CHARLES P. KOCORAS, District Judge:
Before the Court is the Motion by Defendant Baker Taylor, Inc. ("Baker") to Dismiss the Amended Counterclaims of Third-Party Defendant VR Record Company, Inc., d/b/a VR Distribution ("VR"), or, in the alternative, for a More Definite Statement and to Strike VR's Affirmative Defenses. For the reasons set forth below, this Court grants Baker's Motion to Strike VR's Affirmative Defenses in part and grants Baker's Motion to Dismiss VR's Counterclaims in part.
BACKGROUND
In February 1999, Plaintiff Franklin Capital Corporation ("Franklin") entered into an agreement with VR to purchase from VR some of its account receivables. One of the accounts receivables Franklin was assigned was that of Baker. Baker is a book, music, and videotape distribution company. Baker had offered to purchase a selection of recordings by Judy Garland on compact disk from VR. VR delivered the disks to Franklin, and assigned the contract to Franklin to collect on the account receivables. In the meantime, Cakewalk Productions, an unrelated thirdparty, sent Baker a cease and desist letter stating that it and not VR owned the copyrights to the recordings, and that Baker was to refrain from further distribution. Baker suspended its distribution and revoked its acceptance of the CDs.
Franklin filed a two-count complaint against Baker in the Circuit Court of Cook County for breach of contract. Baker subsequently removed the action to federal district court on the basis of diversity. Baker then answered, asserted affirmative defenses, and filed counterclaims and third-party claims against Franklin and Third-party Defendant VR. VR answered Baker's allegations, provided affirmative defenses, and asserted counterclaims against Baker. Baker, in its motion, seeks to strike VR's affirmative defenses under Fed.R.Civ.Pro. 12(f) and dismiss VR' s counterclaims under Fed.R.Civ.Pro. 12(b)(6).
DISCUSSION
A. Motion to Strike Affirmative Defenses
Pursuant to Fed.R.Civ.Pro. 8(c), a party is required to set forth any affirmative defenses in a responsive pleading, though by today's liberal pleading standards, failure to do so does not necessarily rob the defendant of the opportunity to assert such a defense. See Bobbitt v. Victorian House Inc., 532 F. Supp. 734, 736 (N.D.Ill. 1982). An affirmative defense is generally an admission of the allegations of the complaint, coupled with some additional reason why the defendant should not be held liable. See Id. Rule 8(c) lists nineteen items considered to be "avoidances" or "defenses" which must be plead separately or "affirmatively". See Fed.R.Civ.Pro. 8(c). Given that it may be difficult to determine whether a particular matter should be plead affirmatively, especially whether it may fall under Rule 8(c)'s catch-all phrase, the pleader is usually given the benefit of the doubt when setting forth a purported affirmative defense. See Sanwa Business Credit Corp. v. Harris, No. 91 C 0204, 1991 WL 156116, at *1 (N.D.Ill. Aug. 6, 1991). Furthermore, Rule 8(c) provides, "When a party has mistakenly designated a defense as a counterclaim or a counterclaim as a defense, the court . . . shall treat the pleading as if there had been a proper designation."
A motion to strike an affirmative defense under Rule 12(f) should not be granted unless the defense is "patently defective". See Heller Financial, Inc. v. Midwhey Powder, Inc., 883 F.2d 1286, 1294 (7th Cir. 1989). Rule 12(f) reads:
Upon a 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.
Since affirmative defenses are pleadings, they are subject to all the pleading requirements of the Federal Rules. See Heller Financial, Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1294; Flasza v. TNT Holland Motor Express, Inc., 155 F.R.D. 612, 613 (N.D.Ill. 1994). In Bobbitt, Judge Shadur of this District set forth a three-part test for examining affirmative defenses subject to a motion to strike:
(1) Initially the court will determine whether the matter is appropriately pleaded as an affirmative defense. Only matters that deserve a clear "no" answer will be stricken to make the pleadings more precise;
(2) If a matter may remain as an affirmative defense the Court will determine whether the matter is appropriately pleaded under the requirements of Rules 8 and 9. Any defense inadequately pleaded will be dismissed without prejudice to enable defendants to correct that technical deficiency;
(3) Any matter permitted to stand as an affirmative defense will be tested under a standard identical to Rule 12(b)(6). If it is impossible for defendants to prove a set of facts in support of the affirmative defense that would defeat the complaint, the matter will be stricken as legally insufficient.
