### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON A ssi gne d on Br ie fs A ugus t 4, 200 6 S es sio n

PA ULE TTE D OBBIN S

v. JE FFERY F. DABBS, J R., JEANET TE DABBS , JEFFERY F. DABBS, SR.,
AND 

### ACCREDITE D HOME L ENDERS, I NC., A 

### C ALIF ORNI A 

### C ORP ORATI ON

An Appeal f

romthe Chancer y Court for Henderson County No. 17126 Jam es F . Butler, Chancellor

No. W2006-00322-C OA-R3-C V - F iled Janu ary 25, 2007

Th is c a se inv olv e s a c c or d a ndsa tis fa c tio n. Th e de fe nd a nts fr a ud ule ntl y tr a ns fe rr e d r e a l pr op e rt y
ow ne d by the plaint if

f. Th e plaint if

f fi le d thi s la ws uit a g a ins t the de fe nd a nts fo r d a ma g e s r e la te d to the fra udulent transfe r. The pa

rties later ag ree d to se ttle the matter for approximately

$6,000. The defe ndants initiallypaid the plaintiff $3,000 pursuant to the settlement ag ree ment. Be fore the

rema inder wa s paid, the plaintiff re pudiated the ag ree ment in w riting. L ater , the def endants sent the plaint if f a c he c k f or the re ma ind e r o f the se ttl e me nt. Th e plaint if f k e pt the se c on d p a y me nt, bu t to ld the def endants that she did not consider the pay ment to satisfy the debt and stated her

intent to set the case for trial. At the subsequent trial, the defe ndants did not a ppear . A judg ment was e ntere d in f a vo r o f the plaint if

f f or $5 8, 00 0. Th e de fe nd a nts fi le d a mot ion to se t a sid e the jud g me nt a s w e ll as a moti on to dismiss the case, based on the orig inal settlement ag ree ment. The trial c ourt g rante d the de fe nd a nts ’ m oti on s a nddis mis se d th e c a se on that ba sis

. Th e plaintif f no w app e a ls. We a ff

ir m,
c on c lud ing that the pa

rt ie s’ se ttl e me nt a g re e me nt w a s a n e xec uto ry a c c or d w hic h w a s n ot e ff

e c tiv e ly repudiated and wa s proper ly enfor ced unde r the c ircumstance s.
Tenn. R. App . P . 3 Appeal as of Right; Judgme nt of th e Chancer y Court is Aff irm ed

H OL L Y M. K I RBY , J. , d e li v e r e d th e o p in io n o f th e Co u r t, inw h ic h W. F RAN K C RAW FORD , P.J ., W.S
., and A L AN E. H I G H ERS , J ., joined.

Ra df or d H . D imm ic k, Na sh vil le , T e nn e sse e , f or the app e lla nt, Paule tte Do bb ins

.
L loy d R. Tatum , H e nd e rs on , T e nn e sse e , f or the app e lle e s, Jef

fe ry Da bb s, Jr., a ndJea ne tte Da

bb s.D o b b i ns’ pa rent s ret ai ned a li fe est at e i n the p rop ert y

. A p p arent l y , D o b b i ns’ m o t her was st i l l al i ve d uri ng t he 1

t rans act i o n i n que st i o n.

D ob bi ns al s o named as a def endan t Accr edi t ed H om e Len ders
, I nc. , a Cal i forn i a C orporat i on, but t hat 2
d e fen d a n t wa s v o lun ta rily d ism isse d fro m the law su it.

J e ff re y F . D a b b s, S r., d id no t jo in in e it h e r th e a n sw e r o r th e m o tio n to se t as id e the d e fau lt ju d g m e n t. 3

T h e re fo re , t h e ju d g m e n t as to him is no t at issu e in this a p p e a l.

C ouns el appear ed t o re s po nd onl y o n behal f o f Jeanet t e D abbs. T he part i es , howev er , t r eat t he s et t l ement offer 4

a n d a c c e p ta n c e a s if it a p p lies to b o th J e ff re y F . D a b b s, J r., a n d J e a n e tte D a b b s. F o r p u rp o se s o f t h is o p inio n , w e w ill

assu m e that t he sett l em en t ag ree m en t ap p l i es to b o t h d efen d an t s.
-2- OP IN ION

I n May 19 96 , the pa

re nts of Pla int if

f/Ap pe lla nt Pau le tte Do bb ins (“ Do bb ins ” ) c on ve y e d to Dobbins their intere st in real prope rty at 327 Vine Stree t in L exington, Tenne ssee. Def endant 1 J eff rey Dabbs, Sr., is Dobbins’ brother . Allege d l y , i n Oc t ober 2002, Jeffr ey Dabbs, Sr., his wife, De fe nd a nt/Ap pe lle e Jea ne tte Da bb s, a ndhis s on , D e fe nd a nt/Ap pe lle e Jef fr e y Da bb s, Jr., a c te d in

conce rt to fraudulently convey the Vine Street property to J eff rey Dabbs, J r., i n order

to obtain funds to h e lp Je ff

re y Da bb s, Sr
., pay

le g a l e xpe ns e s.
On May 15, 2003, Dobbins filed t he ins tant lawsuit ag ainst J eff rey F. Da bbs, Sr., J eff

rey E. Dabbs, J r., and J eane tte Dabbs, alleg ing conver sion of the Vine Street property

. Dobbins asserte d 2 that th e thr e e de fe nd a nts pr oc ur e d a fr a ud ule nt s ig natur e pu rp ortin g to b e Do bb ins ’ o n a qu itc la im d ee d t h at t ransf

err ed the Vine Street prope rty to J eff rey Dabbs, Jr. The complaint stated that the property was then used by J eff rey Dabbs, Jr., to secure a mortg ag e in the amount of $24,000. When t h e b o rr o w e r s d e f

au l t e d a n d t h e l e n d e r

f o r e c l o s e d o n t h e p r o p e r t y , D o b b i n s l e ar n e d o f t h e f r a u d

. In the re su lti ng la ws uit

fo r c on ve rs ion , D ob bin s so ug ht b othc omp e ns a tory a ndpu nit ive da ma g e s.

