## Facts

- Vincent J. Douthwright was seriously injured when concrete pylons rolled off a truck owned by Northeast Corridor Foundations (Northeast) and crushed his leg.
- New England Pipe Corporation (New England) was also responsible for Douthwright’s injuries.
- Douthwright, Northeast, and New England participated in a settlement conference and reached an oral settlement agreement valuing Douthwright’s total damages at \$3.2 million.
- Under the oral settlement terms, if the settlement sums were not paid as agreed, Douthwright was entitled to interest at 12 percent per year.
- The settlement allocated \$2.5 million of the \$3.2 million to Northeast.
- Northeast’s primary insurer paid Douthwright \$1 million, but Northeast’s secondary insurer refused to pay the remaining \$1.5 million when payment became due.
- The trial court found that Douthwright completed his settlement obligations on January 2, 2001, making Northeast’s remaining \$1.5 million due on February 2, 2001.
- On February 13, 2001, Douthwright moved for a default judgment based on Northeast’s failure to pay under the settlement agreement.
- After an initial hearing on March 26, 2001, Northeast sent Douthwright a check for \$1.5 million.
- The check was accompanied by a letter stating it was intended as an accord offered in satisfaction of Northeast’s debt; the tender did not include any interest.
- After an evidentiary hearing on May 8, 2001, the trial court rendered judgment for Douthwright for \$40,931.45 in interest for the late payment.

## Issues

1. Whether Northeast’s tender of a \$1.5 million check labeled as an accord “in satisfaction,” without any interest, discharged any obligation to pay interest under Conn. Gen. Stat. § 42a-3-311.
2. Whether the settlement obligation for the \$1.5 million principal and late-payment interest was “unliquidated or subject to a bona fide dispute,” as required for discharge under § 42a-3-311.
3. Whether the trial court properly awarded interest based on the parties’ oral settlement terms and Connecticut law governing interest for untimely payment of settlement amounts.

## Decision

- The Appellate Court affirmed the trial court’s judgment awarding Douthwright \$40,931.45 in interest.
- The court agreed that, under the oral settlement agreement, Douthwright was entitled to payment once his own settlement obligations were satisfied and the defendants’ payment obligations came due.
- The court accepted the trial court’s findings that Douthwright performed by January 2, 2001, and that Northeast’s remaining \$1.5 million was due on February 2, 2001.
- The court rejected Northeast’s accord-and-satisfaction argument because § 42a-3-311 requires that the claim be unliquidated or subject to a bona fide dispute, and the record supported the conclusion that the obligation to pay (including the agreed consequence of late payment) was not genuinely disputed once due.
- The court held that a debtor cannot avoid interest on a late, fixed settlement obligation by tendering only the undisputed principal with a “full satisfaction” condition.

## Legal Principles

- A settlement agreement is enforced according to contract principles; once a party performs required settlement conditions, payment becomes due as agreed.
- Discharge by accord and satisfaction under Conn. Gen. Stat. § 42a-3-311 requires the debtor to prove, among other things, that the instrument was tendered in good faith as full satisfaction of the claim and that the claim was unliquidated or subject to a bona fide dispute.
- The debtor bears the burden of establishing the statutory requirements for discharge under § 42a-3-311.
- A unilateral statement that a payment is offered as “full satisfaction” does not, by itself, convert a fixed, due obligation into a bona fide dispute.
- When a settlement provides for interest upon late payment, and payment is not made when due, a court may award interest consistent with the settlement terms and applicable Connecticut law.

## Conclusion

The Appellate Court held that Northeast’s late tender of only the undisputed \$1.5 million principal, accompanied by a letter asserting “accord and satisfaction,” did not extinguish Douthwright’s entitlement to interest for untimely payment where the settlement obligation was fixed and not subject to a bona fide dispute, and it affirmed the trial court’s award of \$40,931.45 in interest.


Douthwright v. Northeast Corridor Foundations, 805 A.2d 157, 72 Conn. App. 319 (2002)