The opinion
An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NO. COA13-1073
NORTH CAROLINA COURT OF APPEALS
Filed: 6 May 2014
CRAIG HENSEL,
Plaintiff
Guilford County
v.
No. 13 CVS 4734
XEROX BUSINESS SERVICES, LLC, d/b/a
ACS, a XEROX COMPANY, d/b/a ACS, d/b/a
ACS@XEROX, LLC, d/b/a AFFILIATED
COMPUTER SERVICES, LLC, and d/b/a
AFFILIATED COMPUTER SERVICES, INC.,
Defendant
Appeal by plaintiff from order entered 18 July 2013 by
Judge Lindsay R. Davis, Jr., in Guilford County Superior Court.
Heard in the Court of Appeals 4 February 2014.
Hensel Law, PLLC, by Craig Hensel, pro se.
Carruthers & Roth, P.A., by Rachel S. Decker, for
Defendant.
ERVIN, Judge.
Plaintiff Craig Hensel appeals from an order granting a
motion for judgment on the pleadings filed by Defendant Xerox
Business Services, LLC, d/b/a ACS, a Xerox Company, d/b/a ACS,
d/b/a ACS@Xerox, LLC, d/b/a Affiliated Computer Services, LLC,
and d/b/a Affiliated Computer Services, Inc. On appeal,
Plaintiff argues that the trial court erred by entering judgment
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on the pleadings in favor of Defendant on the grounds that the
pleadings revealed the existence of a number of factual issues
sufficient to preclude the entry of judgment in Defendant’s
favor; that Plaintiff had sufficiently pled claims for a
declaration that the parties had entered into an accord and
satisfaction and breach of contract; and that nothing in the
parties’ pleadings supported a determination that Plaintiff had
breached the duty of good faith and fair dealing. After careful
consideration of Defendant’s challenges to the trial court’s
order in light of the record and the applicable law, we conclude
that the trial court’s order should be affirmed.
I. Factual Background
A. Substantive Facts
Plaintiff obtained several student loans in a total face
amount in excess of $90,000.00 from Access Group, Inc., which
are serviced by Defendant. On or about 30 November 2012,
Defendant sent Plaintiff two bills for late fees in the total
amount of $68.28. On 9 December 2012, Plaintiff sent a letter,
accompanied by a check drawn in the amount of $68.28, to
Defendant at the address shown on the face of the invoice in
which he asserted that Defendant had unlawfully assessed late
fees against him in violation of the Federal Fair Debt
Collection Practices Act and that Defendant’s conduct had
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injuriously caused a delay in the closing of a residential
purchase that Plaintiff was in the process of making, resulting
in the necessity for Plaintiff to pay a daily fee in order to
preserve his right to complete the transaction. As a result,
Plaintiff proposed that his dispute with Defendant be resolved
based on an agreement under which Defendant would, in return for
the transmission of the enclosed $68.28 check and his commitment
to refrain from instituting civil litigation against Defendant,
forgive the balance due under all of his outstanding loans held
by, serviced by, or originating from Defendant; indemnify him
from any claims resulting from these loans; agree that any
future litigation arising from the original loan agreements or
any subsequent modifications would take place in Guilford
County; and agree to refrain from taking any action that would
negatively impact Plaintiff’s credit rating. According to
Plaintiff, Defendant could accept his offer to enter into this
agreement by “silence or acceptance of the enclosed payment,”
with the check in question having been tendered “exclusively for
the settlement of the matter using the above terms.” On 18
December 2012, the check which accompanied Plaintiff’s 9
December 2012 letter was deposited into an account held by ACS
Education Services.
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On or about 31 December 2012, Defendant sent Plaintiff a
statement in which the $68.28 check that accompanied Plaintiff’s
letter had been applied to the balances of Plaintiff’s accounts,
which were otherwise unaltered. Although Plaintiff paid the
amount requested in the December statement on 18 January 2012,
he included a letter with his payment indicating that his
actions in paying the 31 December 2012 invoice should not be
treated as an acknowledgement that he owed anything on the
underlying notes and represented, instead, an action taken to
maintain his credit score.
