PRESENT: All the Justices
GELLES & SONS GENERAL CONTRACTING, INC.
v. Record No. 012319 OPINION BY JUSTICE ELIZABETH B. LACY
September 13, 2002
JEFFREY STACK, INC., T/A JSI
PAVING & CONSTRUCTION, ET AL.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
M. Langhorne Keith, Judge
Gelles & Sons General Contracting, Inc. (Gelles) appeals
the trial court's final order, holding that its claim for
additional monies allegedly due under its contract with Jeffrey
Stack, Inc. (JSI) was barred by an accord and satisfaction
pursuant to Code § 8.3A-311. Because we conclude that the trial
court's factual determination, that a reasonable person would
consider that JSI provided Gelles with a "conspicuous statement
to the effect that the instrument was tendered as full
satisfaction of the claim," was not clearly erroneous, we will
affirm the judgment of the trial court.
Through a series of oral agreements, Gelles agreed to
provide brick laying work on JSI's construction project. Gelles
submitted invoices totaling $91,932 for its work. JSI paid
Gelles $70,486. In response to Gelles' invoice for a balance of
$26,175, JSI sent Gelles a schedule of account on December 8,
2000, reflecting a balance remaining of only $13,580 after
adjustments made for work and materials provided by JSI "in
order to properly complete the work." In a December 11
facsimile transmittal Gelles disagreed with JSI's statement of
account and requested payment of the full amount invoiced. On
December 13, 2000, JSI sent Gelles a letter detailing the
deficiencies in Gelles' work. The final paragraph of the letter
stated, "JSI Paving and Construction stands by its final amounts
as stated on the latest correspondence dated December 8, 2000.
Enclosed, please find a check in the amount of $13,580.00
representing final payment on the contract." Gelles negotiated
JSI's check for that amount.
Gelles filed a motion for judgment against JSI and its
bonding company, North American Specialty Insurance Company
(NASIC), for $26,000 plus interest, asserting that it was
entitled to the entire unpaid balance. JSI and NASIC filed a
plea in bar, claiming that Gelles' action was barred by an
accord and satisfaction pursuant to Code § 8.3A-311.
After an evidentiary hearing on the plea in bar, the trial
court concluded that the requirements set out in Code § 8.3A-
311(a)-(b) had been met, that there was an accord and
satisfaction, and entered an order dismissing Gelles' motion for
judgment. We awarded Gelles this appeal.
DISCUSSION
Code § 8.3A-311 provides in pertinent part:
(a) If a person against whom a claim is asserted
proves that (i) that person in good faith tendered an
instrument to the claimant as full satisfaction of the
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claim, (ii) the amount of the claim was unliquidated
or subject to a bona fide dispute, and (iii) the
claimant obtained payment of the instrument, the
following subsections apply.
(b) . . . 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.
Gelles maintains that the statement in JSI's December 13 letter
that the check submitted by JSI represented "final payment on
the contract" did not meet the requirements of Code § 8.3A-
311(b) because it was neither conspicuous nor sufficiently clear
to inform a reasonable person that cashing the check constituted
a settlement of the claims between the parties.
Conspicuous, as defined in Code § 8.1-201(10), means a term
or clause that a reasonable person "ought to have noticed."
This definition describes a physical attribute of the statement,
not the content or meaning conveyed by the statement.
Therefore, the manner in which the statement is displayed is the
focus of the inquiry. According to Code § 8.1-201(10), whether
a term or clause is conspicuous, as required by Code § 8.3A-
311(b), is a decision to be made by the court.
There is no statutory requirement, found in Code § 8.1-
201(10) or elsewhere, that the term or clause must be displayed
in specific type or in any other distinguishing manner. While
asserting that the statement in issue is not conspicuous, Gelles
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presents little support for this assertion, suggesting rather
that "[t]he most important question" is whether the statement
adequately relayed JSI's intent to tender the check in full
satisfaction of Gelles' claim. Under these circumstances, we
find no basis for rejecting the trial court's determination that
the statement at issue was "conspicuous" for purposes of Code
§ 8.3A-311(b).
