## Facts

- T. Keefe and Son, LLC (Keefe), a Connecticut contractor, subcontracted Metal Perreault, Inc. (Metal Perreault), a metal fabricator, to manufacture and supply custom metal components for a construction project, including guardrails and handrails for six concrete staircases.
- Metal Perreault delivered the stair-rail components, and Keefe later reported fit problems with the metal parts for staircases one and four.
- Metal Perreault refabricated replacement parts for stairs one and four, but Keefe continued to experience fit issues, particularly with stair four.
- Keefe notified Metal Perreault about the continuing issue with stair four after an attempted refabrication, but Keefe did not reject the goods, and Metal Perreault did not receive further notice that Keefe was rejecting the parts or that the problem remained unresolved after later work.
- Facing schedule pressure, Keefe modified and installed some of the refabricated parts and scrapped others rather than return them or insist on further corrective work.
- Keefe later terminated its contract with Metal Perreault and refused to pay the remaining balance for the fabricated work that Metal Perreault claimed it had completed or substantially completed.
- Export Development Canada (EDC), a Canadian government export-credit corporation, became the assignee of Metal Perreault’s receivable; on February 28, 2008, Metal Perreault assigned Keefe’s alleged debt of $189,500 to EDC, including the right to pursue collection.
- EDC sued Keefe in Connecticut Superior Court by writ, summons, and complaint dated November 24, 2009, asserting a single count for breach of contract seeking payment of the assigned $189,500 for goods sold and delivered.
- Keefe denied liability and asserted defenses including accord and satisfaction and a theory that defects required Keefe to obtain replacement materials and services and scrap unusable items (a setoff theory). Keefe also filed a counterclaim, which was later stricken; Keefe did not replead it.
- Prior motions for summary judgment were denied earlier in the case. The matter proceeded to a bench trial in 2016, with testimony from Metal Perreault’s project manager and from Keefe’s principals.

## Issues

1. Whether EDC, as assignee of Metal Perreault, proved by a preponderance of the evidence that Keefe owed $189,500 for the fabricated metal goods delivered under the parties’ contract.
2. Whether Keefe established its remaining affirmative defense of accord and satisfaction, or otherwise proved a setoff based on alleged nonconforming goods and related replacement/scrap costs under UCC contract principles.

## Decision

- The court found in favor of EDC on its breach-of-contract claim for the unpaid contract price assigned to it by Metal Perreault.
- The court concluded that Metal Perreault sold and delivered goods to Keefe at Keefe’s request and that, after credits and payments, the unpaid debt due on the account was $189,500.
- The court determined that Metal Perreault validly assigned the receivable to EDC, giving EDC the right to seek full recovery from Keefe.
- The court rejected Keefe’s accord-and-satisfaction defense, finding Keefe did not prove a clear mutual agreement that any different performance or reduced amount would satisfy the entire obligation.
- The court also rejected Keefe’s effort to reduce or eliminate the debt through a setoff theory tied to fabrication problems, reasoning that Keefe accepted and used modified goods, did not timely or effectively reject the goods, and did not carry its burden to prove an enforceable setoff that defeated EDC’s claim for the unpaid balance.
- Judgment entered for EDC for the amount due on the assigned debt (with any applicable interest and costs as awarded by the court).

## Legal Principles

- In a bench trial, the court as factfinder determines witness credibility, weighs evidence, and may accept or reject testimony in whole or in part.
- A plaintiff asserting breach of contract for goods sold and delivered must prove the agreement, delivery/performance, the amount due, and nonpayment; an assignee may sue in its own name on an assigned receivable.
- An assignment transfers the assignor’s collection rights to the assignee; the assignee’s claim is generally subject to defenses the debtor could have asserted against the assignor, but the debtor bears the burden to prove affirmative defenses and any setoff.
- Under UCC-based sales principles, a buyer seeking to avoid paying the price based on nonconformity must timely reject or otherwise give proper notice of breach; continued use, modification, installation, or scrapping of goods can support a finding of acceptance rather than rejection.
- Accord and satisfaction is an affirmative defense requiring proof of a mutual agreement to accept substituted performance (or a different amount) in full satisfaction of an existing obligation; absent proof of a meeting of the minds, the defense fails.
- A claimed setoff for alleged defects and replacement costs requires competent proof of entitlement and amount; unsupported or procedurally barred counterclaims do not establish a reduction of the contract debt at trial.

## Conclusion

After a bench trial, the court held that Export Development Canada, as assignee of Metal Perreault’s receivable, proved Keefe owed $189,500 for fabricated metal components delivered under the contract, and that Keefe failed to establish accord and satisfaction or a valid setoff based on alleged nonconforming goods, resulting in judgment for EDC for the unpaid assigned debt.


Export Development Canada v. T. Keefe and Son, LLC, 2016 WL 8488125 (2016)