                 IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                        Assigned on Briefs August 4, 2006 Session

                     PAULETTE DOBBINS
                             v.
JEFFERY F. DABBS, JR., JEANETTE DABBS, JEFFERY F. DABBS, SR.,
AND ACCREDITED HOME LENDERS, INC., A CALIFORNIA CORPORATION

                 An Appeal from the Chancery Court for Henderson County
                        No. 17126 James F. Butler, Chancellor



                   No. W2006-00322-COA-R3-CV - Filed January 25, 2007


This case involves accord and satisfaction. The defendants fraudulently transferred real property
owned by the plaintiff. The plaintiff filed this lawsuit against the defendants for damages related to
the fraudulent transfer. The parties later agreed to settle the matter for approximately $6,000. The
defendants initially paid the plaintiff $3,000 pursuant to the settlement agreement. Before the
remainder was paid, the plaintiff repudiated the agreement in writing. Later, the defendants sent the
plaintiff a check for the remainder of the settlement. The plaintiff kept the second payment, but told
the defendants that she did not consider the payment to satisfy the debt and stated her intent to set
the case for trial. At the subsequent trial, the defendants did not appear. A judgment was entered
in favor of the plaintiff for $58,000. The defendants filed a motion to set aside the judgment as well
as a motion to dismiss the case, based on the original settlement agreement. The trial court granted
the defendants’ motions and dismissed the case on that basis. The plaintiff now appeals. We affirm,
concluding that the parties’ settlement agreement was an executory accord which was not effectively
repudiated and was properly enforced under the circumstances.

    Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court is Affirmed

HOLLY M. KIRBY , J., delivered the opinion of the Court, in which W. FRANK CRAWFORD , P.J., W.S.,
and ALAN E. HIGHERS, J., joined.

Radford H. Dimmick, Nashville, Tennessee, for the appellant, Paulette Dobbins.

Lloyd R. Tatum, Henderson, Tennessee, for the appellees, Jeffery Dabbs, Jr., and Jeanette Dabbs.
                                                     OPINION

        In May 1996, the parents of Plaintiff/Appellant Paulette Dobbins (“Dobbins”) conveyed to
Dobbins their interest in real property at 327 Vine Street in Lexington, Tennessee.1 Defendant
Jeffrey Dabbs, Sr., is Dobbins’ brother. Allegedly, in October 2002, Jeffrey Dabbs, Sr., his wife,
Defendant/Appellee Jeanette Dabbs, and his son, Defendant/Appellee Jeffrey Dabbs, Jr., acted in
concert to fraudulently convey the Vine Street property to Jeffrey Dabbs, Jr., in order to obtain funds
to help Jeffrey Dabbs, Sr., pay legal expenses.

        On May 15, 2003, Dobbins filed the instant lawsuit against Jeffrey F. Dabbs, Sr., Jeffrey E.
Dabbs, Jr., and Jeanette Dabbs, alleging conversion of the Vine Street property.2 Dobbins asserted
that the three defendants procured a fraudulent signature purporting to be Dobbins’ on a quitclaim
deed that transferred the Vine Street property to Jeffrey Dabbs, Jr. The complaint stated that the
property was then used by Jeffrey Dabbs, Jr., to secure a mortgage in the amount of $24,000. When
the borrowers defaulted and the lender foreclosed on the property, Dobbins learned of the fraud. In
the resulting lawsuit for conversion, Dobbins sought both compensatory and punitive damages.

        None of the three defendants filed an answer to the complaint within the appropriate time
limitations. On September 10, 2003, the trial court entered a default judgment against all three
defendants, reserving the issue of damages for a later hearing. On January 28, 2004, defendants
Jeffery F. Dabbs, Jr., and Jeanette Dabbs (collectively, “defendants”) filed a belated answer to the
complaint. On January 29, 2004, the defendants filed a motion to set aside the default judgment.3
The record does not indicate whether the motion to set aside was ever adjudicated.

        On June 2, 2004, Dobbins’ attorney faxed to counsel for the defendants an offer of
compromise and settlement in the case. The letter said that Dobbins was prepared to waive all
claims and dismiss the case if the defendants would agree to pay her attorney’s fees, “which currently
amount to $5925.14.” The letter did not state a time frame for payment of the money. On June 14,
2004, counsel for the defendants accepted the offer, responding that the defendants would pay the
requested amount in exchange for a dismissal with prejudice of Dobbins’ complaint.4 The
acceptance letter stated that the defendants would “need, however, until June 30[, 2004] to have this
money . . . .”


