Opinion ID: 2499776
Heading Depth: 1
Heading Rank: 9

Heading: Schettler's affirmative defenses

Text: At the outset, we note that Schettler asserted numerous affirmative defenses below in response to RalRon's complaint. On appeal, however, Schettler limits his argument to the affirmative defense based on breach of contract, claiming that it is allowed under FIRREA. The disputed affirmative defense states as follows: To the extent that any contract between these parties is supported by adequate consideration, Plaintiffs have failed to fulfill and perform their obligations and duties to Defendant under that contract and is therefore barred from enforcing the same against the Defendants. On appeal, Schettler asserts that this affirmative defense is based on allegations that Silver State wrongfully defaulted Schettler. Similar assertions are made in Schettler's counterclaims. True affirmative defenses, under NRCP 8(c), include those encompassing `new facts and arguments that, if true, will defeat the plaintiffs ... claim, even if all allegations in the complaint are true.' [5] Clark Cty. Sch. Dist. v. Richardson Constr., 123 Nev. 382, 392-93, 168 P.3d 87, 94 (2007) (alteration in original) (quoting Saks v. Franklin Covey Co., 316 F.3d 337, 350 (2d Cir.2003)) (describing NRCP 8(c)'s catchall provision, which states that a plaintiff must affirmatively set forth any other matter constituting an avoidance or affirmative defense). Thus, in actions based on a contract, one type of affirmative defense impliedly admits the sufficiency of the underlying contract, but offers an excuse for the defendant's failure to perform. 17B C.J.S. Contracts § 891 (2011); see also Durell v. Sharp Healthcare, 183 Cal.App.4th 1350, 108 Cal. Rptr.3d 682, 697 (2010); Richardson, 123 Nev. at 394 n. 21, 168 P.3d at 95 n. 21. Here, based on his general breach of contract allegation, Schettler may be able to demonstrate that Silver State's prior breach of the contract has rendered the contract unenforceable. [6] See Restatement (Second) of Contracts § 237 cmt. a (1981); 17A Am. Jur.2d Contracts § 685 (2004). This allegation constitutes a true affirmative defense. Further, the affirmative defense, especially when viewed in light of Schettler's counterclaims, inherently raises recoupment. [7] Recoupment is [a] right of the defendant to have a deduction from the amount of the plaintiffs damages, for the reason that the plaintiff has not complied with the cross-obligations or independent covenants arising under the same contract. Black's Law Dictionary 1275 (6th ed.1990). Recoupment must arise out of the same transaction and involve the same parties; thus, it does not apply when the defendant's allegations arise out of a transaction extrinsic to the plaintiffs cause of action. Id.; see also Bolduc v. Beal Bank, SSB, 167 F.3d 667, 672 n. 4 (1st Cir.1999). While the defendant may thus defend against the plaintiffs claim by asserting competing rights arising out of the same transaction and thereby extinguish or reduce any judgment awarded to the plaintiff, recoupment does not allow the defendant to pursue damages in excess of the plaintiffs judgment award. Nevada State Bank v. Jamison Partnership, 106 Nev. 792, 797 n. 2, 801 P.2d 1377, 1381 n. 2 (1990). Thus, by its very nature and regardless of whether the same facts could constitute a separate claim for damages, recoupment seeks to challenge the foundation of the plaintiffs claim and, consequently, we recognize recoupment as an affirmative defense not barred by FIRREA. Jamison Partnership, 106 Nev. at 797, 801 P.2d at 1381; Bolduc, 167 F.3d at 672; F.D.I.C. v. Modular Homes, Inc., 859 F.Supp. 117, 123 (D.N.J. 1994). Here, based on his allegations, Schettler may be able to demonstrate that he is entitled to recoup against any amount awarded RalRon on its claims, up to the amount awarded. [8] Because Schettler's affirmative defense raised unresolved questions of material fact, and because affirmative defenses are not barred by FIRREA, the district court erred in granting summary judgment in favor of RalRon on its breach of contract and breach of personal guaranty claims. See generally First Interstate Bank v. Shields, 102 Nev. 616, 619-20, 730 P.2d 429, 431 (1986) (As a general rule, the payment or other satisfaction or extinguishment of the principal debt or obligation by the principal or by anyone for him discharges the guarantor.) Accordingly, we reverse the district court's summary judgment, and we remand this matter to the district court for further proceedings. We concur: DOUGLAS and PARRAGUIRRE, JJ.