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AGFA Photo USA Corp. v. Parham

March 9, 2007

AGFA PHOTO USA CORPORATION, PLAINTIFF,
v.
FRED PARHAM, INDIVIDUALLY AND D/B/A PRO-PHOTO 1 HOUR & CUSTOM LAB AND D/B/A PRO-PHOTO IMAGING, DEFENDANT.



The opinion of the court was delivered by: R. Allan Edgar United States District Judge

MEMORANDUM

Plaintiff Agfa Photo USA Corporation ("Agfa Photo") brings this motion to strike the answer, affirmative defenses, and counterclaim of Defendant Fred Parham, individually and d/b/a Pro-Photo 1 Hour & Custom Lab and d/b/a Pro-Photo Imaging ("Pro-Photo"). [Court Doc. No. 3]. Pro-Photo opposes the motion. [Court Doc. No. 4].

The Court has reviewed the relevant pleadings and applicable law relating to this motion and has determined that Agfa Photo's motion will be GRANTED IN PART and DENIED IN PART.

I. Background

Agfa Photo filed its initial complaint on September 8, 2006 in the Chancery Court of Hamilton County, Tennessee claiming breach of contract against Pro-Photo. [Court Doc. Nos. 1-3, 1-1]. Pro-Photo removed the case to this Court on October 10, 2006. [Court Doc. No. 1-1].

The complaint alleges that beginning in October 2003, Pro-Photo leased photo processing equipment from Agfa Photo. Agfa Photo alleges that Pro-Photo breached its lease agreement by failing to pay its monthly lease payments. [Court Doc. No. 1-3]. It contends that due to ProPhoto's breach of the lease agreement, all payments due to Agfa Photo under the agreement have been accelerated by the terms of the agreement and are due and payable immediately. Agfa Photo seeks its payments under the lease agreement, as well as prejudgment interest, attorneys' fees, costs, and possession of its equipment and assets.

On October 25, 2006 Pro-Photo filed its answer to the complaint. [Court Doc. No. 2]. The answer also states counterclaims against Agfa Photo and raises eighteen separate affirmative defenses. Id. In its answer Pro-Photo alleges that Agfa Photo entered into a warranty agreement with Pro-Photo. It further alleges that Agfa Photo's equipment never performed adequately to meet Pro-Photo's business needs. Pro-Photo alleges that it relied on Agfa Photo's representations that it would service its equipment at a reduced cost pursuant to a service maintenance agreement Pro-Photo entered with Agfa Photo. The counterclaim also alleges that Agfa Photo engaged in a conspiracy with other businesses entities relating to Agfa Photo's lease agreements with photo businesses across the country to "raise cash by selling the Lease Agreements free and clear of obligations under the Service Maintenance Agreements." Id. Pro-Photo alleges that Agfa Photo's actions have rendered its equipment valueless and that, as a consequence, it has suffered lost sales and profits. Pro-Photo brings counterclaims against Agfa Photo for declaratory judgment, revocation of acceptance of goods pursuant to the Uniform Commercial Code, breach of implied covenant of good faith and fair dealing, breach of the implied warranty of merchantability, violation of implied warranty of fitness for particular purpose, and violation of the Tennessee Consumer Protection Act.

In support of its counterclaims, Pro-Photo has attached several documents to its answer.

These documents include: a document purporting to be an Agfa Photo Limited Equipment Warranty provided to Pro-Photo; a letter from Agfa Photo to an unspecified customer regarding divestiture of its photo activities; a letter to an unspecified customer regarding the insolvency of Agfa Photo's German parent company; a letter to an unspecified customer regarding the sale of that customer's lease agreement to a company known as LEAF Funding, Inc. ("LEAF"); a letter to an unspecified customer regarding a new service and parts provider for Agfa Photo equipment; a purchase agreement between Agfa Photo and LEAF regarding the sale of non-related Agfa Photo leases to LEAF.

Agfa Photo has moved to strike Pro-Photo's answer, affirmative defenses, and counterclaim. [Court Doc. 3-1]. Agfa Photo argues that Pro-Photo's exhibits attached to its answer are misleading because most of the exhibits do not relate to Pro-Photo's relationship with Agfa Photo in any way. It points out that the letters from Agfa Photo to customers were not written to Pro-Photo and that the purchase agreement between Agfa Photo and LEAF did not involve the sale of Pro-Photo's lease. In response, Pro-Photo has attached a class action complaint filed in federal district court in Massachusetts against Agfa Photo, as well as other individuals and corporate entities. [Court Doc. 4-1]. Pro-Photo argues that its counterclaims against Agfa Photo are related to the conspiracy claims charged by the plaintiff photography processing shops in the Massachusetts lawsuit. The Massachusetts complaint appears to raise issues similar to those raised by Pro-Photo in its counterclaim.

II. Analysis

Federal Rule of Civil Procedure 12(f) states that: Upon motion made by a party before responding to a pleading or, if no responsive pleading is permitted by these rules, upon motion made by a party within 20 days after the service of the pleading upon the party or upon the court's own initiative at any time, 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). Federal Rule of Civil Procedure 7(b) further requires that motions "shall state with particularity the grounds therefore, and shall set forth the relief or order sought." Fed.R.Civ.P.7(b).

District courts have discretion in determining whether to grant a motion to strike pursuant to Federal Rule of Civil Procedure 12(f). See Seay v. Tennessee Valley Authority, 339 F.3d 454, 480 (6th Cir. 2003) (review of motion to strike affirmative defenses is for abuse of discretion); Federal Savings & Loan Ins. Corp. v. Gemini Mgmt., 921 F.2d 241, 244 (9th Cir. 1990) (same); Krisa v. Equitable Life Assur. Society, 109 F.Supp.2d 316, 319 (M.D. Pa. 2000) (noting that "'a court possesses considerable discretion in disposing of a motion to strike under Rule 12(f)'") (quotation omitted); Johnson v. Metropolitan Sewer Dist., 926 F.Supp. 874, 875 (E.D. Mo. 1996); ...


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