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Dorothy Mittelstaedt v. Gamla-Cedron Orleans LLC

December 12, 2012


The opinion of the court was delivered by: Judge Virginia M. Kendall


Dorothy Mittelstaedt ("Plaintiff") has brought claims against Gamla-Cedron Orleans, Inc. ("Gamla") for breach of contract and specific performance of a real estate purchase agreement. Gamla asserted the affirmative defense of unclean hands to the Plaintiff's claims. Plaintiff has now moved to strike that affirmative defense pursuant to Federal Rule of Civil Procedure 12(f). For the reasons set forth below, the Court denies the Plaintiff's Motion.


When considering a motion to strike an affirmative defense, the court must take as true all facts alleged in the defense and construe all reasonable inferences in favor of the defendant. See, e.g., Circle Group Holdings, Inc. v. Akhamzadeh, No. 05 C 3921, 2006 WL 2548164, at *7 (N.D. Ill. Sept. 1, 2006); Fried Trading Co. v. Austern, No. 86 C 8223, 1987 WL 4773, at *1 (N.D. Ill. April 20, 1987) ("[T]he court must accept as true the well-pleaded facts of the counterclaim and the affirmative defenses").

On or about May 11, 2012, Plaintiff entered into a contract with 327 Chicago L.L.C. ("327 Chicago") to purchase a condominium in a building located at 757 N. Orleans Street in Chicago, Illinois. (Gamla Affirmative Defense, Doc. 25 at 13, ¶ 10.)*fn1 327 Chicago is managed by RTG Land Development Corporation ("RTG"). (Id. at ¶ 2.) RTG is also a member of 327 Chicago. (Id.) RTG is owned and controlled by Richard Gammonley, the Plaintiff's son. (Id. at ¶ 3.)

Prior to Plaintiff entering into her purchase agreement with 327 Chicago, 327 Chicago had entered into an "Agreement of Purchase and Sale" (the "Bulk Purchase Agreement") with Gamla on or about May 3, 2012. (Id. at ¶ 5.) Pursuant to the Bulk Purchase Agreement, 327 Chicago agreed to sell Gamla forty residential condominium units, as well as all remaining limited common element parking spaces and limited common elements storage spaces owned by 327 Chicago that were located at 757 N. Orleans. (Id.) In addition, 327 Chicago assigned its rights and obligations under five existing pending sales contracts for condominium units in the building. (Id. at ¶ 8.)

At the time Gamla entered into the Bulk Purchase Agreement, there was no pending sales contracts for Unit 2206, which is one of the condominium units in 757 N. Orleans. The value of Unit 2206 was listed at $706,000. (Id. at ¶ 6.) Gamla gave 327 Chicago and Gammonly permission to continue to market and sell individual units before Gamla closed on the Bulk Purchase Agreement; however, no units could be sold for less than $252 per square foot. (Id. at ¶ 8.)

On May 9, 2012, Gamla advised 327 Chicago that Gamla was willing to close under the Bulk Purchase Agreement and the parties set a closing date for May 16, 2012. (Id. at ¶ 9.) Between May 9th and the closing date, 327 Chicago entered into seven additional contracts to sell individual condominium units in the building. (Id. at ¶ 10.) One of these contracts was for the sale of Unit 2206 to the Plaintiff (the "2006 Contract"). (Id.) Despite being listed for sale at $706,000, Gammonley caused 327 Chicago to convey Unit 2206 to his mother for only $460,000. This $460,000 purchase price also included two separate parking spaces, which were not included in the original $706,000 list price. (Id. at ¶ 15.) At the time she entered into the 2206 Contract, Plaintiff was aware that 327 Chicago would assign its rights under the 2206 Contract to Gamla pursuant to the Bulk Purchase Agreement. (Id. at ¶¶ 23-25.)

Prior to entering into the 2206 Contract, Plaintiff knew that the unit was not complete and required significant work to be complete. (Id. at ¶ 20.) There were no fixtures, flooring, cabinetry or appliances in the unit. (Id.) In fact, significant labor and expense would be required to complete the unit for occupancy. (Id.) Despite this, Plaintiff agreed that the unit was complete and ready to be occupied as a residence when she executed the 2206 Contract. (Id.) However, after Gamla closed on the Bulk Purchase Agreement, Plaintiff demanded that Gamla improve the unit and finish its completion. (Id. at ¶ 21.)

At no time prior to or at the closing on the Bulk Sales Agreement did 327 Chicago, RTG or Gammonley advise Gamla that: (1) there was an agreement with the Plaintiff whereby Unit 2206 would be built out; (2) the two parking spaces to be conveyed under the 2206 Contract were already the subject of a previous lease agreement between 327 Chicago and a third-party lessee; (3) the pre-existing lease agreement was in effect and provided the third-party lessee with an option to purchase the parking spaces; and (4) that Unit 2206 was not sold in an arm's length transaction to a bona fide party retail purchaser, i.e., that 327 Chicago was selling the unit to Gammonley's mother. (Id. at ¶ 17.) Plaintiff was aware that none of this information was conveyed to Gamla prior to the closing on the Bulk Sales Agreement. (Id. at ¶¶ 23-25.) After learning about the Plaintiff's relationship with Gammonley, Gamla has refused to honor the 2206 Contract.


Federal Rule of Civil Procedure 8(c) requires parties to set forth any affirmative defenses in their responsive pleadings and specifically lists nineteen defenses that must be pled affirmatively. A motion to strike pursuant to Rule 12(f) is the appropriate means of removing "impertinent or redundant matter in any pleading and is the primary procedure for objecting to an insufficient defense." Van Schouwen v. Connaught Corp., 782 F. Supp. 1240, 1245 (N.D. Ill. 1991). Courts disfavor motions to strike affirmative defenses, and only grant these motions "if the affirmative defenses are insufficient as a matter of law or present no questions of law or fact." Man Roland Inc. v. Quantum Color Corp., 57 F. Supp. 2d 576, 579 (N.D. Ill. 1999). Nonetheless, a motion to strike can be a useful means of removing "unnecessary clutter" from a case. Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1294 (7th Cir. 1989).

In ruling on a motion to strike an affirmative defense, the Court must determine whether the matter is appropriately pled as an affirmative defense and whether it is sufficiently pled pursuant to Federal Rule of Civil Procedure 12(b)(6). See, e.g., Bobbitt v. Victorian House, Inc., 532 F. Supp. 734, 737 (N.D. Ill. 1982); Reis Robotics USA, Inc. v. Concept Indus., Inc., 462 F. Supp. 2d 897, 905 (N.D. Ill. 2006); Renalds v. S.R.G. Restaurant Group, 119 F. Supp. 2d 800, 802 (N.D. Ill. 2000). A court should only strike an affirmative defense if it appears beyond a doubt that the pleader can prove no set of facts in support of his defense that would plausibly entitle him to relief. See, ...

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