Unpublished Disposition, 909 F.2d 1489 (9th Cir. 1990)

No. 89-55207.

United States Court of Appeals, Ninth Circuit.

Before REINHARDT and LEAVY, Circuit Judges, and BRUCE R. THOMPSON, District Judge^* .

MEMORANDUM^** 

This is an appeal from the district court's grant of summary judgment in favor of the appellee, McGraw-Hill, Inc. Ronald Ineman contends that he was wrongfully discharged and that he did not subsequently enter into an accord and satisfaction with the appellee. Because we agree with the district judge regarding the accord and satisfaction, we do not reach the issue of wrongful discharge.

FACTS

Ronald Ineman was employed by McGraw-Hill from December, 1966 to June, 1986. He began as a district sales manager and, in 1977 and 1985, was promoted to regional management positions. In the fall of 1985, Ineman informed McGraw-Hill that he planned to take a three week vacation in the spring of 1986. Roughly one week before his vacation was to begin, Ineman was told by two of his superiors to change his vacation plans. He refused to do so. Three days before his scheduled vacation, one of his supervisors, Mark Dacey, sent Ineman a memo explaining why McGraw-Hill needed him to stay and suggested that he either postpone the vacation or limit it to five days. Dacey offered Ineman reimbursement for any losses resulting from the change in plans; he also warned that if Ineman went ahead with the vacation as planned, it could be considered grounds for termination.

Despite these warnings, Ineman did not respond to the memo and took his vacation as planned. He returned on March 21, 1986, and telephoned Dacey, who told him he was being demoted to a sales position. Ineman responded that such a demotion was unacceptable and that he would resign.

The following day, Ineman telephoned Dacey, saying he did not really want to resign, and sent him a memo, in which he wrote: "It is probably in both our best interests that I do leave McGraw-Hill ... I am not interested in a sales position ... I do think I deserve full severance and retirement benefits to age 60."

On March 27th, Dacey telephoned Ineman and transmitted McGraw-Hill's response. McGraw-Hill offered to: (1) treat Ineman's departure as a "reduction in force," in order to make him eligible for severance pay; and (2) keep him on the payroll through June 30, 1986, so that he would qualify for improved benefits under a new "Corporate Retirement Plan." Under an ordinary resignation, neither severance pay nor the improved benefits plan would have been available to Ineman.

Dacey testified that Ineman responded to this offer by saying something to the effect of "this is terrific, that sounds great." Ineman testified that he did not recall exactly what he said during the conversation of March 27th, but that he did not express any dissatisfaction with the proposed settlement. Neither did he complain at a later date to anyone else at McGraw-Hill. He did, however, contend that he had not given McGraw-Hill's offer his "blessing."

On April 1st, Dacey sent Ineman a memo confirming their telephone conversation of March 27th and reiterating the details of the settlement. Ineman failed to respond to this memo. While he stopped working at McGraw-Hill on April 4th, he was kept on the payroll through June 30, 1986, per the agreement. Thereafter, Ineman received and cashed checks covering the agreed upon severance pay, accrued vacation time, and pension payments under the improved "Corporate Retirement Plan." At no point did he indicate to McGraw-Hill either through oral or written communication that the payments were only in partial satisfaction of his claim.

More than a year later, on June 29, 1987, Ineman filed suit against McGraw-Hill for wrongful discharge and related claims in Los Angeles County Superior Court. The case was removed to district court under 28 U.S.C. § 1332 (1976). The district court granted McGraw-Hill's motion for summary judgment, and appellant timely filed a notice of appeal under 28 U.S.C. § 1291 (1982).

STANDARD OF REVIEW

We review the entry of summary judgment de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir. 1989). In reviewing the district court's grant of summary judgment, we must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there is any genuine issue of material fact and whether the district court correctly applied the relevant substantive law. Tzung v. State Farm Fire and Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir. 1989); Judie v. Hamilton, 872 F.2d 919, 920 (9th Cir. 1989).

There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a "reasonable jury" to return a verdict for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-51 (1986). Evidence that is merely colorable or is not "significantly probative" does not raise a genuine issue of material fact, and the mere possibility that the plaintiff may discredit defendant's testimony at trial will not suffice to defeat a properly presented motion. United Steelworkers of America v. Phelps Dodge Corp., 865 F.2d 1539, 1542, (9th Cir. 1989) (en banc) (citing Anderson, 477 U.S., at 249-50 (1986)). Summary judgment should be granted so long as the evidence before the district court demonstrates that, after adequate time for discovery, there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986).

The question raised on appeal is whether any significantly probative evidence in the record conflicts with the existence of an accord between McGraw-Hill and Ineman. If so, the grant of summary judgment was inappropriate. We find no evidence in the record which contravenes any material element of the accord. Accordingly, we affirm the district court's grant of summary judgment.

DISCUSSION

Under California law, an accord is defined as an agreement by a person to "accept, in extinction of an obligation, something different from or less than that to which the person agreeing to accept is entitled." Cal.Civ.Code Sec. 1521 (Deering 1971). The agreement itself does not extinguish the original obligation, Cal.Civ.Code Sec. 1522, but acceptance of the consideration of an accord, such as monetary payment or specific performance, does extinguish the obligation and is called "satisfaction," Cal.Civ.Code Sec. 1523.