No ne of

the thr e e de fe nd a nts fi le d a n a ns we r t o th e com plaint wi thi n th e app ro pria te tim e limit ations. On September 10, 2003, the trial court e ntere d a def ault judgme nt ag ai n s t all three de fe nd a nts , r e se rv ing the iss ue of da ma g e s fo r a lat er he ari ng . O n Jan ua ry 28 , 2 00 4, de fe nd a nts J eff ery F. Dabbs, J r., and J eane tte Dabbs (collec tively
, “def endants” ) filed a be lated answ er to the

c omp la int . O n Jan ua

ry 29 , 2 00 4, the de fe nd a nts fi le d a motio n to se t a sid e the de fa ult jud g me nt. 3 The re cord doe s not indicate whe ther the motion to set aside wa s ever adjudicate d.

On J une 2, 2004, Dobbins’ attorney faxed to counsel for

the def endants a n o ff

er of

c omp ro mis e a ndse ttl e me nt i n th e c a se . T he le tte r s a id that D ob bin s w as prep ared to waive a ll

c la ims a nddis mis s th e c a se if the de fe nd a nts wo uld a g re e to p a y he r atto rn e y ’s fe e s, “ wh ic h c ur re ntl y amount to $5925.14.” The letter did not state a time frame for pay ment of the money . On J une 14, 2004, counsel for

the def endants a cce pted the off

er, r esponding that the defendants would pay the reque sted amount i n exchang e for a dismissal with prejudice of Dobbins’ complaint. The 4

a c c e ptanc e le tte r s ta te d th a t th e de fe nd a nts wo uld “ ne e d, ho we ve r, un til June 30 [, 20 04 ] to h a ve thi s money . . . .”-3-

As of June 30 , 2 00 4, the de fe nd a nts ha d n ot s e nt any of the se ttl e me nt f

un ds to D ob bin s. Cou ns e l for the pa

rt ie s a pp are ntl y e xch a ng e d te le ph on e c a lls , a ndon July 14 , 2 00 4, the de fe nd a nts ’

a tto rn e y se nt D ob bin s a

c he c k f or $3 ,0 00 . T he le tte r o f en c los ur e state d tha t the c he c k wa s th e fi rs t

“ p ar t i a l p a y m e n to f

o u r a g r e e m e n tt o s e t t l e y o u r

c l i e n t ’ s c l a i m f

o r t h e t o t a l s u mo f

$ 5
, 9 2 5

. 1 4

. ” In the letter, the defe ndants’ attorne y said that he would be leaving for vac ation on J uly 29, 2004, but that he expected to r ece ive the next pay ment from the de fendants f or Dobbins befor e that time. The letter fur ther stated that, “[i] f any of the above is not ag ree able, then please return the chec k and g ive

me a c all.” Dobbins ac cepte d the che ck.
By the end of

J uly , Dobbins had not r ece ived a second payment. On Aug ust 3, 2004, counsel for Dobbins sent the def

endants a letter informing them that Dobbins wa s repudiating the settlement

a g re e me nt, a sse rt ing that th e de fe nd a nts ha d faile d to pay in a tim e ly ma nn e r. Th e le tte r re fe rr e d to a Jul y 2
, 2004 telephone c all betwee n the parties’ counse l in which the def endants’ attorney purportedly

said that the def

endants “w o u l d b e able to pay one-ha lf of the sums due on July15, 2004, and the balance by

the end of

the month.” Dobbins’ attorne y noted that Dobbins had re ceive d and ac cepte d the first payment of $3,000, but had rec ei v ed n o o ther pa y ment. The letter then indicated Dobb i n s ’ opi nion that the defe ndants had “ now re neg ed on what was a more than

rea sonable settlement a g ree ment,” and that, conseque ntly
, Dobbins “dee med [the ag ree ment] t o be dissolved.” Dobbins’ attorne y expressed his intent to “nece ssarily move forw ard w i t h t his case.” The $ 3
, 0 0 0 t h at had alrea dy been paid as part of

the settlement wa s not tendere d back to the defe ndants.

De sp ite Do bb ins ’ s ta te d inte nt to r e pu diate , o n A ug us t 23 , 2 00 4, c ou ns e l f or the de fe nd a nts sent Dobbins a che ck for $2,925.14 as t h e fi nal payment in acc ordanc e with the parties’ orig inal

a g re e me nt. Th e le tte r o f e nc los ur e state d:

[The chec k is] in final payment of our ag ree ment to se ttle y our client’s c laim for the total sum or $5,925.14 plus court costs

. . . . I will forwar d a dismissal with prejudice

a s to y ou r c lie nt’ s c la ims if y ou te ll m e that Ms . D ob bin s h a s dec ide d to tak e thi s in final settlement. Hopefully
, while I understand her frustration, she wil l decide that a bird in the ha nd is worth two in the bush and we can w rap this up.

