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TJD Architects v. Cervini's Auto Designs

March 2, 2010


On appeal from the Superior Court of New Jersey, Law Division, Cumberland County, Docket No. DC-004705-08.

Per curiam.


Submitted January 25, 2010

Before Judges Lisa and Alvarez.

Plaintiff, TJD Architects (TJD), appeals from summary judgment dismissing its complaint against Cervini's Auto Designs (Cervini), in which TJD sought to collect $4832.39 allegedly due for architectural services rendered. In granting summary judgment, the court concluded that an accord and satisfaction had been reached. Based upon our review of the record, the controlling legal principles, and the arguments of counsel, we conclude that material facts exist as to the accord and satisfaction issue, as a result of which summary judgment was improperly granted.*fn1

TJD is an architectural firm. Cervini acquired a prefabricated steel building which it had constructed for use in its business operation. Representatives of TJD and Cervini's negotiated an agreement as memorialized in a letter from TJD to Cervini by which TJD would provide all required architectural "Fit-out design" for the structure. The contract price was $9000 plus reimbursable expenses.*fn2 Cervini paid a deposit of $2250, and the work began.

According to TJD, it completed all of the fit-out work that was covered by the contract, after which it learned that the steel structure was not designed to support a proposed second floor. Accordingly, TJD engaged in correspondence with Cervini and proposed additional engineering and design work that would be required to construct the second floor as a freestanding structure, without attachment to the pre-engineered steel structure. It was TJD's understanding that this additional work was not contemplated by the original agreement. It was therefore extra work for which it would charge an extra amount. According to TJD, Cervini did not object to the additional work and acquiesced in the need for it in order to accomplish the desired result in the project. TJD billed Cervini an additional $4000, consisting of the following: (1) $2500 for additional services to structural design and second floor steel framing, and (2) $1500 for engineering analysis and review by an outside engineering firm. The invoice stated: "NOT PART OF BASE AGREEMENT."

About six weeks after that invoice was sent to Cervini, Cervini issued a check to TJD in the amount of $7150. There is no dispute that this sum was the amount needed to satisfy the original $9000 plus undisputed reimbursable costs, after giving credit for the deposit Cervini initially paid. However, in the memo section in the lower left hand portion of the front of Cervini's check, the following entry appeared: "RELEASE OF ALL CLAIMS FOR FIT-OUT/CERVINI'S AUTO DESIGNS." A similar notation appeared on the back of the check. TJD crossed out from the notation in the front of the check the words "RELEASE OF ALL CLAIMS," and wrote in "No, see Letter Attached." TJD then deposited the check.

Relying on Zeller v. Markson Rosenthal & Co., 299 N.J. Super. 461 (App. Div. 1997), the trial court agreed with Cervini that TJD's act of depositing the check, even if "under protest," was sufficient to impute an intent to plaintiff to accept the amount of the check as full satisfaction of any disputed claims arising out of this project. Thus, the court concluded that an accord and satisfaction had been reached and plaintiff was barred from seeking any further recovery.

In Zeller, the issue revolved around whether acceptance of a lesser amount constituted an accord and satisfaction in the absence of a statement by the payor that the tender of the lesser amount was conditioned upon the creditors acceptance of it as full satisfaction of the disputed claim. Id. at 465. That is not the situation in the case before us. However, a broader reading of Zeller reveals applicable fundamental principles of accord and satisfaction, including, that to be effective an accord and satisfaction "necessitates a finding that the party making the tender and the party accepting the tender each intends the acceptance to serve as full satisfaction of the entire disputed obligation." Id. at 466. It can hardly be said in this case that TJD intended to accept Cervini's check as final payment for all services rendered on this project. Thus, there was no meeting of the minds between the parties to resolve the disputed claim for the amount submitted.

More precisely, in this case the issue revolves around identifying the "disputed" claim. According to Cervini, the disputed claim was the amount due for all services rendered by TJD on this project. According to TJD, the disputed claim pertained only to the additional work. TJD insists that the base contract was only for "fit-out" services, and that the additional work, for which it billed $4000, was not within the scope of that undertaking, but was extra. The notation on Cervini's check stated that the sum submitted was for a release of all claims for the fit-out work. By crossing out the words "release of all claims" and writing in the notation "No, see Letter Attached," TJD expressed its view that the check satisfied only the balance due under the base contract for the fit-out work, but did not constitute a "release of all claims" on the project. TJD supports its position based upon the documentary record, including the terms of the base contract, correspondence between the parties and invoices submitted.

In our view, there is a genuine factual dispute as to the scope of Cervini's tender. The elements of accord and satisfaction are: "(a) a bona fide dispute as to the amount owed; (b) a clear manifestation of intent by the debtor to the creditor that payment is in satisfaction of the disputed amount, and (c) acceptance of satisfaction by the creditor." Loizeaux Builders Supply Co. v. Donald B. Ludwig Co., 144 N.J. Super. 556, 564-65 (Law Div. 1976) (citing U.S. ex rel. Glickfeld v. Krendel, 136 F. Supp. 276, 282 (D.N.J. 1955)). A rational factfinder could find in favor of TJD with respect to the first and second elements. In light of the course of dealings and documentary record, it could be reasonably found that the only amount in dispute regarded the work TJD claimed was additional, and not included in the base contract for "fit-out" work. And, it could reasonably be found that Cervini's notation, by its wording, which specifically referenced the "fit-out" work, the very term used in the base contract for $9000 plus reimbursable expenses, could reasonably have been interpreted by TJD as an offer for payment of the balance due on only the base contract.

In Peterson v. Hartford Accident & Indemnity Co., 32 N.J. Super. 23, 31 (App. Div. 1954) (quoting Rose v. American Paper Co., 83 N.J.L. 707, 709 (E. & A. 1912)), we set forth this guiding principle:

The party seeking to settle for a less sum than is claimed to be due must, by his words or conduct when making the offer, clearly inform the other of what is sought and expected. The transaction must be such that the condition is as plain as the tender, so that the acceptance of the tender will involve the acceptance of the condition. In other words, the tender and the condition must be incapable of severance; for ...

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