Affirmative Defenses (Minn. R. Civ. P. 8.03)–Pleading affirmative defenses in Minnesota

8.03 AFFIRMATIVE DEFENSES

In pleading to a preceding pleading, a party shall set forth affirmatively (1) accord and satisfaction, (2) arbitration and award, (3) assumption of risk, (4) contributory negligence, (5) discharge in bankruptcy, (6) duress, (7) estoppel, (8) failure of consideration, (9) fraud, (10) illegality, (11) injury by fellow servant, (12) laches, (13) license, (14) payment, (15) release, (16) res judicata, (17) statute of frauds, (18) statute of limitations, (19) waiver, and (20) any other matter constituting an avoidance or affirmative defense. When a party has mistakenly designated a defense as a counterclaim or a counterclaim as a defense, the court, on such terms as justice may require, shall treat the pleading as if there had been a proper designation.

(1) Accord and Satisfaction

Accord and satisfaction is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including accord and satisfaction, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

In analyzing the definition of accord and satisfaction, Minnesota courts have held “accordis ‘a contract in which a debtor offers a sum of money, or some other stated performance, in exchange for which a creditor promises to accept the performance in lieu of the original debt.’” Nelson v. Am. Family Ins. Group, 651 NW2d 499, 512 (Minn. 2002) quoting Webb Bus. Promotions, Inc. v. Am. Elecs. & Entm’t Corp., 617 NW2d 67,72 (Minn. 2000) (emphasis added). And “[s]atisfaction is the performance of the accord, generally acceptance of money, which operates to discharge the debtor’s duty as agreed to in the accord.” Nelson, 615 NW2d at 512 quoting Webb, 617 NW2d at 72 (emphasis added).

The purpose of accord and satisfaction was to promote dispute resolution without the need for judicial intervention. Nelson, 615 NW2d at 512. Accord and satisfaction allows the creditor to accept an alternate form of payment, one different than originally agreed upon, and discharges the debtor from all debt owed to the creditor. Id.

For a party to successfully claim the affirmative defense of accord and satisfaction to a breach of contract claim, the party must prove “(1) the party, in good faith, tendered an instrument to the claimant as full satisfaction of the claim; (2) the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim; (3) the amount of the claim was unliquidated or subject to a bona fide dispute; and (4) the claimant obtained payment of the instrument.” Id. The four-step process established by the Supreme Court of Minnesota in Nelson basically states that the debtor and claimant agreed on an amount that the debtor could pay the claimant to satisfy the debtor’s debt, the claimant put into writing his satisfaction with the agreed upon amount, and the payment was actually received by the claimant. All four steps must be satisfied in order to be successful on an accord and satisfaction defense. See AgCountry Farm Credit Servs. v. Oelke, 2005 Minn. App. Unpub. LEXIS 171 (Minn. App. August 16, 2005) (holding since creditor did not agree that payment would satisfy full satisfaction of the claim, steps (1)-(3) were not satisfied, and therefore debtor could not be successful on an accord and satisfaction defense).

(2) Arbitration and Award

Arbitration and award is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including arbitration and award, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

Arbitration is a form of dispute resolution that can be an attractive alternate to the judicial system because of its low cost and ability to resolve disputes quickly. Minnesota statue states arbitration is a “valid, enforceable, and irrevocable” method of resolving controversies, including contract disputes. Minn. Stat. § 572.08 (2009).

If a party claims the affirmative defense of arbitration and award, the party is expressly stating that the controversy should be resolved in arbitration and not in the judicial system. The affirmative defense of arbitration and award must be in the party’s pleading, “[f]ailure to do so may constitute waiver of the defense.” West St. Paul Federation of Teachers v. Independent School District No. 197, West St. Paul, Minnesota, 713 N.W.2d 366, 377 (Minn. App. 2006). Minnesota courts will reject a party’s claim of arbitration if the party participates in judicial litigation first and then claims the affirmative defense of arbitration and award at a later time. See Driveway Design, LLC, Appellant, vs. Johnson and Johnson Land Development, LLC, et al., 2009 Minn. App. Unpub. LEXIS 658 (Minn. App. June 16, 2009) (denying appellant’s claim to arbitration after it filed an Answer without claiming the affirmative defense of arbitration and award).