         1
          Dobbins’ parents retained a life estate in the property. Apparently, Dobbins’ mother was still alive during the
transaction in question.

         2
         Dobbins also named as a defendant Accredited Home Lenders, Inc., a California Corporation, but that
defendant was voluntarily dismissed from the lawsuit.

         3
         Jeffrey F. Dabbs, Sr., did not join in either the answer or the motion to set aside the default judgment.
Therefore, the judgment as to him is not at issue in this appeal.

         4
         Counsel appeared to respond only on behalf of Jeanette Dabbs. The parties, however, treat the settlement offer
and acceptance as if it applies to both Jeffrey F. Dabbs, Jr., and Jeanette Dabbs. For purposes of this opinion, we will
assume that the settlement agreement applies to both defendants.

                                                          -2-
         As of June 30, 2004, the defendants had not sent any of the settlement funds to Dobbins.
Counsel for the parties apparently exchanged telephone calls, and on July 14, 2004, the defendants’
attorney sent Dobbins a check for $3,000. The letter of enclosure stated that the check was the first
“partial payment of our agreement to settle your client’s claim for the total sum of $5,925.14.” In
the letter, the defendants’ attorney said that he would be leaving for vacation on July 29, 2004, but
that he expected to receive the next payment from the defendants for Dobbins before that time. The
letter further stated that, “[i]f any of the above is not agreeable, then please return the check and give
me a call.” Dobbins accepted the check.

        By the end of July, Dobbins had not received a second payment. On August 3, 2004, counsel
for Dobbins sent the defendants a letter informing them that Dobbins was repudiating the settlement
agreement, asserting that the defendants had failed to pay in a timely manner. The letter referred to
a July 2, 2004 telephone call between the parties’ counsel in which the defendants’ attorney
purportedly said that the defendants “would be able to pay one-half of the sums due on July 15,
2004, and the balance by the end of the month.” Dobbins’ attorney noted that Dobbins had received
and accepted the first payment of $3,000, but had received no other payment. The letter then
indicated Dobbins’ opinion that the defendants had “now reneged on what was a more than
reasonable settlement agreement,” and that, consequently, Dobbins “deemed [the agreement] to be
dissolved.” Dobbins’ attorney expressed his intent to “necessarily move forward with this case.”
The $3,000 that had already been paid as part of the settlement was not tendered back to the
defendants.

       Despite Dobbins’ stated intent to repudiate, on August 23, 2004, counsel for the defendants
sent Dobbins a check for $2,925.14 as the final payment in accordance with the parties’ original
agreement. The letter of enclosure stated:

        [The check is] in final payment of our agreement to settle your client’s claim for the
        total sum or $5,925.14 plus court costs . . . . I will forward a dismissal with prejudice
        as to your client’s claims if you tell me that Ms. Dobbins has decided to take this in
        final settlement. Hopefully, while I understand her frustration, she will decide that
        a bird in the hand is worth two in the bush and we can wrap this up.

Thus, the defendants’ attorney specified that the check was the final payment pursuant to the
settlement agreement. On October 6, 2004, Dobbins’ counsel sent a letter in response, stating that
Dobbins intended to keep the money tendered, but did not consider the payment as satisfying the
debt. The letter stated:

         . . . While I do appreciate the funds received to date, the settlement agreement was,
        as you know, dissolved before the final payment was made. My client will dismiss
        this action upon the additional payment of $2025.00 to her. If this payment is not
        received in full at my office . . . by November 5, 2004, this offer shall be withdrawn
        and we shall proceed accordingly. . . . I enclose an order setting this case for trial.



                                                   -3-
Thus, in order to release her claim against the defendants, Dobbins requested an additional $2,025
for the fees and costs incurred as a result of the defendants’ delays in payment.

        Meanwhile, on August 4, 2004, just after she repudiated the settlement agreement, Dobbins
filed a motion to set the case for trial and for a scheduling order. On November 10, 2004, the trial
court set the matter for trial on March 3, 2005.

        The trial commenced as scheduled on March 3, 2005. A transcript of the trial is not in the
record on appeal. The defendants did not appear at trial. On March 14, 2005, the trial court entered
an judgment in favor of Dobbins against all three defendants in the amount of $58,024.90.

