Determined1

Leave to Amend my Affirmative Defenses

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Hi,

This is a case update and request for assistance. I posted in July about this lawsuit, where my company and I were sued for Breach of Contract over an alleged Business Line of Credit and alleged personal guarantee. I filed my Answer and Affirmative Defenses, and the Plaintiff moved to Strike all of them. Here is the original thread, and my Affirmative Defenses:

http://www.creditinfocenter.com/forums/there-lawyer-house/315383-plaintiffs-motion-strike-my-affirmative-defenses-how-respond.html

We had our hearing on the Plaintiff's Motion to Strike my Affirmative Defenses. The anti-pro se nature of courtrooms today is disturbing to say the least. The Judge started it off by saying to the Plaintiff's lawyer with a smirk "Is this about Affirmative Defenses? What do we have, the usual?" The Judge then gave the Plaintiff's attorney 10 minutes to state why each Affirmative Defense should be stricken, and then turned to me and said, "Defendant, you have 2 minutes, as this hearing was only scheduled for 15 minutes." I said "Your Honor, I wont be given equal time?" The Judge said, "You have 2 minutes - go."

Recognizing I did not have enough time to review and defend each of my Affirmative Defenses, or present my Opposition Motion which the Judge quite obviously ignored, all I could do was speak in general terms about Florida rules of procedure and Florida's requirement to state in "short and plain terms its Answer" - and that I had far surpassed this requirement by providing detail to a boiler plate lawsuit that in three years the Plaintiff had failed to provide a single bank statement or any proof of any debt, or proof of any default. In addition, I had provided corroboration through two class actions of the Plaintiff's misconduct as outlined in my Affirmative Defenses, with copies of these lawsuits attached to my Answer. The Judge cut me off, said bring up the next case, struck with prejudice 6 of my affirmative defenses, but gave me leave to amend the other 8. So, that being said, despite what I felt was unequal treatment, was this a victory in disguise? For argument's sake, let's say I amend - they move to strike again, and I'm left with 4 of 8 Affirmative Defenses - how many do I have to prove to win?

I could use some help with strategy going forward. If I detail every last aspect of the dispute in my Affirmative Defenses, I partially prove what they have yet failed to prove, the full nature of the account and portions of the debt. My concern is this Judge has a history of giving bank Judgments on the total debt claimed, and then reducing it using offsets for errant transactions. In my case, I never denied the agreement per se (a signed contract is attached to the complaint), but I stated honestly facts that I can fully back up - that the Plaintiff breached the Agreement, not I. These also were not errant transactions, but rather falsified transactions made by the Plaintiff to create the false appearance of default. Unfortunately, one of the Affirmative Defenses struck with Prejudice was Breach of Contract by the Plaintiff. I stated my objection as the Judge was moving on to the next case, and the Judge quickly said, "If you can prove it, I'll let you bring it back up with a Motion for Reconsideration." However, i think we all know difficult than will be.

So here's what I'm left with, and can now Amend:

Breach of Florida’s Covenant of Good Faith and Fair Dealing

Unconscionability

Unconscionable Contract

Impossibility of Performance

Complaint fails to state a claim upon which relief can be granted.

Equitable Estoppel

Estoppel by Laches

Unclean Hands

Please note that she also said she wants to hear more about my claims about attorney misconduct, and to detail that under Unclean Hands.

I assume I could also add Affirmative Defenses that I did not make use of before. Two positive things came out of the hearing. The Plaintiff's attorney said they don't plan any discovery. I think they plan to obtain new Affidavits stating the debt owed and will move again for Summary Judgment (they lost at their first attempt here) or trial. When the Plaintiff's attorney wrote up the Order, I felt he made an error, so I asked that he wait until the next Hearing was over so the Judge could verify it. During this new exchange, the Judge looked at us both and said, "have you tried to settle this?" I said I have tried but they wont enter into a discussion (I did try - both before it was a lawsuit and after). The Judge said to the Plaintiff's attorney, just know I will require you to go through Arbitration before any trial. Since the contract has no arbitration clause, I assume she means either a courthouse mediation, or outside arbitration which I most certainly wont pay for, but will be glad to attend.

So the battle ensues - and any thoughts are most welcome and appreciated!

Edited by Determined2
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Unfortunately, one of the Affirmative Defenses struck with Prejudice was Breach of Contract by the Plaintiff.

***

So here's what I'm left with, and can now Amend:

Breach of Florida’s Covenant of Good Faith and Fair Dealing

Unconscionability

Unconscionable Contract

Impossibility of Performance

Complaint fails to state a claim upon which relief can be granted.

Equitable Estoppel

Estoppel by Laches

Unclean Hands

To be honest, you're lucky you didn't lose more of them. The Plaintiff's Breach of contract calls for a legal remedy. Equibable defenses generally do not apply. Laches and unclean hands are equitable defenses.