If a party pleads the affirmative defense of arbitration and award, the court will consider a motion to compel arbitration, which will effectively dismiss the judicial action and send the dispute to arbitration. When considering a motion to compel arbitration, the court will look to “(1) whether a valid arbitration agreement exists, and (2) whether the dispute falls within the scope of the arbitration agreement.” Amdahl, et al., v. Green Giant Company, d/b/a the Pillsbury Company, 497 N.W.2d 319, 322 (Minn. App. 1993).

(3) Assumption of Risk

Assumption of risk is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including assumption of risk, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

Assumption of risk is “[t]he principle that one who takes on the risk of loss, injury, or damage cannot maintain an action against a party that causes the loss, injury, or damage.” Black’s Law Dictionary, 143 (9th Ed. 2009). The Minnesota Supreme Court defined assumption of risk as “the defendant owes a limited duty of care to the plaintiff with respect to the risk incident to their relationship.” Olson v. Hansen, 216 N.W.2d 124, 127 (Minn. 1974).

The Olson court explained primary assumption of risk is available “only where parties have voluntarily entered a relationship in which plaintiff assumes well-known, incidental risks.”Id. In Wu v. Shattuck-St. Mary’s Sch., 393 F.Supp. 2d 831, 836 (D. Minn. 2005), the court declared “[p]rimary assumption of risk is rarely applied by Minnesota courts.”

A common example of a party voluntarily encountering a known or appreciated danger is when parents sign their children up for youth sports and sign a waiver contract (also known as exculpatory contracts). In Wu, the mother signed a waiver contract to allow her daughter to participate in extracurricular activities at the high school, and the daughter was subsequently injured while playing golf. 393 F.Supp.2d at 833-836. In denying the high school’s affirmative defense of assumption of risk, the court held the high school was not free from liability because of “enhancement of risk, negligent maintenance of a facility, or negligent supervision of a sporting activity.” Id. at 837. The Wu court was cautious with its decision to invalidate the waiver contract, but reasoned that assumption of risk “does not bar a claim where a defendant’s conduct has enhanced the risk of an activity.” Id. at 836.

(4) Contributory Negligence

Contributory negligence is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including contributory negligence, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

Contributory negligence is a claim by a defendant that the “plaintiff’s own negligence … played a part in causing the plaintiff’s injury and that is significant enough to bar the plaintiff form recovering damages.” Black’s Law Dictionary, 1134 (9th Ed. 2009). The defendant is shifting the blame from himself to the plaintiff.

However, Minnesota Statute states contributory negligence does not bar recovery “if the contributory fault [by plaintiff] was” less than defendant’s fault. Minn. Stat. § 604.01. The Statute further states, “any damages allowed must be diminished in proportion to the amount of fault attributable to the person recovering [plaintiff].” Id.

(5) Discharge in Bankruptcy

Discharge in bankruptcy is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including discharge in bankruptcy, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

A party who files for bankruptcy is named a “debtor.” When a debtor initiates a bankruptcy proceeding, the Bankruptcy Code restricts all proceedings against the debtor’s property.Bernick v. Caboose Enterprises, Inc., 395 N.W.2d 412, 413 (Minn. App. 1986). This is also called a stay in judicial proceedings. The affirmative defense of discharge in bankruptcy will protect a debtor from being named as a defendant in a civil action. The public policy reasons behind the stay in judicial proceedings for the debtor are it allocates the “debtor a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.” Id at 414.