        On March 28, 2005, the defendants filed a motion to set aside the judgment and for a new
trial pursuant to Rules 59 and 60 of the Tennessee Rules of Civil Procedure. In the motion, the
defendants claimed that they were either not apprised of the trial date or, through excusable neglect,
the date was not placed on counsel’s office calendar due to a computer malfunction. The defendants
argued that the trial court erred in proceeding with the trial when a motion to withdraw had been
filed by the defendants’ counsel on February 17, 2005, but had not yet been decided. Finally, the
defendants asserted the defense of accord and satisfaction. The accord and satisfaction defense was
further explained in a motion to enforce the settlement agreement filed contemporaneously with the
motion to alter or amend. The motion to enforce the settlement agreement asserted that the parties
had reached an agreement, that Dobbins had accepted full payment under the agreement, and that
Dobbins could not repudiate the agreement without tendering back payment. Attached to the motion
were copies of the communications between counsel regarding the proposed settlement and
payments from the defendants.

        On June 30, 2005, the trial court held a hearing on the defendants’ motions. The record on
appeal does not include a transcript of the hearing. On July 6, 2005, the trial court sent a letter to
counsel for the parties stating the trial court’s intent to grant the defendants’ motion to set aside the
final order as well as the defendants’ motion to enforce the settlement agreement based on accord
and satisfaction. The trial court reasoned:

        . . . Defendants did not act with diligence and responsibility in pursuing the
        settlement and complying with the terms, however, there were no time limits set forth
        in any of the agreements pertaining to the settlement. . . . Although Mr. Tatum filed
        a Motion to Withdraw, that Motion was never heard or allowed, or even set for
        hearing. The Plaintiffs in fact, took the money for the settlement, both payments,
        although they were not paid within the time frame of promise. Plaintiff did not pay
        or tender back the funds after it repudiated the agreement. In fact, after repudiation,
        Plaintiff accepted the balance of the funds for the payment of the original agreement,
        which had been offered and accepted.
                The Court finds that the agreement was an offer and an acceptance. That the
        agreement was in fact complied with within a reasonable period of time under the
        circumstances, and that there was no drop-dead deadline for the agreement to be
        completed. Even if there were a deadline, and it were not complied with, by

                                                  -4-
        accepting the funds thereafter to complete the payment of the agreed amount, the
        Plaintiff’s [sic] are now bound by the agreement and the payment thereof constitutes
        accord and satisfaction.

On August 4, 2005, the trial court entered an order incorporating the findings in its July 2005 letter,
enforcing the settlement agreement as an accord and satisfaction, and dismissing the case. On
September 1, 2005, Dobbins filed a motion to alter or amend the judgment. The trial court denied
that motion.5 From that order, Dobbins now appeals.

        On appeal, Dobbins contends that the trial court erred in granting the defendants’ motion to
enforce the settlement agreement, arguing that the correspondence between the parties shows that
there was no accord and satisfaction in this case. She claims that, by the time the second payment
was made by the defendants, the settlement agreement had already been terminated by the August
3, 2004 letter from Dobbins’ counsel. Because the second payment was not accepted in satisfaction
of the settlement agreement, she maintains, there can be no accord and satisfaction, and the case
should not have been dismissed. Furthermore, Dobbins argues, the trial court erred in granting the
motion because the defense of accord and satisfaction is an affirmative defense that must be
specifically pled. She asserts that the defense was waived because the defendants did not raise the
issue until after a judgment had been entered against them.

        We review the trial court’s findings of fact de novo, presuming those findings to be correct
unless the evidence preponderates otherwise. Tenn. R. App. P. 13(d). Issues of law are reviewed
de novo, with no such presumption of correctness. LDI Design, LLC v. Dukes, No. M2003-02905-
COA-R3-CV, 2005 WL 3555543, at *2 (Tenn. Ct. App. Dec. 28, 2005). “Although accord and
satisfaction is governed by the law of contracts, whether there has been an accord and satisfaction
is a question of fact.” Id. at *3 (citations omitted).

        We first address Dobbins’ argument that the defendants have waived the defense of accord
and satisfaction, because the defense was not timely pled. Dobbins argues that the trial court erred
in permitting the defendants to raise the affirmative defense of accord and satisfaction in a motion
that was filed post-trial and post-judgment. She argues that the defendants had time between the day
the agreement was allegedly consummated in August 2004 to the time of trial in March 2005 to
amend their answer. Because they did not, Dobbins argues, the defense was waived. In response,
the defendants note that the defense could not have been raised in their answer, because the answer
was filed in January 2004, well before the settlement agreement occurred. By timely filing their
motion to set aside the judgment and their motion to enforce the settlement agreement, the
defendants contend, they cured any defects in their pleadings.