Thus, the de fe n d an t s’ attorne y specifie d that the che ck wa s the final payment pursuant to the settlement ag ree ment. On Octobe r 6, 2004, Dobbins’ counsel sent a letter in r esponse, stating that Dobbins intended to kee p the money tender ed, b u t d i d n o t consider the pay ment as satisfying the debt. The le tter stated:

. . . Wh ile I

do app re c ia te the fu nd s re c e ive d to d a te , th e se ttl e me nt a g re e me nt w a s,
a s y ou kn ow , d iss olv e d b e fo re the fi na l pay me nt wa s ma de . M y c lie nt w ill dis mis s this action upon t h e ad d i t ional payment of $2025.00 to her. I f this pay ment is not

rec eived in full at my

office . . . by

November

5, 2004, this offer sha ll be withdrawn and we shall proce ed ac cording ly . . . . I enclose an orde r setting this case f or trial.-4-

Thus, in order to r elea se her claim ag ainst the defe ndants, Dobbins reque sted an additional $2,025 fo r the fe e s a ndc os ts i nc ur re d a s a re su lt o f the de fe nd a nts ’ d e la y s in pay me nt.

Meanw hile, on Aug ust 4, 2004, just a fter she repudiated the settlement a g ree ment, Dobbins filed a motion to set the case for trial and for a sche duling or der. O n November 10, 2004, the trial court set the matter for

trial on Marc h 3, 2005.

The trial c ommenced a s scheduled on Ma rch 3, 2005. Atranscript of the trial is not in the

rec ord on appe al. The de fendants did not appear at trial. On Marc h 14, 2005, the trial court entere d an judg ment in favor of

Dobbins ag ainst all three de fendants in the amount of $58,024.90.

On Marc h 28, 2005, the def endants filed a

motion to s et aside the judgme nt and for a new trial pursuant to Rules 59 and 60 of the Tenne ssee Rules of Civil Procedure . I n t h e m o t i o n, the de fe nd a nts c la ime d that the y we re e ith e r no t app ri se d of the tr ia l date or , th ro ug h e xcu sa ble ne g le c t, the date wa s n ot p la c e d o n c ou ns e l’ s o ff ic e c a le nd ar d ue to a

c omp ute r ma lf

un c tio n. Th e de fe nd a nts arg ued that the tria l court er red in proc eeding with the trial when a motion to wit hdraw had bee n filed by t h e d ef

en d ants’ counse l on Febr uary 17, 2005, but had not y et bee n decide d. Finally , the defe ndants asserted the defe nse of acc ord and satisfac tion. The a ccor d and satisfa ction defe nse wa s further explained in a motion to enfor ce the settlement ag ree ment filed contemporaneously with the motion to alter or amend. T he motion to enforc e the settlement ag ree ment asserted that the parties had re ache d an ag ree ment, that Dobbins had acce p t ed full pay ment under the ag ree ment, and that Dobbins could not repudiate the ag ree ment without tendering back pay ment. Attache d to the motion

wer e copie s of the communi ca t i o n s betwee n counsel re g arding the proposed se ttlement and payments from the de fendants.

On J une 30, 2005, the t rial court held a he aring on the def endants’ motions. The r ecor d on

a pp e a l d o e s n o ti n c l u d e a tr a n s c r i p to f

t h e h e ar i n g

. O n Ju l y

6 , 2 0 0 5
, t h e tr i a l c o u r ts e n ta l e t t e r to counsel for

the parties stating the trial court’s intent to g rant the def endants’ motion to set aside the final order as well as the defendants’ moti on to enforc e the se ttlement ag ree ment based on a ccor d and satisfa ction. The trial c ourt rea soned:

. . . De fe ndants did not act with dilige nce and responsibilityin pursuing the

se ttl e me nt andc omp ly ing wi th the te rm s, ho we ve r, the re we re no tim e lim its se t f orth in any of the a g ree ments pertaining to the s ettlement. . . . Although Mr . Tatum filed a Motion to W ithdraw, that M otion was neve r hea rd or a llowed, or e ven set for he ari ng . T he Pla int if

fs in f a c t, t oo k th e mon e y

fo r the se ttl e me nt, bo th p a y me nts , althoug h they

wer e not paid within the time fra me of promise. Plaintiff did not pay
or tender back the funds afte r it r epudiated the ag ree ment. I n fac t, after repudiation, Pla int if f a c c e pte d th e ba la nc e of the fu nd s for the pa y me nt o f the orig ina l a g re e me nt, which had be en off

ere d and ac cepte d. The Court finds that the a g ree ment was a n offe r and an acce ptance

. That the ag ree men t w a s in f

a c t c o mp li e d w ith w ith in a r e a s o n ab le p e r io d o f ti me u n d er the circ umstances, a nd that there was no drop- dead de adline for the ag ree ment to be completed. Eve n if t h er e we re a dea dline, and it wer e not complied with, byT he t ri al c o urt f i l ed t wo i d ent i cal ord ers de ny i ng D o b b i ns’ m o t i o n t o al t er or am end
, da t ed January 5 and 5

Ja n u ar y 12, 2005.