A court, State or federal, does not have discretion to hear a case involving a debtor who has initiated a bankruptcy proceeding. The Bankruptcy Code strips all courts of jurisdiction to hear actions against the debtor. Id. See Borg-Warner Acceptance Corp. v. Hall, 685 F.2d 1306, 1308 (11th Cir. 1982) (“Actions taken in violation of the automatic stay are void and without effect”). A defendant who has initiated a bankruptcy proceeding can successfully claim discharge in bankruptcy as an affirmative defense to any breach of contract lawsuit.

(6) Duress

Duress is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including duress, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

A party claiming duress must prove the other party induced the contract by threat with either actual force or an unlawful threat of death or bodily harm. If an aggrieved party’s manifestation of assent is induced by an improper threat by the other party that leaves the aggrieved party no reasonable alternative, the contract is voidable by the aggrieved party. Restatement, Second of Contracts § 175. In plain terms, if one party to a contract (1) threatens the other party and (2) leaves the other party with no reasonable alternative, the contract is voidable. A voidable contract (also known as an “avoidable contract”) is a contract in which the aggrieved party has the option to either enforce the contract or cancel the contract.

The Restatement defines an improper threat to a fair contract as “if (a) what is threatened is a crime or a tort, or the threat itself would be a crime or a tort if it resulted in obtaining property; or (b) what is threatened is a criminal prosecution; or (c) what is threatened is the use of civil process and the threat is made in bad faith; or the threat is a breach of the duty of good faith and fair dealing under a contract with the recipient.” Restatement, Second of Contracts § 176(1). The Restatement defines an improper threat to an unfair contract as “ (a) the threatened act would harm the recipient and would not significantly benefit the party making the threat; or (b) the effectiveness of the threat in inducing the manifestation of assent is significantly increased by prior unfair dealing by the party making the threat; or(c) what is threatened is otherwise a use of power for illegitimateends.” Restatement, Second of Contracts § 176(2). Basically, if the contract’s terms are fair, it is more difficult for the aggrieved party to prove there was an improper threat in making the contract; if the contract’s terms are intrinsically unfair, it is easier for the aggrieved party to prove there was an improper threat in forming the contract.

Keep in mind the Restatement is helpful in defining the law, but it is not binding on Minnesota courts, rather it is a secondary source for legal scholars. The Restatement defines three categories of improper threats to an unfair contract, what is threatened is (1) crime or tort; (2) criminal prosecution; or (3) use of civil process (party threatening a lawsuit). Surprisingly, what is not included in the definition is economic duress. “Economic duress or business compulsion generally is defined as wrongful or unlawful conduct resulting in the pressure of a business necessity or financial hardship, which compels the injured party to execute an agreement against their will and to their economic detriment.” St. Louis Park Inv. Co. v. R.L. Johnson Inv. Co., Inc., 411 N.W.2d 288, 291 (Minn. App. 1987). Similar to the Restatement, Minnesota courts have refused to include in its definition of duress “economic duress,” holding “duress [is] a defense to a contract when there is coercion by means of physical force or unlawful threats, which destroys one’s free will and compels compliance with the demands of the party exerting the coercion.” Id. (emphasis added). See St. Louis Park Inv. Co., 411 N.W.2d 288, 291 (stating “[m]erely driving a hard bargain or wresting advantage of another’s financial difficulty is not duress.”)

Minnesota courts have further limited duress as an affirmative defense, holding “a claim of duress will not be sustained when the claimant entered into the contract with full knowledge of all the facts, advice from an attorney, and ample time for reflection.” Id. The fact that the aggrieved party had knowledge of the facts that he now alleges caused him harm, had advice from an attorney, and time to reflect on the terms of the contract will cause Minnesota courts to reject a claim of duress. All of the abovementioned elements will prove the aggrieved party in fact did have a reasonable alternative. Proof of the reasonable alternative is most evidenced by the aggrieved party’s reliance on attorney advice.

