PRESENT: All the Justices
MICHAEL L. HELTON
OPINION BY
v. Record No. 081240 JUSTICE S. BERNARD GOODWYN
FEBRUARY 27, 2009
PHILLIP A. GLICK PLUMBING, INC.
FROM THE CIRCUIT COURT OF ROCKINGHAM COUNTY
John J. McGrath, Jr., Judge
In this case, we consider whether the circuit court erred
in failing to find an accord and satisfaction by use of an
instrument.
Phillip A. Glick Plumbing, Inc. (“Glick Plumbing”) filed a
warrant in debt in the General District Court of Rockingham
County claiming payment due for plumbing work that had been
completed on a house owned by Michael L. Helton (“Helton”). The
case was appealed to the Circuit Court of Rockingham County. In
the circuit court, Helton filed a plea in bar claiming an accord
and satisfaction pursuant to Code § 8.3A-311. The plea in bar
was denied after argument, and the case proceeded to trial.
After the trial, the circuit court awarded Glick Plumbing a
judgment of $1,686.51 plus interest. Helton objected to the
judgment, claiming that he had proven an accord and satisfaction
by use of an instrument. Helton appeals.
FACTS
In 2005, Helton met with Andy Glick (“Glick”), owner of
Glick Plumbing, and they orally contracted for Glick Plumbing to
complete plumbing work on a house under construction in Penn
Laird, Virginia. The plumbing services were to be charged at
the rate of $35 per hour plus the cost of materials. After the
initial work was done, Helton noted that the workers were taking
extended breaks and generally working slowly. He informed Glick
about these problems. Glick acknowledged the complaint but did
not agree that the workers were wasting time.
After Helton received the initial invoice, he requested an
itemized statement and paid a portion of the invoice. Glick
complained to Helton about the partial payment, and Helton told
him that the issue of wasted time and materials would have to be
addressed before he would make a full payment. Glick again
denied that any time or materials were being wasted.
Helton later contracted with Glick Plumbing to install a
hot water heater in the Penn Laird home. Glick agreed to
install the hot water heater if payment would be made. Helton
agreed to pay for the hot water heater and the hours worked to
make the installation.
Helton kept track of the hours related to the installation
of the hot water heater. After receiving the invoice, Helton
told Glick that the amount billed was “considerably high based
on the hours worked, multiplied by the rate per hour.” Helton
then paid for the hot water heater installation but did not pay
for all of the hours billed for the work.
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Helton, thereafter, sent two letters to Glick’s business
address advising him of perceived problems with overbilling on
the original job as well as on the installation of the water
heater. These letters contained detailed allegations of workers
“goofing off” and wasted materials. After sending these
letters, Helton mailed a cashier’s check to Glick’s business
address in the amount of $1,300, which was $1,686.51 less than
the amount billed. The cashier’s check included the words “Paid
in Full” on the memo line on the front of the check.
Accompanying the check, Helton sent a letter stating that the
amount was reduced from the total amount billed, due to the
previously reported issues with overbilling of hours and wasted
materials. Both the letter and the check indicated that no more
payments would be made.
Later, Glick Plumbing mailed Helton another invoice asking
for the remainder of the amount billed. This invoice included a
copy of Helton’s cashier’s check, which had been deposited into
Glick Plumbing’s bank account. The words “Paid in Full” had been
crossed out on the check, and the words “No” and “Balance Due
$1,686.51” had been added.
ANALYSIS
On appeal, Helton assigns error to the circuit court’s
denial of his plea in bar and defense of an accord and
satisfaction. Helton claims he satisfied all the requirements
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set forth in Code § 8.3A-311 for an accord and satisfaction by
use of an instrument. Glick Plumbing argues that even if the
statute applies, Helton does not meet the criteria for an accord
and satisfaction by use of an instrument because “he did not act
in good faith with an honest belief that a bona fide dispute
existed.”
Code § 8.3A-311 was adopted by the General Assembly in 1992
as an amendment to the Uniform Commercial Code (“UCC”), and it
is applicable to the situation presented in this appeal. Code
§ 8.3A-311; see Johnston v. First Union Nat’l Bank, 271 Va. 239,
244, 624 S.E.2d 10, 12 (2006). In order to prove an accord and
satisfaction by use of an instrument, the person against whom
the claim is asserted, the debtor, must prove that: (1) he in
good faith tendered an instrument to the claimant as full
satisfaction of the claim, (2) the amount of the claim was
unliquidated or subject to a bona fide dispute and (3) the
claimant obtained payment of the instrument. Code § 8.3A-
311(a). Unless subsection (c) of the statute applies, the claim
is discharged if the debtor 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. ∗ Code § 8.3A-311(b).