-5- acc epting the funds ther eaf ter to comp l et e t h e pay ment of the a g ree d amount, the Plaintiff’s [si c] are now bound by the ag ree ment and the pay ment there of constitutes

acc ord and satisfaction.
On August 4, 2005, the t rial court enter ed an order incorporating the findings in its J uly 2005 letter, enfor cing the settlement ag ree ment as an a ccor d and satisfa cti o n , and dismissing the c ase. O n September 1, 2005, D obbins filed a motion to alter or a mend the judg ment. The trial c ourt denied that mo tio n. F ro m th a t or de r, Do bb ins no w a pp e a ls. 5

On app e a l, D ob bin s c on te nd s tha t the tr ia l cou rt e rr e d in g ranti ng the de fe nd a nts ’ m oti on to enfor ce the settlement ag ree ment, arg uing that the corresponde nce betwee n the parties shows that there was no a ccor d and satisfa ction in this case. She claims that, by the t ime the sec ond payment
wa s ma de by

the de fe nd a nts , th e se ttl e me nt a g re e me nt h a d a lr e a dy be e n te rm inate d b y

the Au g us t 3, 2004 letter from Dobbins’ counsel. Be cause the second pay ment was not ac cepte d in satisfaction of the s e t t l e m e n ta g r e e m e n t , s h e m a i n t a i n s , t h e r e c a n b e n o a c c o r d a n d s a t i s f a c t i o n , a n d t h e c a se should not have been dism issed. Furthermore
, Dobbins arg ues, t he trial court e rre d in gr anting the motion because th e d ef

ense of acc ord and satisfaction is an af firmative de fense that must be specific ally

pled. She asserts that the defe nse was waived because t he defenda nts did not raise the iss ue un til a ft e r a

jud g me nt h a d b e e n e nte re d a g a ins t th e m.

We re vie w the tr ia l c ou rt ’s fi nd ing s o f f a c t de novo
, presuming those finding s to be corr ect unless the evidenc e pre ponderates otherwise . Tenn. R. App. P

. 13(d). I ssues of law a re r eviewe d de novo , with no such presumption of cor rec tness. LDI Design, LLC v. Dukes , No. M2003-02905- COA-R3-CV, 2005 WL

3555543, at *2 (Te nn. Ct. App. Dec. 28
, 2 0 0 5 ). “Although ac cord and satisfac tion is governed by the law of

contra cts, whethe r t here has been an a ccor d and satisfa ction is a question of fa ct.” Id. at *3 (c itations omi tted).

We first addre ss Dobbins’ arg ument that the def endants ha ve wa ived the def ense of acc ord and satisfac tion, be cause the defe nse was not timelypled. Dobbins arg ues that the trial c ourt err ed in permitting the de fendants to raise the a ffirmative defe nse of accor d and satisfaction in a motion that was filed post-trial and post-judg ment. She arg ues that t he defenda nts had time betwe en the day the a g re e me nt w a s a lle g e dly c on su mmate d in August 20 04 to the tim e of

tr ia l in Ma

rc h 2 00 5 to amend their answe r. Be cause they did not, Dobbins arg ues, the de fense was waived. I n response , the def endants note that the defense could not have been raised in their answer, because the answe r
wa s f ile d inJanu ary

20 04 , w e ll before the se ttl e me nt a g re e me nt o c c ur re d. B y tim e ly fi lin g the ir motion to set aside the judgme nt and their motion to enfor ce the settlement agr ee m en t , t he defe ndants contend, the y

cure d any

defe cts in their pleading s.R u le 8 .0 3 p ro v id e s in p e rtine n t p a rt: 6

I n pl e a di n g t o a pr e c e di n g pl e a di n g , a pa r t y s h a l l s e t for t h a f f i r ma t i v e l y f a c t s i n s h or t an d p l a i n t e r ms rel i ed upo n t o c o nst i t ut e acco rd and s at i sfact i o n, arbi t rat i o n and award
, exp res s ass um p t i o n of ri sk,

c o m p a ra tive fau lt (in c lud ing the id e n tit y o r d e sc rip tio n o f a n y o the r a lleg e d to rtfe a so rs ), d isc h a rg e in b a n k ru p tc y, d u re ss, e sto p p e l, failu re o f co n sid e ra tio n , f ra u d , i lleg a lit y , la c h e s, li c e n se , p a ym e n t, rel ease, res judi cat a, s t at ut e o f f rauds, s t at ut e o f

l i m i t at i o ns, wai ver, and any o t her matt er const i t ut i ng

a n a v o id a n c e o r a ff

irm a tive d e fen se

.

T en n

. R. Ci v

. P. 8. 03.

-6- Th e de fe ns e of

a c c or d and sat is fact ionis amon g the e nu me rate d a ff ir ma tiv e de fe ns e s in Rule 8.03 which must be timely raised. See Tenn. R. Civ. P. 8.03. A “party waives a ll defense s and 6 object io n s w h ic h th e p ar ty d o e s n o t p r e s e n t e ith e r b y mo ti o n

. . . o r

. . . in th e p ar ty ’ s a nswer or reply .” Te nn. R. Civ. P . 12.08. “Rec og nizi ng the mandatory n at u re o f T en n . R. Civ. P . 8.03, the courts have consistently

held that af

firmative de fense s that are not properly rai s ed are waived.” Est ate ofBak e r v . King , No. W 2005-00847-COA- R3-CV, 2006 WL 1173130, at *9 (Tenn. Ct. App. Ma y 4, 20 06 ); see Raw lings v. Joh n Hancock M ut. Life Ins. Co.
, 78 S.W. 3d 29 1, 30 0 ( Te nn . Ct

. App. 2001) (“ The failure to assert a claim or de fense in a timely manner is de emed a waiver of the rig ht to rely

on the claim or de fense later in the proce eding .”). The que stion then becomes whe ther the def ense of acc ord and satisfaction was r aised in a timely and prope r manne r in this case.

