Opinion ID: 2973557
Heading Depth: 4
Heading Rank: 1

Heading: Legal Definitions and Burdens

Text: Sections IV, VI, and VII of Plaintiffs’ brief challenge the district court’s conclusion that the parties ratified the Proposed Agreement and that the agreement constituted and accord an satisfaction under Tennessee law. According to Tennessee’s long-standing definition of an accord and satisfaction: An accord is an agreement whereby one of the parties undertakes to give or perform, and the other to accept in satisfaction of a claim, liquidated or in dispute, and arising either from contract or from tort, something other than or different from what he is or considers himself entitled to; and a satisfaction is the execution of such agreement. Lytle v. Clopton, 149 Tenn. 655, 663 (Tenn. 1923) (quotation omitted). In other words, [T]he accord of “accord and satisfaction” is a form of contract. The satisfaction of a disputed debt (or of an undisputed yet unliquidated debt) is offered in consideration for the substitute performance. Ward v. Wilkinson, No. 01-A-01-9803-CH-00151, 1999 Tenn. App. LEXIS 250, at  (Tenn. Ct. App. Apr. 19, 1999). The party asserting the defense of accord and satisfaction must prove by a preponderance of the evidence both that a contract existed and that “the contracting plaintiff agreed to accept lesser payment rendered in satisfaction of the original performance or payment for which the parties contracted.” Id. at -5 (emphasis omitted). - 16 - No. 05-5134 Steve Scipio and Patrick Patterson d/b/a Cymande Music; Leosong Copyright Service, Ltd. v. Sony Music Entertainment, Inc. et al. In the latter inquiry, “[w]hether a later agreement between contracting parties represents an accord and satisfaction so as to extinguish their original relationship or whether it is simply an executory accord is a matter of the intention of the parties.” Rhea v. Marko Constr. Co., 652 S.W.2d 332, 334 (Tenn. 1983) (citing Restatement (Second) of Contracts § 281, cmt. e (1981)). More precisely: To constitute a valid accord and satisfaction it is also essential [1] that what is given or agreed to be performed shall be offered as a satisfaction and extinction of the original demand; [2] that the debtor shall intend it as a satisfaction of such obligation, and [3] that such intention shall be made known to the creditor in some unmistakable manner. It is equally essential [4] that the creditor shall have accepted it with the intention that it should operate as a satisfaction. Both the giving and the acceptance in satisfaction are essential elements, and if they be lacking there can be no accord and satisfaction. The intention of the parties, which is of course controlling, must be determined from all the circumstances attending the transaction. Lytle, 149 Tenn. at 663-64 (quoting 1 Corpus Juris, 529). Matters of intention are generally resolved by the trier of fact: An accord and satisfaction is established by the intentions of the parties at the time of the transaction and the issue is a question of fact to be determined by the trier of fact. . . . Unless the evidence thereof is insufficient to submit to the jury or is undisputed and not open to opposing inferences, accord and satisfaction, including the various elements thereof, is ordinarily a question of fact to be determined by the jury or by the court where it is the trier of the facts. Helms v. Weaver, 770 S.W.2d 552, 553-54 (Tenn. Ct. App. 1989) (internal citations omitted). That said, Tennessee courts have often assessed the existence of an agreement as a matter of law: - 17 - No. 05-5134 Steve Scipio and Patrick Patterson d/b/a Cymande Music; Leosong Copyright Service, Ltd. v. Sony Music Entertainment, Inc. et al. Instances may arise in which an acceptance, on the part of the offeree, will be presumed; or where, in the circumstances, the offeree will be held estopped to deny acceptance. Such a case will arise where a check was mailed to a party and cashed, on the face of which appeared, “in full settlement of account.” Lytle, 149 Tenn. at 663. But see Quality Care Nursing Services, Inc. v. Coleman, 728 S.W.2d 1, 3-4 (Tenn. 1987) (quoting 6 ARTHUR L. CORBIN, CORBIN ON CONTRACTS, § 1277 (1951) for the proposition that: “It is not enough for the debtor merely to write on a voucher or on his check such words as ‘in full payment’ or ‘to balance account’ where there has been no such dispute or antecedent discussion as to give reasonable notice to the creditor that the check is being tendered as full satisfaction.”). 2. The Proposed Agreement, If Ratified, Constituted a Valid Accord and Satisfaction. A precise parsing of the Tennessee cases regarding what may constitute an accord and satisfaction is unnecessary because the Proposed Agreement, if ratified, clearly would. The Fugee Defendants’ Statement of Undisputed Facts establishes that “prior to the filing of [the] lawsuit, Plaintiffs’ representatives and The Fugees’ representatives negotiated[] a joint ownership agreement . . . that constituted a final settlement and release of Plaintiffs’ claims” and that “the parties agreed to the material terms of [that agreement].” (J.A. 764.) Moreover, the face of the Proposed Agreement, itself entitled “Settlement/Co-Administration Agreement,” indicates that its purpose was to “resolve” the dispute between the parties. The agreement provided for joint ownership of “all of the worldwide right, title, and interest in and to the copyright [of ‘The Score’].” (J.A. 367.) See - 18 - No. 05-5134 Steve Scipio and Patrick Patterson d/b/a Cymande Music; Leosong Copyright Service, Ltd. v. Sony Music Entertainment, Inc. et al. Bowater N. Am. Corp. v. Murray Mach., Inc., 773 F.2d 71, 76 (6th Cir. 1985) (“The settlement agreement here is clearly an Accord and Satisfaction. The central intent of the agreement was to substitute the undertakings of the agreement for the claims asserted by plaintiff in the original litigation. The settlement agreement clearly embodies those substituted undertakings.”). The central question thus is not whether the Proposed Agreement could have operated as an accord and satisfaction. Nor is it whether the combination of Defendants’ subsequent conduct (tendering the domestic royalties and reducing their stake in the foreign royalties) and Plaintiffs’ subsequent conduct (arguably allowing the domestic funds to be moved, and collecting the foreign royalties) itself operated as an accord and satisfaction.9 Rather, the question is whether through their conduct the parties ratified the Proposed Agreement, such that it would operate as an accord and satisfaction. For this inquiry, a more general examination of contract law principles is required. See 1 TENN. JURIS., ACCORD AND SATISFACTION § 1 (“An accord and satisfaction is a type of contract and is governed by the law of contracts.”) (citing R.J. Betterton Mgt. Servs., Inc. v. Whittemore, 733 S.W.2d 880, 882 (Tenn. Ct. App. 1987)); Cole v. Henderson, 454 S.W.2d 374, 384 (Tenn. Ct. App. 1969) (“[A]n accord is a form of contract, governed by the general rules for contracts, including the elements of offer and acceptance.”) 9 Defendants do not argue, for example, that a brief statement attached to the $400,000 payment operated analogously to the words, “in full settlement of account,” mentioned in Lytle. See Lytle, 149 Tenn. at 663. - 19 - No. 05-5134 Steve Scipio and Patrick Patterson d/b/a Cymande Music; Leosong Copyright Service, Ltd. v. Sony Music Entertainment, Inc. et al.