately alleged a laches defense.
For their fourth and twelfth affirmative defenses, which
defendants assert solely to the tort claims, (see Defs.' Resp.
Pl.'s Mot. Strike Affirmative Defenses & Dismiss Countercl. at
13), they allege that their liability, if any, should be reduced
or eliminated to the extent that third parties have contributed
or caused plaintiff's damages. Defendants do not allege that
plaintiff's actions contributed to its damages. Thus, this is
not a contributory or comparative negligence defense. Rather,
they say plaintiff cannot recover from them if third parties are
to blame for all or part of its damages. In the context of
plaintiff's fraudulent and negligent misrepresentation claims,
that amounts to a denial of liability or causation, neither of
which is an affirmative defense. Instituto Nacional De
Comercializacion Agricola, 576 F. Supp. at 991 ("[A] true
affirmative defense raises matters outside the scope of
plaintiff's prima facie case and such matter is not raised by a
negative defense") (internal quotation marks and citation
omitted). The fourth and twelfth affirmative defenses are,
In their fifth affirmative defense, defendants allege that
Ivanhoe has no standing to pursue the Illinois Consumer Fraud Act
("ICFA") claim it asserts against them. Ivanhoe can sue under the
ICFA if it is a consumer, which is defined as: "[A]ny person who
purchases or contracts for the purchase of merchandise not for
resale in the ordinary course of his trade or business but for
his use or that of a member of his household." 815 ILL. COMP.
STAT. 505/1e. A purchaser whose "only use of the purchased product is as an input into the making of a
product that he sells," is not a consumer within the meaning of
the Act. Williams Elec. Games, Inc. v. Garrity, 366 F.3d 569,
579 (7th Cir. 2004).
The "merchandise" Ivanhoe purchased was defendants' services in
finding potential borrowers. See 815 ILL. COMP. STAT. 505/1b
(including services in definition of merchandise); (Fifth
Affirmative Defense ¶ 2). Defendants allege that Ivanhoe used
those services to make a product, a mortgage loan, which it then
resold to another bank. Thus, defendants argue, Ivanhoe is not a
proper plaintiff for an ICFA claim.
Recently, another mortgage broker sued by plaintiff offered
this argument to Judge Moran, who rejected it:
Defendants argue that plaintiff essentially resold
the services provided by Mortgage Essentials to its
customers. . . . Here, plaintiff did not incorporate
Mortgage Essentials' [services] into any type of a
finished product. Instead, it used a mortgage broker
to help find suitable potential borrowers. Mortgage
Essentials marketed these services to plaintiff and
other similar lenders. Essentially, Mortgage
Essentials had two groups of customers: potential
borrowers who completed loan applications and
potential lenders who relied on Mortgage Essentials
to ensure that the information in those applications
was reliable. Both groups were consumers of Mortgage
Essentials' services and could therefore bring suit
pursuant to the ICFA.
Ivanhoe Fin, Inc., v. Mortgage Essentials, Inc., No. 03 C
6887, 2004 WL 856591, at *2 (N.D. Ill. Apr. 21, 2004).
We respectfully disagree with that analysis. The "finished
products" into which defendants' services were incorporated were
the home mortgage loans on the Ruptash and Spicak properties.
Those loans could not have been made without the raw materials,
the applicants, provided by defendants. The analogy between
products and services is not perfect, but the rationale
underlying the business-consumer exception applies equally to the
services context. The ICFA is intended to protect ordinary consumers from "predators in the business
world," M&W Gear Co. v. AW Dynamometer, Inc., 424 N.E.2d 356,
366 (Ill.App. Ct. 1981) (J. Webber, dissenting), not to
supplement or "supplant common law breach of contract . . .
cases" between businesses. Williams Elec. Games,
366 F.3d at 579 (internal quotation marks and citation omitted). According to
defendants' allegations, Ivanhoe was not acting as an ordinary
consumer when it purchased their services. Rather, it contracted
with defendants to get the grist for its mortgage banking mill.
Because Ivanhoe's alleged relationship to defendants is more akin
to that of a manufacturer to a supplier than an individual
consumer to a business, Ivanhoe does not fall within the ICFA's
definition of consumer.
