## Facts

- A law firm and its attorneys, acting for Discover Bank, filed and prosecuted a California state-court collection action against Carlos H. Perez.
- Perez alleged the defendants’ conduct in that collection litigation misrepresented the character and legal status of the debt and violated the FDCPA and California’s Rosenthal Act.
- The state-court action ended in a settlement between Perez and Discover Bank and a dismissal with prejudice.
- The settlement agreement released Discover Bank but expressly excluded the defendant law firm and attorneys from the release.
- Perez then sued the law firm and attorneys in federal court under the FDCPA and Rosenthal Act.
- Defendants answered with fifteen largely conclusory affirmative defenses.
- Perez moved to strike the affirmative defenses under Rule 12(f).
- Defendants moved for summary judgment, asserting res judicata based on the state-court dismissal with prejudice.

## Issues

1. Whether the federal FDCPA and Rosenthal Act claims against the defendant law firm and attorneys were barred by res judicata based on the prior state-court dismissal with prejudice after settlement.
2. Whether Twombly/Iqbal plausibility pleading applies to affirmative defenses under Rule 8(b) and Rule 8(c).
3. Whether FDCPA defendants are limited to the defenses enumerated in 15 U.S.C. § 1692k(c)–(e).
4. Whether certain pleaded “affirmative defenses” were improper because they were denials, redundant, or immaterial.

## Decision

- Defendants’ motion for summary judgment was denied; res judicata did not bar Perez’s claims against the law firm and attorneys.
- Plaintiff’s motion to strike was granted in substantial part; many affirmative defenses were stricken under Rule 12(f).
- The court held Twombly/Iqbal plausibility applies to affirmative defenses and requires more than labels and legal conclusions.
- The court rejected the argument that FDCPA defenses are limited to those listed in § 1692k(c)–(e).
- Leave to amend was generally granted so defendants could replead defenses with sufficient factual support and proper characterization.

## Legal Principles

- Claim preclusion based on a settlement and dismissal with prejudice does not extend to non-released parties where the settlement agreement expressly excludes them from the release.
- Affirmative defenses pleaded under Rule 8(b) and Rule 8(c) must satisfy Twombly/Iqbal plausibility by alleging enough facts to provide fair notice and a facially plausible basis.
- Rule 12(f) permits striking defenses that are inadequately pleaded, not true affirmative defenses, redundant, or immaterial, especially where boilerplate pleading would obscure the issues.
- The FDCPA’s defenses in 15 U.S.C. § 1692k(c)–(e) are not exclusive; other defenses may be asserted if legally available and adequately pleaded.

## Conclusion

The court allowed Perez’s FDCPA and Rosenthal Act claims to proceed despite the prior state-court settlement and dismissal, and it required defendants’ affirmative defenses to meet plausibility pleading standards, striking many defenses with leave to amend.


Perez v. Gordon & Wong Law Grp., P.C., No. 11-CV-03323-LHK, 2012 WL 1029425 (N.D. Cal. Mar. 26, 2012)