This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).






Binder Printing Company, Inc.,





Fidelity Leasing, Inc.,

f/k/a JLA Credit Corporation and/or

Citicorp Vendor Finance, Inc.,



Filed February 3, 2004


Harten, Judge


Ramsey County District Court

File No. C0-02-9074


Thomas E. McEllistrem, Christopher K. Wachtler, Garth G. Gavenda, Collins, Buckley, Sauntry & Haugh, P.L.L.P., W-1100 First National Bank, 332 Minnesota Street, St. Paul, MN 55101 (for appellant)


Josh Jacobson, Law Office of Josh Jacobson, One Financial Plaza, 120 South Sixth Street, Suite 1515, Minneapolis, MN 55402 (for respondent)


            Considered and decided by Klaphake, Presiding Judge, Randall, Judge, and Harten, Judge.

U N P U B L I S H E D   O P I N I O N



Appellant lessee brought an action against respondent lessor to recover an alleged overpayment in the buyout of a leased printing machine.  The district court granted summary judgment for respondent, finding that the terms of the lease were unambiguous and there was no factual dispute, that there is no industry standard that requires a discount to present value, and that the parties had negotiated a buyout, creating an accord and satisfaction.  Appellant claims that genuine issues of material fact preclude summary judgment.  Because we see no genuine issues of material fact, we affirm.


            Appellant Binder Printing Company entered into a lease agreement with JLA Credit Corporation and/or Citicorp Vendor Finance, Inc. (JLA), corporate predecessor to respondent Fidelity Leasing, Inc., providing for the seven-year lease of a printing press.  The agreement required appellant to make monthly payments of $2,305 and a balloon payment of $14,990 at the end of the seven-year term, at which time appellant would become the owner of the press.  The lease may have included a prepayment addendum, but if it did, no copy is available showing the terms.

            About three years into the lease, appellant sought to trade in the printing press for a newer model and informed respondent that it wanted to buy out the remainder of the lease.  Respondent offered to let appellant buy out the lease for $125,648.  Appellant promptly paid that amount to respondent and traded in the printing press on the purchase of a newer model.

            Several months later, upon reviewing the transaction, appellant’s management thought that it had overpaid respondent and brought this action, claiming breach of contract, unjust enrichment, and rescission.[1]  In its answer, respondent asserted several affirmative defenses, including accord and satisfaction.  Respondent also moved for summary judgment.[2]

            The district court granted summary judgment for respondent.  Appellant claims that genuine issues of material fact exist as to accord and satisfaction, the existence and effect of a prepayment addendum, and standards for course of dealing and usage of trade.


            Summary judgment is proper when the pleadings, depositions, interrogatory answers, admissions, and affidavits “show that there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law.”  Minn. R. Civ. P. 56.03.  On appeal from summary judgment, a reviewing court asks (1) whether there are any genuine issues of material fact and (2) whether the district court erred in its application of the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).

When deciding a motion for summary judgment, a district court must not decide factual issues, but rather must determine whether any material factual issues exist. Nord v. Herreid, 305 N.W.2d 337, 339 (Minn. 1981).  The nonmoving party has the burden to present evidence sufficiently probative of an essential element of the claim to allow reasonable minds to reach different conclusions.  DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997).  A genuine issue for trial must be established by substantial evidence.  Id.
at 69-70; see Minn. R. Civ. P. 56.05 (the party opposing summary judgment “may not rest upon mere averments . . . but must present specific facts showing that there is a genuine issue for trial”).  The reviewing court views the evidence in a light most favorable to the party against whom judgment was granted.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).

1.         Accord and Satisfaction

            In general, whether an accord and satisfaction occurs is a question of fact.  Brekke v. THM Biomedical, Inc., 667 N.W.2d 452, 456 (Minn. App. 2003) (stating that the critical issue is intent).  But accord and satisfaction is established where the parties objectively intended the new promise to constitute full settlement of the original claim.  Id.  Appellant does not dispute that both parties intended the buyout agreement to replace the original lease agreement.

            Four elements are generally required to establish the defense of accord and satisfaction:

(1) the party, in good faith, tendered an instrument to the claimant as full satisfaction of the claim;  (2) the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim;  (3) the amount of the claim was unliquidated or subject to a bona fide dispute;  and (4) the claimant obtained payment of the instrument.

Webb Bus. Promotions, Inc. v. Am. Elecs. & Entm’t Corp., 617 N.W.2d 67, 73 (Minn. 2000).  It is undisputed that appellant tendered the buyout amount to respondent in good faith in full satisfaction of the original lease obligation and that the amount tendered fully satisfied the original obligation, thereby satisfying elements (1), (2), and (4).  As to element (3), the fact that the amount obtained was liquidated or undisputed at the time does not preclude accord and satisfaction.  T.B.M. Props. v. Arcon Corp., 346 N.W.2d 202, 203 (Minn. App. 1984), review denied (Minn. 31 Oct. 1984).

