Opinion
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County, Daniel J. Didier, Judge. Super. Ct. No. 05CC09930
Murtaugh Meyer Nelson & Treglia, and John R. Armstrong, for Defendant, Appellant and Cross-complainant.
Rus, Miliband & Smith, Joel S. Miliband, Leo J. Presiado and M. Peter Crinella, for Plaintiff, Respondent and Cross-defendant.
OPINION
BEDSWORTH, J.
Midwest Renewable Energy, LLC (Midwest), appeals from a postjudgment order compelling it to acknowledge Western Ethanol Company, LLC’s (Western), full satisfaction of the judgment entered in the litigation between them, and to pay Western’s attorney fees and a $350.00 statutory penalty. Midwest argues the trial court erred, because Western’s original tender of a check, in the full amount called for in the judgment, included “conditional” language specifying that the check reflected “payment in full” of the judgment. According to Midwest, cashing a check containing such language might have operated as an accord and satisfaction, and imperiled its right to pursue its planned appeal from that judgment (in which it sought to be declared the “prevailing party” for purposes of entitlement to costs, and to be awarded prejudgment interest) – and that consequently the check could not be viewed as a proper “tender” of payment.
Midwest also contends the court erred in imposing statutory penalties and attorney fees against it, because Western’s formal demand for a full satisfaction of judgment was delivered via facsimile, rather than by U.S. mail or personal delivery as specified in the statute, and thus Midwest was deprived of the opportunity to calculate with precision the 15-day period within which the satisfaction of judgment could be filed without incurring those penalties and fees.
We discern no error in the court’s ruling, and affirm the order. As Western points out, the “payment in full” language on the check originally tendered was not conditional, as the amount tendered was in fact a full payment of the existing judgment, and there was no appeal pending at the time the check was tendered. Moreover, the law is clear that Midwest’s acceptance of a check for the amount undisputedly owed under the judgment, would not affect its right to maintain an appeal in which it was seeking a greater amount. And to the extent Midwest believed there was uncertainty as to either of those points, or suspected that Western was seeking to gain some advantage other than preventing the accrual of interest by its tender of payment, Midwest could have sought clarification or agreement from Western as to the legal ramifications of cashing the check. But it did not, choosing instead to simply hold the check, uncashed, and later claim a right to accrued interest. The court did not err in refusing to endorse that approach.
And finally, it is undisputed Midwest actually received Western’s written demand for an acknowledgment of full satisfaction; that the demand’s transmission via facsimile created more certainty as to the statutory deadline than would delivery by U.S. mail, and that Midwest had no intention of complying with that demand within the 15-day period, or otherwise. Under those circumstances, Midwest was neither deprived of due process nor prejudiced by the facsimile transmission, and the court did not abuse its authority by imposing the statutory penalties and fees.
FACTS
This litigation arises out of an agreement which obligated Midwest to sell, and Western to buy, monthly shipments of ethanol for a fixed price through September of 2005. In August of 2005, the parties’ relationship broke down – Midwest informed Western that it considered Western in breach of the contract based upon earlier conduct, and thus Midwest would not be making the September ethanol delivery due under the contract. In response, Western elected to withhold the payment which was shortly to become due for Midwest’s August shipment, and claimed a right to set off that payment against the damages it would incur due to Midwest’s failure to make the September delivery.
In the litigation, each side claimed the other had breached the contract, and that its own conduct had been a reasonable response to that breach. The court ruled in favor of Western, concluding that Midwest had breached the contract when it refused to make the September delivery, and that Western had been justified in withholding its payment for the August shipment until its claim for damages could be resolved and set off against its liability for that shipment.
The net result of the judgment was that Western, the party who had prevailed on all claims, would pay Midwest the net sum of $45,165.39. The court declined to award either side costs, and rejected Midwest’s claim for prejudgment interest on the net amount owed to it. The day after the court entered its judgment, Western delivered a check to Midwest for the full amount called for therein. The check bore the name and case number of this litigation, along with the statement “Pursuant to the judgement [sic] entered in the above-entitled case – Paid in full.” The check was accompanied by a letter explaining that the check was intended as payment of the judgment entered, and suggesting that if Midwest had “any questions or comments,” its counsel should not hesitate to contact Western’s counsel.