Dobbins corr ectly

points out that, in this case, the de fendants had a pe riod of seve ral months in which the def

ense of acc ord and satisfac tion c ould have bee n raised. In her O ctober 2004 letter, Dobbins’ counse l informed the de fendants of her intent to set the matter for trial. Neve rtheless, the defe ndants did not seek to amend the ir answe r. I n Fe bruary 2005, counsel for the defe ndants filed a motion to withdraw fr om the case
, which was never set for a hearing. The trial was he ld in March 2005, but the defe ndants failed to a ppear and a judg ment was take n ag ainst them. After having been informed of

the judg ment taken a g ainst them, the defe ndants filed a motion to set aside the judg ment based on e x cusable neg lect and the likelihood of a meritorious defe nse, and, for the first time, raised the def ense of acc ord and satisfaction in their motion to enforc e the se ttlement ag ree ment.
We first note that, beca

use t he parties’ settlement ag ree ment was not neg otiated until after the def endants’ answer w as filed in January 2004, the def

endants c ould not have in cl u d ed the defe nse of a ccor d and satisfa ction i n t h eir a nswer. A ccor dingly , we c onsider whe ther, unde r the

c ir c ums ta nc e s, the de fe nd a nts sh ou ld h a ve be e n p recl ud e d f ro m r a isi ng the iss ue in the ir po stjudgme nt motions . On appe al, Dobbins does not challeng e the trial court’s decision to set aside the final orde r. Rather , she appe als only the trial court’s g rant of the motion to enforce the settlement ag ree ment. There fore , there is no issue on appea l reg arding the trial court’s implicit findi ng that the defe ndants’ failure to appe ar at trial resulted from excusable negle ct and/or failure to re ceive notice of the trial setting. The rec ord ref lects that neither party had filed any pleading s in the case (other than the motion to withdraw) afte r Dobbins’ October 2004 letter stating her intent to set the c ase f or trial or, in the alternative, settle the case in e x chang e for an additional payment. Once the judg ment
was e n te r e d in M ar c h 2 0 0 5
, th e d e f e n d a n ts w e r e th e n p u t o n n o ti c e th a t D o b b in s w a s in s is te n t on pursuing her c ause, that she did not intend to honor the settlement ag ree men t , an d that it was-7-

nece ssary to assert the d ef

en s e of a ccor d and satisfa ction. The de fendants possibl y could have

asserted the def

ense befor e the Marc h 2005 trial had they known the trial had been sc heduled, but counsel for

the def endants ha d filed a motion to withdraw f rom the ca se i n Fe bruary

2005, and that motion was still pending at the time of trial. Under these circumstance s, we c onclude that the trial court did not err

in permitting the de fendants to raise the sett l em en t agr eement as an a ffirmative defe nse at that juncture

. Having found n o er ro r in the trial court’ s decision to permit the def endants to asse rt the

se ttl e me nt a g re e me nt a s a de fe ns e , w e ne xt turn to Do bb ins ’ a rg ume nt that th e tr ia l c ou rt e rr e d in enfor cing the settlement ag ree ment and in determining that an acc o rd an d s atisfac tion had been

re a c he d. As no te d ab ov e , th e tr ia l c ou rt de te rm ine d th a t th e pa

rt ie s h a d e nte re d in to an a g re e me nt, that the ag ree ment co n t ai n ed no dea dline for pay ment, that payment was in fa ct made to Dobbins within a rea sonable pe riod of time, and that Dobbins a cce pted the payment, despite Dobbins’ attempt to r e pu diate the a g re e me nt p ri or to the fi na l pay me nt. Un de r the se c ir c ums ta nc e s, the tr ia l c ou rt he ld that th e de fe nd a nts c omp lie d w iththe a g re e me nt b y pa y ing wi thin a

re a so na ble tim e , a nde ve n if payment was not made in compliance w ith the orig inal ag ree m en t, Dobbins’ acc eptanc e of the second pay ment constituted an ac cord and satisfac tion.
Dobbins arg ues on appe al that the trial court err ed in de termining that her acc eptanc e of the pay me nts te nd e re d b y

the de fe nd a nts c on sti tut e d a n a c c or d a nd satis fa c tio n in thi s c a se . Sh e a sse rt s that, by the time the second payment was made, she had r epudiated the parties’ orig inal settlement

a g re e me nt i n h e r A ug us t 3, 20 04 le tte r to c ou ns e l fo r the de fe nd a nts

. Th e de fe nd a nts re c og nize d th is repudiation, she contends, in the Aug ust 23, 2004 letter fr om the defe ndants’ counse l, enclosing the

se c on d p a y m e n t

. T h u s , s h e c l a i m s , s h e m a d e i t c l e ar t o t h e d e f e n d a n t s t h a t s h e d i d n o t i n te nd to
acc ept the second payment as a satisfac tion, and conseque ntly there was no a ccor d and satisfa ction. I n r e sp on se , th e de fe nd a nts arg ue that, wh e n one a c c e pts a pay me nt of a dis pu te d amo un t ma de wi th

an ac co m panying le tter or other memorandum making an off er of settlement, then an a ccor d and satisfac tion of the debt occur s when the payment is a cce pted. Furthermore
, they maintain, that under Tenne ssee law , one who ha s rec eived a settlement and see ks to r epudiate the settlement ag ree ment must first tender back the money rec eived unde r the a g ree ment soug ht to be avoided. See Sm ith v. Boyd , 2 Te nn . A pp . 3 34 (1 92 6) . B e c a us e Do bb ins did no t te nd e r the mon e y ba c k, the de fe nd a nts arg ue, the tria l cou rt was c orre ct in enfor cing the settlement and in finding that an ac cord a nd satisfac tion had been a ccomplished.