        5
         The trial court filed two identical orders denying Dobbins’ motion to alter or amend, dated January 5 and
January 12, 2005.

                                                       -5-
          The defense of accord and satisfaction is among the enumerated affirmative defenses in
Rule 8.03 which must be timely raised. See Tenn. R. Civ. P. 8.03.6 A “party waives all defenses and
objections which the party does not present either by motion . . . or . . . in the party’s answer or
reply.” Tenn. R. Civ. P. 12.08. “Recognizing the mandatory nature of Tenn. R. Civ. P. 8.03, the
courts have consistently held that affirmative defenses that are not properly raised are waived.”
Estate of Baker v. King, No. W2005-00847-COA-R3-CV, 2006 WL 1173130, at *9 (Tenn. Ct. App.
May 4, 2006); see Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 300 (Tenn. Ct.
App. 2001) (“The failure to assert a claim or defense in a timely manner is deemed a waiver of the
right to rely on the claim or defense later in the proceeding.”). The question then becomes whether
the defense of accord and satisfaction was raised in a timely and proper manner in this case.

        Dobbins correctly points out that, in this case, the defendants had a period of several months
in which the defense of accord and satisfaction could have been raised. In her October 2004 letter,
Dobbins’ counsel informed the defendants of her intent to set the matter for trial. Nevertheless, the
defendants did not seek to amend their answer. In February 2005, counsel for the defendants filed
a motion to withdraw from the case, which was never set for a hearing. The trial was held in March
2005, but the defendants failed to appear and a judgment was taken against them. After having been
informed of the judgment taken against them, the defendants filed a motion to set aside the judgment
based on excusable neglect and the likelihood of a meritorious defense, and, for the first time, raised
the defense of accord and satisfaction in their motion to enforce the settlement agreement.

         We first note that, because the parties’ settlement agreement was not negotiated until after
the defendants’ answer was filed in January 2004, the defendants could not have included the
defense of accord and satisfaction in their answer. Accordingly, we consider whether, under the
circumstances, the defendants should have been precluded from raising the issue in their post-
judgment motions. On appeal, Dobbins does not challenge the trial court’s decision to set aside the
final order. Rather, she appeals only the trial court’s grant of the motion to enforce the settlement
agreement. Therefore, there is no issue on appeal regarding the trial court’s implicit finding that the
defendants’ failure to appear at trial resulted from excusable neglect and/or failure to receive notice
of the trial setting. The record reflects that neither party had filed any pleadings in the case (other
than the motion to withdraw) after Dobbins’ October 2004 letter stating her intent to set the case for
trial or, in the alternative, settle the case in exchange for an additional payment. Once the judgment
was entered in March 2005, the defendants were then put on notice that Dobbins was insistent on
pursuing her cause, that she did not intend to honor the settlement agreement, and that it was

         6
             Rule 8.03 provides in pertinent part:

         In pleading to a preceding pleading, a party shall set forth affirmatively facts in short and plain terms
         relied upon to constitute accord and satisfaction, arbitration and award, express assumption of risk,
         comparative fault (including the identity or description of any other alleged tortfeasors), discharge in
         bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, laches, license, payment,
         release, res judicata, statute of frauds, statute of limitations, waiver, and any other matter constituting
         an avoidance or affirmative defense.

Tenn. R. Civ. P. 8.03.

                                                            -6-
necessary to assert the defense of accord and satisfaction. The defendants possibly could have
asserted the defense before the March 2005 trial had they known the trial had been scheduled, but
counsel for the defendants had filed a motion to withdraw from the case in February 2005, and that
motion was still pending at the time of trial. Under these circumstances, we conclude that the trial
court did not err in permitting the defendants to raise the settlement agreement as an affirmative
defense at that juncture.

