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Docket Number

No. 99-P-1189.

Attorney(S)

Scott A. Lathrop for the defendants. Rosario M. Rizzo for the plaintiff.

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Smart Summary

Case Summary: Gerard Cuddy v. A E Mechanical, Inc., others

Factual and Procedural Background

This appeal arises from consolidated actions (Civil Action No. 96-1138 consolidated with Middlesex Superior Court Civil Action No. 97-5261) in which the plaintiff, Gerard Cuddy (doing business as Cuddy Sons Pipe Covering), sought payment for subcontract work performed on a construction project. The defendant contractor, AE Mechanical, Inc. (AE Mechanical), sent a check to Cuddy that bore the notation: "Final payment for all work completed to date." Cuddy's bill totaled approximately $63,000. Prior payments from AE Mechanical to Cuddy amounted to about $31,000, and AE Mechanical sent an additional check for approximately $6,500 over and above those prior payments.

The case was heard by a Superior Court judge without a jury. That judge concluded that AE Mechanical had not proved the defense of accord and satisfaction and entered judgment for the plaintiff. AE Mechanical appealed. The Appeals Court reviewed the record, the parties' testimony (including plaintiff's admissions on cross-examination), and applicable legal principles, and reached a different conclusion.

Legal Issues Presented

Whether the defendant contractor's notation on the face of a check—"Final payment for all work completed to date"—operated to discharge the subcontractor's asserted outstanding balance under the doctrine of accord and satisfaction.
Whether the trial judge's finding that there was no accord and satisfaction was clearly erroneous in light of the plaintiff's testimony and the applicable legal standards.

Arguments of the Parties

Defendants' (AE Mechanical, Inc., et al.) Position

AE Mechanical asserted the defense of accord and satisfaction, contending that the check it sent, with the notation "Final payment for all work completed to date," was intended to and did resolve the parties' dispute over the amount due, thereby discharging any remaining claim by the subcontractor.

Plaintiff's (Gerard Cuddy) Position — As Reflected in Testimony

Cuddy testified at trial and, on cross-examination, conceded that AE Mechanical partner Thomas Hooper told him that the amount already paid (about $31,000) was more than he was owed and that Cuddy and Hooper disagreed about whether Cuddy's work exceeded a prior subcontractor's $27,500 estimate.
Cuddy also testified that he understood the final check (about $6,500 above the prior payments) was being offered to settle the dispute.
Although the trial judge characterized AE Mechanical's reaction as "surprise" rather than a dispute over the bill, the plaintiff's own admissions bear on the legal question whether an accord and satisfaction occurred.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Chamberlain v. Barrows, 282 Mass. 295, 299 (1933)	States the basic principle of accord and satisfaction: if a creditor with an unliquidated or disputed claim accepts a sum smaller than claimed in satisfaction, the creditor cannot later sue for the unpaid balance.	The court used this principle to frame the defense AE Mechanical asserted and to explain the legal framework for deciding whether the check and its notation effected a discharge.
Whittaker Chain Tread Co. v. Standard Auto Supply Co., 216 Mass. 204, 208 (1913)	Holds that a debtor does not obtain a discharge where the debtor makes payment of an amount he admits to be due conditioned on its being accepted as discharge of a disputed amount.	The court cited this case to note the exception where a payment constitutes an admission of the amount due conditioned on settlement; it contrasted the present case with situations covered by Whittaker.
Longo Elec. Co. v. Dumais, 1 Mass. App. Ct. 830 (1973)	Referenced as an example of cases involving payment of an amount admittedly due in an attempt to discharge a disputed balance.	The court used Longo (along with other cases) to distinguish those facts from the present case in which the dispute concerned the value of performed work rather than the existence of indebtedness.
Puritan Wool Co. v. Winsted Hosiery Co., 263 Mass. 467, 471 (1928)	Another comparative case cited regarding disputes over payment and accord and satisfaction.	Quoted as a comparison to show differing factual patterns; the court indicated the present dispute more closely matched cases where the value of performance was in dispute rather than the existence of an admitted debt.
Ravosa v. Zais, 40 Mass. App. Ct. 47, 51 (1996)	Principle that a party is bound by his testimony when there is no more favorable evidence in the record.	The court relied on Ravosa to conclude that Cuddy was bound by his own cross-examination admissions since there was no evidence more favorable to him on those points.
Restatement (Second) of Contracts § 281, comment d, illustration 6 (1981)	Provides explanatory material on accord and satisfaction and how acceptance of payment relates to disputed claims.	The court referenced this Restatement provision to support the conclusion that the record did not support the trial judge's finding that the settlement check represented an amount AE Mechanical admitted was due.
Johnson v. Modern Continental Constr. Co., 49 Mass. App. Ct. 545, 547 (2000)	States the standard of appellate review for a judge's ultimate conclusion: the appeals court will not set aside that conclusion unless it is clearly erroneous or inconsistent with the legal standard.	The court applied this standard in explaining that it will reverse a trial judge's finding only if clearly erroneous and then concluded the finding was indeed clearly erroneous here.
Mass.R.A.P. 16(a)(4), as amended, 367 Mass. 921 (1975)	Procedural rule cited for deeming an appeal waived when a party files a notice of appeal but fails to address the appeal in its brief.	The court applied this rule to deem T.J. Industrial Services, Inc.'s appeal waived because it filed a notice of appeal in the consolidated action but did not address that appeal in the brief filed on its behalf.