The de fense of ac cord and satisfac tion a rises from a form of contra ct, discussed in C O R B IN ON C ON TR AC TS :

“Ac cord and satisfac tion” is a term that states the leg al conseque nce of a cr editor’s

acc eptanc e of a

substitut e performance for a previously exis ting c laim or prior

orig ina l d uty . A c c e ptanc e of the su bs titute pe rf

orma nc e dis c ha

rg e s th e pr e vio us ly

e xistin g c la im. A d e bto r’ s p le a din g a nd pr ov ing of the “ a c c or d a ndsa tis fa c tio n” is

a c omp le te de fe ns e to an a c tio n b y the c re dit or

on the pr e vio us ly

e xistin g c la im.

13 S AR AH H OW AR D J EN K I NS , C OR B I N ON C ON TR AC TS § 70.1, at 301 (Jos eph M. Perillo ed., 2003).-8-

Th e Te nn e sse e Sup re me Cou rt ha s d e sc ri be d a c c or d a ndsatis fa c tio n a s f oll ow s:

An a c c or d is an ag re e me nt wh e re by on e of the pa rt ie s u nd e rt ake s to g ive or pe rf orm, and the other

to acc ept in satisfac tion of a cla im, liqui dated or in dispute, and arising

e ith e r f ro m c on tr a c t or

fr om t ort, s ome thi ng oth e r tha n o r d if fe re nt f ro m w hat he is or consider s himself entitled to; and a satisfac tion is t he executio n o f such an

a g re e me nt. * * * To constitute a valid ac cord and satisfac tion it is also essential that what is given or ag ree d to be per formed sha ll be offe red a s a satisfac tion and exti nction of the orig inal demand; that the de btor shall intend it as a satisfac tion of such obligation, and that such intention shall be made know n to the cre ditor in some unmistakable manner

. It is e qu a lly e sse nti a l th a t th e c re dit or sh a ll h a ve a c c e pte d it

wi th the in ten ti on that it should operate as a satisfaction. B oth the g iving a nd the ac cepta nce in satisfac tion are essential ele ments, and i f t hey be lac king the re c an be no a ccor d and satisfa ction. The int e nti on of

the pa rt ie s, wh ic h is of

c ou rs e c on tr oll ing , mu st b e de te rm ine d f ro m a ll the circ umstances attending the transac tion.
Lytle v . Clopton , 261 S.W . 664, 666-67 (Te nn. 1924) (quotations omitted). Thus, ac cord and

s a t i s f a c t i o n i s i n e s s e n c e a

c o n tr a c tb e t w e e n t h e p ar t i e s , w h i c h r e q u i r e s a m e e t i n g o f t h e m i n d s

. In order to establish the defe nse of acc ord and satisfac tion, the pa rty asserting the de fense must show that perf ormanc e is offe red by

the debtor a s a satisfac tion of the obligation, a nd that the per formanc e is acc epted by

the cr editor as satisfaction of the oblig ation. Whether s u ch off er and acc eptanc e
occur red is g overn ed b ythe intentions of the parties, which must be determined from all the circ umstances of

the ca se. Id.

Dobbins relies on c ases indicating that a n acc ord and satisfac tion cannot be rea ched w here the payment made by

the debtor is not ac cepte d with the i ntent by the creditor t hat i t satisfy the debt betwee n the parties. See, e.g., Tullahom a Concrete Pipe Co. v. Py ram id Con crete Co. , 330 S.W .2d 578, 582 (Tenn. Ct. App. 1959). D obbins corre ctly points out t hat, in order

to establish acc ord and satisfac tion, the evidence must show that the pay ments were made by the debtor with the intention of satisfy ing the debt, and that the payments were acce pted by the cr edit or with t he intention that the payme nt operate as satisfaction

. “B oth the giving and the ac cepta nce in satisfaction ar e esse ntial elements, a nd if they

be lacking there can be no acc ord and satisfac tion.” Ly tle , 261 S.W . at 666-67. Be cause she made it clear to the defe ndants th at s h e d i d n o t acc ept the sec ond payment from the defe ndants with the intent that it satisfy the debt, Dobbins cla ims, the trial c ourt err ed in conc luding that an ac cord and satisfac tion had been r eac hed in this case.

A situatio n t h at often occurs involving acc ord and satisfaction arises out of circ umstances in w hich there is a disputed debt and the debtor se nds a che ck to the cr editor for less than the cla imed fu l l am o u n t o f t he debt, with the c heck ma rked “ paid in full” or the like. T here is no antece dent

se ttl e me nt a g re e me nt; the de bto r’ s pro ff e r of the c he c k is in e ff

e c t a n o ff e r t o s e ttl e the dis pu te d d e bt. The issue then be comes whe ther the c reditor’ s actions in c ashing the chec k, as well as the c reditor’ s
a c c omp a ny in g act io ns su c h a n ma rking thr ou g h th e no ta tio n o n th e c he c k, ind ic a te a n in te nt t o-9-

acc ept the chec k as offe red in c omplete satisfac tion of the disputed debt. See, e.g., Sawn er v. M.P. Sm ith C onstr. C o. , 52 6 S. W.2 d 4 92 (T e nn . Ct . A pp . 1 97 5) ; Lewis v. Modern Suppl y Co.
, 1 9 8 6 WL 89 99 (T e nn . Ct . A pp . A ug . 1 9, 19 86 ); see also Ideal Stencil Mach. Co. v. Can-Do, Inc. , No. 85-81- I I , 198 5 WL 40 41 , at *4- *5 (T e nn . Ct. App . De c . 4, 198 5)

