Douthwright v. Northeast Corridor Foundations

Connecticut Appellate Court · 2002 · Contracts

72 Conn. App. 319 (2002)

Updated July 26, 2026

ContractsAccord and satisfactionSettlement paymentInterest on settlementsUCC 3-311good faith disputeliquidated debtsettlement agreement

Facts

The parties entered into an oral settlement agreement under which the plaintiff was entitled to receive $3.2 million, with the defendants obligated to pay $2.5 million of that amount. After the plaintiff delivered the required releases and withdrawal on January 2, 2001, the defendants' payment became due on February 2, 2001, but they did not timely pay the remaining $1.5 million. Following a hearing on the plaintiff's motion for default, the defendants sent a $1.5 million check with a letter stating that it was tendered in full and final settlement and disputing any obligation to pay interest. The trial court found the settlement required immediate payment, was not conditioned on a later arbitration agreement, and awarded the plaintiff $40,931.45 in statutory interest for the delay.

Issue

Whether the defendants' tender of a check for the principal amount of the debt, accompanied by a letter stating that it was in full settlement, effected an accord and satisfaction that discharged their obligation to pay statutory interest. More specifically, the question was whether there was a good faith dispute over an unliquidated or bona fide disputed claim when the check was tendered.

Rule

To establish an accord and satisfaction by use of a check, the debtor must prove that it in good faith tendered the instrument as full satisfaction of the claim, that the amount of the claim was unliquidated or subject to a bona fide dispute, and that the claimant obtained payment of the instrument. Where the debt and interest are fixed and due, there is no good faith dispute, and tender of the principal amount alone does not discharge the obligation to pay interest.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Hartford, Lena Ortiz settled a personal injury suit with Riverbend Paving Group for $400,000. Lena delivered the required release and withdrawal, the 30-day payment deadline passed, and Riverbend then mailed a check for $400,000 with a letter stating that the check was tendered in full satisfaction and that no interest was owed.

If Lena deposits the check and then sues for the statutory interest that accrued after the missed deadline, which is the strongest argument against Riverbend's accord-and-satisfaction defense?

Explanation. Accord and satisfaction by check requires, among other things, a good faith tender of the instrument as full satisfaction of a claim that is unliquidated or subject to a bona fide dispute. Once the settlement payment was due and unpaid, the principal was fixed, and the statutory interest was also fixed by law. A unilateral statement that the check is in full satisfaction does not create a bona fide dispute over a liquidated obligation.