Bobbitt at 737;
see also Heller Financial, Inc. v. Midwhey Powder Co,. Inc., 883 F.2d 1286, 1295 (holding that where defendant's affirmative defenses omitted a short and plain statement of the facts and failed completely to allege the necessary elements of the claims, such defenses were "nothing but bare bones conclusory allegations" which should be stricken).
In this Motion to Strike, Baker alleges that VR's affirmative defenses 2-19 fail to meet even the liberal pleading requirements of the Federal Rules. VR asserts that courts generally disfavor motions to strike affirmative defenses, and that motions to strike will not be granted unless the defenses are insufficient as a matter of law or present no questions of fact. See Man Roland Inc. v. Quantum Color Corp., 57 F. Supp.2d 576, 578 (N.D.Ill. 1999). VR however does not set forth any details responsive to Baker's allegations. After reviewing VR's affirmative defenses and applicable case law, this Court finds the affirmative defenses numbered 2-19, except 16, even as amended, insufficient and should be stricken from VR's answer.
VR's Second Affirmative Defense states:
As a second affirmative defense, this answering defendant alleges that Plaintiff in counterclaim [Baker] has failed to join an indispensable party to wit Cakewalk and/or Sid Luft.
This, without more, is insufficient. VR fails to allege sufficient details to allow this Court to even inquire whether either party might be indispensable and as such, fails to allege a claim upon which relief can be granted. See Dunlop v. Beloit College, 411 F. Supp. 398, 401 (W.D.Wis. 1976) (finding on a motion to dismiss for failure to join an indispensable party, at a minimum defendant must produce evidentiary materials from which court could make findings of fact on which claim is based).
VR's 14th Affirmative Defense without more, is insufficient, and therefore also stricken. VR's 14th Affirmative Defense states:
As a fourteenth affirmative defense this answering defendant alleges that Neither [sic] Baker nor its presumed source of information, Cakewalk, have demonstrated that BCD did not have the rights, title and interest in the copyrights to the Recordings at the time that the Products were created, manufactured, and distributed. Moreover, Cakewalk has never obtained a ruling from any competent legal tribunal to the effect that BCD did not have the rights, title and interest in the copyrights to the Recordings at the time that the Products were created, manufactured, marketed, or distributed. In fact, Cakewalk knew or should have known of the existence of the Products and BCD's prior and valid rights, title and interest to the Recordings at the time that Cakewalk acquired any rights, title and interests to the Recordings in November, 1998. Finally Baker and Cakewalk know or should know that the Products have been marketed and distributed by VR in interstate commerce without any legal restraint. Accordingly, Baker is guilty of "unclean hands" in that Baker acted precipitously and without due reflection in refusing to proceed with the contract merely upon the assertion by Cakewalk that Cakewalk had rights and that the rights Cakewalk had were to the Recordings at issue. WHEREFORE, VR respectfully requests that this Court enter judgment in favor of VR on all counts and order that Baker take nothing.
VR's 15th Affirmative Defense is also stricken. It states:
As a fifteenth affirmative defense this answering defendant alleges that Neither [sic] Baker nor its presumed source of information, Cakewalk, have demonstrated that BCD did not have the rights, title and interest in the copyrights to the Recordings at the time that the Products were created, manufactured, marketed, and distributed. Moreover, Cakewalk has never obtained a ruling from any competent legal tribunal to the effect that BCD did not have the rights, title and interest in the copyrights to the Recordings at the time that the Products were created, manufactured, marketed and distributed. In fact, Cakewalk knew or should have know of the existence of the Products and of BCD's prior and valid rights, title and interest to the Recordings at the time that Cakewalk acquired any rights title and interests to the Recordings in November, 1998. Finally, Baker and Cakewalk know or should know that the Products have been marketed and distributed by VR in interstate commerce without any legal restraint. Accordingly, Baker has breached the covenant of good faith and fair dealing by terminating the contract without giving VR time to prove though [sic] legal process or otherwise that Cakewalk did not have the rights it asserted. WHEREFORE, VR respectfully requests that this court enter judgment in favor of VR on all counts and order that Baker take nothing.