        Having found no error in the trial court’s decision to permit the defendants to assert the
settlement agreement as a defense, we next turn to Dobbins’ argument that the trial court erred in
enforcing the settlement agreement and in determining that an accord and satisfaction had been
reached. As noted above, the trial court determined that the parties had entered into an agreement,
that the agreement contained no deadline for payment, that payment was in fact made to Dobbins
within a reasonable period of time, and that Dobbins accepted the payment, despite Dobbins’ attempt
to repudiate the agreement prior to the final payment. Under these circumstances, the trial court held
that the defendants complied with the agreement by paying within a reasonable time, and even if
payment was not made in compliance with the original agreement, Dobbins’ acceptance of the
second payment constituted an accord and satisfaction.

        Dobbins argues on appeal that the trial court erred in determining that her acceptance of the
payments tendered by the defendants constituted an accord and satisfaction in this case. She asserts
that, by the time the second payment was made, she had repudiated the parties’ original settlement
agreement in her August 3, 2004 letter to counsel for the defendants. The defendants recognized this
repudiation, she contends, in the August 23, 2004 letter from the defendants’ counsel, enclosing the
second payment. Thus, she claims, she made it clear to the defendants that she did not intend to
accept the second payment as a satisfaction, and consequently there was no accord and satisfaction.
In response, the defendants argue that, when one accepts a payment of a disputed amount made with
an accompanying letter or other memorandum making an offer of settlement, then an accord and
satisfaction of the debt occurs when the payment is accepted. Furthermore, they maintain, that under
Tennessee law, one who has received a settlement and seeks to repudiate the settlement agreement
must first tender back the money received under the agreement sought to be avoided. See Smith v.
Boyd, 2 Tenn. App. 334 (1926). Because Dobbins did not tender the money back, the defendants
argue, the trial court was correct in enforcing the settlement and in finding that an accord and
satisfaction had been accomplished.

        The defense of accord and satisfaction arises from a form of contract, discussed in CORBIN
ON   CONTRACTS:

         “Accord and satisfaction” is a term that states the legal consequence of a creditor’s
         acceptance of a substitute performance for a previously existing claim or prior
         original duty. Acceptance of the substitute performance discharges the previously
         existing claim. A debtor’s pleading and proving of the “accord and satisfaction” is
         a complete defense to an action by the creditor on the previously existing claim.

13 SARAH HOWARD JENKINS, CORBIN ON CONTRACTS § 70.1, at 301 (Joseph M. Perillo ed., 2003).

                                                 -7-
The Tennessee Supreme Court has described accord and satisfaction as follows:

        An accord is an agreement whereby one of the parties undertakes to give or perform,
        and the other to accept in satisfaction of a claim, liquidated or in dispute, and arising
        either from contract or from tort, something other than or different from what he is
        or considers himself entitled to; and a satisfaction is the execution of such an
        agreement.
        * * *
        To constitute a valid accord and satisfaction it is also essential that what is given or
        agreed to be performed shall be offered as a satisfaction and extinction of the original
        demand; that the debtor shall intend it as a satisfaction of such obligation, and that
        such intention shall be made known to the creditor in some unmistakable manner. It
        is equally essential that the creditor shall have accepted it with the intention that it
        should operate as a satisfaction. Both the giving and the acceptance in satisfaction are
        essential elements, and if they be lacking there can be no accord and satisfaction. The
        intention of the parties, which is of course controlling, must be determined from all
        the circumstances attending the transaction.

Lytle v. Clopton, 261 S.W. 664, 666-67 (Tenn. 1924) (quotations omitted). Thus, accord and
satisfaction is in essence a contract between the parties, which requires a meeting of the minds. In
order to establish the defense of accord and satisfaction, the party asserting the defense must show
that performance is offered by the debtor as a satisfaction of the obligation, and that the performance
is accepted by the creditor as satisfaction of the obligation. Whether such offer and acceptance
occurred is governed by the intentions of the parties, which must be determined from all the
circumstances of the case. Id.

        Dobbins relies on cases indicating that an accord and satisfaction cannot be reached where
the payment made by the debtor is not accepted with the intent by the creditor that it satisfy the debt
between the parties. See, e.g., Tullahoma Concrete Pipe Co. v. Pyramid Concrete Co., 330 S.W.2d
578, 582 (Tenn. Ct. App. 1959). Dobbins correctly points out that, in order to establish accord and
satisfaction, the evidence must show that the payments were made by the debtor with the intention
of satisfying the debt, and that the payments were accepted by the creditor with the intention that
the payment operate as satisfaction. “Both the giving and the acceptance in satisfaction are essential
elements, and if they be lacking there can be no accord and satisfaction.” Lytle, 261 S.W. at 666-67.
Because she made it clear to the defendants that she did not accept the second payment from the
defendants with the intent that it satisfy the debt, Dobbins claims, the trial court erred in concluding
that an accord and satisfaction had been reached in this case.