(7) Estoppel

Estoppel is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including estoppel, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

A defendant can plead two types of estoppel as an affirmative defense: promissory estoppel and collateral estoppel.

The Restatement defines promissory estoppel as (1) a promise that the promisor knows or reasonably should know will induce action and (2) a promisee acts or refrains from acting based on the promisor’s promise. Restatement, Second of Contracts § 90. If a promisor makes a promise he knows (or reasonably should know) will induce action or forbearance on behalf of the aggrieved party and the aggrieved party acts (or fails to act) relying on that promise, the aggrieved party can claim promissory estoppel. The Restatement further states that the promise is binding if injustice can be avoided by enforcement of the promise. Id. The aggrieved party can use the affirmative defense of promissory estoppel to claim that he acted (or refrained from acting) in response to the other party’s promise.

Minnesota courts address promissory estoppel frequently. In 2010, the Court of Appeals of Minnesota stated a party “invoking estoppel must show that she reasonably relied to her detriment on material misrepresentations made by” the other party. Singelman v. St. Francis Med. Ctr., 777 N.W.2d 540, 543 (Minn. App. 2010). The Supreme Court of Minnesota held “[a]n essential element of estoppel is that the party asserting the estoppel acted, or failed to act, in reliance upon the representation claimed to give rise to the estoppel, whereby he has changed his position for the worse.” Stribling v. Fredericks, Clark & Co., Inc., 300 Minn. 525, 526, (1974).

Collateral estoppel, commonly referred to as issue preclusion, is a very different doctrine from promissory estoppel. The Minnesota Supreme Court outlined collateral estoppel as “once an issue is determined by a court of competent jurisdiction, that determination is conclusive in subsequent suits based on a different cause of action involving a party to the prior litigation.” Kaiser v. N. States Power Co., 353 N.W.2d 899, 902 (Minn. 1984). The doctrine of collateral estoppel prevents a plaintiff from suing a defendant after that plaintiff previously sued the same defendant on the same issue, and that prior court entered final judgment on that issue. The key to collateral estoppel is that the issue must be the same and the parties to the prior lawsuit must be the same as the parties to the current lawsuit. The Minnesota Supreme Court has outlined four elements that must be satisfied to plead collateral estoppel as an affirmative defense: “(1) the issue was identical to one in a prior adjudication; (2) there was a final judgment on the merits; (3) the estopped party was a party or in privity with a party to the prior adjudication; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue.” Willems v. Comm’r of Pub. Safety, 333 N.W.2d 619, 621 (Minn. 1983). Collateral estoppel is similar to the doctrine of res judicata that is addressed below.

(8) Failure of Consideration

Failure of consideration is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including failure of consideration, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

The classic definition of the formation of a contract includes offer, consideration and acceptance. The affirmative defense of failure of consideration is pleaded when the defendant claims there was no consideration in forming the contract, and therefore the contract is void. The Restatement echoes the classic definition of a contract by defining the formation of a contract as a “bargain in which there is a manifestation of mutual assent to the exchange and a consideration.” Restatement, Second of Contracts § 17. The Restatement further defines consideration, stating “a performance or a return promise must be bargained for.” Restatement, Second of Contracts § 71(1). A performance can be payment (such as “I hereby give you $5 in consideration…”) or a return promise. A contract that includes a promise and a return promise is a bilateral contract, because both parties to the contract have promised something and no action on behalf of either party has occurred when the contract was formed. A bilateral contract is complete once both parties perform their promises.