Appellant relies on Roaderick v. Lull Eng’g Co., 296 Minn. 385, 389-90, 208 N.W.2d 761, 764 (Minn. 1973), in which the supreme court found a genuine issue of material fact as to whether an employer intended bonus checks to be full payment of an employee’s commissions because bonuses were paid sporadically.  But Roaderick is distinguishable: here, it is undisputed that both parties intended appellant’s payment of $125,648 to completely fulfill appellant’s obligation to buy out and satisfy the original lease.

Appellant also claims that the parties lacked the mutual agreement necessary for an accord and satisfaction, relying on Action Instruments Co. v. Hi-G, Inc., 359 N.W.2d 664 (Minn. App. 1984).  Action found that the record was ambiguous as to whether a check was full payment of one party’s claims against the other.  Id. at 666.  Here, there is no ambiguity: appellant’s payment was a full payment of respondent’s claims under the original lease.  Accordingly, mutual agreement existed to support the accord and satisfaction.

            Because the parties’ buyout agreement constituted an accord and satisfaction of the original lease, the district court properly granted summary judgment on that basis.

2.         Existence and Effect of a Prepayment Addendum

The district court held that, while there was a fact issue as to whether a prepayment addendum existed, it was not a material fact issue.  A fact is material where its resolution affects the result or outcome of the case.  Morris v. Perpich, 421 N.W.2d 333, 336 (Minn. App. 1988), review denied (Minn. 16 May 1988).  Whether a prepayment addendum exists would not affect a determination of whether respondent breached the lease agreement by not applying a present-value reduction to the buyout amount because even if an addendum exists, its terms are unknown and speculative.[3]

            The district court also determined that appellant had not established a genuine issue of material fact as to whether such an addendum included a present-value reduction.  While language in a prepayment addendum requiring a present-value reduction would affect the outcome of the case, nothing in the record indicates that the addendum, if it existed, included a present-value reduction.  The former district sales manager for JLA stated in an affidavit that he intended the buyout term to include a descending percentage penalty on the outstanding balance discounted to present value, but no other documents or affidavits in the record mention a present-value reduction in the alleged prepayment addendum.  See Resolution Trust Corp. v. Kahn, 501 N.W.2d 703, 705 (Minn. App. 1993) (intent of the parties to a written instrument is relevant only when the language of the writing is ambiguous), review denied (Minn. 16 Aug. 1993); DLH, Inc., 566 N.W.2d at 71(“the party resisting summary judgment must do more than rest on mere averments”).

            Because the existence of a prepayment addendum is not a genuine issue of material fact and no genuine issue of material fact existed as to whether a prepayment addendum included a present-value reduction, summary judgment was properly granted.

3.         Course of Dealing and Usage of Trade

            Finally, appellant argues that a genuine issue of material fact exists as to whether course of dealing and usage of trade require a present-value reduction of lease buyout amounts.  Minn. Stat. § 336.1-205(1) (2002) defines course of dealing as a “sequence of previous conduct between the parties . . . establishing a common basis of understanding for interpreting their expressions and other conduct.”  There is no evidence that the parties had any previous lease transactions; therefore, course of dealing does not apply.

Under Minn. Stat. § 336.1-205(2) (2002), usage of trade is a “practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question.”  While the district court received various affidavits indicating that some leasing arrangements in the industry include buyout provisions with reductions to present value, other evidence showed the absence of such reductions.  The evidence did not show a recognized industry standard requiring a present-value reduction in prepayment addendums to lease agreements.[4]  In short, for lack of regularity of observance, the usage of the trade here conclusively yields no recognized standard.  Therefore, no genuine issue of material fact exists as to whether usage of trade required respondent to include a present-value reduction to the buyout price.

Because no issue of material fact was shown regarding the accord and satisfaction, the existence and effect of a prepayment addendum, and the course of dealing and usage of trade, the district court properly granted summary judgment.


[1] Appellant later conceded that its claim for rescission was not viable.

[2] Appellant never moved to continue summary judgment under Minn. R. Civ. P. 56.06 in order to conduct discovery.

[3] Appellant argues that the existence of the prepayment addendum will determine whether appellant had the “right” to buy out of the lease and whether the contract governs the entire relationship of the parties.  Although the district court found that the unambiguous terms of the lease did not provide appellant with a right to buy out the lease, neither of these issues affects the resolution of whether respondent breached the lease agreement by not applying a present-value reduction.

[4] Appellant’s president stated in an affidavit that two prior lease arrangements with other companies resulted in buyout agreements, and the amount appellant paid had been discounted to present value.  Appellant’s accountant stated in an affidavit that, in his experience, early payoffs of financing include the outstanding principal amount plus any agreed-on percentages as a penalty.  The president of the firm that supplied the printing press stated in an affidavit that respondent’s calculation of the buyout amount is “extremely rare” and “not common industry practice.”  But he also stated that some leases contain buyout provisions with present-value reductions and some do not.