Trojan Construction Co. (P) sued Smith Contracting Corp. (D) for damages to rental equipment. At trial, D claimed that it had overpaid the rent, and was therefore entitled to a setoff. Neither D's answer nor the pretrial order had raised the overpayment issue. The pretrial order stated that the action was based on a factual dispute over whether the damages to the equipment were from excessive wear and tear. At trial, D raised its counterclaim for the excess in rental payments alleging that it was entitled to repayment of those excess payments. The court refused D's request to amend its answer and the pretrial order. D was not permitted to raise the issue at trial. D appealed.