The statute does not limit standing to consumers, however,
Entities that are not consumers may file suit if "the alleged
conduct involves trade practices addressed to the market
generally or otherwise implicates consumer protection concerns."
Lake County Grading Co. v. Advance Mech. Contractors, Inc.,
654 N.E.2d 1109, 1115 (Ill.App. Ct. 1995) (internal quotation marks
and citation omitted). Ivanhoe contends that defendants' alleged
conduct implicates consumer protection concerns because the
ultimate consumers of the loans, the banks that bought them from
Ivanhoe, unwittingly purchased under-secured loans.*fn3
Like Ivanhoe, however, the alleged ultimate "consumers" are
sophisticated entities that purchase loans in the ordinary course
of business. The interests of such entities, which are fully
capable of protecting themselves via contract and tort law, are
not the kind the statute is designed to protect. Compare id.
at 1116 (breach of construction contract between contractor and
subcontractor did not implicate consumer protection concerns)
with Downers Grove Volkswagen, Inc. v. Wigglesworth Imports, Inc., 546 N.E.2d 33, 41 (Ill.
App. Ct. 1989) (allegation that defendant published false
information to consuming public about plaintiff's prices
implicated consumer protection concerns); see also Credit
Ins. Consultants, Inc. v. Gerling Global Reins. Corp. of Am.,
210 F. Supp. 2d 980, 985 (N.D. Ill. 2002) ("While the scope of
what constitutes consumer protection concerns is under debate,
courts have generally required some allegations of sharp
practices designed to mislead consumers about a competitor, or an
implication of public health, safety or welfare issues.") Because
defendants have adequately alleged that Ivanhoe does not have
standing to pursue its ICFA claim, plaintiff's motion to strike
the fifth affirmative defense is denied.
In their sixth affirmative defense, defendants allege that
Ivanhoe is responsible for its own losses under an implied
warranty theory because the defective appraisals were prepared by
an Ivanhoe-approved appraiser, whom the contract required
defendants to use. (Defs.' Resp. Pl.'s Mot. Strike Affirmative
Defenses & Dismiss Countercl. at 14.) Ivanhoe contends that this
defense is contradicted by the contract.
Once again, the Court agrees. The contract makes defendants
"responsible for the accurate preparation" of property
appraisals. (Defs.' Second Am. Answer, Affirmative Defenses &
Countercl., Ex. A, Broker/Lender Agreement ¶ 1e.) Moreover, by
signing the agreement defendants expressly warranted that "[a]ll
. . . appraisal[s] . . . [were] complete, true and accurate" and
that "[n]o fraudulent or intentionally misleading. . . .
appraisal" had been submitted. (Id. ¶¶ 5d, 5f.) In the face of
those provisions, defendants' implied warranty defense simply
The gist of defendants' seventh affirmative defense is that
Ivanhoe cannot enforce the contract because it prevented
defendants from complying with their contractual obligations.
Florida law recognizes "the rule that when a person contracts for
the doing of a certain thing with another, he impliedly promises that he will not . . . do anything to
hinder or obstruct the performance by the other person." Gulf
Am. Land Corp. v. Wain, 166 So. 2d 763, 764 (Fla.App. Ct.
1964); FL. JUR. 2D CONTRACTS § 252 ("Prevention of performance by
one party to a contract generally excuses nonperformance by the
other party. The one who prevents performance cannot take
advantage of his or her own wrong."). The rule does not apply,
however, when "the plaintiff was not solely responsible for the
nonperformance." Id. § 254.
The contract makes defendants responsible for "the accurate
preparation and execution of a complete property and credit loan
application package" including the appraisal on the property
securing the loan. (Defs.' Second Am. Answer, Affirmative
Defenses & Countercl., Ex. A, Broker/Lender Agreement ¶ 1e.)
Defendants allege that plaintiff hindered or prevented them from
performing that obligation by requiring them to use an
untrustworthy appraiser. But defendants do not, and cannot,
allege that Ivanhoe, by insisting that they choose an appraiser
from an approved list, was solely responsible for their failure
to complete accurate loan application packages. Had defendants
verified the appraisal information they were given, as the
contract required them to do, they could have fulfilled their
duty, regardless of the quality of the information they were
given. Because defendants cannot lay responsibility for their
alleged breach solely at plaintiff's feet, their seventh
affirmative defense is stricken.