Remember, "breach of contract" is a cause of action, not an affirmative defense. If you feel you were relieved of performance because of the the other side's breach, the proper defense would have been "excuse of performance." If you have grounds for your own breach of contract claim, you probably should have brought it as a counterclaim.

As far as the balance of your defenses, if you plan to amend, then you'll need to formulate a short, plain statement of facts (just as in a Complaint) as to why each defense applies, for example, your laches defenses (which probably should have been stricken unless the SOL has passed):

Laches: circumstances are such that so much time has passed and/or so many other events have occurred, that defendant is no longer able to marshall evidence in his defense. Then state, briefly, what those circumstances or events were.

Finally, you're going to have to come up with something really good to support your unconscionability defense. By all accounts, you entered into the contract of your own free will. Parties are free to enter into contracts, even bad ones.

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Hi Nascar,

Thank you for your valuable advice. I did plead short and plain statements, however, they still objected and obviously the Judge did too, otherwise she would not have stricken them (without prejudice) and given me leave to amend them. Here's an example of an original Affirmative Defense I made, and speaks to the issue of Unconsionability:

Unconscionability. Plaintiff’s actions preceding the filing of this lawsuit, and after the case has commenced have been Unconscionable. By improperly combining Defendant(s)individual transactions to create debits larger than originally intended to trigger returned transactions and improper overdraft fees; submitting transactions for processing in a non sequential order to trigger improper overdraft fees; charged Defendant(s) non-contractual and unauthorized fees; reversed properly made transactions by Defendant in order to create false overdrafts in Defendant(s)’ accounts; and manufactured a series of improper transactions to create the false appearance of default by Defendant(s), Plaintiff has acted Unconscionably.

I then attached a class action lawsuit where it has been proven the same Plaintiff did the same thing, however, in that instance Unconscionability was used as a cause of action. I thought this should have been enough of a statement, but the Judge did not.

If I am required to amend my defense in this instance, do I need to cite their actions chapter and verse? For example, should I state: On such and such date, Plaintiff combined a transaction for $xx.xx and another for $xxx.xx into a single transaction. This combined transaction defeated the Plaintiff's ability to have his checking account make a required interest payment on the account in dispute, where as individual transactions the interest payment would have processed normally. Further, due to Plaintiff's improper combining of these transactions, $xxx.xx in overdraft fees were charged by the Plaintiff. In addition, one of the transactions, for $xxx.xx was charged by the Plaintiff as an annual fee, however, the contract the Plaintiff relies upon in its complaint shows no such annual fee. Therefore, this charge against Defendant's account was not only improper and unauthorized, but may be fraudulent in nature and was used to create the false appearance of a breach by the Defendant. On such and such a date, Plaintiff reversed properly made interest payments by Defendant, to create the appearance of a default or breach, when in fact no actual default or breach occurred. On such and such a date, local Bank Officer Jane Doe, V.P. declared these charges to be bank errors, and reversed multiple associated overdrafts. Despite this, on such and such a date, Plaintiff raided Defendant's personal checking account for $xxx.xx without cause. Because this action was unknown by the Defendant, $xxx.xx in overdraft fee resulted. Etc...etc...

So do I go into that much detail? In doing so, I verify a portion of their complaint. However, I can point out and 100% prove they created this dispute, and when I tried to resolve it by making the same interest payment twice, they reversed my interest payments. In fact, the bank officer, a VP who signed the contract in dispute, re-made these payments for me as manual transactions. I can provide bank statements and emails where I raised hell over this matter - and a statement by the bank officer that they were told by their corporate office via email to "close all commercial lines of credit by any means necessary." It's also important to note this happened the month before new consumer friendly banking regulations were going into effect.

I have a reasonable defense on laches, too. The Plaintiff delayed litigation for 15 months where no prosecution took place. During this time, I dissolved my company, which has no further assets. The Plaintiff sat on their rights. In addition, my very last account receivable is no longer collectible, as the Statute of Limitations on the matter has run out. In fact, one of the local bank officers had referred me to her attorney just before they closed my accounts. The attorney required a retainer to pursue collection. If the bank did not close my accounts and did not raid my personal checking account, I would have had the extra funds for the attorney to pursue that account's collection. - Again, not sure how much detail I should go into here, but I can back up the claim.

Re Excuse of Performance, I've been given Leave to Amend so I may add it. However, I'm already using Impossibility of Performance, is this the same defense?

Any thoughts on walking a fine line here, how much info to provide (ie. should I attach bank statements and emails) and how to best present this? Thanks!

Edited by Determined2
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Re Excuse of Performance, I've been given Leave to Amend so I may add it. However, I'm already using Impossibility of Performance, is this the same defense?