A defendant will plead the affirmative defense of failure of consideration if he (or the other contracting party) either did not perform for the contract or did not give a return promise for the contract. When a defendant pleads the affirmative defense of failure of consideration, the burden is on the defendant to prove the contract was lacking consideration. Penn Mut. Life Ins. Co. v. Utne, 207 F. Supp. 521, 524 (D. Minn. 1962). If the defendant meets its burden of proving failure of consideration, “a contract valid when formed becomes unenforceable because the performance bargained for has not been rendered.” Franklin v. Carpenter, 309 Minn. 419, 422, (1976). As the Minnesota Supreme Court in Franklinstated, the previously valid contract becomes enforceable when the defendant proves the contract lacked consideration. “Where a promisor received what he bargained for, however, there is no failure of consideration.” In re MJK Clearing, Inc., 408 F.3d 512, 515 (8th Cir. 2005).

(9) Fraud

Fraud is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including fraud, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

The Restatement has established two types of fraud: fraud in the inducement and fraud in the factum.

Fraud in the inducement requires one party to a contract to make some sort of statement or active nondisclosure which has induced the aggrieved party’s actions. Restatement, Second of Contracts § 167. If fraud in the inducement is proven, the contract becomes voidable. A voidable contract (also known as an “avoidable contract”) is a contract in which the aggrieved party has the option to either enforce the contract or cancel the contract. The Restatement further defines fraud in the inducement as “[a] misrepresentation induces a party’s manifestation of assent if it substantially contributes to his decision to manifest assent.” Id.

Fraud in the factum requires one party to a contract misrepresenting the terms of the contract to the aggrieved party. Restatement, Second of Contracts § 163. If fraud in the factum is proven, the contract becomes void. A contract that is deemed void becomes null and inoperative, even if the aggrieved party wishes to enforce the terms of the contract. The Restatement further defines fraud in the factum as “[i]f a misrepresentation as to the character or essential terms of a proposed contract induces conduct that appears to be a manifestation of assent by one who neither knows nor has a reasonable opportunity to know of the character or essential terms of the proposed contract, his conduct is not effective as a manifestation of assent.” Id.

The Minnesota Supreme Court has created a five-step test that must be satisfied for a party to claim fraud: “(1) there was a false representation by a party of a past or existing material fact susceptible of knowledge; (2) made with knowledge of the falsity of the representation or made as of the party’s own knowledge without knowing whether it was true or false; (3) with the intention to induce another to act in reliance thereon; (4) that the representation caused the other party to act in reliance thereon; and (5) that the party suffer[ed] pecuniary damage as a result of the reliance.” Hoyt Properties, Inc. v. Prod. Res. Group, L.L.C., 736 N.W.2d 313, 318 (Minn. 2007). In Hoyte Properties, the Minnesota Supreme Court combined both fraud in the inducement and fraud in the factum for a party to plead fraud.

An example of fraud is if one party “secretly substitute[s] one type of document for another.” BankCherokee v. Insignia Dev., LLC, 779 N.W.2d 896, 900 (Minn. App. 2010). However, the Minnesota Court of Appeals in BankCherokee limited when a party can plead fraud even when the other party was in fact fraudulent: “one party’s misrepresentation as to the nature of a proposed contract does not amount to fraud . . . if the other party had a reasonable opportunity to acquaint himself with the contract and failed to do so.” Id.

(10) Illegality

Illegality is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including illegality, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

Contracts in Minnesota have been protected by the State courts: “[c]ourts should not invalidate enforceable promises except in the clearest of cases.” Cohen v. Cowles Media Co., 479 N.W.2d 387, 391 (Minn. 1992). The general rule is that contracts for performance of illegal conduct are unenforceable and void. The Minnesota Court of Appeals addressed this, stating “the application of the doctrine of in pari delicto is appropriate for (1) preventing enforcement of a contract the performance of which is illegal.” Brubaker v. Hi-Banks Resort Corp., 415 N.W.2d 680, 684 (Minn. App. 1987). The Supreme Court of Minnesota has held “anyone who engages in a fraudulent scheme forfeits all right to protection, either at law or in equity.” State by Head v. AAMCO Automatic Transmissions, Inc., 293 Minn. 342, 347 (1972).