The crux of Gelles’ argument on appeal is that the language
at issue would not clearly inform a reasonable person that the
check was being offered in full satisfaction of the claim. As
noted in the official comment, Code § 8.3A-311 "follows the
common law" with only "minor variations to reflect current
business conditions." Thus, common law principles regarding the
nature of the offer are relevant to applying the doctrine of
accord and satisfaction as codified in Code § 8.3A-311.
Under the common law, an accord and satisfaction requires
both that the debtor intend that the proffered amount be given
in full satisfaction of the disputed claim and that the claimant
accept that amount in accordance with the debtor's intent.
Virginia-Carolina Elec. Works, Inc. v. Cooper, 192 Va. 78, 80-
81, 63 S.E.2d 717, 719 (1951). The acceptance need not be
express, but may be implied. Id., 63 S.E.2d at 719. In Mercury
Insurance Co. v. Griffith, 178 Va. 9, 18, 16 S.E.2d 312, 315
(1941), we explained that the giving and acceptance of a check
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is prima facie evidence that the check constituted "payment in
full" of the disputed account and that acceptance of the check
"merely placed the burden of proof upon the [claimant]." "The
acceptance of a check on which appears 'in full of account,' or
words of like import, does not in fact close the account unless
it was accepted with intelligent appreciation of its possible
consequences, coupled with knowledge of all relevant facts."
Id. at 20, 16 S.E.2d at 316.
Code § 8.3A-311 codifies these principles in subsections
(a) and (b). Thus, once the requirements of those subsections
are met, an accord and satisfaction is presumed. The party
challenging the accord and satisfaction may rebut this
presumption. Unlike the common law, however, the statute
requires the claimant to overcome the presumption by satisfying
an objective rather than a subjective test, that is, would a
reasonable person have considered that the "instrument was
tendered as full satisfaction of the claim?" See Webb Bus.
Promotions, Inc. v. American Electronics & Entertainment Corp.,
617 N.W.2d 67, 76 (Minn. 2000) (applying the UCC and holding
that the presumption is rebutted if the claimant shows that a
reasonable person would not have understood that the payment
meant to discharge the obligation).
We now turn to the application of these principles to the
facts of this case. First, Gelles urges that this Court adopt
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"clear guidelines" for language that is sufficient to give rise
to the presumption under the statute. The statute itself,
however, by describing the required statement as one "to the
effect" that the tender will satisfy the debt, necessarily
contemplates that no specific language is required and that each
case must be considered on its own merits. Additionally, if a
claimant has any misgivings about the nature of the tender, Code
§ 8.3A-311(c)(2) allows the claimant to repay the creditor
within 90 days and nullify the accord and satisfaction. This
statutory scheme protects a claimant and is inconsistent with a
requirement that only certain language will invoke the
presumption.
The trial court concluded in this case that the evidence
presented a prima facie case of an accord and satisfaction under
the statute. In rejecting Gelles' arguments that the language
at issue was ambiguous and would not lead a reasonable person to
conclude that the tender of the check by JSI in its December 13
letter was intended as full satisfaction of Gelles' claim, the
trial court properly looked at the circumstances of the
transaction and the conduct of the parties. See John Grier
Constr. Co. v. Jones Welding & Repair, Inc., 238 Va. 270, 272-
73, 383 S.E.2d 719, 721 (1989). The fact finder, in this case
the trial court, found that a reasonable person could not have
considered the language of the December 8 and 13 letters "was
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anything other than" an expression of JSI’s intent that the
check and letter proffered on December 13 was, "in effect, a
drop-dead letter that says, 'This is it. This is what we're
going to pay you.' " Further, the trial court specifically
stated that Gelles' evidence that its president did not think
the language meant full satisfaction of the claim was not
credible. We cannot say that, on this record, these factual
findings were clearly erroneous.
The record supports the trial court's finding that the
entire course of conduct and communications between these
parties made clear that JSI offered the $13,580 as the final
payment that it intended to make and that JSI considered that
amount to represent the proper accounting under the contract.
JSI's December 8 and December 13 letters to Gelles, taken
together, made express JSI's position that it would pay no more
under the contract than the $13,580 check that it included with
the December 13 letter. Nothing in the language of the December
8 and 13 letters qualified JSI's decision to "stand[] by its
final amounts."
Accordingly, for the reasons stated above, we will affirm
the judgment of the trial court.
Affirmed.
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