In their eighth affirmative defense, defendants assert that
plaintiff's unclean hands bar it from recovery. "The equitable
doctrine of unclean hands precludes a party who has been guilty
of misconduct amounting to fraud or bad faith connected to the
subject matter of the litigation from seeking any relief from a
court in equity." Wolfram P'ship, Ltd. v. LaSalle Nat. Bank,
765 N.E.2d 1012, 1024 (Ill.App. Ct. 2001). Defendants allege
that plaintiff acted in a "fraudulent manner with respect to the dispute at issue in this case," (Eighth
Affirmative Defense ¶ 1), but they do not describe that fraud at
all, much less with the detail required by Rules 8 and 9.
Accordingly, affirmative defense eight is stricken.
For their ninth affirmative defense, defendants allege that the
contract is unconscionable. Unconscionability, under Florida law,
has two components, one procedural and one substantive. Fotomat
Corp. v. Chanda, 464 So. 2d 626, 629 (Fla.App. Ct. 1985). A
contract is substantively unconscionable if its terms are
"unreasonable and unfair." Id. (internal quotation marks and
citation omitted). "Procedural unconscionability . . . speaks to
the individualized circumstances surrounding each contracting
party at the time the contract was entered into" and includes
such considerations as "age, education, intelligence, business
acumen and experience [and] relative bargaining power." Id.
(internal quotation marks and citation omitted). The "two
elements must coalesce before a case for unconscionability is
made out." Id. (internal quotation marks and citation omitted).
A contract will be held unconscionable only if "no decent,
fairminded person would view [it] without being possessed of a
profound sense of injustice." Id. at 630 (internal quotation
marks and citation omitted).
Defendants allege that the contract is unconscionable because
of its lopsided risk allocation. (Ninth Affirmative Defense ¶ 1.)
That allegation, however, is addressed solely to the substantive
prong of the unconscionability defense. Absent allegations of
procedural unconscionability, and defendants have made none,
their ninth affirmative defense cannot stand
In their tenth and eleventh affirmative defenses, defendants
allege that, by funding the Ruptash and Spicak loans, plaintiff
waived the contract verification provisions or is estopped from
enforcing them. These defenses are inconsistent both with the
contract and the governing law. Paragraph nine of the parties' contract specifically contemplates
that defendants' verification obligations survive Ivanhoe's
funding of a loan: "Ivanhoe may require [defendants] to
repurchase any loan [that] results from a loan application
submitted by [defendants] . . . if any covenant, representation
or warranty made by [defendants] is breached." (Defs.' Second Am.
Answer, Affirmative Defenses & Countercl., Ex. A, Broker/Lender
Agreement ¶ 9.) If, as defendants argue, Ivanhoe's funding of a
loan relieves them of their obligations, that provision would be
Moreover, waiver, under Florida law, is "[the] intentional
relinquishment of a known right." FL. JUR. 2D CONTRACTS § 248
(2004). Ivanhoe could not have intentionally relinquished its
right to hold defendants to their contractual obligations unless
it knew, at the time it funded the loans, that the Ruptash and
Spicak appraisals were inflated. Because defendants have not
alleged that Ivanhoe knew about the defects before it funded the
loans, they have not adequately alleged waiver.
The estoppel defense has similar problems. Because the contract
assumes that defendants' obligations outlive loan funding, the
act of funding does not estop Ivanhoe from enforcing the contract
against defendants. Moreover, as a matter of law, Ivanhoe would
be estopped from asserting its contract rights only if the act of
funding caused defendants to change position to their detriment.
Ennis v. Warm Mineral Springs, Inc., 203 So. 2d 514, 520
(Fla.App. Ct. 1967); FL. JUR. 2D ESTOPPEL § 27 (2004). Unless
Ivanhoe's funding of the loans somehow induced defendants to
change their position materially, and they have not alleged that
it did, their estoppel defense must be stricken.