       A situation that often occurs involving accord and satisfaction arises out of circumstances
in which there is a disputed debt and the debtor sends a check to the creditor for less than the claimed
full amount of the debt, with the check marked “paid in full” or the like. There is no antecedent
settlement agreement; the debtor’s proffer of the check is in effect an offer to settle the disputed debt.
The issue then becomes whether the creditor’s actions in cashing the check, as well as the creditor’s
accompanying actions such an marking through the notation on the check, indicate an intent to

                                                   -8-
accept the check as offered in complete satisfaction of the disputed debt. See, e.g., Sawner v. M.P.
Smith Constr. Co., 526 S.W.2d 492 (Tenn. Ct. App. 1975); Lewis v. Modern Supply Co., 1986 WL
8999 (Tenn. Ct. App. Aug. 19, 1986); see also Ideal Stencil Mach. Co. v. Can-Do, Inc., No. 85-81-
II, 1985 WL 4041, at *4-*5 (Tenn. Ct. App. Dec. 4, 1985). This type of accord and satisfaction is
discussed in CORBIN ON CONTRACTS:

       [This] method of achieving the legal consequence of an accord and satisfaction is
       without a promise or promises but rather by the offer of a substitute performance that
       is accepted in discharge of the previously existing duty. . . . In such cases, the new
       transaction is wholly executed at the very moment of the acceptance of the
       performance. The substituted performance is fully rendered and the antecedent debt
       is discharged, leaving nothing more to be done by either party. The acceptance of the
       performance, usually in the form of a check . . . tendered in “full satisfaction” of
       some . . . disputed claim, is the satisfaction of the creditor’s previous claim.

CORBIN ON CONTRACTS, supra, at 303 (footnote omitted). In such a situation, the creditor’s actions
surrounding the receipt and cashing of the check are frequently crucial to determining whether there
was a meeting of the minds and both parties intended the check to be a satisfaction of the debt.

        This case presents a different situation. It is undisputed that, prior to payment of any monies,
the parties reached an agreement in writing to settle the lawsuit for a specific amount, $5,925.14.
Accord and satisfaction in circumstances in which the debtor and creditor reach an agreement before
the substitute performance is proffered is also discussed in CORBIN ON CONTRACTS:

       [A] creditor’s acceptance of a substitute performance for a previously existing claim
       . . . can occur . . . by the formation of an enforceable contract . . . called an executory
       accord. The creditor promises to accept a future performance or receives a promise
       of future performance for the discharge of the original duty. When the accord is
       performed, the substitute performance is the satisfaction of the accord and the
       original duty is discharged. Consequently, we have an accord, the agreement, and the
       satisfaction, the performance. No acceptance subsequent to that for the formation of
       the executory accord is required. Indeed, a refusal to receive the agreed upon
       substitute performance is a breach of the accord.

CORBIN ON CONTRACTS, supra, at 301-03 (footnotes omitted). Thus, where the debtor has offered
and the creditor has agreed to accept the substituted performance, an executory accord has been
formed, and this contract can be enforced. This type of agreement is also addressed in the
RESTATEMENT (SECOND ) OF CONTRACTS:

               (1) An accord is a contract under which an obligee promises to accept a stated
       performance in satisfaction of the obligor’s existing duty. Performance of the accord
       discharges the original duty.
               (2) Until performance of the accord, the original duty is suspended unless
       there is such a breach of the accord by the obligor as discharges the new duty of the

                                                  -9-
       obligee to accept the performance in satisfaction. If there is such a breach, the
       obligee may enforce either the original duty or any duty under the accord.
               (3) Breach of the accord by the obligee does not discharge the original duty,
       but the obligor may maintain a suit for specific performance of the accord, in addition
       to any claim for damages for partial breach.

RESTATEMENT (SECOND ) OF CONTRACTS § 281 (1981). The RESTATEMENT comments further
address the effect of a breach of the executory accord by the creditor: “If a breach of the accord by
the obligee prevents the obligor from performing the accord, the original duty is not discharged, but
the obligor has a claim for damages for total breach of the accord. . . . [S]pecific performance of the
accord will be granted unless for some reason that remedy is inappropriate.” RESTATEMENT
(SECOND ) OF CONTRACTS § 281, cmt. c.