Excuse of performance would be when the other party commits a material breach or an anticipatory breach and it would result in inequity if you were forced to "hold up your end of the bargain" when it is clear the other side is not going to.

Impossibility of Performance would be you contracting to paint a house, but before you can, hurricane blows house into the Gulf of Mexico. You can't complete the contract because the house no longer exists.

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Thanks Nascar. Can I ask your thoughts on how far to go in my Affirmative Defense?

Did I go far enough and the Judge just gave me a hard time, or do I need to cite the specific issues chapter and verse? Essentially, how much info to provide here - ie. should I attach bank statements and emails??

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Essentially, how much info to provide here - ie. should I attach bank statements and emails??

No, you don't have to do that.

Review each of your affirmative defenses and confirm that they are/are not applicable, and how, to breach of contract case.

Then start the mental checklist. Plaintiff is claiming he is entitled to relief because [enter here].

Then look at your first affirmative defense. Does it apply to contracts? What do you need to establish in order to prove it? What does the caselaw say?

For example, unconscionability. Orkin Exterminating Co., Inc. v. Petsch, 872 So. 2d 259 (Fla. 2nd DCA 2004) explains what a court looks for in determining whether this defense applies.

Cox v. CSX Intermodal, Inc., 732 So. 2d 1092 (Fla. 1st DCA 1999) explains convenant of good faith and fair dealing.

Then, formulate a one or two sentence statement. "Contract was unconscionalbe because . . . ." Plaintiff breached implied duty of good faith and fair dealing by . . . "

And so on, for the rest of them. Your reasons, if proven, must constitute a bar to (whole or in part) to Plaintiff's recovery.

Finally, if your judge is biased and doesn't care what you say, the most finely crafted pleadings in the world are not going to help you win the day. If he's already made up his mind, just do the best you can with an eye toward appeal, if practical.

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In contract law an unconscionable contract is one that is unjust or extremely one-sided in favor of the person who has the superior bargaining power. An unconscionable contract is one that no person who is mentally competent would enter into and that no fair and honest person would accept. Courts find that unconscionable contracts usually result from the exploitation of consumers who are often poorly educated, impoverished, and unable to find the best price available in the competitive marketplace.

Contractual provisions that indicate gross one-sidedness in favor of the seller include provisions that limit damages against the seller, limit the rights of the purchaser to seek court relief against the seller, or disclaim a Warranty. State and federal Consumer Protection and Consumer Credit laws were enacted to prevent many of these unconscionable contract provisions from being included in sales contracts.

Unconscionability is determined by examining the circumstances of the parties when the contract was made; these circumstances include, for example, the bargaining power, age, and mental capacity of the parties. The doctrine is applied only where it would be an affront to the integrity of the judicial system to enforce such contracts. (the free dictionary)

I haven't seen any of the documents that govern this account, but I would guess that there is some fine print in there somewhere that allows them to do this stuff. A favorite trick of banks is to process the biggest checks first to eat up the available balance, then pay the others out of "uncollected funds" and whack you an overdraft fee for each one. Is it legal? Probably. It is unfair? Probably.

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Hi Bruno,

Thanks for the feedback, its appreciated. The transactions they made and actions taken are unconscionable (not just the contract), and just as this was used against this bank as a cause of action in a related class action for many of the account dirty tricks I described. In addition, they took their illicit game one step higher, and began COMBINING unrelated transactions to make them greater than they would normally be as individual transactions. By doing this, they created a scenario where they stopped or "bounced" interest payments to the loan that normally would have been processed and paid on time. So my beef here is not just that they hit me with over $500 in overdraft fees I did not owe, but they caused the loan to go into arrears, when I had enough funds in the account for the automatic deduction of interest on the loan as agreed.

Further, they charged fees to the account that were not in the contract, most notably a large fee they declared an "annual fee" that is not called for in the contract, and was not charged on the anniversary of the account, or in any prior year. Then, the local bank officer (who signed the contract on behalf of the bank) agreed these were bank errors, resubmitted my interest payment and refunded back the improper fees. Then, three months later, the corporate office of this bank reversed 3 months of interest payments, and said tough luck buddy, you're now in default - triggering new overdrafts fees, penalties, and a lawsuit. For these reasons I plead the Affirmative Defense of Unconscionability.

In addition, I plead Unconscionable Contract, and stated:

The partial Agreement relied upon by the Plaintiff is unconscionable and therefore unenforceable. Per Plaintiff’s Exhibit “A”, this document states: “Guarantor waives notice of acceptance of this Guaranty, protest and notice of dishonor or default.” Plaintiff is putting forth a contract and argument that its customers waive their rights to accept key contract provisions, any protest or be apprised of any notice of default. This purported Agreement violates basic legal principles of being provided notice of contract terms or changes to contract terms, notice of an alleged default, the ability to protest or cure, and therefore should be deemed unconscionable and unenforceable.