Midwest formally acknowledged receipt of the check, and did not thereafter communicate any concerns about it. It neither cashed the check nor made any effort to return it. Instead, approximately six weeks later Midwest filed an appeal, challenging the court’s refusal to award it prejudgment interest or to designate it as “prevailing party” for purposes of a cost award, but not challenging the merits of the court’s ruling on the parties’ competing monetary claims or the net amount the court determined it was entitled to be paid.
On appeal, we rejected Midwest’s arguments and affirmed the judgment as entered. After that decision became final, and the remittitur issued, Midwest filed an abstract of judgment and began recording judgment liens in December of 2008. When Western learned of those efforts, it contacted Midwest, demanded it cease, and reminded it that Western had delivered payment in full back in 2006. Initially, Midwest seemed to agree, its counsel explaining he hadn’t been aware of the prior payment at the time he recorded the abstract of judgment. Western confirmed with its bank that the original check could still be negotiated, and Midwest indicated it would do so.
Unfortunately, Midwest soon revoked its agreement, explaining that the paid in full language on the original check had rendered it conditional, meaning that Midwest could not have cashed the check without waiving its appellate rights. Midwest claimed that since the check had remained uncashed, no “accord and satisfaction” had occurred, and thus interest had continued to accrue on the judgment debt, at a rate of 10 percent per annum. Midwest claimed an entitlement to an additional $11,653.29 in accrued interest. Midwest also explained that it was still unable to negotiate the original check, since doing so would then operate as a waiver of the right to collect the accrued interest.
Western disputed Midwest’s interpretation of events. Western denied any attempt to place conditions on its payment of the judgment. Western explained that “the notation on the check indicates that the tender was made in full payment of the Judgment, and placed no condition on its negotiation. As such, the obligation was extinguished upon your... acceptance and retention of the check.” Western also pointed out that “[a]t no point in time after [you] accepted the check did [you] indicate that [you] did not intend to negotiate the check or otherwise protest or refuse the tender.” As for Midwest’s assertion that its refusal to cash the check was intended to prevent what it construed as an attempt to create an accord and satisfaction, Western merely noted that the refusal would have been ineffective to prevent that in any case, since “[i]t is well settled that an accord and satisfaction results were [sic] a creditor retains a tendered check without protest even if the check remains uncashed.”
In an effort to speed things along, Western delivered a new check to Midwest, in the same amount as its original check but without the offending paid in full language, while expressly maintaining its contention that the original check had been sufficient to satisfy the judgment. Western demanded that Midwest immediately expunge its abstract of judgment, and file an acknowledgment of satisfaction of judgment as required by Code of Civil Procedure section 724.040.
On January 20, 2009, after Midwest had failed to comply with its demand after nearly a week, Western sent it a formal demand, via facsimile, to file an acknowledgement of satisfaction of judgment within 15 days of the date of the letter. Western’s letter relied specifically on Code of Civil Procedure section 724.050, subdivision (b), which sets forth the procedure to be followed by a party seeking an order to compel its opponent to acknowledge satisfaction of the judgment. As required by that statute, the letter included the following statement: “‘Important warning. If this judgment has been satisfied, the law requires that you comply with this demand not later than 15 days after you receive it. If a court proceeding is necessary to compel you to comply with this demand, you will be required to pay my reasonable attorney’s fees in this proceeding if the court determines that the judgment has been satisfied and that you failed to comply with the demand. In addition, if the court determines that you failed without just cause to comply with this demand within the 15 days allowed, you will be liable for all damages I sustain by reason of such failure and will also forfeit one hundred dollars to me.’”