To be valid, an accord and satisfaction must be grounded upon a bona fide dispute regarding the original obligation. Potter v. Pacific Coast Lumber Co., 37 Cal. 2d 592, 597, 234 P.2d 16, 18 (1951); Berger v. Lane, 190 Cal. 443, 448, 213 P. 45 (1923). Since both parties agree that there was a bona fide dispute as to Ineman's employment status and severance package, this issue is not before us.

The alleged accord in this case arose from McGraw-Hill's tender and Ineman's acceptance of a severance package with greater benefits than were available for an ordinary resignation, but less than Ineman had initially demanded.¹  This accord would be executory and would not discharge the original obligation until performance was complete, but both parties would be bound to execute it. Cal.Civ.Code Sec. 1522.²  It is undisputed that thus far McGraw-Hill has performed its duties and Ineman has accepted and cashed all payments made under the accord. If the accord is found to be valid, McGraw-Hill would then have a right to specific performance. See Restatement (Second) of Contracts Sec. 281 comment b (accord entitles obligor to a chance to render the substituted performance in satisfaction of the original duty), comment c (where obligee breaches accord, specific performance will generally be granted). Thus, while satisfaction here could not technically be rendered until Ineman received his final pension check, a finding of a valid accord would be sufficient ground for dismissing his employment claims against McGraw-Hill.

The issues Ineman raises on appeal are: (1) whether McGraw-Hill's tender gave sufficient notice that acceptance would extinguish his employment claims against them; (2) whether Ineman did in fact accept the offer; and (3) whether his intention was to dispose of his entire employment claim.

Under California law, the agreement constituting an accord may be either express or implied. Sierra & San Francisco Power Co. v. Universal Electric & Gas Co., 197 Cal. 376, 387, 241 P. 76 (1925). A writing is not required to evidence the agreement, Thompson v. Williams, 211 Cal. App. 3d 566, 573, 259 Cal. Rptr. 518, 521 (1989), and the agreement need not be explicit but may be inferred from the circumstances, Rankin v. Miller, 179 Cal. App. 2d 133, 139, 3 Cal. Rptr. 496 (1960).

In determining whether an agreement constitutes an accord, California courts look to the nature of the transaction as well as the surrounding circumstances, e.g., the parties' conduct, their statements and declarations. See Potter, 37 Cal.2d at 598-601; Weller v. Stevens, 12 Cal. App. 779, 782, 108 P. 532 (1910). The central concern is whether the parties mutually intended to settle in full the underlying claim. Lapp-Gifford Co. v. Muscoy Water Co., 166 Cal. 25, 32, 134 P. 989 (1913) (citing Creighton v. Gregory, 142 Cal. 34, 41 (1904)). California courts have held that the requisite intention for an accord and satisfaction may be inferred from the surrounding circumstances and conduct of the parties. Id. at 32; Zuckerman v. Pacific Sav. Bank, 187 Cal. App. 3d 1394, 1405, 232 Cal. Rptr. 458 (1986).

To sustain an accord, the tender must be of such character as to put the creditor on notice that acceptance will discharge the entire claim. Potter, 37 Cal. 2d at 597. In this case, the circumstances were indisputably sufficient to have placed Ineman on notice. Ineman's initial proposal was framed in terms of the conditions upon which he would agree to resign. McGraw-Hill responded with a counter-proposal which covered all the issues he had raised. The nature of the negotiations demonstrates that the settlement proposed by McGraw-Hill was intended to be a final resolution of the dispute, as required under Potter. These circumstances leave no doubt that Ineman understood McGraw-Hill's proposal to be tendered in full satisfaction of his employment claim.

We turn next to the question of acceptance. Notwithstanding Ineman's assertions, Dacey's testimony is effectively uncontradicted. Dacey testified that Ineman orally indicated his approval of McGraw-Hill's proposal during their conversation on March 27, 1986. In his own deposition, Ineman acknowledged the substance of the conversation and affirmed that he did not disapprove the proposed settlement. Nor did he deny approving it orally; he merely testified that he did not recall exactly what he had said. The closest he came to contradicting Dacey's sworn testimony was: "I don't remember. I certainly wasn't going to give it my blessing." We conclude that, on the basis of Ineman's and Dacey's testimony in their respective depositions, a reasonable jury could only find that Ineman did indeed accept McGraw-Hill's proposal.

Only in his affidavit opposing McGraw-Hill's motion for summary judgment did Ineman directly deny agreeing to the settlement. There, Ineman asserted that: "There was never any agreement or understanding that receipt of the new retirement program beginning July, 1986, was accepted in lieu of any rights to complain about the nature of my termination. While I did appreciate extra benefits, it was unilateral on their part." These assertions are generalities, and conclusory. They are insufficient to controvert the evidence of his specific conduct on and following March 27, 1986.

