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Kras v. Conifer Insurance Co.

United States District Court, N.D. Indiana, Hammond Division

November 30, 2016

NATHAN KRAS, Plaintiff/Judgment Creditor,
v.
CONIFER INSURANCE COMPANY, Garnishee-Defendant, CONIFER INSURANCE COMPANY, Counter Claimant,
v.
NATHAN KRAS, Counter Defendant.

          OPINION AND ORDER

          JOHN E. MARTIN, UNITED STATES MAGISTRATE JUDGE

         This matter is before the Court on Plaintiff's Motion to Strike Affirmative Defenses [DE 21], filed by Plaintiff Nathan Kras on July 27, 2016. Garnishee-Defendant Conifer Insurance Company has responded, and Kras has replied.

         I. Background

         In September 2013, Nathan Kras was shot in the leg and abdomen outside a Hammond, Indiana nightclub. Two years later, in September 2015, Kras sued the nightclub and its owners in state court, alleging negligence. The nightclub owners had insurance with Conifer Insurance Company, but Conifer denied the nightclub owners' request for coverage for the attack. In Conifer's view, the policy provided coverage for the nightclub property only, not for the adjoining gravel parking lot where Conifer said the attack occurred.

         The state court litigation proceeded without Conifer's involvement. The insureds fairly quickly agreed to a consent judgment by which they admitted negligence and admitted to all 28 admissions requests. The state court entered judgment against the insureds for $2, 955, 056-the amount of damages identified in the consent judgment and in the admissions requests.

         Having received judgment in his favor, in April 2016 Kras filed a motion for a proceeding supplemental. Kras sought to garnish $2, 955, 056 from Conifer in satisfaction of the state court judgment against the insureds. Conifer removed the case to federal court.

         Conifer has asserted several affirmative defenses, and Kras now asks the Court to strike Affirmative Defenses #5, #7, #8, #11, and #12.

         II. Analysis

         The Court may strike from a pleading “an insufficient defense.” Fed.R.Civ.P. 12(f). Motions to strike are disfavored, because they “potentially serve only to delay, ” but when striking portions of a pleading “remove[s] unnecessary clutter from the case, ” the motion may “serve to expedite, not delay.” Heller v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir. 1989).

         Conifer argues that Kras's motion to strike is premature, because Conifer has not yet had a chance to conduct discovery. But striking an affirmative defense before the parties conduct discovery is not premature if the affirmative defense is clearly insufficient. See, e.g., Spell v. McDaniel, 591 F.Supp. 1090, 1113 (E.D. N.C. 1984) (granting motion to strike where, “even accepting as true the facts alleged by defendants as the basis for their immunity defenses, [the affirmative defenses] are clearly insufficient as a matter of law”); Forker v. Wm. Wrigley Jr. Co., No. 92-858, 1992 U.S. Dist. LEXIS 11978, *14 (N.D. Ill. Aug. 3, 1992) (striking some affirmative defenses and staying a ruling on the remaining affirmative defenses pending “complet[ion of] sufficient discovery”). So the Court will not deny wholesale Kras's motion to strike; rather, the Court will assess sufficiency of the challenged affirmative defenses individually. And if the sufficiency of a particular defense depends on a disputed question of fact or law, the Court will deny the motion to strike with respect to that defense. See Index Fund v. Hagopian, 107 F.R.D. 95, 100 (S.D.N.Y. 1985) (“If the sufficiency of [a] defense depends upon disputed questions of fact or law, then the motion to strike will be denied.”).

         A. Affirmative Defense #5

         Conifer's Affirmative Defense #5 asserts that Kras's claims may be limited because Kras may have “other insurance” that covers Kras's loss.

         Kras says that, under Indiana's “collateral source rule, ” compensation for a loss that a plaintiff receives from a collateral source cannot be an affirmative defense. And Kras is correct that Indiana's collateral source rule generally holds that a defendant cannot reduce a plaintiff's damages by pointing to compensation the plaintiff received from a collateral source such as insurance. Aldridge v. Abram & Hawkins Excavating Co., 474 N.E.2d 107, 108 (Ind.Ct.App. 1985) (“Evidence of benefits from a collateral source tends to prejudice the jury and influence its verdict not only as to damages but also as to liability.”); accord Stanley v. Walker, 906 N.E.2d 852 (Ind. 2009); see also Indiana Code § 34-44-1-2.

         Conifer agrees that it cannot introduce evidence of payments received by Kras from sources made exempt by the collateral source rule. But Conifer says that it should be allowed to introduce evidence of any other insurance or collateral source payments that are not covered by collateral source rule. And Conifer is correct that the collateral source rule bars using evidence of certain payments to reduce damages awards while leaving the door open to allowing evidence of other payments. But one of the types of payments that is specifically barred is payments that result “from the victim's own foresight.” Stanley, 906 N.E.2d at 855 (“The purpose of the collateral source statute is to determine the actual amount of the prevailing party's pecuniary loss and to preclude that party from recovering more than once . . . . [while] retain[ing] the common law principle that collateral source payments should not reduce a damage award if they resulted from the victim's own foresight”) (emphasis added). The classic example of a payment that results from the victim's own foresight is an insurance payment, and here “insurance” is precisely the payment that Conifer's Affirmative Defense #5 asserts may limit Kras's recovery in this case. See ...


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