Estate Landscape and Snow Removal Specialists, Inc. v. Mountain States Tel. & Tel. Co.

• Decision Date: 17 December 1992
• Docket Number: No. 900312,900312
• Parties: ESTATE LANDSCAPE AND SNOW REMOVAL SPECIALISTS, INC., Plaintiff and Respondent, v. MOUNTAIN STATES TELEPHONE AND TELEGRAPH CO., Defendant and Petitioner.
• Court: Utah Supreme Court

Page 322

844 P.2d 322

ESTATE LANDSCAPE AND SNOW REMOVAL SPECIALISTS, INC., Plaintiff and Respondent, v. MOUNTAIN STATES TELEPHONE AND TELEGRAPH CO., Defendant and Petitioner.

No. 900312.

Supreme Court of Utah.

Dec. 17, 1992.

Floyd A. Jensen, Salt Lake City, for Mountain States.

Lowell V. Summerhays, Murray, for Estate Landscape.

ON CERTIORARI TO THE UTAH COURT OF APPEALS

ZIMMERMAN, Justice:

This case is before us on writ of certiorari to the Utah Court of Appeals. Estate Landscape and Snow Removal Specialists, Inc. ("Estate Landscape"), sued Mountain States Telephone and Telegraph Company ("Mountain Bell"), claiming that Mountain Bell owed it $21,549.50 for removing snow from Mountain Bell's premises. The trial court granted judgment for Estate Landscape, and Mountain Bell appealed. The court of appeals affirmed the judgment, except for the portion of the judgment that provided for compound instead of simple interest. Estate Landscape & Snow Removal Specialists, Inc. v. Mountain States Tel. & Tel. Co., 793 P.2d 415 (Utah Ct.App.1990). We granted certiorari and now reverse.

Before we recite the history of this case, we discuss the appropriate light in which we will view the facts before us. The court of appeals held that where, as here, the trial court denies the movant's motion for summary judgment and thereby eliminates one of the movant's claims or defenses, the reviewing court should view the facts in the light most favorable to the movant. We disagree. As the movant before the trial court, Mountain Bell had the burden of showing that it was entitled to summary judgment on the basis of accord and satisfaction. See, e.g., Security State Bank v. Broadhead, 734 P.2d 469, 472 (Utah 1987); Petersen v. Petersen, 709 P.2d 372, 375 (Utah 1985); Bennion v. LeGrand Johnson Constr. Co., 701 P.2d 1078, 1082 (Utah 1985); United Am. Life Ins. Co. v. Zions First Nat'l Bank, 641 P.2d 158, 160 (Utah 1982); Messick v. PHD Trucking Serv., Inc., 615 P.2d 1276, 1277 (Utah 1980). As the petitioner before this court, Mountain Bell has the burden of demonstrating that the trial court misconstrued the law in denying its motion for summary judgment and that it was entitled to summary judgment as a matter of law. Because Mountain Bell retains the burden of demonstrating the errors of the trial court and the court of appeals, we must view the facts in this case in the light most favorable to Mountain Bell's opponent, Estate Landscape. We state the following facts accordingly. ¹

In November of 1984, Estate Landscape entered into a written contract with Mountain Bell to remove snow from Mountain Bell's premises, including its office in Alta, Utah. The contract required Estate Landscape's services at the Alta office whenever accumulated snow was at least four inches deep. Estate Landscape removed snow at the Alta office from December of 1984 to April of 1985, billing Mountain Bell twice for its services. The first bill was for snow removal services performed before December 27th. Mountain Bell paid that bill without dispute. At the end of snow season, Estate Landscape sent Mountain Bell its second bill. That bill was for $30,162.50, itemizing the services rendered from the end of December of 1984 to April of 1985. Because Mountain Bell believed that Estate Landscape had charged it for services on days when snowfall at the Alta office was less than four inches, it prepared a check to Estate Landscape for only $8,613.

On or about June 21st, due to an oversight by its accounting department, Mountain Bell sent Estate Landscape the $8,613 check without an explanation of the lower figure or a warning that negotiating the check would result in an accord and satisfaction. Upon discovering its error, Mountain Bell sent Estate Landscape an explanatory letter on or about June 28th. The letter listed the dates Mountain Bell believed Estate Landscape had erroneously charged it for snow removal and then concluded:

Based on the above identified billing descrepancies [sic] we have enclosed a check for $8613.00 which is payment in full for satisfaction of contracted services. If you are not willing to accept that sum $8613.00 in full satisfaction of the sums due, DO NOT negotiate the check, for upon your negotiation of that check, we will treat the matter as fully paid.

(Emphasis in original.) Although the letter took more than a month to reach Estate Landscape, a delay Mountain Bell attributes to the fact that it sent the letter by certified mail, Estate Landscape had not yet negotiated Mountain Bell's $8,613 check. Estate Landscape's answers to requests for admissions suggest that it knew the letter referred to the $8,613 check.