A plaintiff who sues a defendant for breach of contract when the contract was for an illegal activity will be unsuccessful if the defendant raises the affirmative defense that the contract was for the performance of an illegal act.

(11) Injury by Fellow Servant

Injury by fellow servant is an affirmative defense enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including injury by fellow servant, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

The Supreme Court of Minnesota has defined the injury by fellow servant (“injury by fellow”) defense as a rule that “absolves the employer from liability to one in his employ for injuries incurred or suffered solely as the result of the negligence, carelessness, or misconduct of others who are in the service of the employer and who are engaged in the same common or general employment as the injured employee.” Lunderberg v. Bierman, 241 Minn. 349, 356, (1954). Basically, a defendant-employer named as a defendant in a lawsuit may plead the affirmative defense of injury by fellow if the plaintiff is an employee of defendant, and is alleging negligence, carelessness, or misconduct on the part of his fellow employee(s). The Lunderberg court was explicit to not extend the injury by fellow doctrine to injuries of third parties. See 241 Minn. at 356 (holding “[t]he doctrine has no application in connection with the liability of the master to a third party.”)

The doctrine of injury by fellow servant has common law roots. The Supreme Court of Minnesota stated the injury by fellow servant doctrine in an 1880 opinion, holding “as a general rule the master is not liable to one servant for an injury caused by the negligence of another servant in the same common employment.” Brown v. Winona & St. P.R. Co., 27 Minn. 162, 163, (1880).

(12) Laches

Laches is an affirmative defense enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including laches, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

Laches is an “equitable doctrine by which a court denies relief to a claimant who has unreasonably delayed in asserting the claim, when that delay has prejudiced the party against whom relief is sought.” Black’s Law Dictionary, 953 (9th Ed. 2009). The Restatement has defined the doctrine of laches as “[i]n proceedings in equity, a person otherwise entitled to restitution is barred from recovery if he has failed to bring or, having brought has failed to prosecute, a suit for so long a time and under such circumstances that it would be inequitable to permit him now to prosecute the suit.” Restatement, First of Restitution § 148(1).

The Supreme Court of Minnesota defined three scenarios where the doctrine of laches is applicable: “[a] suit in equity for restitution is barred by the lapse of time only if it would be unjust to allow the complainant to maintain it. The existence of such injustice depends on (a) whether the complainant has been unreasonable in his delay after learning the facts, or (b) whether the delay has made it unfair to permit the suit either because of hardship to the defendant or to third persons by reason of a change in circumstances, or (c) whether the lapse of time has made it difficult to ascertain the facts so that a substantial chance of arriving at an erroneous decision exists.” Knox v. Knox, 222 Minn. 477, 486, (1946).

The Supreme Court of Minnesota commented on the doctrine laches, stating, “[a] party who comes into a court of equity must act with reasonable diligence, under all the circumstances, or he is chargeable with laches.” Lindquist v. Gibbs, 122 Minn. 205, 208 (1913). The Lindquist court further narrowed circumstances where a defendant can claim the affirmative defense of laches when a party delayed because of mistake, “[b]ut where it is sought to rescind a contract or deed on the ground of mistake, a party is not guilty of laches until he discovers the mistake, or until he is chargeable with knowledge of facts from which, in the exercise of proper diligence, he ought to have discovered it.” Id. The relaxation of the doctrine of laches due to mistake allows plaintiffs more flexibility in bringing suit, even when the delay in brining suit prejudices the defendant.

(13) License

License is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including license, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

(14) Payment

Payment is an affirmative defense enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including payment, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

Generally, payment is when the defendant has satisfied the plaintiff’s claim prior to litigation by “[p]erformance of an obligation by the delivery of money or some other valuable thing accepted [by plaintiff] in partial or full discharge of the obligation.” Black’s Law Dictionary, 1243 (9th Ed. 2009). In pleading the affirmative defense of payment, the defendant bears “the burden of showing payment” was received and accepted by plaintiff.Marshall & Illsley Bank v. Child, 76 Minn. 173, 177 (1899).