Affirmative defense thirteen is fraud. This defense, which is
just a restatement of defendants' counterclaim for fraudulent
misrepresentation, fails for the same reasons. (See supra at
4.) Defendants' fourteenth and last affirmative defense is that the
parties' contract is illusory because it is terminable at will
and lacks mutuality of obligation.*fn4 The Florida courts
deem illusory contracts "wherein one party reserves the right to
cancel at his pleasure." Lauren, Inc. v. Marc & Melfa, Inc.,
446 So. 2d 1138, 1139 (Fla.App. Ct. 1984) (internal quotation
marks and citation omitted). That is not the case here, however.
This contract permits either party to "terminate . . . at any
time for any reason" upon written notice to the other party.
(Defs.' Second Am. Answer, Affirmative Defenses & Countercl., Ex.
A, Broker/Lender Agreement ¶ 11.) Moreover, it says,
"[n]otwithstanding any such termination, this Agreement shall
continue to apply with respect to any loan applications which
have been locked-in, submitted or otherwise committed to Ivanhoe
under this Agreement." (Id.) Thus, the contract enables either
party to terminate, conditions the right upon written notice and
requires the parties to perform their obligations with respect to
any loan applications in process at the time of the termination.
Given those conditions, the termination clause of the contract
does not render it illusory. See Lauren, 446 So. 2d at 1139
(contract that allowed one party to terminate under certain
conditions held not illusory).
At first blush, defendants' second objection has more merit.
The contract requires defendants to sell mortgage loan packages
to Ivanhoe, but requires Ivanhoe to pay defendants for those
packages only if a loan is actually funded and closed. (Defs.'
Second Am. Answer, Affirmative Defenses & Countercl., Ex. A,
Broker/Lender Agreement, Recitals & ¶ 6.) Moreover, the contract
reserves to Ivanhoe the unfettered right to reject any loan
application defendants submit to it. (Id., Recitals.) In other
words, defendants agreed to sell loan packages to Ivanhoe, but
Ivanhoe agreed to buy only those it deemed satisfactory. Thus, it
is debatable whether Ivanhoe's "promise" to buy from defendants only those loan packages it deemed acceptable is
actually a promise at all. Compare Office Pavilion South Fla.,
Inc. v. ASAL Prods., Inc., 849 So. 2d 367, 370 (Fla.App. Ct.
2003) ("Words of promise which by their terms make performance
entirely optional with the `promisor' do not constitute a
promise.") (internal quotation marks and citation omitted) with
Lauren, 446 So. 2d at 1139 ("A promise to buy conditioned upon
the buyer's `satisfaction' as to the goods agreed to be sold is
not illusory since the buyer is at liberty to reject the goods
only if he is in fact dissatisfied.") (internal quotation marks
and citation omitted).
Even if the contract lacked mutuality when it was signed,
however, it may still be enforceable now. According to the
Florida Appellate Court:
Although a contract is lacking in mutuality at its
inception, such defect may be cured by the subsequent
conduct of the parties. Want of mutuality is no
defense in the case of an executed contract, and a
promise lacking mutuality at its inception becomes
binding on the promisor after performance by the
Wright & Seaton, Inc. v. Prescott, 420 So. 2d 623
(Fla.App. Ct. 1982). To the extent Ivanhoe proves that it performed
with respect to the Ruptash and Spicak loans, allegations that
defendants have denied, (see Compl. ¶¶ 12, 15; Defs.' Second
Am. Answer ¶¶ 12, 15), lack of mutuality will be no defense. But,
if Ivanhoe is unable to do so, the defense may be valid.
Ivanhoe's motion to strike this affirmative defense is,
For the reasons set forth above, plaintiff's combined motion to
strike affirmative defenses and dismiss counterclaim is granted
in part and denied in part. Defendants' counterclaim is dismissed
with prejudice. Defendants' first affirmative defense is stricken
with prejudice, to the extent it is addressed to Counts II and III of the complaint.
Also stricken with prejudice are defendants' fourth, sixth,
seventh, twelfth and thirteenth affirmative defenses. Defendants'
second, third, eighth, ninth, tenth and eleventh affirmative
defenses are stricken with leave to amend. Plaintiff's motion to
strike is denied with respect to the first affirmative defense,
to the extent it is asserted to Counts I and IV, and the fifth
and fourteenth affirmative defenses. Defendants have fourteen
days from the date of this Memorandum Opinion and Order to file
amended affirmative defenses in accordance with this Order, if
they can do so and remain in compliance with Rule 11.