                          In the
 United States Court of Appeals
              For the Seventh Circuit
                       ____________

No. 04-2096
IFC CREDIT CORPORATION,
                                        Plaintiff-Appellant,
                             v.


BULK PETROLEUM CORPORATION
and DARSHAN S. DHALIWAL,
                                      Defendants-Appellees.


                       ____________
           Appeal from the United States District Court
               for the Eastern District of Wisconsin.
     No. 02-C-1015—Aaron E. Goodstein, Magistrate Judge.
                       ____________
    ARGUED JANUARY 10, 2005—DECIDED APRIL 8, 2005
                    ____________



 Before CUDAHY, KANNE and EVANS, Circuit Judges.
  CUDAHY, Circuit Judge. Plaintiff IFC Credit Corporation
(IFC) brought suit alleging that Bulk Petroleum Corpora-
tion (Bulk) and its CEO, Darshan Dhaliwal, breached a
lease agreement under which Bulk leased gasoline tanks
and other equipment from IFC with an option to purchase
2                                                No. 04-2096

them at the end of the lease. Bulk claims that the lease
agreement has been concluded through an accord and
satisfaction executed with the assignee of IFC’s rights under
the lease. The district court, through Magistrate Judge
Aaron E. Goodstein, granted Bulk’s motion for summary
judgment, ruling that a valid accord and satisfaction had
taken place. IFC now appeals that ruling, and we affirm.


    I.   FACTUAL BACKGROUND AND DISPOSITION
         BELOW
  On or about June 21, 1995, Bulk and IFC entered into a
series of agreements by which Bulk leased gasoline tanks
and equipment from IFC to be used at various gas stations
operated by Bulk. Under the terms of the agreements, Bulk
was given an option to purchase the equipment at the end
of the 72-month lease term. The purchase price was to be
the greater of the fair market value of the equipment and
$31,419.40, together with all applicable taxes. The lease
documents also provided for extension of the lease term at
a rate of $2,820.52 per month. The documents further
required that any notices regarding the purchase of the
equipment were to be sent to IFC at a designated address.
Concurrent with the execution of the lease, Bulk’s CEO,
Darshan Dhaliwal, executed a personal guaranty of the
agreements.
  Less than two weeks later, on or about June 30, 1995, the
Bulk lease was assigned by IFC to Finova Capital Corpora-
tion (Finova), giving Finova full right, title and interest in
the lease, including the initial scheduled payments under
the lease. Bulk’s payments were to be sent to a Finova
lockbox.
  Beginning in November 2000, IFC’s Patrick Witowski and
Bulk’s John Gerth engaged in negotiations concerning the
termination of the lease and purchase of the equipment by
Bulk. However, the two parties could not agree on a
No. 04-2096                                                     3

purchase price. On January 23, 2001, while these negotia-
tions were ongoing, Finova notified Bulk in writing that all
further negotiations regarding the purchase option were to
be conducted with IFC (and with Witowski specifically).
Finova then promptly filed for bankruptcy on March 7,
2001.
  On June 18, 2001, Dhaliwal, who to that point had ap-
parently not been involved in negotiations, sent a letter to
Finova and a check for $31,419.40, made out to Finova
Capital Corporation. The invoice attached to the check read
“pay off lease 5613500,” and the endorsement area on the
back of the check stated “payment in full of lease and pur-
chase option # 5613500.” (Plaintiff-Appellant Sep. Appx. at
43A-44A.) The accompanying letter from Dhaliwal stated
that the check represented “payment in full of the lease and
the purchase option” and that “[a]cceptance of this check
represents full satisfaction of the obligation of Bulk Petro-
leum to Finova Capital Corporation.” Id. at 42A. The letter
concluded by stating that if Finova did not accept the check,
then it should inform Bulk as to where it should ship the
leased equipment back to Finova. Id.
  The parties dispute the exact date upon which IFC, via
Witowski, received a copy of Dhaliwal’s letter. They also dis-
pute whether the letter and the check were sent together or
separately,1 and whether the check was sent to Finova’s
“automated lockbox” rather than to its office (though the
letter does not appear to have been sent to a P.O. Box ad-
dress). In any event, it is undisputed that Witowski (and
hence IFC) received a copy of the letter and the check via
fax from Bulk on June 22, 2001. (See Witowski Aff. at ¶ 11,
Plaintiff Appellant Sep. Appx. at 58A.) The check was nego-
tiated three days later by Finova on June 25, 2001. Follow-


