Opinion
NO. 2011-CA-001378-MR
01-25-2013
POP'S CLASSIC CARS, LLC, AND DENNIS SOWDER APPELLANTS v. ENGINE WAREHOUSE PARTS, INC. APPELLEE
BRIEF FOR APPELLANT: James A. Maples R. Julius Craig Elizabethtown, Kentucky BRIEF FOR APPELLEE: Bryan H. Hayes Louisville, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM HARDIN CIRCUIT COURT
HONORABLE KEN M. HOWARD, JUDGE
ACTION NO. 11-CI-00803
OPINION
AFFIRMING
BEFORE: CLAYTON, STUMBO AND THOMPSON, JUDGES. THOMPSON, JUDGE: Pop's Classic Cars, LLC, and Dennis Sowder (collectively referred to as Sowder) appeal from a summary judgment of the Hardin Circuit Court awarding Engine Warehouse Parts, Inc. $18,517.87 plus post-judgment interest at the rate of 1.5% per month, attorneys' fees in the amount of $3,440 and court costs. Sowder alleges that the circuit court erred because the amount owed to Engine Warehouse was discharged by accord and satisfaction under KRS 355.3-311 and that a credit application and agreement (credit agreement) signed by Sowder was not an enforceable contract.
Engine Warehouse is a wholesale distributor of engine parts. Sowder owns Pop's Classic Cars, LLC, an automobile parts business. From February 2006, until May 2008, Sowder and Engine Warehouse conducted business on a cash basis requiring payment at the time goods were received from Engine Warehouse.
In mid-2008, Sowder requested, completed, and signed a credit agreement that was delivered to Engine Warehouse. The credit agreement contained a provision stating that Sowder agreed to pay the invoices and attorney fees if the invoices were not paid.
Sowder ordered goods from Engine Warehouse and failed to pay the invoices. As an incentive to pay the bills, Engine Warehouse offered a 10% discount on purchases and a payment plan of $500 per month but Sowder's accounts remained delinquent. The last payment received by Engine Warehouse from Sowder was a check for $236.16 in December 2010, that was delivered to a lock box and cashed by Engine Warehouse. The check contained a notation that appears to state: "Pops, Account of Satisfaction and Accord Pd in Full."
The precise language used is difficult to see on the copy of the check. However, the parties do not dispute that it contained the accord and satisfaction language or that it stated payment in full.
On April 11, 2011, Engine Warehouse filed a complaint seeking $18,517.87, owed on Sowder's account and attached the credit agreement and copies of the statements and invoices pertaining to Sowder's account. Sowder filed a general answer and, in addition to denying any amount owed, alleged that the credit agreement was unenforceable because it did not comply with the uniform commercial code's statute of frauds provision and Engine Warehouse did not provide a 10% discount as required by the parties' contract. The answer did not affirmatively plead accord and satisfaction.
Engine Warehouse filed a motion for summary judgment accompanied by the same documents filed with the complaint and an affidavit of its accounts receivable director stating the amount owed. Sowder filed a reply asserting accord and satisfaction as a defense and that the credit agreement was an unenforceable adhesion contract.
Confronted for the first time with the defense of accord and satisfaction, Engine Warehouse argued that the defense had to be affirmatively pled in Sowder's answer and, when the check was tendered, the amount owed was undisputed and liquidated. It also argued that the credit agreement was not an unenforceable adhesion contract and was a binding contract. It submitted a supplemental affidavit by its accounts receivable director stating that prior to the filing of the present action, she spoke with Sowder and that he did not dispute the amount owed. After considering the parties' arguments, the circuit court found that there were no material issues of material fact and granted Engine Warehouse's motion for summary judgment.
The standard of review when a trial court grants a motion for summary judgment is "whether the trial court correctly found there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law." Hallahan v. The Courier-Journal, 138 S.W.3d 699, 704 (Ky.App. 2004). The trial court must review the evidence in a light most favorable to the non-moving party. Id. at 705.
Accord and satisfaction by use of an instrument is a defense addressed by statute. KRS 355.3-311 provides that a debt or claim may be discharged if a instrument was tendered in good faith to the claimant to satisfy an unliquidated amount or an amount subject to a bona fide dispute and the claimant received payment of the instrument. As noted in Estes v. McKinney, 354 S.W.3d 144, 148 (Ky.App. 2011), whether a debt or claim is discharged based on accord and satisfaction may be decided by summary judgment if the facts are undisputed and clear.
"[W]hen a claim is in dispute and the debtor delivers to his creditor a check which he clearly states is in full payment of the claim, and the creditor collects the check without objection, this constitutes a good accord and satisfaction." Weickert v. Alliant Health Systems, Inc., 954 S.W.2d 314, 317 (Ky. 1997). However, Sowder's delivery of a $236.16 check to a lock box as full payment for $18,517.87 owed to Engine Warehouse was not a good accord and satisfaction. Engine Warehouse submitted undisputed evidence that when Sowder tendered the check, the amount owed was liquidated and undisputed.
Moreover, Sowder waived the defense of accord and satisfaction because it was not presented in a responsive pleading. CR 8.03 specifically requires that "[i]n pleading to a preceding pleading, a party shall set forth affirmatively accord and satisfaction." A responsive pleading is an answer or amended answer. It is undisputed that Sowder did not plead accord and satisfaction in the answer to Engine Warehouse's complaint and, therefore, the defense was waived.
Sowder's argument that the credit agreement is an unenforceable adhesion contract is unpersuasive. An adhesion contract is a "standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it." Conseco Finance Servicing Corp. v. Wilder, 47 S.W. 3d 335, 342 n.20 (Ky.App. 2001). As recognized in Conseco, "[a]dhesion contracts are not per se improper." Id. An unconscionable contract is "one which no man in his senses, not under delusion, would make, on the one hand, and which no fair or honest man would accept, on the other." Id. at 342 (quoting Louisville Bear Safety Service Inc. v. South Central Bell Telephone Company, 571 S.W. 2d 438, 439 (Ky.App. 1978)).
The credit agreement was executed to permit Sowder to purchase automobile parts for resale. There are no facts alleged that the agreement was anything more than a commercial transaction favorable to both parties. We reject the contention that the credit agreement is an unenforceable adhesion contract.
Sowder contends that he is not bound by the credit agreement because he did not sign the reverse side of the agreement containing the terms and conditions. The facts are undisputed that Sowder signed the credit agreement. Above his signature, the credit agreement states: "I understand that the terms, right and conditions set forth on the reverse side of this Credit Application and Agreement are part of this application, and by signing below and/or placing orders with you, I accept terms, rights and conditions." The terms and conditions of the agreement were clearly incorporated by reference and did not require a separate signature. Bartelt Aviation, Inc. v. Dry Lake Coal Co., Inc., 682 S.W.2d 796, 797 (Ky.App. 1985).
For the reasons stated, the summary judgment of the Hardin Circuit Court is affirmed.
ALL CONCUR. BRIEF FOR APPELLANT: James A. Maples
R. Julius Craig
Elizabethtown, Kentucky
BRIEF FOR APPELLEE: Bryan H. Hayes
Louisville, Kentucky