On August 8, 1985, Estate Landscape filed suit to recover the entire $30,162.50. It negotiated the $8,613 check on October 28, 1985, and later amended its complaint to recover the $21,549.50 difference. Mountain Bell moved for summary judgment, arguing that Estate Landscape's negotiation of the check constituted an accord and satisfaction. Third District Court Judge Michael Murphy denied the motion. The order denying the motion stated that given the "undisputed facts" of the case, Mountain Bell could not show an accord and satisfaction because the dispute involved severable claims, thereby precluding application of the accord and satisfaction doctrine.

After the denial of summary judgment, the case went to trial before Judge Timothy Hanson. Judge Hanson entered a $10,990 judgment for Estate Landscape, ruling that Judge Murphy's denial of summary judgment precluded Mountain Bell's defense of accord and satisfaction. Judge Hanson noted that "there was no accord and satisfaction in that the Order of Judge Michael R. Murphy delineated the area fully and is the law of the case." ² Before the Utah Court of Appeals, Mountain Bell argued, first, that the trial court erred in treating the denial of its motion for summary judgment as dispositive of its accord and satisfaction defense; and second, that Estate Landscape's negotiation of the $8,613 check discharged Mountain Bell's obligation to pay the remaining $21,549.50 of Estate Landscape's bill. Although the opinion is ambiguous, Estate Landscape apparently responded that its contract with Mountain Bell was severable and that therefore Mountain Bell's payment did not discharge its entire obligation. See 793 P.2d at 419 n. 10.

The court of appeals rejected Mountain Bell's claims, reasoning that because Judge Murphy had denied Mountain Bell's summary judgment motion on the merits, that denial "effectively disposed of Mountain Bell's accord and satisfaction defense." Id. at 418. Reviewing the legal correctness of the denial of summary judgment, the court held that Mountain Bell had failed to prove mutual assent for the alleged accord and satisfaction because it had produced no evidence that Estate Landscape subjectively intended to accept the $8,316 as satisfaction of its claims. Consequently, the court of appeals affirmed the judgment in favor of Estate Landscape. See id. at 419-20. The court noted that the contract may have been severable, but it declined to address the issue of severability because its finding of lack of mutual assent disposed of Mountain Bell's claim of accord and satisfaction. Id. at 419 n. 10. We granted certiorari and now reverse.

Before our court, Mountain Bell attacks the reasoning of both the court of appeals and the district court, arguing, inter alia, that the trial court misconstrued the law of accord and satisfaction in denying its motion for summary judgment. Mountain Bell contends that its $8,613 payment completely discharged its obligation to Estate Landscape because it fulfilled all the elements of an accord and satisfaction. Those elements are (i) a bona fide dispute over an unliquidated amount; (ii) a payment tendered in full settlement of the entire dispute; and (iii) an acceptance of the payment. See Marton Remodeling v. Jensen, 706 P.2d 607, 609 (Utah 1985); Masonry Equip. & Supply v. Willco Assoc., Inc., 755 P.2d 756, 758 (Utah Ct.App.1988).

Although Mountain Bell discusses all three elements of accord and satisfaction in its brief, the trial court and the court of appeals focused on issues pertinent to the latter two elements, holding, respectively, that Mountain Bell did not tender the $8,613 payment in full settlement of the entire dispute and that Estate Landscape never accepted the payment because it did not subjectively assent to the accord. Nevertheless, because a statement in the court of appeals' opinion indicates some confusion as to the proper criteria for determining the existence of a dispute, we will discuss all three elements of accord and satisfaction.

Before we address these elements, however, we note the applicable standard of review. Judge Hanson based his finding that there was no accord and satisfaction on Judge Murphy's denial of summary judgment on "undisputed facts." Because he was dealing with undisputed facts, Judge Murphy's denial of summary judgment amounted to a ruling of law, which we review for correctness, without any deference to the trial court. See, e.g., Landes v. Capital City Bank, 795 P.2d 1127, 1129 (Utah 1990); Madsen v. Borthick, 769 P.2d 245, 247 (Utah 1988).

We now turn to the merits of this case. We begin with the question of what constitutes a bona fide dispute over an unliquidated amount. As a preliminary matter, we note that even if a claim is undisputed and liquidated, parties can still discharge their obligations through accord and satisfaction. In such instances, however, parties must support the accord with separate consideration. Sugarhouse Fin. Co. v. Anderson, 610 P.2d 1369, 1372 (Utah 1980). In cases like the one before us, where there is no separate consideration, the parties' surrender of their legal right to dispute the amount at issue supplies the consideration necessary to support the accord. Id. Without relinquishment of rights to press a bona fide dispute over...