Ineman's conduct following the conversation of March 27th strongly supports the conclusion that he did in fact agree to McGraw-Hill's proposal and intended it to constitute the final resolution of his claim. In ascertaining the intent with which the parties entered into a settlement, we consider whether the conduct of the parties following the tender and acceptance of the settlement demonstrates that they considered it a final resolution of the claim. See Potter, 37 Cal. 2d at 599-601 (plaintiff who accepted payment and later wrote seeking additional payments was estopped by his own conduct from denying an accord and satisfaction); Owens v. Noble, 77 Cal. App. 2d 209, 215, 175 P.2d 241 (1946) ("the giving and acceptance ... followed by such conduct of both parties as clearly shows that they did not consider the check a final settlement of the debt"). There is no indication that Ineman responded in any way to Dacey's memo of April 1st, a memo which confirmed in writing the substance of their March 27th conversation. After that conversation, Ineman did not complain to Dacey or to any one else in McGraw-Hill's management about the settlement. Moreover, after leaving work on April 4, 1986, Ineman accepted and cashed all of the payments made by McGraw-Hill. He did so without objection for over a year before bringing the present suit.

The nature of McGraw-Hill's offer, Ineman's apparent acceptance on March 27th, and his acquiescence thereafter, when viewed collectively, in the light most favorable to Ineman, could leave no doubt in the mind of any reasonable juror that he accepted the proposal and intended it to be the final resolution of his claim. When the circumstances and nature of a proposed settlement are such that the creditor understands that it is tendered to discharge an entire claim, he is bound either to accept it in discharge of that claim or reject it. Keppard v. International Harvester Co., 581 F.2d 764, 767 (9th Cir. 1978); Potter, 37 Cal. 2d at 597. As we concluded supra, McGraw-Hill's proposal constituted such a tender. Though the recipient later protests that the payment is not accepted in complete satisfaction of his claim, cashing of the check will constitute acceptance so as to sustain an accord and satisfaction. Potter, 37 Cal. 2d at 597.

Here, as previously noted, there was no protest--merely acceptance. One party's uncommunicated reservations about accepting another party's final offer do not militate against the validity of an accord and satisfaction. Potter, 37 Cal. 2d at 599; Thompson, 211 Cal. App. 3d at 574. That Ineman harbored hidden dissatisfaction or later changed his mind will not now relieve him of the consequences of his earlier action. Keppard, 581 F.2d at 767 ("employer was ... entitled to rely on [employee's] objective manifestations" where "there was no action by the parties to cast doubt on [employer's] belief that they had reached an accord").

We are mindful that the intention of the parties is the critical element of accord and satisfaction, and that intent usually presents a question for the trier of fact. Sanford Co. v. Cory Glass Co., 85 Cal. App. 2d 724, 729, 194 P.2d 127 (1948); accord Milgard Tempering, Inc. v. Sela Corp. of America, Nos. 87-4067, 87-4068, slip op. at 3401, 3419 (9th Cir. Apr. 24, 1990). Nonetheless, cases of this nature may properly be decided by summary judgment. See Milgard at 3418-19 (" [i]f the facts are not controverted by the parties, the question is purely one of law ..."). In fact, we have previously upheld a grant of summary judgment in an accord and satisfaction case by inferring the requisite intent despite the plaintiff's statement that he did not know that accepting the check might preclude him from seeking additional compensation and would not have accepted it had he known. Keppard, 581 F.2d at 765. In this case, we find Ineman's assertion that he never intended to forgo the right to bring additional claims against McGraw-Hill to be belied by his conduct during the oral negotiations, by his failure to respond to the memo documenting the agreement, and by his subsequent cashing of the checks from McGraw-Hill. Thus, Keppard is controlling with respect to the question of intent.

Ineman contends, however, that there must be written notice that the payment is in full satisfaction in order to constitute an accord and satisfaction. We disagree. The mere presence or absence of written notice on a check or draft is not dispositive. See Id. at 767. The check in Keppard contained no written notice that it was in full satisfaction of the claim. Nonetheless, we held on summary judgment that: (1) the plaintiff knew that the company considered the check to be a full settlement of his backpay claim; and (2) his intent to accept it as such could be inferred as a matter of law. Id. As we stated supra, Ineman understood McGraw-Hill's intention to settle his employment claim in full. He cashed the checks with full knowledge that the payments were being made for that purpose. Again we find Keppard controlling. Here, as in that case, the absence of a written statement of purpose on the check is insufficient to preclude summary judgment.

As noted at the outset, summary judgment is mandated against a party who, after adequate time for discovery, fails to make a sufficient showing of a factual basis for his claim. See Celotex, 477 U.S., at 322. We hold that the year Ineman had was adequate time for discovery in this case and that the record betrays an absence of evidence to support his claims. Because the only tenable inference from the evidence presented is that Ineman accepted McGraw-Hill's proposal with the understanding that it was in full discharge of his claims, no reasonable jury could return a verdict in favor of Ineman, as required to defeat a summary judgment motion under Anderson. 477 U.S., at 252.

Ineman has failed to establish any genuine issue of material fact under Anderson and Celotex. Accordingly, the district court properly granted the motion for summary judgment on the ground that the parties had entered into a valid accord and satisfaction. We therefore affirm the judgment of the district court.

AFFIRMED.