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Cosalt Exports Ltd. v. Koushel (In re Koushel)
Citations: 6 B.R. 315; 1980 Bankr. LEXIS 4355Docket: Bankruptcy No. 80-00097; APN 800-365
Court: District Court, E.D. Virginia; October 6, 1980; Federal District Court
Stanley and Josianne Koushel filed for bankruptcy on February 4, 1980, following their operation of a business, Mirror Decorations, in Germany. A creditor initiated a civil action against them in the U.S. District Court for the Eastern District of Virginia, claiming misleading and fraudulent financial statements. The bankruptcy filing stayed the District Court proceedings, prompting the creditor to file a complaint regarding the dischargeability of their debt under 11 U.S.C. § 523(a)(2). Initially, a pre-trial conference was scheduled for June 24, 1980, but the creditor's counsel later indicated the case could be settled. On July 15, 1980, however, the creditor sought to reinstate the complaint due to failed settlement negotiations. The Koushels contended they had accepted a settlement offer from the creditor, which would bar the complaint based on the legal principle of accord and satisfaction. The Court examined whether an accord and satisfaction had been achieved, defined as an agreement (the accord) and its execution (the satisfaction). The creditor’s settlement proposal required the Koushels to confess judgment, dismiss their counterclaim, and transfer business documents. Although the Koushels claimed acceptance, they did not fulfill the necessary steps outlined by the creditor. Under Virginia law, for an accord and satisfaction to be valid, both the agreement must exist and be executed. The Court found that the Koushels had not performed the required actions, thus no accord and satisfaction was established. Consequently, the plaintiff is not barred from proceeding, and the trial is set to continue as planned. The ruling affirms that until the settlement is executed, the creditor retains the right to pursue the claim.