Opinion ID: 6330581
Heading Depth: 2
Heading Rank: 2

Heading: Waiver of the Set-off/Recoupment Defense

Text: The Defendants argue next that the Court of Chancery erred when it found that they waived their affirmative defense of set-off/recoupment. This Court reviews a trial court’s finding of waiver under the standard of plain error.19 “In order for this Court to find plain error, the error complained of must be so clearly prejudicial to substantial rights as to jeopardize the fairness and integrity of the trial process.”20 In an order resolving the issues raised by the Plaintiffs’ Motion for Entry of Final Judgment, the Court of Chancery held that the Defendants had waived their affirmative defense of set-off/recoupment. The Defendants contend that they were not required to litigate that affirmative defense in response to the Plaintiffs’ Motion for Partial Summary Judgment. A party filing a motion for partial summary judgment may leave issues to be decided at trial that are outside the scope of the motion.21 The Defendants argue that the Plaintiffs never challenged the Defendants’ 18 The Defendants also argue that Section 9.7, which discusses exclusive remedies and subrogation rights, supports their argument. We disagree. Section 9.7 merely sets forth and preserves remedies that may be available to the contracting parties in addition to their contractual rights to indemnification. Nothing in Section 9.7 suggests that subrogation was to be the Plaintiffs’ sole remedy for a claim based on a surety bond after the Termination Date. 19 Med. Ctr. Of Del., Inc. v. Lougheed, 661 A.2d 1055, 1060 (Del. 1995). 20 Id. 21 Del. Ct. Ch. R. 56. 16 set-off/recoupment defense in their Motion for Partial Summary Judgment and sought only the trial court’s ruling as to liability, not damages. Because, they contend, set-off/recoupment is a defense that pertains to damages, and damages were not within the scope of the motion for partial summary judgment, they were not required to brief the court on this issue and therefore did not waive this defense. The Plaintiff’s Motion for Partial Summary Judgment, however, expressly sought judgment on their breach of contract claim “in the amount of $20,934,028.56,”22 a specific amount substantiated by a letter from Zurich. By moving for judgment for the specific amount of their entire claim, it is evident the Plaintiffs sought summary judgment on all issues relating to the breach of contract claim, including affirmative defenses. The Defendants were on notice that they should raise any issue, including any affirmative defense, that might reduce the amount of damages the Plaintiffs sought in the motion. The Defendants’ failure to raise the set-off/recoupment defense in their briefs is compounded by the fact that they also did not raise the defense in their Motion for Reargument. There is no plain error.