On 17 February 2013, Defendant sent another statement that
failed to reflect Plaintiff’s January payment and indicated that
Plaintiff’s account had become delinquent. On 24 February 2013,
Plaintiff corresponded with Defendant for the purpose of
contesting the existence of any debt on the basis of the
“Contract” set out in his 9 December 2012 letter. On 28
February 2013, Defendant transmitted another statement to
Plaintiff that reflected the making of the 18 January 2013
payment and reiterated Defendant’s contention that Plaintiff’s
account was delinquent. After Plaintiff contacted Defendant by
phone on a number of occasions in March 2013 for the purpose of
contending that his debt had been forgiven based on the
arrangement proposed in his 9 December 2012 letter, Defendant
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returned the $68.28 payment that Plaintiff had made to Defendant
in connection with the transmission of the 9 December 2012
letter.
B. Procedural History
On 9 April 2013, Plaintiff filed a complaint in which he
sought a declaration that the parties had entered into a
contract and alleged that Defendant had breached the contract in
question. On 5 June 2013, Defendant filed an answer in which it
denied the material allegations of Plaintiff’s complaint and
asserted a number of affirmative defenses, including lack of
consideration, breach of the covenant of good faith and fair
dealing, non-compliance with the provisions of the notes which
underlay Plaintiff’s claims, failure to mitigate damages, and
failure to provide proper notice. On the same date, Defendant
filed a motion seeking the entry of judgment on the pleadings in
its favor. On 18 July 2013, the trial court entered an order
granting Defendant’s motion. Plaintiff noted an appeal to this
Court from the trial court’s order.
II. Substantive Legal Analysis
A. Standard of Review
“A motion for judgment on the pleadings is authorized by
Rule 12(c) of the North Carolina Rules of Civil Procedure.”
Garrett v. Winfree, 120 N.C. App. 689, 691, 463 S.E.2d 411, 413
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(1995); N.C. Gen. Stat. § 1A-1, Rule 12(c). “The rule’s
function is to dispose of baseless claims or defenses when the
formal pleadings reveal their lack of merit.” Ragsdale v.
Kennedy, 286 N.C. 130, 137, 209 S.E.2d 494, 499 (1974).
“Judgment on the pleadings is properly entered only if ‘all the
material allegations of fact are admitted[,] . . . only
questions of law remain’ and no question of fact is left for
jury determination.” N.C. Concrete Finishers v. N.C. Farm
Bureau, 202 N.C. App. 334, 336, 688 S.E.2d 534, 535 (2010)
(quoting Ragsdale, 286 N.C. at 137, 209 S.E.2d at 499).
“In deciding [a motion for judgment on the
pleadings], the trial court looks solely to
the pleadings. The trial court can only
consider facts properly pleaded and
documents referred to or attached to the
pleadings.” “This Court reviews de novo a
trial court’s ruling on motions for judgment
on the pleadings. Under a de novo standard
of review, this Court considers the matter
anew and freely substitutes its own judgment
for that of the trial court.”
N.C. Concrete Finishers, 202 N.C. App. at 336-37, 688 S.E.2d at
535 (quoting Reese v. Mecklenburg County, 200 N.C. App. 491,
497, 685 S.E.2d 34, 37-38 (2009), disc. review denied, 364 N.C.
242, 698 S.E.2d 653 (2010)) (internal citations omitted). We
will now utilize the applicable standard of review to evaluate
the validity of Plaintiff’s challenges to the trial court’s
order.
