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Visco Financial Services, Ltd. v. Siegel

November 13, 2008


The opinion of the court was delivered by: Charles P. Kocoras, District Judge


This matter comes before the court on Plaintiff Visco Financial Services, Limited ("Visco")'s motion to dismiss Defendant John Siegel ("Siegel")'s counterclaim and affirmative defenses and also to strike Siegel's answers to ¶¶ 5, 6, and 9 of the complaint. For the reasons set forth below, the motion to dismiss is granted and the motion to strike is granted.


Visco sued Siegel for allegedly defaulting on a commercial promissory note. According to the allegations of the complaint, which we must accept as true for the purposes of this motion, Visco made several loans to Fortitude Resources ("Fortitude")*fn1.

Visco eventually converted the group of business loans into one consolidated loan with a principal balance of $1,323,387.00*fn2 . On July 11, 1997, Siegel signed the consolidated loan as President of Fortitude and also personally guaranteed the loan. As of June 30, 2008, it remained past due since May 1998 with principal balance and interest equal to $6,287,841.55. Visco alleges that Siegel acknowledged the debt and promised to pay but has yet to satisfy his alleged obligation under the note.

The complaint alleges the court has jurisdiction on the basis of diversity of citizenship; Visco is an Illinois corporation with its principal place of business in Chicago, and Siegel is a citizen of Kentucky. See 28 U.S.C. § 1332(a).

After the court granted two of Siegel's requests for extended time to answer or otherwise plead, Siegel answered the complaint, filed a counterclaim, and asserted several affirmative defenses. Siegel's counterclaim alleges that Visco committed the following torts: breach of duty of good faith and fair dealing, tortious interference with contractual relations, and conversion.

For his breach of duty of good faith claim, Siegel asserts Visco had an obligation to act in good faith and deal fairly with Siegel and Fortitude. Accepting as true Siegel's allegations, Visco knew the note was to benefit Fortitude and could only be paid upon Fortitude's success. Siegel claims that Visco breached the duty of good faith and fair dealing by knowing that Siegel managed Fortitude's operations. Furthermore, Siegel complains that Visco knowingly interfered with all aspects of Fortitude's business operations, which rendered performance on the note impossible. Siegel's counterclaim draws upon the same allegations contained in the breach of duty of good faith and fair dealing claim that Visco tortiously interfered with contractual relations. Finally, Siegel claims that by taking over all aspects of business operations, Visco converted Siegel's property.

Siegel's counterclaims are derived from Illinois state law. Since the court has diversity jurisdiction over Visco's breach of contract claim, and the counterclaims involve the same parties and the damages allegedly exceed $75,000, diversity jurisdiction is present for the counterclaim as well.

Visco filed the instant motion to dismiss Siegel's counterclaim pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim and to strike affirmative defenses pursuant to Fed. R. Civ. P. 12(f). It also moves to strike Siegel's answers to ¶¶ 5, 6, and 9 of the complaint.


I. Motion to Dismiss for Failure to State a Claim

Fed. R. Civ. P. 12(b)(6) evaluates the legal sufficiency of a plaintiff's complaint.

Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In ruling on a motion to dismiss, a court must draw all reasonable inferences in favor of the plaintiff, construe all allegations of a complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in the complaint. Bontkowski v. First Nat'l Bank of Cicero, 998 F.2d 459, 461 (7th Cir. 1993); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). To be cognizable, the factual allegations contained within a complaint must raise a claim for relief "above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. ---, 127 S.Ct. 1955, 1965 (2007). However, a pleading need only convey enough information to allow the defendant to understand the gravamen of the complaint. Payton v. Rush-Presbyterian-St. Lukes Med. Ctr., 184 F.3d 623, 627 (7th Cir. 1999). Claims should not 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." Hefferman v. Bass, 467 F.3d 596, 598 (7th Cir. 2006), quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232 (1984).

II. Motion to Strike Affirmative Defenses

Fed. R. Civ. P. 12(f) permits a court to strike defenses that are insufficient on the face of the pleadings. Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1294 (7th Cir. 1989). Because motions to strike can be used as delay tactics, they are generally not a favored part of motion practice. See, e.g., United States v. 416.81 Acres of Land, 514 F.2d 627, 631 (7th Cir. 1975). However, if legal implications can be drawn from uncontroverted facts within the pleadings, such motions can be useful tools to examine the sufficiency of asserted defenses. Id. When presented with a motion to strike a defense as insufficient, a court must examine whether the challenged defenses raise substantial questions of law or fact. Id. If they do, the motion is not meritorious. Moreover, if on ...

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