The Loan Source Inc. and The 1993 Steven D. Kravitz Family Trust v. Newity LLC and ACAP SME, LLC

Summary

The United States District Court for the District of Delaware denied Plaintiffs’ motion to strike Defendants’ sixteenth affirmative defense of prior material breach under Federal Rule of Civil Procedure 12(f). The court held that whether Plaintiffs breached the agreement’s exclusivity provision, and whether any breach relieved Defendants of performance obligations, presented factual and legal issues unsuitable for resolution at the pleading stage. The matter was ordered to proceed to a bench trial.

Holdings

1. The affirmative defense was not legally insufficient because Defendants alleged that Plaintiffs materially breached the agreement's exclusivity provision, potentially relieving ACAP of its contractual obligations.
2. Plaintiffs failed to show that the prior-material-breach defense was impertinent, immaterial, or prejudicial, so the court denied the motion to strike.

Questions Presented

1. Whether Defendants' sixteenth affirmative defense of prior material breach was legally insufficient, impertinent, or immaterial under Federal Rule of Civil Procedure 12(f).
2. Whether factual questions concerning Plaintiffs' alleged violation of the agreement's exclusivity provision required denial of the motion to strike.

Disposition

other