. Th is type of a c c or d a ndsa tis fa c tio n is discussed in C OR B I N ON C ON TR AC TS :
[Th is] me tho d o f a c hievi ng the le g a l c on se qu e nc e of a n a c c or d a ndsa tis fa c tio n is without a promise or promises but r ather by the offe r of a

substitut e performanc e that is acc epted in disc harg e of the previously exis ting duty . . . . I n such ca ses, the new transac tion is wholl y

executed at t h e v ery

moment of the ac cepta nce of the perf ormanc e. The substitut ed performa nce is fully rende red and the ante cede nt debt is discharg ed, lea ving nothing more to be done by either party

. The acc eptanc e of the perf ormanc e, usually

in the form o f a check . . . tender ed in “f ull satisfaction” of

so me

. . . d isp ute d c la im, is the satis fa c tio n o f the c re dit or ’s pr e vio us c la im.

C OR B I N ON C ON TR AC TS , su pr a , at 303 (footnote omit ted). I n such a situation, t he cr editor’s a ctions surrounding the re ceipt and c ashing of the c heck a re fre quently cruc ial to de termining whether there

wa s a me e tin g of

the min ds a ndbo th p art ie s in te nd e d th e c he c k to be a satis fa c tio n o f the de bt.

Th is c a se pr e se nts a

dif fe re nt s itu a tio n. I t is un dis pu te d tha t, p ri or to p a y me nt o f any

mon ie s, the parties rea ched an ag ree ment in writing to settle t h e lawsuit for a spec ific amount, $5,925.14. Acc ord and satisfaction in circ umstances in which the debtor a nd cre ditor rea ch an ag ree ment befor e the substitute performance is proffe red is also discussed in C OR B I N ON C ON TR AC TS :
[A] c re dit or ’s a c c e ptanc e of a su bs titute pe rf

orma nc e fo r a

pr e vio us ly

e xistin g c la im

. . . can oc cur . .

. by

the formation of an enf

orce able c ontrac t . . . called a n executory
a c c or d. Th e c re dit or pr omi se s to ac c e pt a fu tur e pe rf orma nc e or

re c e ive s a

pr omi se of fu tur e pe rf

orma nc e fo r the dis c ha

rg e of the o ri g ina l du ty . Wh e n th e a c c or d is perf ormed, the substitute perf ormanc e is t h e s at i s fac tion of the ac cord and the orig inal duty

is discharg ed. Consequently
, we have an acc ord, t he agr eeme nt, and the satisfac tion, the performance . No ac cepta nce subse quent to that for the formation of t h e ex ecutory

acc ord is require d. I ndeed, a ref usal to rec eive the a g ree d upon substitut e performanc e is a bre ach of the ac cord.

C OR B I N ON C ON TR AC TS , su pr a , at 301-03 (f

ootnotes omitt ed). Thus, w here the debtor ha s offe red and the c reditor ha s ag ree d to acc ept the substituted performance , an ex ecutory acc ord has be en formed, and this contract c an be e nforc ed. Th i s type of a g ree ment is also addre ssed in the R E S TA TE ME NT (S EC OND ) O F C ON TR AC TS :

(1) An a ccor d is a contra ct under which an oblig ee pr omises to acce pt a stated perf ormanc e in satisfaction of the oblig or’s e x isting duty . Performance of the a ccor d d i s c h ar g e s t h e o r i g i n a l d u t y. (2 ) Un ti l p e r f

o r m a n c e o f

t h e a c c o r d
, t h e o r i g i n a l d u t y i s s u s p e n d e d u n le ss there is suc h a brea ch of the acc ord by the obligor as discharg es the new duty of the-10-

oblig e e to a c c e p t th e p e r f o r man c e ins a ti s f

a c ti o n

. I f

th e r e is s u c h a

b r e a c h
, the oblige e may

enfor ce e ither the orig inal duty or any duty under the acc ord. ( 3 ) B r e a c h o f

t h e a c c o r d b y t h e o b l i g e e d o e s n o td i s c h ar g e t h e o r i g i n a l d u t y, but the obligor

may maintain a suit for spec ific per formanc e of the acc ord, in addition to any claim for damag es for

partial bre ach.

R E S TA TE ME NT (S EC OND ) O F C ONT RAC TS § 281 (1981). The R ES TATEME NT comments furthe r addre ss the eff

ect of a bre ach of

the executory acc ord by the cr editor: “I f a br eac h of the a ccor d by the oblige e pre vents the oblig or fr om performing the a ccor d, the orig inal duty is not discha rg ed, but the obligor has a claim for damag es for total brea ch of the acc ord. . . . [S] pecif ic per formanc e of the

acc ord will be g rante d unless for s o m e reason that re medy is inappropriate .” R ES TATEME NT (S EC OND ) O F C ON TR AC TS § 281, cmt. c.

I n this case, ther e wa s clea rly an executory

acc ord, i.e . a settlement a g ree ment betwee n the parties prior to perf

ormanc e. The corr espondenc e betwe en the pa rties establishes that Dob b i ns offe red to settle the case if the def endants pa id Dobbins’ attorney s’ fe es to date, w hich then amounted to $5,925.14. B y return le tter, counse l for the defendants acc epted this offe r, noting that they would “ne e d
, h o w e v e r , u n ti l Ju n e 3 0 to h a v e th is mo n e y

. ” A t th is p o in t, th e n , th e r e w a s an executory acc ord, enfor cea ble by either party , althoug h the exact date f or payment was not stated. Th e pa rt ie s’ a tto rn e y s e xch a ng e d te le ph on e c a lls , th e fi rs t c he c k w a s se nt o n July 14 , 2 00 4, a ndit

wa s ac c e pte d. Th e July

14 le tte r i nd ic a te d th a t th e de fe nd a nts ’ atto rn e y e xpe c te d th a t D ob bin s w ou ld

rec eive the f

inal payment by

J uly 29, 2004.