1
  IFC’s contention that they were sent separately is waived in any
event. See discussion, infra.
4                                                No. 04-2096

ing negotiation of the check, IFC did not return the ten-
dered money or claim that Finova had negotiated the check
in error. Instead, IFC retained the tendered money, claim-
ing that it constituted only partial satisfaction of Bulk’s
outstanding obligations under the agreement (which IFC
reckoned to be in excess of $200,000). Bulk refused to make
further payments, contending that its contractual obliga-
tions under the lease had been fulfilled upon acceptance and
negotiation of the $31,419.40 check to Finova.
  IFC filed this action on December 15, 2002, seeking to
recover $207,961.88 (plus holdover rent) that it claims is
owed by Bulk due to the breach of the lease agreement. IFC
also sued Dahliwal based upon the personal guaranty he
executed contemporaneously with the lease. On October 22,
2003, Bulk and Dahliwal filed a motion for summary
judgment, contending that IFC’s claim was barred by a valid
accord and satisfaction. The district court granted Bulk and
Dahliwal’s motion, ruling that there was no remaining
question of fact that defendants had met all the require-
ments of an accord and satisfaction under the relevant
Uniform Commercial Code (UCC) provisions and Illinois
law, and there was no evidence that the check was tendered
in bad faith. (4/5/2004 Order.) IFC’s appeal now comes
before this Court. Since Bulk’s tender met all the require-
ments of a valid accord and satisfaction, and above all since
IFC did not return the tendered money or attempt to “undo”
the transaction, we affirm.


    II. JURISDICTION
  The district court had diversity jurisdiction over this suit
pursuant to 28 U.S.C. § 1332(a). IFC is an Illinois corpora-
tion with its principal place of business in Illinois. Bulk
Petroleum is a Delaware corporation with it principal place
of business in Wisconsin. The amount in controversy in this
suit is in excess of $75,000 (specifically, $207,961.98 plus
No. 04-2096                                                        5

holdover rent). Both parties consented in writing to the
jurisdiction of the magistrate judge. The district court
granted Bulk Petroleum’s motion for summary judgment in
an order resolving all claims on April 5, 2004. (4/5/2004
Order.) IFC timely filed its notice of appeal on April 23,
2004. Accordingly, we now have jurisdiction pursuant to 28
U.S.C. § 1291, which provides for appellate review of final
orders issued by the district courts.


    III. DISCUSSION
   In proceedings below, the district court granted Bulk’s
motion for summary judgment on the ground that a valid
accord and satisfaction had occurred. We review rulings on
motions for summary judgment de novo. Grayson v. City of
Chicago, 317 F.3d 745, 749 (7th Cir. 2003). Summary judg-
ment is warranted when the evidence, when viewed in a
light most favorable to the non-moving party, presents “no
genuine issue as to any material fact” such that “the moving
party is entitled to a judgment as a matter of law.” Fed. R.
Civ. P. 56(c). See also Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986).
  Under both Illinois law and the relevant provisions of the
UCC,2 an accord and satisfaction occurs when the “person
against whom a claim is asserted proves that (i) that person
in good faith tendered an instrument to the claimant as full
satisfaction of the claim, (ii) the amount of the claim was


2
   Ordinarily, a diversity action such as this would raise choice of
law questions. However, in this case both parties agree that the
governing legal standards are identical—Bulk cites to the relevant
UCC provisions (U.C.C. § 3-311 (2002)), and IFC cites to Illinois
law (810 Ill. Comp. Stat. 5/3-311), which formally adopts the UCC
provisions. For the sake of simplicity, this opinion will cite to the
Illinois code sections and to case law applying Illinois law,
although both the Illinois and UCC provisions lead to the same
result.
6                                                No. 04-2096