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B. Validity of the Trial Court’s Order
The essential gist of Plaintiff’s challenge to the trial
court’s decision to grant judgment on the pleadings in favor of
Defendant is that he had successfully asserted a claim for
breach of contract against Defendant arising from the
transmission of the 9 December 2012 letter to Defendant, in
which he proposed a settlement of their alleged dispute, and the
subsequent cashing of the accompanying check, and that the trial
court erred by reaching a contrary conclusion. In essence,
Plaintiff claims that the 9 December 2012 letter constituted an
offer to form a contract between Defendant and himself, which
Defendant accepted by cashing the accompanying check, and that
Defendant’s actions in subsequently transmitting invoices
seeking payment of amounts inconsistent with the parties’
alleged agreement constituted a breach of the December 2012
“contract.” Although we agree that Plaintiff did, in fact,
sufficiently allege the “facts” upon which he relies in support
of this argument, we do not believe that those “facts”
adequately support the assertion of any contract-based claim
against Defendant.1
1
Admittedly, Plaintiff asserts claims for both the entry of
a declaratory judgment to the effect that the parties had
entered into a valid contract and for breach of contract in his
complaint. However, both claims rest upon a contention that the
parties formed a valid contract as the result of the
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“It is well established that a valid contract comes into
existence only where the parties involved mutually assent to the
same agreement.” Elliott v. Duke University, Inc., 66 N.C> App.
590, 595, 311 S.E.2d 632, 636, disc. review denied, 311 N.C.
754, 321 S.E.2d 132 (1984). If any portion of the proposed
terms is not settled, there is no agreement.” Goeckel v.
Stokely, 236 N.C. 604, 607, 73 S.E.2d 618, 620 (1952) (citations
omitted). “Where one party simply believes that a contract
exists, but there is no meeting of the minds, the individual
seeking to enforce the obligation upon a contract theory is
without a remedy.” Elliott, 66 N.C. App. at 595, 311 S.E.2d at
636 (citing Brown v. Williams, 196 N.C. 247, 250, 145 S.E. 233,
234 (1928)).
As the parties have acknowledged, an agreement of the
nature that Plaintiff alleges to have existed in this instance
is typically referred to as an accord and satisfaction.
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 tort,
something other than or different from what
he is, or considered himself entitled to;
and a “satisfaction” is the execution or
transmission of the 9 December 2012 letter and the cashing of
the accompanying check. As a result, a conclusion that
Plaintiff had not alleged the existence of a valid contract
would suffice to defeat both of the claims asserted in his
complaint.
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performance of such agreement.
Sharpe v. Nationwide Mut. Fire Ins. Co., 62 N.C. App. 564, 565,
302 S.E.2d 893, 894, (quoting Allgood v. Wilmington Savings &
Trust Co., 242 N.C. 506, 515, 88 S.E.2d 825, 830-31 (1955)),
cert. denied, 309 N.C. 823, 310 S.E.2d 353 (1983). However,
The word “agreement” implies the parties are
of one mind—all have a common understanding
of the rights and obligations of the others—
there has been a meeting of the minds. . . .
Agreements are reached by an offer by one
party and an acceptance by the other. This
is true even though the legal effect of the
acceptance may not be understood.
Prentzas v. Prentzas, 260 N.C. 101, 103-04, 131 S.E.2d 678, 680-
81 (1963) (citations omitted). For that reason, “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, 242 N.C. at 515, 88
S.E.2d at 831). “Although the existence of accord and
satisfaction is generally a question of fact, ‘where the only
reasonable inference is existence or non-existence, accord and
satisfaction is a question of law and may be adjudicated
[summarily] when the essential facts are made clear of record.’”
Zanone v. RJR Nabisco, Inc., 120 N.C. App. 768, 771, 463 S.E.2d
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584, 587 (1995) (quoting Construction Co. v. Coan, 30 N.C. App.
731, 737, 228 S.E.2d 497, 501, disc. review denied, 291 N.C.
323, 230 S.E.2d 676 (1976)), disc. review denied, 342 N.C. 666,
467 S.E.2d 738 (1996).
“[A] claim is not discharged [by accord and satisfaction by
use of instrument] when the claimant, if an organization, proves
that (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.” N.C.
Gen. Stat. § 25-3-311(c). According to Section L, Subsection 2,
of the Application and Loan Agreements under which Plaintiff
procured the student loan debt at issue in this case,2
“[Borrower] will not send [Lender] any partial payments marked
‘paid in full,’ ‘without recourse’ or with similar language
unless those payments are marked for ‘special handling’ and sent
to: Access Group, P.O. Box 7400, Wilmington, DE 19803-0400.”