        In this case, there was clearly an executory accord, i.e. a settlement agreement between the
parties prior to performance. The correspondence between the parties establishes that Dobbins
offered to settle the case if the defendants paid Dobbins’ attorneys’ fees to date, which then
amounted to $5,925.14. By return letter, counsel for the defendants accepted this offer, noting that
they would “need, however, until June 30 to have this money.” At this point, then, there was an
executory accord, enforceable by either party, although the exact date for payment was not stated.
The parties’ attorneys exchanged telephone calls, the first check was sent on July 14, 2004, and it
was accepted. The July 14 letter indicated that the defendants’ attorney expected that Dobbins would
receive the final payment by July 29, 2004.

        Dobbins argues that, because the second check was not sent by July 29, 2004, the defendants
breached the settlement agreement and she effectively repudiated the agreement in her August 3,
2004 letter. Even after the second payment was sent to Dobbins, she maintains, the repudiation was
effective, as recited in the defendants’ counsel’s October 6, 2004 letter to Dobbins’ attorney.

        This argument fails on two counts. First, the trial court found that the settlement agreement
had “no time limits” and “no drop-dead deadline” for payment of the agreed amount. The trial court
found that the defendants “in fact complied with” the agreement by making the required payments
“within a reasonable period of time under the circumstances. . . .” From our review of the record,
we find no error in these findings by the trial court. Therefore, there was no “breach of the accord
by [the defendants] [so as to] discharge[] the new duty of [Dobbins] to accept the performance in
satisfaction.” RESTATEMENT (SECOND ) OF CONTRACTS § 281(2). Consequently, Dobbins did not
have cause to repudiate the executory accord.

        Second, as noted by the trial court, at no time did Dobbins tender back either the first or
second settlement payment made by the defendants. Dobbins’ failure to tender back to the
defendants either of these payments rendered her attempted repudiation ineffective. Tennessee
adheres to the “tender rule,” which recognizes that settlement agreements are binding until rescinded
for cause, and that tendering back the consideration received is a condition precedent to the right to
repudiate the settlement agreement. See Smith v. Boyd, 2 Tenn. App. 334 (Tenn. Ct. App. 1926).
Requiring the return of any consideration paid is a widely recognized condition precedent for a party

                                                 -10-
seeking to avoid a settlement agreement. See Ming v. Ho, 371 P.2d 379, 404 (Haw. 1962)
(determining that “one who seeks to repudiate a settlement and throw the subject matter into the
arena of litigation cannot at the same time claim the benefit of the agreement he is repudiating”);
Stephenson v. Stephenson, No. 220506, 2001 WL 965520, at *1 (Mich. Ct. App. Aug. 24, 2001)
(“It is well settled law that settlement agreements are binding until rescinded for cause and that
tendering back the consideration received is a condition precedent to the right to repudiate a contract
of settlement.”); Watson v. Bugg, 280 S.W.2d 67, 69 (Mo. 1955) (in order to repudiate a settlement
agreement that allegedly was based on fraud, plaintiff must tender back the consideration received
in settlement); Doe v. Golnick, 556 N.W.2d 20, 23 (Neb. 1996) (adhering to the “tender rule,”
requiring plaintiff who wishes to avoid a former settlement agreement in order to bring a medical
malpractice lawsuit must tender back the consideration she received for signing the release); Swan
v. Great N. Ry. Co., 168 N.W. 657, 663 (N.D. 1918) (following the rule that payment must be
tendered back in order to repudiate a settlement agreement and sue on the original cause); see
generally A. M. Srarthout, Return or tender of consideration for release or compromise as condition
of action for rescission or cancellation, action upon original claim, or action for damages sustained
by the fraud inducing the release or compromise, 134 A.L.R. 6 (1941).

       Therefore, since the defendants did not breach the executory accord, but in fact performed
under the agreement, and because Dobbins did not effectively repudiate the agreement, the
defendants were entitled to “specific performance of the accord.” RESTATEMENT (SECOND ) OF
CONTRACTS § 281, cmt. c. Consequently, the trial court did not err in granting the defendants’
motion to enforce the settlement agreement.

        The decision of the trial court is affirmed. Costs on appeal are to be taxed to Appellant
Paulette Dobbins and her surety, for which execution may issue, if necessary.



                                                        ___________________________________
                                                        HOLLY M. KIRBY, JUDGE




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