Opinion
Case No. 20020700-CA.
Filed May 15, 2003. (Not For Official Publication)
Appeal from the Third District, Salt Lake Department, The Honorable Michael K. Burton.
Dwight J. Epperson, Salt Lake City, for Appellant.
Donald J. Winder and John Warren May, Salt Lake City, for Appellee.
Before Judges Jackson, Bench, and Thorne.
MEMORANDUM DECISION
The three elements of an accord and satisfaction are "`(1) an unliquidated claim or a bona fide dispute over the amount due; (2) a payment offered as full settlement of the entire dispute; and (3) an acceptance of the payment as full settlement of the dispute.'" Dishinger v. Potter, 2001 UT App 209, ¶ 19, 47 P.3d 76, (quoting ProMax Dev. Corp. v. Raile, 2000 UT 4, ¶ 20, 998 P.2d 254), cert. denied, 40 P.3d 1135 (Utah 2001). "The third and final element of accord and satisfaction is the creditor's acceptance of the payment." Estate Landscape Snow Removal Specialists, Inc. v. Mountain States Tel. Tel. Co., 844 P.2d 322, 329 (Utah 1992). This "element . . . may be satisfied by [either a] subjective intent to discharge an obligation by assenting to the accord, or conduct which gives rise to a reasonable inference that acceptance of payment discharged the obligation."Dishinger, 2001 UT App 209 at ¶ 22; see also Estate Landscape, 844 P.2d at 330 (stating that "the doctrine [of accord and satisfaction] does not require subjective intent to discharge an obligation").
On October 5, 2001, Hardesty sent a check to ECO for $3,394.72, along with a letter that stated:
This check represents full and final payment, satisfying all conditions existing between [ECO] Marketing, Inc. and Business Pricing Systems (DBA). Endorsement and deposit of full and final payment indicates a full release of interests and liabilities between [ECO] Marketing, Inc. and Business Pricing Systems (DBA).
ECO sent Hardesty an email on October 17, 2001, stating that "we do not accept these terms for final payment [but] only partial payment." Thereafter, ECO endorsed and negotiated Hardesty's check. On the back of the check ECO wrote "without waiver, rights reserved per our 10/17/01 email." ECO argues that the reserved negotiation of Hardesty's check was not an acceptance of payment as required to reach an accord and satisfaction. We disagree.
Although ECO sought to conditionally accept Hardesty's payment through its actions, the law is very clear that ECO's tendering of the check resulted in an accord and satisfaction. See Estate Landscape, 844 P.2d at 330 ("Where, as here, the check is tendered under the condition that negotiation will constitute full settlement, mere negotiation of the check constitutes the accord, regardless of the payee's efforts or intent to negate the condition." (emphasis added)); see also Utah Code Ann. § 70A-3-311(2) (2001) (stating that "the claim is discharged if the person against whom the claim is asserted proves that 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"). Because ECO negotiated the check, its subjective objections are irrelevant. See Estate Landscape, 844 P.2d at 330. ECO's "options were to accept the check on their debtors' terms or to refrain from negotiating the check and seek the entire sum through the judicial process." Id. Because ECO's "negotiation of the check constituted acceptance of the accord and satisfaction as a matter of law," we conclude that the trial court did not err in granting Hardesty's motion to dismiss. Id.
Hardesty argues that it is "entitled to attorney fees and costs incurred on appeal under rule 33 of the Utah Rules of Appellate Procedure." Rule 33 allows for attorney fees and costs incurred on appeal if an "appeal taken under these rules is either frivolous or for delay." Utah R.App.P. 33(a). A frivolous appeal "is one that is not grounded in fact, not warranted by existing law, or not based on a good faith argument to extend, modify, or reverse existing law." Utah R.App.P. 33(b).
In the case before us, an accord and satisfaction was reached as a matter of law. The law in regard to what constitutes an accord and satisfaction, in this context, has been clear for many years. See Estate Landscape, 844 P.2d at 330 ("Where, as here, the check is tendered under the condition that negotiation will constitute full settlement, mere negotiation of the check constitutes the accord, regardless of the payee's efforts or intent to negate the condition."); Marton Remodeling v. Jensen, 706 P.2d 607, 609 (Utah 1985) (holding that the negotiation of a check with a restrictive condition is an accord and satisfaction under the general rule even though the creditor wrote "not full payment" on the check before negotiation); Dishinger, 2001 UT App 209 at ¶ 26 (quoting Estate Landscape for the proposition that "`mere negotiation of the check constitutes the accord, regardless of the payee's efforts or intent to negate the condition'" (citation omitted)); Cave View Excavating Constr. Co. v. Flynn, 758 P.2d 474, 478 (Utah Ct.App. 1988) (crossing out a restrictive condition before negotiating a check does not avoid an accord and satisfaction); see also Utah Code Ann. § 70A-3-311 (2001). ECO's appeal is "not warranted by existing law" and ECO does not present "a good faith argument to extend, modify, or reverse existing law." Utah R.App.P. 33(b). Accordingly, we award Hardesty the requested attorney fees and costs incurred on appeal.
CONCLUSION
We affirm the decision of the trial court and conclude that Hardesty is entitled to attorney fees and costs pursuant to rule 33 of the Utah Rules of Appellate Procedure. We remand the case for a determination of the attorney fees and costs reasonably incurred on appeal.
I CONCUR: Norman H. Jackson, Presiding Judge.
I concur with the bulk of the majority decision. However, because in my view ECO's appeal was a good faith attempt to modify existing law, based on its interpretation of certain statements found in Dishinger v. Potter, 2001 UT App 209, 47 P.3d 76, the argument cannot have been made in bad faith. While ECO's attempt was doomed to fail, we have previously held to the standard that we would award fees only in "egregious cases" to avoid the effect of "chilling of the right to appeal erroneous lower court decisions." Porco v. Porco, 752 P.2d 365, 369 (Utah Ct.App. 1988). Because ECO had a good faith belief in its ill-fated position, I cannot join in the majority decision to sanction it for its effort.
Accordingly, I concur in the majority's decision concerning the accord and satisfaction, but I dissent from its decision to award Hardesty his fees.