As a result of the fact that Defendant is an organization
2
As a result of the fact that these agreements were attached
to the pleadings, they are properly before us.
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entitled to take advantage of the protections afforded by N.C.
Gen. Stat. § 25-3-311(c) and the fact that the undisputed
information contained in the pleadings establishes that
Plaintiff sent the 9 December 2012 letter and the accompanying
check to an address other than that specified in the application
and loan agreement,3 the undisputed factual information contained
in the pleadings establishes that Plaintiff’s claim to have
entered into an accord and satisfaction with Defendant as a
result of the transmission of the 9 December 2012 letter and the
cashing of the accompanying check is barred by N.C. Gen. Stat. §
25-3-311(c).
In an attempt to persuade us to reach a contrary result,
Plaintiff argues that the 9 December 2012 letter and
accompanying check clearly proposed the entry of a new contract;
3
As we have already noted, the 9 December 2012 letter and
accompanying check were sent to the address shown on the front
of the invoices that Plaintiff received from Defendant.
According to the invoices contained in the record that Plaintiff
received from Defendant around the relevant period of time,
“[a]ny correspondence other than payments should be sent to the
address listed on the back of this statement.” Although
Plaintiff has contended in his brief that the address shown on
the back of the invoices in question was identical to the
address shown on the front of those documents, he has not
presented us with copies of the relevant documents or explained
why any information contained on the face of the invoices that
he received from Defendant supersedes the explicit provisions of
the application and loan agreements that evidence the underlying
debt at issue here, particularly given that the applications and
loan agreements specifically state in bold-faced type that “you
may change the terms of this agreement only by another written
agreement.”
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that the check that accompanied the 9 December 2012 letter
stated that it was “exclusively for the settlement of
[Plaintiff’s loans and potential legal action against
Defendant];” and that, although, Defendant applied the check
that accompanied the 9 December 2012 letter against the balance
owed on Plaintiff’s account, it continued to send Plaintiff
monthly invoices and ultimately refunded $68.28 to Plaintiff
upon learning of Plaintiff’s contention that the parties had
entered into a new agreement. Based upon these facts, Plaintiff
argues that “[t]here was no possibility that an observer opening
the letter could think that the enclosed check was for anything
other than the purpose of settling a claim using the terms of
the letter.” [PB14] In essence, Plaintiff appears to be
arguing that the pleadings support a determination that he
entered into an accord and satisfaction with Defendant that is
effective under the common law of contract. Assuming, without
deciding, that the facts alleged in the pleadings, when taken in
the light most favorable to Plaintiff, do tend to show that the
parties entered into an agreement that would otherwise
constitute an accord and satisfaction that was valid under the
common law, Plaintiff has not cited any authority to the effect
that the underlying transaction between the parties did not
involve a negotiable instrument subject to the provisions of
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N.C. Gen. Stat. § 25-3-311(c), and we have not identified any
such authority in the course of our own research. As a result,
given that Defendant was entitled to rely on the protections
afforded by N.C. Gen. Stat. § 25-3-311(c) and that there has
been no showing that Plaintiff complied with that statutory
provision in the course of his dealings with Defendant, we hold
that the pleadings, when taken in the light most favorable to
Plaintiff, do not tend to show that he has asserted a viable
claim against Defendant, a determination that necessitates a
conclusion that the trial court correctly granted Defendant’s
motion for judgment on the pleadings.4
III. Conclusion
Thus, for the reasons set forth above, we conclude that
none of Plaintiff’s challenges to the trial court’s judgment
have merit. As a result, the trial court’s judgment should be,
and hereby is, affirmed.
AFFIRMED.
Judges McGEE and STEELMAN concur.
4
Although the applications and loan agreements under which
Plaintiff procured the loans at issue in this case specifically
provide that disputes arising under those agreements are to be
governed by the laws of Ohio, the parties to this proceeding
have based their arguments before this Court on North Carolina,
rather than Ohio, law. As a result, our decision in this case
rests upon the law of this jurisdiction rather than that of
Ohio, about which we have received only limited information from
the parties.
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Report per Rule 30(e).