On February 2, 2009, Midwest filed a partial satisfaction of judgment in the amount of $45,165.40. Two days later, Western protested the partial satisfaction, and warned Midwest that if an acknowledgment of full satisfaction was not filed by the close of business the following day, it would proceed with a motion to compel, and would include a request for statutory attorney fees and damages.
The amount reflected in the acknowledgment of partial satisfaction is 1 cent more than the amount of the check tendered by Western. The disparity is not explained.
On February 5, 2009, Midwest reiterated its refusal to acknowledge full satisfaction of the judgment, and warned Western that (1) interest was continuing to accrue, and (2) the court also had discretion to award fees and costs to Midwest when it prevailed on Western’s motion to compel acknowledgment of satisfaction of the judgment.
Western filed its motion to compel acknowledgement of satisfaction on February 10, 2009. Midwest opposed the motion, and requested that it be awarded $4,687.50 in fees and costs incurred in connection with its opposition.
The court’s tentative ruling, announced prior to the hearing, reflected its inclination to compel Midwest to acknowledge satisfaction of the judgment, and to require it to pay Western $7,400 in attorney fees, plus penalties of $350. At the hearing, Midwest reiterated its opposition to the motion on the merits, but also emphasized the point, mentioned only briefly in its opposition brief, that Western’s facsimile transmission of its formal demand for acknowledgment was not in compliance with Code of Civil Procedure section 724.050’s requirement that such demands be delivered either personally or by U.S. mail. Midwest argued that Western’s failure to comply with the statute prevented the award of any attorney fees or penalties under the statute.
After further consideration of Midwest’s argument, the court nonetheless converted its tentative ruling into its final order, compelling Midwest to acknowledge full satisfaction of the judgment and pay attorney fees and penalties to Western.
DISCUSSION
I
Midwest’s primary argument is that the paid in full language contained on Western’s original check necessarily constituted an offer to create an accord and satisfaction, such that the tender of payment was conditioned on Midwest’s agreement to accept that judgment as rendered and waived its right to maintain an appeal seeking additional recovery.
However, as Midwest otherwise concedes, an accord and satisfaction is a form of contract. “An accord and satisfaction is the substitution of a new agreement for and in satisfaction of a preexisting agreement between the same parties. The usual purpose is to settle a claim at a lesser amount. [Citations.] The elements of an accord and satisfaction are: (1) a bona fide dispute between the parties, (2) the debtor sends a certain sum on the express condition that acceptance of it will constitute full payment, and (3) the creditor so understands the transaction and accepts the sum. [Citations.]” (In re Marriage of Thompson (1996) 41 Cal.App.4th 1049, 1058.)
As Midwest explains it, an accord and satisfaction occurs when “[t]he debtor makes an offer of payment on condition that the creditor waives any claim to moneys over and above the amount that the debtor tenders. The creditor accepts this offer by negotiating the check....”
In matters of contract, things are rarely as clear-cut as this. “Whether a transaction constitutes an accord and satisfaction depends on the intention of the parties as determined from the surrounding circumstances, including the conduct and statements of the parties, and notations on the instrument itself.” (In re Marriage of Thompson, supra, 41 Cal.App.4th at pp. 1058-1059.) “Since ‘accord’ signifies an agreement between the parties, the primary principles which govern the law of contracts are necessarily applicable. [Citation.] One of such principles is the fundamental rule that there must be a consent or meeting of the minds of the contracting parties [citation]; it must be shown that the parties intend the sum paid to be accepted in extinction of the amount due. [Citation.]” (Zuckerman v. Pacific Savings Bank (1986) 187 Cal.App.3d 1394, 1405.)
Of course, the “[i]ntent of the parties to make a final settlement generally is a question of fact.” (In re Marriage of Thompson, supra, 41 Cal.App.4th at p. 1059, citing Conderback, Inc. v. Standard Oil Co. (1966) 239 Cal.App.2d 664, 680; D. E. Sanford Co. v. Cory Glass Etc. Co. (1948) 85 Cal.App.2d 724, 730 [“‘The question whether an agreement amounts to an accord and satisfaction is... a question of the intention of the parties and is, therefore, a question of fact.’”].) And in this case, the court very reasonably concluded that Western, at least, never intended any such thing.
