980 F.3d 709
9th Cir.2020Background
- ES held a NASA subcontract (ACES) and subcontracted work to KST and DME; NASA later imposed a $5.4M retainage on ES for alleged small-business subcontracting violations.
- ES withheld payments to KST equal to NASA’s retainage, invoking an indemnification provision; KST sued ES for nonpayment (over $5M).
- KST filed successive complaints; after motions, the district court narrowed the case to KST’s breach of contract claim in a Second Amended Complaint.
- ES had pleaded affirmative defenses in its Answer to the First Amended Complaint but did not file a new answer to the Second Amended Complaint.
- The district court granted summary judgment sua sponte to KST on breach of contract and held ES waived its affirmative defenses by not filing a new answer; the Ninth Circuit reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court could grant summary judgment sua sponte without giving ES an opportunity to assert affirmative defenses | KST treated sua sponte SJ as proper because it prevailed on the merits | ES argued it was deprived of notice/opportunity to litigate affirmative defenses | Court: Sua sponte SJ requires notice and a reasonable opportunity; district court erred by not giving ES that chance |
| Whether ES waived affirmative defenses by not filing a new answer to the Second Amended Complaint | KST: filing the Second Amended Complaint rendered earlier answer moot; ES had to reassert defenses or waive them | ES: its earlier answer covered the same breach claim; no new answer required where theory/scope unchanged | Court: No waiver; when amended complaint does not change theory or scope, prior answer and defenses suffice |
| Whether Rule 15(a)(3) automatically requires a new answer to an amended complaint | KST: Rule 15(a)(3) and the court’s invitation required ES to file a new answer | ES: Rule 15(a)(3) does not render prior responses moot; the district court merely invited (not ordered) a new answer | Court: Rule 15(a)(3) does not automatically moot prior responsive pleadings; a new answer is not required where allegations remain the same |
| Standard of review for ruling on waiver of affirmative defenses | KST: district court’s decision reviewed for abuse of discretion | ES: de novo review applies to legal interpretation of the Rules | Court: Applied de novo review because the question turned on the interpretation of the Federal Rules of Civil Procedure |
Key Cases Cited
- John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (affirmative defenses generally waived if not asserted)
- Kassbaum v. Steppenwolf Prod., Inc., 236 F.3d 487 (courts must take care before granting sua sponte summary judgment)
- Sohappy v. Hodel, 911 F.2d 1312 (sua sponte judgment standards and cautionary principles)
- Harbeson v. Parke Davis, Inc., 746 F.2d 517 (interpretation of Rule 8(c) is a legal question reviewed de novo)
- Zivkovic v. Southern Cal. Edison Co., 302 F.3d 1080 (attacking plaintiff’s case-in-chief is distinct from asserting affirmative defenses)
- Stanley Works v. Snydergeneral Corp., 781 F. Supp. 659 (defendant need not re-answer when amended complaint does not change theory or scope)
- Simmons v. Navajo Cnty., 609 F.3d 1011 (district courts have discretion to allow late pleading of affirmative defenses)
- Oja v. U.S. Army Corps of Eng'rs, 440 F.3d 1122 (interpretation of Federal Rules reviewed de novo)
- DP Aviation v. Smiths Indus. Aerospace & Def. Sys., Ltd., 268 F.3d 829 (legal interpretation of procedural rules reviewed de novo)