In Triangle Construction Company, Inc. v. Fouche and Associates, Inc., 218 So. 3d 1180 (Mississippi 2017), Triangle Construction Company, Inc. (“Triangle”) contracted with East Madison Water Association (“EMWA”) to build a water system in Madison and Leake Counties in Mississippi.  The contract designated Fouche and Associates (“Fouche”) as the project engineer, although Fouche was not a signatory to the contract.  Triangle nevertheless argued Fouche was a party to the contract because Fouche’s seal was affixed to the contract’s cover, was designated as the project engineer and was designated as the agent and representative of the owner.

Triangle brought suit against EMWA and Fouche for breach of contract alleging EMWA and Fouche did not obtain easements in a timely manner, and prematurely and negligently issued a Notice to Proceed.  Triangle argued this resulted in unnecessary delays. Triangle also asserted EMWA and Fouche expanded the scope of the project “long after the [p]roject had been designed, sealed by [Fouche], and long after the Notice to Proceed . . .  had been issued to Triangle.”

Upon completion of the project, EMWA issued a check to Triangle marked as “Final Payment.” Triangle cashed the check, but contended this check did not fully compensate Triangle for its increased construction costs as a result of the delays or the project expansion.   Triangle subsequently provided a letter to EMWA stating the amount was insufficient and that “Triangle does not waive, in any way, its contractual claims to additional funds under the terms of the bid contract.”

The Court held that cashing the final payment check, despite Triangle’s assertions that EMWA’s payment did not constitute final payment, constituted accord and satisfaction.  The Court stated, “Mississippi law is clear that, despite whatever contentions a party may make to the contrary, cashing a check marked ‘final payment’ constitutes an accord-and-satisfaction agreement.”  Such an accord and satisfaction agreement precludes a party from bringing future claims for additional payment.

Although accord and satisfaction would normally apply to a claim by the contractor against the owner only, the Court also found it barred the claim against Fouche.  While Triangle argued on one hand that Triangle and Fouche were in a quasi-contractual relationship, because Fouche acted as EMWA’s representative or agent, it argued on the other hand that EMWA and Fouche were separate entities for its accord and satisfaction argument.  The Court “refuse[d] to allow Triangle to have it both ways.”  Accordingly, the Court held that Triangle’s claims against Fouche were barred pursuant to the doctrine of accord and satisfaction. 

The holding in this case is a good reminder that any party to a contract should not accept a check marked as “final payment” if the party intends to pursue a claim. More importantly, it reminds parties that they should be careful what they ask for.  In this case, Triangle’s claims against Fouche were dismissed because it asked the Court to accept the extraordinary argument that a non-signatory to a contract is still obligated by its terms. Had Triangle proceeded against Fouche under a negligence theory, the accord and satisfaction defense would most likely have been inapplicable.