unliquidated or subject to a bona fide dispute, and (iii) the
claimant obtained payment of the instrument.” 810 Ill.
Comp. Stat. 5/3-311(a) (2004). Accord Saichek v. Lupa, 787
N.E.2d 827, 832, 204 Ill. 2d 127, 135 (Ill. 2003) (“An accord
and satisfaction is a contractual method of discharging a
debt or claim. To constitute an accord and satisfaction there
must be: (1) a bona fide dispute, (2) an unliquidated sum,
(3) consideration, (4) a shared and mutual intent to compro-
mise the claim, and (5) execution of the agreement.”).
Additionally, 810 Ill. Comp. Stat. 5/3-311(b) requires that
“the instrument or an accompanying written communica-
tion contain[ ] a conspicuous statement to the effect that the
instrument was tendered as full satisfaction of the claim.”
  Clearly Bulk’s tendered check and accompanying letter
facially meet these criteria. The purchase price of the tanks
was subject to a “bona fide dispute” (the parties could not
agree on a price), the instrument and accompanying letter
sent by Bulk contained highly “conspicuous statement[s]”
that the check was tendered as full satisfaction of all obli-
gations under the lease and purchase agreement, and Finova
“obtained payment of the instrument” by negotiating the
check on June 25, 2001. So far so good.
   Paragraph (c) of section 5/3-311 adds a slight twist. It
provides for an exception to these basic requirements which
is designed to avoid inadvertent satisfaction of debts when
a tender is sent to a large company. Under section (c), an
otherwise valid tender to a claimant “organization” fails if
“(i) within a reasonable time before the tender, the claimant
sent a conspicuous statement to the person against whom
the claim is asserted that communications concerning
disputed debts, including an instrument tendered as full
satisfaction of a debt, are to be sent to a designated person,
office, or place, and (ii) the instrument or accompanying
communication was not received by that designated person,
office, or place.” 810 Ill. Comp. Stat. 5/3-311(c) (emphasis
added). This exception does not apply, however, if “within
No. 04-2096                                                   7

a reasonable time before collection of the instrument was in-
itiated, the claimant or an agent of the claimant having
direct responsibility with respect to the disputed obligation
knew that the instrument was tendered in full satisfaction
of the claim.” 810 Ill. Comp. Stat. 5/3-311(d) (emphasis
added).
  In the present case, assuming that IFC and Finova qualify
as “organizations” so as to trigger the provisions of paragraph
(c), Witowski was the acknowledged “designated person”
responsible for conducting communications regarding the
lease/purchase agreement, and Bulk sent the disputed check
to Finova rather than to IFC or Witowski directly. Had no
further communications taken place, this circumstance
could have thwarted any attempted accord and satisfaction
under section 5/3-311(c). However, it is undisputed that
Witowski eventually received notice of Bulk’s tender no
later than June 22, 2001—three days before the check was
cashed by Finova. The transaction here thus falls squarely
within the provisions of section 5/3-311(d): regardless of any
initial misdirection in making the tender, notice was given
to the correct party within a reasonable time before col-
lection of the instrument. The special exception contained
in paragraph (c) does not apply, and Finova’s negotiation of
the check presumptively suffices to conclude a valid accord
and satisfaction.
   IFC objects that there is a material question of fact as to
whether Bulk tendered its check in good faith. The UCC
comment provides that “good faith” implies “not only honesty
in fact, but the observance of reasonable commercial stand-
ards of fair dealing. The meaning of ‘fair dealing’ will depend
upon the facts in the particular case.” U.C.C. § 3-311, cmt.
¶ 4 (2002). See also Fremarek v. John Hancock Mut. Life
Ins., 651 N.E.2d 601, 605, 272 Ill. App. 3d 1067, 1072
(Ill. App. Ct. 1995) (same). Here, IFC alleges that Bulk’s fail-
ure to send the check directly to Witowski and its mailing
of the check and explanatory letter separately, taken to-
8                                                No. 04-2096

