Opinion
CIV. NO. 99-3283 SECTION "K"(5)
March 30, 2000.
ORDER AND REASONS
Before the Court is a Motion for Summary Judgment filed by Monsanto Company ("Monsanto") on the grounds that all the elements of the doctrine of accord and satisfaction have been proven, and thus no genuine issues of material fact exist. The Court has reviewed the pleadings, memoranda, exhibits and the relevant law and finds that the motion must be denied for the reasons that follow.
Facts and Cause of Action
On May 26, 1997, Monsanto and Plaintiff, Castay Incorporated ("Castay"), entered into a contractual agreement whereby Castay would provide Monsanto with certain rental equipment and emergency standby services for a five-year term. The agreement also stated that during the five years the prices would remain the same. Monsanto's form of acceptance was a purchase order (#38332) which provided: "this purchase order is for the five year plan." This purchase order also contained a provision which read: "This purchase order includes terms and conditions on the back." Castay, however, maintains that their copy did not have any terms or conditions on the back page. Monsanto, for purposes of this motion only, concedes that Castay did not receive the back page that allegedly contained a notation in Paragraph 8 which provided: "Buyer may terminate all or part of this contract for its convenience upon written notice to seller." Therefore, the following analysis proceeds under the assumption that there were no terms and conditions contained on the back of purchase order #38332.
For approximately two years the two parties carried out the obligations imposed by the contract. In May of 1999, however, a dispute arose, and Monsanto advised Castay via letter dated May 5, 1999 (post-marked May 23, 1999), that they were terminating the contractual agreement pursuant to Paragraph 8 contained on the reverse of purchase order #38332. On June 3, 1999, Castay responded by letter which stated that $127,214.00 remained outstanding, a sum which represented the amount allegedly due in Castay's estimation on the remaining three years on the contract. In this letter Castay also offered to accept 50%, or $63,657.00, of the outstanding balance as a reasonable figure to break the contract.
The letter specifically stated: "Should Monsanto choose to break the 5 year contract, Castay, Inc. will accept no less than 50% of the outstanding balance of $127,314.00 or $63,657.00 which is a reasonable figure in light of the investment my company has made to perform our part of the contract."
On June 10, 1999, Castay again wrote Monsanto requesting that Monsanto honor the five-year term of the contract. Monsanto responded by letter dated June 14, 1999, which stated that Monsanto was standing behind its decision to terminate the contract pursuant to Paragraph 8. The letter also stated:
As for compensation, per Section 8 of the Agreement Monsanto will pay Castay the amount addressed in the attached Exhibit B for all portions of work already performed. Enclosed you will find a check for the amount addressed in Exhibit B and, therefore, we will now consider this matter closed.
Monsanto enclosed a check (#04215575) for $6,734.00, which also contained the notation: "Termination costs for P.O. 38332." Castay negotiated this check.
Castay filed suit in state court seeking the balance allegedly owed them pursuant to the contract. Monsanto removed that action to this Court and now moves the Court for summary judgment. Monsanto asserts that all of the elements of accord and satisfaction under Louisiana state law have been met, and thus no genuine issue of material fact exists. Castay, on the other hand, contends that a genuine issue of material fact exists as to whether Castay intended the acceptance and subsequent negotiation of Monsanto's check to be a full and final settlement of all claims.
Standard for Summary Judgment
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The party moving for summary judgment bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact." Stults v. Conoco, 76 F.3d 651, 656 (5th Cir. 1996), citing Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 912-13 (5th Cir. 1992), quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. The nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986) (emphasis added); Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995).
Thus, where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial." Matsushita, 475 U.S. at 588. Finally, the court notes that the substantive law determines materiality of facts and only "facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The court now turns to the merits of the arguments with these standards in mind.
Law of Accord and Satisfaction
Under Louisiana law, an accord and satisfaction is very much like a new contract that terminates a dispute between the parties which arose over obligations claimed due under a previous contract. See Fischbach and Moore, Inc. v. Cajun Elec. Power Coop., 799 F.2d 194, 197 (5th Cir. 1986), citing Berger v. Quintero, 127 So. 356 (1930). Thus the doctrine is subject to the rules governing contracts. Id.
Three elements are essential to a successful claim for accord and satisfaction: (1) a disputed claim; (2) the debtor's tendering of a sum less than that claimed by the creditor; and (3) the creditor's acceptance of the payment. Id. at 198. In the instant matter, the parties agree that these three elements have been proven as evidenced by their respective Statements of Uncontested Facts. The Fifth Circuit, however, has held that the mutual consent of the parties to enter into the agreement is also required, and that this determination is an essential question of fact. Id.
Where it is necessary to determine whether a certain performance rendered by the obligor, be it a payment in money, or by check . . ., was tendered to the creditor in such a manner that he knew . . . that it was in full satisfaction of his claim, the question is one of fact. . . .Id., (citing S. Litvinoff, 6 Louisiana Civil Law Treatise: Obligations I (1969), § 384, at 649). The Fifth Circuit further noted in Fischbach and Moore that Louisiana jurisprudence supports the conclusion that the intent of the parties is a question of fact to be resolved by the trier-of-fact. Id.