Both "unclean hands" and "good faith and fair dealing" essentially translate into "bad faith" defenses. See Jones Apparel Group. Inc. v. Piccone, No. 94 Civ 0754, 1994 WL 260767, at *4 (S.D.N.Y. Jun. 8, 1994);Lockett v. Prudential Ins. Co. of America, 870 F. Supp. 735, 737 (W.D.Tex. 1994). The party asserting the "bad faith" defense must specifically allege bad faith. See Jones, at *4. In VR's 14th and 15th Affirmative Defenses, it is not specifically alleged with regard to Baker. The bad faith assertion might be read as directed at Cakewalk [party sending "cease-and-desist' letter to Baker which seems to have caused Baker not to pay VR/Franklin], but we cannot see how the bad faith of Cakewalk bars Baker's allegations against VR. As such, the 14th and 15th Affirmative Defenses are stricken.
VR's 16th Affirmative Defense stands, though it is more properly treated as a counterclaim. It states:
As a sixteenth affirmative defense this answering defendant alleges that Baker has breached its agreement with VR by failing to remit to VR or to VR's assign the funds due for the CDs received and not returned by Baker. WHEREFORE, VR respectfully requests that this Court enter judgment in favor of VR on all counts and order that Baker take nothing.
Given the principles this Court laid out above, failure to properly designate a counterclaim is not grounds alone for striking it from the pleadings. See Fed.R.Civ.Pro. 8(c). Baker does not otherwise object to the so-called 16th Affirmative Defense. As such, VR's 16th Affirmative Defense stands.
VR's 17th Affirmative Defense is stricken. It states:
As a seventeenth affirmative defense this answering defendant alleges that Baker has made several misrepresentations to third-party retailers that the Products were "counterfeit", "bootleg" or "infringing", thereby casting a false light upon VR and the Products. Baker's misrepresentations are false because the Products were created, manufactured, marketed, and distributed under valid rights, title and interest in copyrights to the Recordings, [sic] Accordingly, Baker's acts and omissions constitute an unjustified interference with the prospective business advantages of VR and breach the covenant of good faith and fair dealing. WHEREFORE, VR respectfully requests that this Court enter judgment in favor of VR on all counts and order that Baker take nothing.
Interpreting this affirmative defense first as a fraud claim, it must fail because it does not meet the pleading requirements of Fed.R.Civ.Pro. 9(b) (stating "in all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity"). The reference to "circumstances" in the rule requires "the plaintiff to state "the identity of the person who made the misrepresentation, the time, place and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff." Vicom, Inc., v. Harbridge Merchant Services. Inc., 20 F.3d 771, 777 (7th Cir. 1994) (citations omitted). Even if the misrepresentation was properly plead, the affirmative defense would nonetheless have to be stricken because it is not a claim upon which relief can be granted. VR cannot assert a claim against Baker for misrepresentations Baker made to thirdparties. See Broadcasters Media Service. Inc. v. Keys, No. 99 C 0212, 1999 WL 965448, at *3 (N.D.Ill. Sep. 30, 1999). As a result, the affirmative defense of fraud is stricken.
Further, this allegation fails to satisfy the requirements of pleading a count for tortious interference with prospective business interests. Generally, the law requires the identification of the business interest that was interfered with. See. e.g., 45 AM.JuR.2D Interference § 1;Fellhauer v. City of Geneva, 142 Ill.2d 495, 511, 568 N.E.2d 870, 877 (1991). Having failed to so assert, the claim should be stricken.
Finally, this allegation also fails to satisfy the Illinois pleading requirements for the breach of the covenant of good faith and fair dealing, which is an issue of bad faith and is recognized as a tort. See Lockett v. Prudential Ins. Co. of America, 870 F. Supp. 735, 740 (W.D.Tex. 1994). As such, it must be plead with more detail than VR sets forth. See Jones Apparel Group. Inc. v. Piccone, No. 94 Civ 0754, 1994 WL 260767, at *3 (S.D.N.Y. Jun. 8, 1994). Were this an assertion of a claim against Baker for breach of covenant of good faith and fair dealing, as we assume for the purposes of this motion, the affirmative defense should be stricken.