gether, indicate that Bulk was surreptitiously attempting
to induce IFC into an inadvertent accord and satisfaction.
On this score we note first that the parties hotly contest
whether the letter and check were sent separately or
together, and in any case IFC has waived this particular ar-
gument since it did not advance it below. Republic Tobacco
Co. v. North Atlantic Trading Co., Inc., 381 F.3d 717, 728
(7th Cir. 2004) (“ ‘We have long refused to consider argu-
ments that were not presented to the district court in
response to summary judgment motions.’ ”) (quoting Arendt
v. Vetta Sports, Inc., 99 F.3d 231, 237 (7th Cir. 1996)). See
also Ryan v. Chromalloy American Corp., 877 F.2d 598,
603-04 (7th Cir. 1989); Liberales v. County of Cook, 709 F.2d
1122, 1126 (7th Cir. 1983).
  Moreover, IFC’s allegations, even if credited, are probably
not sufficient to obviate the tender in any event. Ordinarily
the good faith requirement is violated where there is no
bona fide mutual dispute concerning consideration, or the
party tendering the payment affirmatively misleads the
claimant. See McMahon Food Corp. v. Burger Dairy Co., 103
F.3d 1307, 1313 (7th Cir. 1996) (holding there was no good
faith where debtor induces acceptance of payment by falsely
leading creditor’s agent to believe that creditor agreed to the
terms of the payment). Here, by contrast, IFC alleges no
misrepresentation or proactive deception, but merely that
Bulk initially sent the check to the wrong party. Addition-
ally, Bulk quickly notified Witowski of the tender verbally
and via fax thereafter.
  But in any event, IFC continues to retain the money sent
to it by Bulk. This bare fact trumps any concerns we might
have about the procedural specifics of the transaction itself.
On the basis of this consideration alone IFC’s claims must
fail. Illinois courts have long held that, where there is a
bona fide dispute as to the amount due, retention of
a tender conspicuously identified as an accord and satis-
faction effectively dooms a claimant’s case. See In re
No. 04-2096                                                  9

Cunningham’s Estate, 142 N.E. 740, 742, 311 Ill. 311, 315-16
(Ill. 1924); Bankers Leasing Association, Inc. v. Pranno, 681
N.E.2d 28, 34, 288 Ill. App. 3d 255, 264 (Ill. App. Ct. 1997);
Quaintance Assoc., Inc. v. PLM, Inc., 420 N.E.2d 567, 569-
70, 95 Ill. App. 3d 818, 821-22 (Ill. App. Ct. 1981). An
Illinois appellate court has recently applied this principle to
a case analogous to the one at bar. In Bankers Leasing
Association, Inc. v. Pranno, the debtor sent the creditor a
check conspicuously marked as being in full satisfaction of
all outstanding debts and accompanied by a letter to the same
effect. The creditor, with full knowledge of the dispute as to
the amount of the debt, promptly cashed the check and, just
as IFC/Finova has done in this case, attempted to char-
acterize the transaction as only partial satisfaction of out-
standing debts. The court rejected this argument, however,
holding that a valid accord and satisfaction had occurred:
    When Pranno [the creditor] cashed the check, however,
    he knew there was a dispute. He knew the parties did
    not agree on what amount Bankers owed him . . . .
    Pranno may have tried to hedge what he was agreeing
    to by stating in an affidavit that the check satisfied only
    part of the dispute, but “If there is a bona fide dispute
    as to the amount due, it makes no difference that the
    creditor protests that he does not accept the amount in
    full satisfaction. The creditor must either accept the
    payment with the condition or refuse.” Nelson v. Fire
    Insurance Exchange, 156 Ill.App.3d 1017, 1020, 109
    Ill.Dec. 516, 510 N.E.2d 137 (1987).
      Both the check and letter Bankers sent Pranno clearly
    indicated that by cashing the check, Pranno agreed that
    all claims between Bankers and Pranno would be
    satisfied. If Pranno did not agree to these terms, he
    should not have cashed the check.
Pranno, 681 N.E.2d at 34. IFC attempts to distinguish
Pranno by pointing out that there the tendered check and
the explanatory letter arrived together, while in this case
they were (allegedly) sent separately. Once again, IFC has
10                                             No. 04-2096

waived any argument to this effect, and in any case such a
minor factual quibble is irrelevant to the principle artic-
ulated here. The recipient of a conspicuously-marked tender
proposing an accord and satisfaction may not keep the tender
and simultaneously contend that no accord and satisfaction
occurred.


IV. CONCLUSION
  In light of the foregoing, we AFFIRM the district court’s
grant of summary judgment in favor of defendants Bulk
Petroleum and Darshan Dhaliwal.

A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit




                   USCA-02-C-0072—4-8-05