Court's Reasoning and Analysis

The court began by identifying the central factual and legal question: whether the notation on the check constituted an accord and satisfaction discharging the subcontractor's remaining claim. It reviewed the legal framework for accord and satisfaction—citing Chamberlain for the general rule and Whittaker for the exception where a debtor pays an amount he admits to be due conditioned on acceptance as discharge of a disputed claim.

The Appeals Court examined the trial record and emphasized key testimony elicited from the plaintiff at trial. On cross-examination, the plaintiff admitted that:

AE Mechanical partner Thomas Hooper had told him that the amount already paid (about $31,000) was more than what Cuddy was owed;
he and Hooper disagreed about whether the work exceeded a prior subcontractor's $27,500 estimate; and
he understood the final check (about $6,500 above prior payments) was offered to settle the dispute.

The court relied on Ravosa to treat these admissions as binding because there was no evidence more favorable to the plaintiff on those points. The Appeals Court contrasted the facts of this case with decisions cited by the trial judge involving payments of amounts admittedly due attempted to discharge further claims; here, the dispute was over the value of work performed rather than the existence of indebtedness. Applying Restatement (Second) of Contracts § 281 (and its illustrative discussion), the court concluded that the record did not support the trial judge's finding that the check represented an amount AE Mechanical admitted was due.

Having concluded that the plaintiff's own testimony established that the check was offered and understood as a settlement of the disputed claim, the Appeals Court held that AE Mechanical proved its defense of accord and satisfaction as a matter of law. The court applied the standard of review from Johnson — reversing the trial judge because the judge's contrary factual finding was clearly erroneous.

Holding and Implications

Holding: The Appeals Court reversed the judgment for the plaintiff and concluded that AE Mechanical proved the defense of accord and satisfaction as a matter of law. A new judgment shall enter for the defendants AE Mechanical, Inc., T.J. Industrial Services, Inc., and Joseph M. Savani.

Implications:

The direct consequence is reversal of the trial court's judgment for the plaintiff and entry of judgment for the defendants named above.
The court deemed T.J. Industrial Services, Inc.'s separate appeal in the consolidated action waived under Mass.R.A.P. 16(a)(4) because it filed a notice of appeal but failed to address the appeal in the brief filed on its behalf.
The opinion resolves the dispute between these parties on the facts presented; the court did not purport to announce a novel rule of law beyond applying established accord and satisfaction principles to the record, and no broader precedent beyond the application to these facts is asserted in the opinion.

So ordered.

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GERARD CUDDY vs. A E MECHANICAL, INC., others. Doing business as Cuddy Sons Pipe Covering. By agreement of the parties, this case, Civil Action No. 96-1138, was consolidated in Superior Court with Middlesex Superior Court Civil Action No. 97-5261, T.J. Industrial Services, Inc. vs. Gerard Cuddy. For convenience, we refer to Gerard Cuddy alone as the plaintiff. T.J. Industrial Services, Inc., and Joseph M. Savani.