Do bb ins arg ue s th a t, b e c aus e the se c on d c he c k w a s n ot s e nt by July 29 , 2 00 4, the de fe nd a nts breach ed the settlement ag ree ment and she e ffe ctively repudiated the ag ree ment in her Aug ust 3, 2004 letter. Eve n afte r the sec ond payment was sent to Dobbins, she maintains, the re pudiation was

e f f e c t i v e , a s r e c i t e di n t h e d e f e n d a n t s ’ c o u n s e l ’ s O c t o b e r 6 , 2 0 0 4 l e t t e r

t o D o b b i n s ’ a t t o r n e y.

This a rg ument fails on two counts. First, the tria l court found that the se ttlement ag ree ment had “no time limits” and “no drop-de ad deadline” for payment of the ag ree d amount. The trial c ourt fo un d th a t th e de fe nd a nts “ in f a c t c omp lie d w ith ” the a g re e me nt by makin g the re qu ir e d p a y me nts “within a reasonable period of time unde r the c ircumstance s. . . .” From our re view of the rec ord, we f ind no error

in these finding s by

the trial court. There fore
, there was no “bre ach of the ac cord by [the defend ant s] [so a s to ] dis c ha rg e [] the ne w d uty

of [Do bb ins ] to a c c e pt the pe rf orma nc e in satisfac tion.” R E S TA TE ME NT (S EC OND ) O F C ON TR AC TS § 281(2). Conseque ntly , Dobbins did not have c ause to re pudiate the e x ecutory acc ord.

Second, as note d by

the trial court, at no time did Dobbins tender bac k ei t h er t he first or second se ttlement pay ment made by the def endan ts. Dobbins’ failure to tender ba ck to the defe ndants either of

these pa y m en t s re n dere d her attempted repudiation ineffec tive. Tenne ssee adher es to the “tender rule,” which rec og nizes that settlement ag ree ments are binding until resc inded fo r c aus e , a ndthat te nd e ri ng ba c k th e c on sid e ratio n r e c e ive d is a c on dition pr e c e de nt to the ri g ht t o repudiate the settlement a g ree ment. See Sm ith v. Boyd , 2 Tenn. App. 334 ( Tenn. Ct. App. 1926). Re qu ir ing the re turn of a ny c on sid e ratio n pa id is a wi de ly re c og nize d c on dit ionpr e c e de nt f or a pa rt y-11-

se e kin g to a vo id a s e tt le me n t a g r e e me n t. S ee Mi ng v . Ho , 371 P.2d 379, 404 (Haw. 1962) (dete rmining that “one who se eks t o repudiate a se ttlement and throw the subjec t matter into the

are na of l i t i g ation cannot at the same time cla im the benef it of the ag ree ment he is repudiating” ); Stephenson v. Stephenson
, No. 220506, 2001 WL 965520, at *1 (Mich. Ct. App. Aug . 24, 2001) (“It is well settled law that settlement ag ree ments are binding u ntil rescinded f or ca use and that tendering ba ck the consideration r ece ived is a condition pr ece dent to the rig ht to repudiate a contra ct of se ttl e me nt. ” ); Watson v. Bu gg , 280 S.W .2d 67, 69 (Mo. 1955) (in order to repudiate a settlement ag ree ment that alleg edly was based on fraud, plaintiff must tender bac k the consider ation rec eived in s e ttl e me nt) ; Doe v . Golnick , 556 N.W.2d 20, 23 (Neb. 1996) ( ad h ering to the “tende r rule,” requiring plaintiff who wishes to a void a former settlement ag ree ment in or der to bring a medica l

ma lpr a c tic e la ws uit

mus t te nd e r b a c k the c on sid e ratio n s he re c e ive d f or sig nin g the re le a se ); Swan v. Gre a t N. R

y. Co. , 168 N.W. 657, 663 (N.D. 1918) ( following the rule that pay ment must be te nd e re d b a c k in or de r t o r e pu diate a se tt lem e nt a g re e me nt andsu e on the orig ina l c a us e ); see generally A. M. Srarthout, Return or tender of c onsideration for release or compromise as c ondition of action for rescission or cancellation, action upon original claim, or action for damages sustained by the fra ud

induc ing the re le as e or

c om prom ise , 134 A.L .R. 6 (1941).

There fore , since the de fendants did not brea ch the executory acc ord, but in fac t performed under th e a g r e e me n t, a n d b e c au s e D o b b in s d idn o t e f f e c ti v e ly r e p u d iate th e a g r e e me n t, the defe ndants wer e entitled to “spe cific pe rformance of the a ccor d.” R E S TA TE ME NT (S EC OND ) OF C ONT RACT S § 28 1, c mt. c . Co ns e qu e ntl y , th e tr ia l c ou rt didno t e rr

in g ranti ng the de fe nd a nts ’ mot ionto e nf

or c e the se ttl e me nt a g re e me nt.

The de cisio n o f t h e t ri al court is affirmed. Costs on appea l are to be taxed to Appellant Paulette Dobbins and he r sure ty , for whic h execution may issue, if nec essary

.

___________________________________ HOLL Y M. KI RBY, JUDGE