Minnesota courts have allowed for payment to be satisfied if the defendant’s insurer paid the plaintiff, holding “in property-damage cases, where the [defendant]’s insurer makes a payment directly or indirectly to the injured party, such payment shall offset the [defendant]’s liability to the injured party.” VanLandschoot v. Walsh, 660 N.W.2d 152, 156 (Minn. App. 2003).

(15) Release

Release is an affirmative defense enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including release, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

The Court of Appeals of Minnesota defined release as “an agreement not to enforce a legal cause of action against a party to the agreement. One party was, therefore, released upon signing from being required to defend a legal action. The other party was obligated not to sue.” Petition of Anderson, 565 N.W.2d 461, 464 (Minn. App. 1997). The Supreme Court of Minnesota compared a release to a contract, stating “[a]s with any contract, a release requires consideration, voluntariness, and contractual capacity.” Karnes v. Quality Pork Processors, 532 N.W.2d 560, 562 (Minn. 1995).

In determining the validity of a release, Minnesota courts consider the following factors: “(a) The length of period between the injury and the settlement; (b) the amount of time elapsed between the settlement and the attempt to avoid the settlement; (c) the presence or absence of independent medical advice of plaintiff’s own choice before and at the time of the settlement; (d) the presence or absence of legal counsel of plaintiff’s own choice before and at the time of the settlement; (e) the language of the release itself; (f) the adequacy of consideration; (g) the competence of the releasor; and (h) whether the injury complained of by the releasor was an unknown injury at the time of the signing of the release or merely a consequence flowing from a known injury.” Id.

(16) Res Judicata

Res Judicata is an affirmative defense enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including res judicata, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

Res judicata, also known as claim preclusion, is defined as “[a]n affirmative defense barring the same parties from litigating a second lawsuit on the same claim, or any other claim arising from the same transaction or series of transactions and that could have been – but was not – raised in the first suit.” Black’s Law Dictionary, 1425 (9th Ed. 2009). The Supreme Court of Minnesota has defined the doctrine of res judicata as “a final judgment on the merits bars a second suit for the same claim by parties or their privies.” Kaiser v. N. States Power Co., 353 N.W.2d 899, 902 (Minn. 1984).

Res judicata is very similar to the doctrine of collateral estoppel (issue preclusion). The Supreme Court of Minnesota has differentiated between res judicata and collateral estoppel, stating “[t]he effect of res judicata on a judgment or final order has at least two distinct and important aspects: (1) merger or bar; and (2) collateral estoppel. The principles of merger and bar operate where a subsequent action or suit is predicated on the same cause of action which has been determined by a judgment, no matter what issues were raised or litigated in the original cause of action. On the other hand, the principle of collateral estoppel operates as to matters which were actually litigated and determined by, and essential to, a previous judgment, irrespective of whether the subsequent action is predicated upon the same or a different cause of action. In short, one stands for claim preclusion, the other for issue preclusion. It is essential to bear this distinction in mind in determining the issue in this case.” Hauser v. Mealey, 263 N.W.2d 803, 806 (Minn. 1978).

The general rule in Minnesota, dating back to 1889, is “[a] judgment on the merits constitutes an absolute bar to a second suit for the same cause of action, and is conclusive between parties and privies, not only as to every matter which was actually litigated, but also as to every matter which might have been litigated therein.” Id. at 807.

(17) Statute of Frauds

Statute of frauds is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including statute of frauds, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

(18) Statute of Limitations

Statute of limitations is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including statute of limitations, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.

(19) Waiver

Waiver is an affirmative defense to a breach of contract enumerated in Minnesota Rules of Civil Procedure 8.03. All affirmative defenses, including waiver, must be stated in a pleading. Minn. R. Civ. P. 8.03. The most common use of an affirmative defense is in a defendant’s Answer to a Complaint.