Instead, as the court explained in its ruling, it interpreted the notation paid in full on Western’s initial check as nothing more than “a statement of fact. [Western] was paying the judgment in full as of the day after entry of judgment. Whether [Midwest] believed it should have been a higher amount is completely irrelevant. [Western] was legally bound to only pay the amount stated in the judgment at that time.”
The court went on to explain that “if [Midwest] had issue with depositing the check, it should have sought agreement with [Western] that the check was for payment of the judgment at that time, notwithstanding further Court rulings that may increase the amount. [Western] doesn’t declare that it made any efforts to clarify the check or remove what only it perceived as a conditional offer that would affect [its] legal remedies.” (Italics added.)
We conclude the trial court’s analysis was spot on, and fully supported by the evidence. The statement paid in full, when placed on a check which in fact represents full payment of the judgment as it then exists, does not, on its face, reflect an effort to compromise the liability. It can just as easily be construed as a plain statement of fact: “this check reflects payment of the just-rendered judgment, in full.” By contrast, if Western had tendered an amount less than that called for in the judgment while still including paid in full language, it would seemingly imply Western’s offer not to appeal the judgment itself if Midwest would accept the lesser amount; and hence Midwest’s negotiation of that reduced check would have presented a strong case for an accord and satisfaction. But that is not what happened here. The evidence here suggests that what Western intended was to simply pay the judgment in full, without requesting concessions, so as to prevent the accrual of interest on a liability it did not dispute.
Indeed, although Midwest contends Western itself argued that an accord and satisfaction had taken place, the contention is misplaced. In the letter cited by Midwest, Western never asserted that its original check had created, or was intended to create, an accord and satisfaction. Rather, Western claimed its check had simply been intended as full payment of the judgment rendered, and then went on to express doubt concerning the sincerity of Midwest’s purported fear of an accord and satisfaction as the justification for its failure to cash the check. Western pointed out that if Midwest had really believed that Western’s tender of a paid in full check might have been intended to create an accord and satisfaction, Midwest’s proper response was to expressly reject that check, and return it uncashed. Midwest’s decision to keep the check, without protest – even though uncashed – actually supported the conclusion that an accord and satisfaction had occurred.
As explained in Besco Enterprises, Inc., v. Carole, Inc. (1969) 274 Cal.App.2d 42, 44, “To constitute an accord and satisfaction, the creditor must evidence his acceptance of the check actually or by implication. The cashing of the check or its certification is sufficient an act of dominion to constitute such acceptance. Also, where the check is retained for an unreasonable length of time without protest as to its being in full payment, even though uncashed, [it] may constitute an accord and satisfaction. [Citation.]” (Second italics added; accord, Sheldon Builders, Inc. v. Trojan Towers (1967) 255 Cal.App.2d 781, 788 [“Where a check is presented as payment and not refused, it is the duty of the payee to return it without unreasonable delay if he does not wish to cash it, in order to avoid the presumption that it constituted satisfaction of the obligation.”].)
The trial court’s factual conclusion that Western had not intended to impose any conditions on its tender of payment by including the words paid in full on the check was sufficient, in and of itself, to support its order compelling Midwest to acknowledge satisfaction of the judgment. Once the court reached that conclusion, the fact that Midwest may have believed otherwise – or that it may have acted in a manner inconsistent with acceptance of the perceived condition – becomes immaterial. No condition was imposed on Midwest’s acceptance of payment unless Western intended that it be. And Western did not.
To be clear, the court did not conclude, as Midwest contends in a later portion of its brief, that an accord and satisfaction actually occurred in this case. The court’s order compelling Midwest to acknowledge full satisfaction of the judgment was based upon its conclusion that no condition had been placed upon Midwest’s negotiation of the original check tendered by Western, and thus that original tender had been sufficient to constitute full satisfaction of the judgment. Consequently, we need not address Midwest’s arguments designed to persuade us that it never accepted the perceived conditions placed upon Western’s tender of payment.
