Court: Louisiana Court of Appeal; April 13, 2011; Louisiana; State Appellate Court
Plaintiffs challenged the trial court's decision to grant defendant Lloyd’s Motion for Summary Judgment and Exception of Res Judicata in a case regarding damages to a 39-unit apartment complex from Hurricane Katrina. Riverbend Capital, LLC, the mortgagee, and Gawain Ministries, L.L.C., the insured, were involved in the dispute. Lloyd’s issued a check for $114,020.41 to both parties, labeled as a full and final settlement for the damages, which both endorsed. Gawain Ministries filed suit against Lloyd’s in August 2006, claiming inadequate compensation, leading to a December 2008 judgment that found the check constituted a full and final settlement, dismissing Gawain's case with prejudice.
In the current case, Lloyd’s argued that Riverbend's negotiation of the check barred further recovery based on the doctrine of accord and satisfaction and that the suit was also precluded by res judicata due to the earlier ruling. The trial court agreed, leading to Riverbend's appeal. The appellate court reviews summary judgments de novo, determining if there are genuine issues of material fact under the criteria established by Louisiana law.
The doctrine of accord and satisfaction prevents a creditor from pursuing claims on a disputed debt if certain conditions are met: a disputed claim, a tender check for less than the claimed amount, and acceptance of the check by the creditor. The trial court found all three conditions satisfied in this case, noting that Riverbend accepted Lloyd’s offer by negotiating the check. Riverbend contended the check was an unconditional tender, but the court maintained that their acceptance of the settlement was valid.
Mr. Green indicated that Gawain Ministries was repeatedly asked to provide a competing contractor’s estimate for property damage but refused. On December 28, 2005, Mr. Green sent a letter detailing a settlement offer based on property damage from Hurricane Katrina, calculating a net payable amount of $114,020.41 after deductions. Gawain Ministries, represented by an attorney, executed a Sworn Statement in Proof of Loss on January 10, 2006, claiming this amount under their insurance policies, which was notarized by their counsel. A check for this amount was issued to Gawain Ministries and Riverbend Capital as a full and final settlement for the hurricane loss, which was then endorsed by both parties and deposited by Riverbend.
The trial court noted that Riverbend's belief that the check amount was inadequate was irrelevant, as Riverbend, being knowledgeable in the mortgage business, should have understood the implications of the check's language indicating it was for "full and final settlement." The court ruled that by negotiating the check, Riverbend accepted the settlement offer. Riverbend contended that the trial court erred by granting summary judgment before completing essential witness depositions, particularly from the Lloyd’s syndicates and others involved. The court maintained that the key issues of accord and satisfaction were met, emphasizing that the negotiated amount represented a compromise of a disputed claim. It found no ambiguity in the settlement language on the check and dismissed Riverbend's claims regarding the lack of specificity in raising the defense of accord and satisfaction in the response.
Lloyd’s 11th Affirmative Defense asserts that the London Underwriters fulfilled all contractual obligations to the insured and thus owe no further payments under the insurance contracts. They received a proof of loss from Gawain Ministries LLC for $114,020.41 and issued a check for that amount, payable jointly to Gawain Ministries and the Plaintiff. Accord and satisfaction is recognized as an affirmative defense that must be explicitly pled. The purpose of special pleading is to provide the plaintiff with fair notice of the defense to prevent trial by ambush, as emphasized in Bienvenu v. Allstate Ins. Co. and other cases. Although affirmative defenses should generally be included in the answer, the court determined that the plaintiff was sufficiently notified of the accord and satisfaction defense, having retained counsel and filed an opposition to the motion, thus preventing any prejudice. The trial court's decision to allow the defense to proceed was upheld, and Riverbend's assignment of error regarding res judicata was deemed moot. The judgment of the trial court was affirmed by Judge Medley.
