N.C. Court of Appeals: Hensel v. Xerox Business Services- Accord and Satisfaction of Student Loan

Summary: Hensel had student loans of more that $90,000. In November 2012, he received two bills for late fees in the total amount of $68.28. In response, on December 9, 2012, Hensel sent XBS a check for $68.28 attached to a letter that asserted the late fees violated the FDCPA, that assessment of the late fees had harmed his ability to purchase a home, and proposing to release his claims if XBS cancelled his remaining student loans, with cashing of the $68.28 to constitute acceptance. XBS did deposit the check and Hensel eventually sought a declaratory judgment that the student loans had been settled through accord and satisfaction. The Court of Appeals held that "establishing an accord and satisfaction . . . as a matter of law requires evidence that permits no reasonable inference to the contrary and that shows the ‘unequivocal' intent of one party to make and the other party to accept a lesser payment in satisfaction . . . of a larger claim." Moore v. Frazier, 63 N.C. App. 476, 478-79, 305 S.E.2d 562, 564 (1983) (citing Allgood v. Wilmington Savings & Trust Co., 242 N.C. 506, 515, 88 S.E.2d at 831). Pursuant to N.C.G.S. § 25-3-311(c), accord and satisfaction does not apply against an organization, defined at N.C.G.S. § 25-1-201(25) as "a person other than an individual", an 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. The loan agreement required that borrowers send such accord and satisfaction offers to a specific address marked for ‘special handling', but Hensel sent his payment and letter to a different address. As a result, there was no accord and satisfaction Commentary: This is actually a very interesting case that may point to a solution to many problems in bankruptcy proceedings regarding the question of whether silence by a party constitutes acceptance for issues such as tender of a Quit Claim Deed surrendering property, modification of otherwise protected mortgages and acceptance under 11 U.S.C. § 1325(a)(5)(A), etc. If the plan were to propose that acceptance of payments under the plan, sent to the address as required under N.C.G.S. § 25-3-311(c) (and marked out for ‘special handling',plus sent by certified mail, for extra measure), constituted accord and satisfaction with the terms of the plan, then a Debtor is complying with the requirements of North Carolina law (in fact, as this is the Uniform Commercial Code, likely most state laws) and cannot be said to be proposing an ‘illegal' plan, satisfying the ‘gatekeeper' function imposed on the bankruptcy courts (not the Trustees- delegata potestas non potest delegari) by U.S.A Student Loans v. Espinosa. After which, silence and check cashing would constitute accord and satisfaction to the plan. For a copy of the opinion, please see: Hensel v. Xerox Business Services- Accord and Satisfaction of Student Loan