Still, Midwest argues it is unfair to adjudicate the conditional nature of the tendered payment based upon Western’s intention, rather than its own reasonable interpretation thereof, because doing so requires Midwest to assume a risk by cashing the check. As Midwest explains, Western’s tender of the paid in full check “presented Midwest with two choices: Negotiate the check with Western raising the argument that Midwest’s negotiation resulted in an accord and satisfaction under the doctrine of offer and acceptance such that Midwest waived its right to challenge the amount of the judgment; or not negotiate the check and risk that Western would later deny that the language ‘paid in full’ was conditional or otherwise legally binding on Midwest.” We are not persuaded.
As the trial court explained in its tentative ruling, “if [Midwest] had issue with depositing the check, it should have sought agreement with [Western] that the check was for payment of judgment at that time, notwithstanding further Court rulings that may increase the amount.” Had Western agreed, it could not have later claimed that an accord and satisfaction had been implied. And had Western refused, it could not later have denied an intention to impose such a condition on acceptance. But Midwest did no such thing, or as the trial court characterized it, made no “efforts to clarify the check or remove what only it perceived as a conditional offer....”
Finally, we note that absent some condition imposed by Western on Midwest’s acceptance of payment – which the trial court concluded had not occurred in this case – nothing in the law precluded Midwest from both cashing Western’s check and pursuing its appeal seeking additional amounts. As explained in Lee v. Brown (1976) 18 Cal.3d 110, 115, a litigant’s acceptance of payment of a judgment does not waive the right to appeal “in those cases in which appellant is concededly entitled to the accepted benefits, and his right to them is unaffected by the outcome of the case on appeal. [Citation.] Stated another way, one may appeal from a portion of a severable and independent judgment while accepting the benefits of the unaffected remainder of the judgment.” In this case, Midwest’s prior appeal did not challenge the aspect of the court’s judgment which had decreed Western’s right to claim an offset and adjudicated the net amount owed to Midwest as a result of that offset. Consequently, Midwest was free to accept payment of that undisputed aspect of the court’s judgment, while still maintaining its appeal regarding an entitlement to costs and interest. (See also In re Marriage of Fonstein (1976) 17 Cal.3d 738, 744 [“[W]here the benefits accepted are those to which the appellant would be entitled even in the event of reversal, acceptance thereof does not bar prosecution of the appeal.”].)
Western’s original tender of a check in full payment of the undisputed portion of the judgment should have been accepted by Midwest in satisfaction of the judgment at that time. Midwest’s unilateral and mistaken belief that cashing the check would constitute a forfeiture of its appellate rights does not affect the validity of Western’s tender. Consequently, no interest accrued on that judgment during the time Midwest continued to hold the check, uncashed, and the court properly ordered Midwest to acknowledge full satisfaction of the judgment.
II
Midwest’s alternate contention is that even if the court could have properly concluded Western’s initial tender of payment fully satisfied the judgment, it nonetheless erred in awarding statutory penalties and fees to Western, since Western did not serve its statutory demand for an acknowledgment of satisfaction by one of the methods specified in the statute. As Western points out, Code of Civil Procedure section 724.050, prescribes the exclusive procedure for compelling an acknowledgement of satisfaction of judgment (Quintana v. Gibson (2003) 113 Cal.App.4th 89), and that section requires the party demanding the acknowledgment to deliver its demand either personally, or by U.S. mail.