∗
Code § 8.3A-311(c) is inapplicable in this case.
Subsection (c) of the Code states that the debt is not
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It is undisputed that Glick Plumbing received and deposited
the check from Helton. Glick conceded that Helton complained to
him more than once concerning allegations of overbilling and
wasted materials. Helton told Glick that the issue of wasted
time and materials would need to be addressed before full
payment would be made. Further, Helton wrote two letters to
Glick about his allegations that workers were “goofing off” and
wasting time. Thus, the amount of Glick Plumbing’s claim was
the subject of a bona fide dispute.
The Code defines “in good faith” as honesty in fact and in
the observance of reasonable commercial standards of fair
dealing. Code § 8.3A-103. In the present case, the circuit
court’s approved statement of facts indicates that Helton
submitted the cashier’s check to Glick Plumbing’s business
address. Further, the check submitted was clearly marked “Paid
in Full,” and a letter accompanying the check indicated that
Helton was submitting the check in full satisfaction of the
discharged if the claimant, if an organization, proves that it
sent a statement to the person against whom the claim is
asserted that communications concerning disputed debts,
including an instrument tendered as full satisfaction of a debt,
are to be sent to a designated person, office, or place, and the
instrument or accompanying communication was not received by
that designated person, or if a claimant, whether or not an
organization, proves that within ninety days after payment of
the instrument, the claimant tendered repayment of the amount of
the instrument to the person against whom the claim is asserted.
Code § 8.3A-311(c). Glick Plumbing has not alleged any facts
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claim. There have been no claims that the check was submitted
fraudulently. The evidence before the circuit court showed that
the check was tendered in good faith in order to settle the
disputed claim.
Because subsection (c) does not apply, 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.” Code § 8.3A-311(b). The circuit court’s approved
statement of facts states that Helton’s cashier’s check was
mailed to Glick’s business address with an accompanying
explanatory letter. Helton wrote, “Paid in Full” on the
cashier’s check. The letter made it clear that no more payments
would be made. Before depositing Helton’s check, Glick Plumbing
placed a line through the notation “Paid in Full” and wrote “No”
and “Balance Due $1,686.51” on the check, verifying Glick
Plumbing’s knowledge of the language on the check. Thus, we
hold that Glick Plumbing received a conspicuous statement to the
effect that Helton’s check was being tendered as full
satisfaction of the claim.
that would support the application of this subsection in this
case.
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The remaining issue is whether Glick Plumbing’s alteration
of the “Paid in Full” language on Helton’s check allows Glick
Plumbing to avoid a finding of an accord and satisfaction by
showing that Glick Plumbing’s acceptance of the check was for a
partial payment only. We hold that it does not.
At common law, if the instrument is sent to the creditor
with a statement that the amount is in full satisfaction of the
claim and the creditor accepts it with knowledge of such
condition, then an accord and satisfaction results. See
Virginia-Carolina Elec. Works v. Cooper, 192 Va. 78, 81, 63
S.E.2d 717, 719 (1951). While some jurisdictions have held that
the UCC allows a creditor to avoid an accord and satisfaction by
altering the “Paid in Full” notation, in keeping with the
majority view, we hold that the UCC does not change the common
law, and that the common law does not allow acceptance with
alteration of an instrument tendered in good faith as a full
payment of the disputed debt. Sarah H. Jenkins, 13 Corbin on
Contracts § 70.2, at 318-27 (Joseph M. Perillo, ed., rev. ed.
2003). See also Nizan v. Wells Fargo Bank Minn. N.A., 274 Va.
481, 491, 650 S.E.2d 497, 502 (2007) (under Code § 8.1A-103,
unless displaced by the particular provisions of the UCC, common
law doctrines are continued).
For these reasons, we hold that Helton proved an accord and
satisfaction by use of an instrument. Accordingly, we will
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reverse the judgment of the circuit court and enter final
judgment in favor of Helton.
Reversed and final judgment.
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