The partial Agreement relied upon by Plaintiff is also overwhelmingly self-serving and therefore unenforceable. Per Plaintiff’s Exhibit “A”, this document states: “Guarantor agrees that the time and place of payment of any Obligations may be changed or extended…” Plaintiff relies upon a purported contract that appears to grant itself the right to change the time and place of payment at will. Further, this clause begins, “Guarantor agrees…” which may also give the Guarantor the right to change time and place of payment, including extensions thereof. Taken together with the aforementioned clause ““Guarantor waives notice of acceptance of this Guaranty, protest and notice of dishonor or default,” the Plaintiff appears to be granting itself the right to change the time and place of payment, and then not be required to notify Defendant(s). This purported Agreement relies upon terms that are overwhelmingly self-serving, and should be deemed unenforceable.

Further, the Application attached as Exhibit A states that if approved, it will be returned with a "check access rider and addendum." Defendant never received these elements of the alleged contract. A contract is created by an offer and acceptance supported by consideration. It must evidence a meeting of the minds as to all essential terms. Not some of the terms, but all of the terms. All essential terms were not agreed to, and despite requests by the Defendant for the Plaintiff to present the check access rider and addendum to this court, in the three years of this litigation, the Plaintiff has failed to produce it. Further, Florida Rules of Civil Procedure 1.130 Attaching Copy of Cause of Action and Exhibits, states in pertinent part:

(a) Instruments Attached. All bonds, notes, bills of exchange, contracts, accounts, or documents upon which action may be brought or defense made, or a copy thereof or a copy of the portions thereof material to the pleadings, shall be incorporated in or attached to the pleading.

The Plaintiff is relying upon terms in its complaint not in evidence before this court, and thus cannot be enforced. In addition, without these additional terms relied upon by the Plaintiff, no offer and acceptance of the purported contract exists, and therefore must be deemed unenforceable.

One other element I should add here. The Bank Officer who signed for the Bank, and who I had a 5 year banking relationship with, told me in the event of any default of the line of credit, any balance would be converted to a 5 year term loan at a reasonable interest rate. We had a detailed discussion about this, and she said it was standard bank policy. I think she'll admit to this in a deposition. Should I state this in my defense?

I know my presentation to date is not perfect, and that's why I'm reaching out for help.

I presented what I thought was brief but sufficient detail in my Affirmative Defenses, and then some, but the Judge did not. So I'm still trying to figure out how to best tell this story without giving a pro-bank Judge and disreputable Plaintiff enough ammo to hang me.

Edited by Determined2
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As the Yankee's Phil Rizzutto used to say, Holy Cow! Something has been bugging me about the way I was "dispatched" so quickly at the last hearing, and I just found something huge in my case. To anyone reading this in the next day or so, please offer your thoughts here or by PM.

6 months ago the last Judge recused herself because she is married to a partner of the law firm representing the bank in my case. This Judge never ruled on any matter, or held any hearing, as it was transferred to her when they changed the Divisions certain Judge's rule on in my county. Obviously the relationship would have presented a conflict of interest, and before I ever addressed the matter, she recused herself and transferred the case.

Now I go before the new Judge, and when trying to bring up the circumstances of this case, I tried to address who the parties were to the court. I don't live in a huge city, nor a small town, but the bank branch in question, and the bank's officer and signor to the contract, is located several hundred yards from the courthouse. When I brought up the person's name, and the branch in question - the Judge quickly cut me off and said "that's enough, next case." This Judge was already giving me very little time, but her reaction here was unusual, and its bugged me since, so tonight I looked up some public records. Sure enough, my Judge and her husband - also a public official in our county - have a mortgage and home equity line of credit with the bank suing me. The line of credit is subject to a class action lawsuit that I have used to corroborate my Affirmative Defenses - and have mentioned specifically by case name and number and stated relevant details. Without a doubt, the Judge banks at the same branch where this dispute originated, and must know and have a relationship with the same bank officers that she will be required to rule on their testimony.

I think I have grounds to motion for her recusal for a conflict of interest, and plan to do so. If approved, I could ask for the prior hearing to be re-heard. However, I am supposed to file my Amended Answer and new Affirmative Defenses this week. Should I just go ahead and re-file my Amended Answer and Affirmative Defenses and take my shot with a new Judge going forward (as I now know some of my Affirmative Defenses were not properly stated).

The Judge's relationship with my bank - and I believe with my bankers is troubling to say the least. I have to handle this delicately...but firmly. I appreciate the feedback of and wisdom of the members here.

Edited by Determined2
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