Commercial Litigation and Arbitration

Affirmative Defense of Recoupment as Offset Barred by Statute of Limitations?

In a suit for unpaid sales commissions, Mikels v. Unique Tool & Mfg. Co., 2007 U.S. Dist. LEXIS 91814 (W.D. N.C. Dec. 3, 2007), the defendant asserted as an affirmative defense the right to offset against any recovery "any previous overpayment of commissions" paid to the plaintiff. The plaintiff moved for summary judgment on the ground that, while his claim was timely, the defendant's right to sue for prior overpayments was foreclosed by the statute of limitations. While not deciding the issue, the District Court cited two conflicting cases, one for the proposition that equitable recoupment- where the requested offset arises out of the "same transaction" as the underlying claim - is not foreclosed by the statute of limitations (Herring v. United States, 131 F.Supp. 536, 537 (E.D.N.C. 1955)), and a second for the proposition that such a claim is legal in nature and subject to the limitations period (Perry v. First Citizens Bank, 223 N.C. 642, 27 S.E.2d 636 (1946)).

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