VR's 8th, 11th, and 18th Affirmative Defenses are also stricken insofar as they allege failure to mitigate damages. Although pleading requirements in mitigation defenses are lenient (See Gorwin v. Local 282. I.B.T., 838 F. Supp. 116, 123 (S.D.N.Y. 1993)), the Federal Rules require more than bare bones conclusory allegations. See Cohn v. Taco Bell Corp., No. 92 C 5852, 1995 WL 493453, at *2 (N. D.Ill. Aug. 16, 1995) (concluding that though not required to plead mitigation with specificity, the party pleading mitigation is obligated to supply enough facts to put opposite party on notice of the course the opposite party was legally obligated to take). VR does not provide any facts to place Baker on notice. For example, the 18th Affirmative Defense states:
As an eighteenth affirmative defense this answering defendant alleges that Baker has failed to mitigate damages.
WHEREFORE, VR respectfully requests that this Court enter judgment in favor of
VR on all counts and order that Baker take nothing.
Furthermore, even when faced with Baker's motion to strike, VR fails to provide any support or insight which might make such a vague defense sufficient. As such, this Court strikes VR's 8th, 11th, and 18th Affirmative Defenses.
VR's 19th Affirmative Defense is also stricken. The Affirmative Defense states:
As a nineteenth affirmative defense this answering defendant alleges that Baker breached the agreement it had with VR not to publicize Sid Luft's involvement except in a manner controlled by VR or BCD, by publicizing Sid Luft's involvement with the project in a manner that gave the impression to Cakewalk that rights Cakewalk claimed to have were being infringed. WHEREFORE, VR respectfully requests that this Court enter judgment in favor of VR on all counts and order that Baker take nothing.
Again, VR fails to relate the context which would make this claim an affirmative defense. See Linc Finance Corporation v. Onsuteaka, No. 95 C 4928, 1995 WL 708575, at *3 (N.D.Ill. Nov. 30, 1995) (finding insufficiently stated affirmative defense where the defendant had asserted a failure of 'meeting of the minds' but had not characterized the differences in the parties' states of mind and how the failure was material to the defense). It is not clear whether this agreement is a contract, which generates obligations for Baker, and as such fails to state a claim upon which relief can be granted. It also is not clear whether the agreement is even related to the contract at issue, and as such it is unclear whether, assuming the defense were asserted properly, that it could even stand as a proper defense. As such, the 19th Affirmative Defense is stricken.
The remaining affirmative defenses (numbers 3, 4, 5, 6, 7, 9, 10, 12, 13) fail simply because they do not meet even liberal notice pleading requirements and as such, are insufficient without more because they simply assert a right to relief without placing Baker on notice as to the context of the defense. See Heller Financial, Inc. v. Midwhey Powder Co. Inc., 883 F.2d 1286, 1295 (7th Cir. 1989). Bare bones conclusory allegations, without more, will be stricken.
B. Motion to Dismiss Counterclaims
Baker moves to strike VR's counterclaims pursuant to Rule 12(b)(6). The purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted is to test the sufficiency of the complaint and not to decide the merits of the case. In ruling on a motion to dismiss, the court must construe the complaint's allegations in the light most favorable to the plaintiff, and all well-pleaded facts and allegations in the plaintiff's complaint must be taken as true. See Bontkowski v. First National Bank of Cicero, 998 F.2d 459, 461 (7th Cir. 1993). The allegations of a complaint should not be dismissed for failure to state a claim "unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Sherwin Manor Nursing Center. Inc. v. McAuliffe, 37 F.3d 1216, 1219 (7th Cir. 1994). In order to withstand a motion to dismiss, a complaint must allege facts sufficiently setting forth the essential elements of the cause of action. See Lucien v. Preiner, 967 F.2d 1166, 1168 (7th Cir. 1992).
VR's amended answer asserts a breach of contract claim, a trade libel claim, and a "tortuous [sic] interference with business" claim. VR's reply challenges Baker's motion on the ground that Baker unreasonably relies on Illinois law because choice-of-law questions have not been decided. As a response to Baker's motion, this is inapposite and insufficient, and this Court therefore grants Baker's motion to dismiss with regard to the trade libel counterclaim and the "tortuous [sic] interference with business" claim. For reasons explained below, we deny Baker's motion to dismiss with regard to the breach of contract counterclaim.
