The Michigan Court of Appeals recently reaffirmed the Michigan Common Law that when a plaintiff enters into a release and provides an accord and satisfaction to settle a lawsuit, that if the plaintiff seeks to later repudiate the accord and satisfaction, he or she must return all the money that was paid by the defendant originally to settle the suit before a new suit may be commenced. An accord and satisfaction is more than a release of a claim. An accord and satisfaction requires that the claim be disputed and the substituted performance be agreed upon and accomplished.
In the case decided by the Michigan Court of Appeals, the plaintiff purchased a manufactured home from the defendant. Soon after the plaintiff took possession, she discovered several serious defects and sued the defendant. The parties reached an out-of-court settlement, wherein the defendant agreed to repair all the various defects and pay plaintiff and her attorney $8,500. After the repairs were made, plaintiff inspected the repairs with her attorney and signed off on them, signing both a release and satisfaction.
A year later, plaintiff discovered high levels of toxic mold, later filing suit against the same defendant arguing that the defendant breached the settlement agreement by not completing the original repairs in a workmanlike manner.
The Court of Appeals affirmed the trial court’s holding that nothing prevented the plaintiff from having a professional inspect the defendant’s work before she signed the original satisfaction. Just because the mold was not visible to the naked eye does not mean the satisfaction does not cover it. Thus, plaintiff’s second lawsuit was an attempt to repudiate the release that she gave defendants originally. The Court held that because plaintiff signed the release and satisfaction, and because defendants made the repairs and paid her, the contract was complete. The Court held because plaintiff was attempting to repudiate the release she must give back the consideration before filing suit. If she had not signed the satisfaction, she could have filed suit without having to return the money first.
Click here to download a PDF copy of the Michigan Court of Appeals Decision in Bain v Community Sales.
This article was written by , Senior Associate at Demorest Law Firm.
