Opinion
No. 5-748 / 04-1885
Filed November 9, 2005
Appeal from the Iowa District Court for Polk County, Douglas F. Staskal, Judge.
Perry Homebuilders, Inc. appeals from an order overruling its application to compel arbitration of a payment dispute. AFFIRMED.
Kathryn S. Barnhill of Barnhill Associates, P.C., West Des Moines, for appellants.
David L. Wetsch of Wetsch Abbott, P.L.C., Des Moines, for appellees.
Considered by Sackett, C.J., and Vogel and Eisenhauer, JJ.
As noted by the district court, the following facts are undisputed. David and Maria Jordan and Perry Homebuilders, Inc. signed a contract for the construction of a new home in May 2002. The contract contained a one-year warranty and the following clause: "All disputes hereunder shall be resolved by binding arbitration." The parties disputed the final amount owed by the Jordans, with Perry Homebuilders demanding $10,775.15 as a final payment.
On April 30, 2003, the Jordans wrote a letter to Perry Homebuilders and enclosed a check for $5,536.55 "for settlement purposes only" and as "payment in full for this construction contract." The Jordans noted "final payment" in the check's memo line. Perry Homebuilders struck through "final payment" on the check and adding the word "disputed" above the strike-through and cashed the check. Perry Homebuilders continued to demand the $5,238.60 it claimed the Jordans still owed. It also placed a mechanic's lien on the Jordans' home.
On October 22, 2003, Perry Homebuilders filed an application to compel arbitration under Iowa Code section 679A.2 (2003), seeking arbitration of its claim for payment and the Jordans' breach of warranty claims. The Jordans filed a motion for summary judgment, which the district court granted in part and denied in part. Although it did order arbitration of the breach of warranty dispute, the district court (1) denied the application to compel arbitration of the final payment dispute and (2) declared the mechanic's lien invalid. Specifically, the district court agreed with the Jordans, who asserted their dispute with Perry Homebuilders was resolved by accord and satisfaction.
Perry Homebuilders appealed. We review a grant of summary judgment for the correction of errors of law. Allied Mut. Ins. Co. v. Heiken, 675 N.W.2d 820, 824 (Iowa 2004). After doing so, we conclude there are no genuine issues of material fact and the Jordans are "entitled to judgment as a matter of law." Iowa R. Civ. P. 1.981(3). We affirm the judgment of the district court.
The Jordans, as the parties asserting accord and satisfaction, must show (1) a bona fide dispute between them and Perry Homebuilders; (2) they made it clear to Perry Homebuilders that their tender was to be in full satisfaction of the claim; and (3) Perry Homebuilders accepted the tender with that understanding, or should have had that understanding, based on the facts and circumstances of the case. Seidler v. Vaughn Oil Co., 468 N.W.2d 474, 476-77 (Iowa Ct.App. 1991). After reviewing the undisputed facts of this case, we conclude the Jordans have demonstrated all three elements and have proven an accord and satisfaction.
On appeal, Perry Homebuilders points to its striking through "final payment" in the Jordan's check and its placing "disputed" above the stricken matter. We cannot see how this fact has any legal significance, as there is no such thing as a conditional acceptance or partial acceptance of an offer of an accord and satisfaction. Id. at 477. "`A party to whom an offer is thus made has no alternative but to refuse it or to accept it upon such conditions, and if he takes it his claim is canceled.'" Id. (quoting Beaver v. Porter, 129 Iowa 41, 46, 105 N.W. 346, 348 (1905)). Having cashed the Jordans' check, it does not matter that Perry Homebuilders made notations attempting to reserve their rights on the face of the Jordans' check. See, e.g., RMP Indus., Ltd., v. Linen Ctr., 386 N.W.2d 523, 529 (Iowa Ct.App. 1986).
Perry Homebuilders argues the Uniform Commercial Code allows it to reserve its rights to seek additional payment while still cashing the Jordans' check. Iowa Code § 554.1207(1). Were we to consider this argument, we would be suspicious of it, see id. § 554.1207(2) (stating Iowa Code § 554.1207(1) "does not apply to an accord and satisfaction"); however, we refuse to consider the application of either portion of section 554.1207 to the present case because its applicability is advanced for the first time on appeal. Chiavetta v. Iowa Bd. of Nursing, 595 N.W.2d 799, 802 (Iowa 1999).
We have considered all issues properly presented and conclude the judgment of the district court should be affirmed.