We reemphasize that in ruling on a motion to dismiss, all well-pleaded allegations in the complaint are taken as true and all reasonable inferences therefrom are drawn in the plaintiff's favor. See Nabisco, Inc. v. American United Logistics, Inc., No. 99 C 0763, 2000 WL 748131, at *6 (N.D.Ill. Jun. 1, 2000). In a diversity action, the adequacy of the pleadings is assessed in accordance with the federal, not state, rules of civil procedure. See Dawn Equipment Co. v. Micro-Trak Sys., Inc., 186 F.3d 981, 986 (7th Cir. 1999) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). A plaintiff may plead conclusions, so long as they are sufficient to understand the gravamen of the complaint. See Doherty v. City of Chicago, 75 F.3d 318, 326 (7th Cir. 1996); Jackson v. Marion County, 66 F.3d 151, 153-54 (7th Cir. 1995). A breach of contract claim must allege: (1) the existence of a valid and enforceable contract; (2) performance by plaintiff under the contract; (3) breach of the contract by defendant; and (4) injury to plaintiff as a result of the breach. See Petri v. Gatlin, 997 F. Supp. 956, 964 (N.D.Ill. 1997).
VR has adequately set forth the components of a breach of contract claim for pleading requirements. VR alleges the existence of a contract between VR and Baker. VR also alleges that it performed its part of the contract, producing and delivering the CD's at issue in this lawsuit. VR further alleges that Baker failed to pay for the CD's as obligated, and that as a result, VR suffered injury. By federal pleading standards, this is sufficient to defeat a motion to dismiss.
VR's "trade libel" claim is not sufficient. The claim is word-for-word identical with VR's fraudulent misrepresentation claim propounded in its initial Answer. Even presuming the misrepresentation claim is properly plead, the counterclaim would have to be stricken because it is not a claim upon which relief can be granted. As with the affirmative defense of fraudulent misrepresentation, VR does not have a claim against Baker for misrepresentations Baker made to thirdparties. See Broadcasters Media Service. Inc. v. Keys, No. 99 C 0212, 1999 WL 965448, at *3 (N.D.Ill. Sep. 30, 1999).
VR would like to plead around the deficient fraud claim and the particularity requirements of the Federal Rules by simply renaming the claim "trade libel." This too is unavailing. VR claims Baker asserted to third-parties, including one identified party, that VR's products were "counterfeit, bootleg, or infringing." Under Illinois law, libel claimants can proceed under libel per se or libel per quod doctrines. See TimeMed Labeling Systems, Inc., v. MedPlus. Inc., NO. 95 C 5148, 1996 WL 467262, at *1 (N.D.Ill. Aug. 13, 1996). Since VR has not plead injury with specificity, we assume that VR is proceeding under libel per se.See Poth v. Paschen Contractors. Inc., No. 85 C 8499, 1986 WL 15081, at 3 (N.D.Ill. Dec. 18, 1986). Establishing libel per se requires a serious charge of incapacity or misconduct so obviously and actually hurtful that proof of their injurious nature is dispensed with. See Harris Trust Savings Bank v. Phillips, 154 Ill. App.3d 574, 578, 506 N.E.2d 1370, 1373 (1st Dist. 1987). The four types of libel per se according to Illinois law are: 1)those imputing the commission of a crime; 2)those imputing infection with a loathsome disease; 3)those imputing unfitness or want of integrity in performing the duties of an office or employment; and 4)those imputing lack of ability in a person's business, trade, or profession. See Van Home v. Muller, 185 Ill.2d 299, 705 N.E.2d 898, 902 (1998). Since Baker's alleged defamatory statements do not fall into any of the categories, VR's counterclaim is stricken.
VR also alleges "tortuous [sic] interference with business opportunities" by Baker. For the purposes of this motion, we will assume VR is referring to tortious interference in the economic relationship between VR and third-parties. An essential component of the claim of tortious interference is the existence of a relationship, whether contractual or otherwise economic, with which the alleged wrongdoer interfered. See 45 AM. JUR. 2D Interference § 1; Broadcasters Media Service. Inc. v. Keys, No. 99 C 0212, 1999 WL 965448, at *4 (N.D.Ill. Sep. 30, 1999). VR does not set forth allegations of any relationship which Baker allegedly interfered with. As such, VR fails to allege an essential component of the interference claim, and its counterclaim is stricken.
CONCLUSION
For the reasons stated above, this Court grants in part and denies in part Baker's Motion to Strike VR's Affirmative Defenses. Likewise, this Court grants in part and denies in part Baker's Motion to Dismiss VR's counterclaims.