However, in Quintana, the court also concluded that failure to comply with the statutory procedure did not necessarily require a reversal of the court’s order. As the Quintana court explained, in the absence of prejudice, the moving party’s failure to comply with the mandatory procedure could be disregarded: “Although defendant did not comply with the demand requirements of Code of Civil Procedure section 724.050 prior to bringing a noticed motion, we conclude plaintiff suffered no prejudice by defendant’s lack of compliance. (Cal. Const., art. VI, § 13.) ‘The court must, in every stage of an action, disregard any error, improper ruling, instruction, or defect, in the pleadings or proceedings which, in the opinion of said court, does not affect the substantial rights of the parties. No judgment, decision, or decree shall be reversed or affected by reason of any error, ruling, instruction, or defect, unless it shall appear from the record that such error, ruling, instruction, or defect was prejudicial, and also by reason of such error, ruling, instruction, or defect, the said party complaining or appealing sustained and suffered substantial injury, and that a different result would have been probable if such error, ruling, instruction, or defect had not occurred or existed. There shall be no presumption that error is prejudicial, or that injury was done if error was shown.’ (Code Civ. Proc., § 475.)” (Quintana v. Gibson, supra, 113 Cal.App.4th at p. 96.)
Midwest seeks to distinguish Quintana, noting the court’s conclusion in that case the plaintiff had suffered no prejudice was based in part on the fact no fees or statutory penalties had been imposed. The contention has only surface appeal. The absence of statutory penalties was significant in Quintana, because the defendant there had ignored the statutory requirements entirely, and thus had not given the mandatory warning which informed the plaintiff of the deadline for acknowledging satisfaction and the consequences of failing to comply with it.
In this case, by contrast to Quintana, Midwest was given the required statutory warnings, and was informed – in writing – of the statutory period within which it could comply with the demand to acknowledge satisfaction of the judgment and thus avoid liability for fees and the imposition of any penalty. Midwest is simply contending that the written warning was delivered to it in an unauthorized – albeit entirely effective – manner.
And rather than filing its acknowledgment of satisfaction in advance of the deadline imposed by the statute, Midwest instead made an informed decision to stand on its contention that Western had not properly satisfied the judgment, and to defend the motion on the merits. Thus, Midwest’s complaint is entirely technical – objecting only to the form, rather than the substance, of Western’s statutory compliance. In effect, Midwest is asserting Western failed to say “Mother may I.”
Technical defects in a moving party’s required notice will be considered waived if the responding party opposes the motion on the merits, and does not claim any prejudice from the defect. “It is well settled that the appearance of a party at the hearing of a motion and his or her opposition to the motion on its merits is a waiver of any defects or irregularities in the notice of motion. [Citations.] This rule applies even when no notice was given at all. [Citations.] Accordingly, a party who appears and contests a motion in the court below cannot object on appeal or by seeking extraordinary relief in the appellate court that he had no notice of the motion or that the notice was insufficient or defective.” (Tate v. Superior Court (1975) 45 Cal.App.3d 925, 930.)
If a party contends it was actually prejudiced by the defect in the notice, the burden is on that party to make a showing in support of that contention, and seek a continuance of the hearing. The failure to do those things in the trial court will be deemed a waiver of the defect. (Carlton v. Quint (2000) 77 Cal.App.4th 690, 698.) In this case, Midwest made no showing of prejudice in the trial court, and made no request for any continuance based upon it. On appeal, Midwest’s only allusion to prejudice is the suggestion that Western’s failure to serve its demand for satisfaction either personally, or through the U.S. mail “created confusion as to Midwest’s deadline to comply with Western’s demands to avoid sanctions.” The suggestion is not a compelling one. The 15-day deadline set forth in Code of Civil Procedure section 724.050 begins to run from the date of “actual receipt of the demand.” (Code Civ. Proc., § 724.050, subd. (c).) Midwest would be at least as capable of discerning when it “actually” received a demand transmitted by facsimile – and perhaps more so – than it would one delivered by U.S. mail.
In the circumstances of this case, Western’s delivery of its statutory demand for an acknowledgment of satisfaction of judgment via facsimile transmission, rather than by personal delivery or U.S. mail, was immaterial and non-prejudicial, and did not prevent the imposition of statutory fees and penalties.
The order is affirmed and Western is to recover its costs on appeal.
WE CONCUR: RYLAARSDAM, ACTING P. J., MOORE, J.