In Fischbach and Moore, Fischbach agreed to furnish labor, material, and equipment required for certain electrical work on a coal-fired generating plant being constructed for Cajun. Id. at 195. After completion of the contract, a dispute arose as to the amount owed by Cajun to Fischbach for the goods and services rendered by Fischbach during the term of the agreement. Id. By letter, Cajun sent a check to Fischbach that contained the notation: "The check constitutes full and final settlement of any obligations or claims which F M (Fischbach) has asserted or may assert in the future concerning [the] Contract." Id. at 196. Fischbach received the letter and deposited the check soon thereafter. Id. On motion for summary judgment, Cajun contended that since Fischbach had negotiated the check with the "fill and final settlement" notation contained on it, the elements of accord and satisfaction were established and thus no genuine issues of fact existed. Id. at 199. The district court granted the defendants' motion and dismissed the complaint. The Fifth Circuit reversed and stated:
Given the run-of-the-mill case of accord and satisfaction in Louisiana, in which the tender and acceptance of a check for a lesser sum as purported full payment has been held to constitute a discharge of the greater obligation, it is understandable how one could conclude that any creditor accepting a payment carrying the trappings of "payment in full," automatically forfeits the greater claim. But that per se resolution is not the prevailing Louisiana rule. Not every remittance and negotiation of a check tendered with a "full settlement" notation will constitute an accord and satisfaction. The creditor must understand that upon acceptance of the tendered payment the claim will be deemed to have been paid in full.Id. (emphasis added). The court reasoned that a dispute over the issue of Fischbach's intent existed because a reasonable trier-of-fact could conclude that the check was not accepted in lieu of all other claims.
Material Questions of Fact Exist With Respect to Accord and Satisfaction
In the instant matter, Monsanto contends that there was mutual consent between the parties to satisfy the obligation. Monsanto asserts that the June 14, 1999 letter, the notation on the check enclosed therein, and Castay's subsequent deposit of that check demonstrates that Castay intended for the $6,734.00 payment to satisfy the $127,214.00 balance allegedly owed under the original contract. Therefore, Monsanto asserts that summary judgment is proper.
As in Fischbach and Moore, genuine issues of material fact exist in this matter as to whether Castay intended its acceptance and subsequent negotiation of Monsanto's check to serve as satisfaction of the entire $127,214.00 balance that Castay maintains is due under the original contract. It is beyond cavil that a question as to a party's intent to satisfy a pre-existing obligation by way of a subsequent agreement is a question of fact for the fact-finder. It must be clear that the creditor understood that upon acceptance of the check the claim would be deemed to have been paid in full. Both federal courts and courts of the State of Louisiana have refused to make such a finding on summary judgment despite the fact that the check tendered and subsequently negotiated contained a notation that the payment was in "full settlement"of the original obligation. See RTL Corp. v. Manufacturers Enterprises, Inc., 429 So.2d 855 (La. 1983); McClelland v. Security Indus. Ins. Co., 426 So.2d 665 (La.App. 1982); Adams v. Sconza, 380 So.2d 679 (La.App. 1980); Antoine v. Elder Realty Co., 255 So.2d 625 (La.App. 1971). Therefore, merely making such a notation on a payment, or in a letter accompanying a payment, is not sufficient evidence to show that there was mutual consent of the parties, an essential element to the defense of accord and satisfaction. This observation is not meant to insinuate that a trier-of-fact after a trial of this matter could not conclude that the requisite intent was formed. On this matter the Court expresses no opinion whatsoever.
Although it appears in this matter that the intent of the parties to enter into the accord and satisfaction is very close to being established, this Court refuses to resolve this matter on summary judgment for several reasons. First, Walter Castay, President of Castay, stated in his affidavit that Castay never intended to settle the disputed claim for less than $63,657.00 and that he interpreted Monsanto's June 14, 1999 letter as a unilateral statement that Monsanto considered the matter closed. Castay, on the other hand, read this letter as merely inviting litigation to enforce the terms of the contract. Therefore, Castay's acceptance of the check enclosed therein does not establish the intent required to fulfill the doctrine of accord and satisfaction.
Second, the Court is of the opinion that Castay's interpretation of the June 14 letter is possible simply because Monsanto's language in the letter was not as explicit as it could have been in making clear the fact that the letter was meant to be a final settlement offer. For instance, if the letter had stated that acceptance and/or negotiation of the check amounted to a full and final settlement of the amount Castay claimed was due, and of any and all other claims regarding the five-year contract, then there would be no question as to its interpretation. Monsanto's letter, however, merely stated that Monsanto "consider[ed] the matter closed." This language is not clear enough in these circumstances to establish the requisite intent, and thus summary judgment is not proper.
The Court, however, does express some doubt as to the reasonableness of Castay's interpretation of Monsanto's letter.
Finally, in Fischbach and Moore, the Fifth Circuit expressed a strong opinion that issues regarding the intent of a party to enter into an accord and satisfaction should not be decided on summary judgment, but rather are questions of fact for the fact finder. See Fischbach and Moore, 799 F.2d at 198. Although the instant matter presents a case in which the intent of the parties to enter into an accord and satisfaction is very close to being established on summary judgment, this Court refuses to grant the summary judgment in light of the strong contradictory sentiments present in the Circuit and without clearer facts warranting such a decision. Accordingly,
IT IS ORDERED that the Motion for Summary Judgment filed by Monsanto Company is DENIED.
New Orleans, Louisiana, this 29th day of March, 2000.