Contract, Construction contract, Subcontract. Accord and Satisfaction.

This appeal presents the question whether the defendant contractor's notation, "Final payment for all work completed to date," on the face of a check sent to a subcontractor, operated to discharge the balance of the subcontractor's bill.

A Superior Court judge, hearing the case jury-waived, ruled that the defendant, AE Mechanical, Inc. (AE Mechanical), failed to meet its burden of proving accord and satisfaction. The defense of accord and satisfaction is premised on the principle that "[i]f a creditor, having an unliquidated or disputed claim against his debtor, accepts a sum smaller than the amount claimed in satisfaction of the claim, he cannot afterwards maintain an action for the unpaid balance of his original claim." Chamberlain v. Barrows, 282 Mass. 295, 299 (1933) (citations omitted). A debtor does not obtain a discharge of a debt, however, "where [the] debtor undertakes to make payment of what he admits to be due conditioned on its being accepted in discharge of what is in dispute." Whittaker Chain Tread Co. v. Standard Auto Supply Co., 216 Mass. 204, 208 (1913).

At issue is the fair compensation due the plaintiff subcontractor for his work on the project. The judge determined that AE Mechanical had neither disputed Gerard Cuddy's bill of approximately $63,000 nor demonstrated that Cuddy's work was worth less than that amount. In so doing, the judge characterized AE Mechanical's response to Cuddy's bill as one of surprise, rather than dispute, an inference the judge appears to have drawn from the stipulated fact that Thomas Hooper, an AE Mechanical partner, "mentioned that the pipe covering job had run over what he had figured."

Significant testimony on this point was elicited at trial from the plaintiff himself, however. On cross-examination, Cuddy testified that Hooper expressed to Cuddy his view that the amount AE Mechanical had already paid Cuddy (some $31,000) was more than he was owed for the work. Cuddy further conceded that he and Hooper disagreed as to whether Cuddy's work had exceeded the work set out in the prior subcontractor's $27,500 estimate. Cuddy also testified that he understood that the final check (for some $6,500 over and above the $31,000 he had already been paid) was being offered to settle the dispute. There being no evidence more favorable to the plaintiff, he is thus bound by his testimony. See Ravosa v. Zais, 40 Mass. App. Ct. 47, 51 (1996).

Cuddy's critical admissions regarding the nature of the parties' dispute over the bill distinguish this case from those relied upon by the judge, which involved the payment of an amount admittedly due in an attempt to discharge the disputed balance. See, e.g., Whittaker Chain Tread Co. v. Standard Auto Supply Co., 216 Mass. at 208; Longo Elec. Co. v. Dumais, 1 Mass. App. Ct. 830 (1973). Here, although the parties did not dispute that Cuddy had performed the work billed for, they did dispute the actual value of the work. Compare Puritan Wool Co. v. Winsted Hosiery Co., 263 Mass. 467, 471 (1928); Longo Elec. Co. v. Dumais, supra. As such, the record and the case law do not support the judge's conclusion that AE Mechanical's settlement check represented an amount that AE Mechanical admitted was due to Cuddy for his work. See Restatement (Second) of Contracts § 281 comment d, ill. 6, at 384 (1981). We thus conclude that the judge's finding that there was no accord and satisfaction is clearly erroneous. See generally Johnson v. Modern Continental Constr. Co., 49 Mass. App. Ct. 545, 547 (2000) ("[w]e will not set aside a judge's ultimate conclusion unless it is clearly erroneous or inconsistent with the relevant legal standard").

Based on the foregoing, we conclude that AE Mechanical proved its defense of accord and satisfaction as matter of law. Accordingly, the judgment for the plaintiff is reversed. A new judgment shall enter for the defendants AE Mechanical, Inc., T.J. Industrial Services, Inc., and Joseph M. Savani.

T.J. Industrial Services, Inc., filed a notice of appeal from the judgment in Cuddy's favor in the consolidated action, no. 97-5261, but has not addressed that appeal in the brief filed on its behalf. Pursuant to Mass.R.A.P. 16 (a)(4), as amended, 367 Mass. 921 (1975), we therefore deem the appeal waived.

So ordered.

CUDDY v. A E MECH