On September 30, 2020, the Puerto Rico Court of Appeals revoked the rulings held on two (2) Accord and Satisfaction cases. The first case, Victor Cruz Perez v. Universal Insurance Company,1 was reversed due to the insurer’s failure to prove that all elements of Accord Satisfaction had been fulfilled.

Elements of Accord and Satisfaction:

  1. A claim or controversy (in absence of oppression or disadvantage by the debtor to the creditor).
  2. Payment offer (made in good faith: honest and pure conscience in addition to be accompanied by declarations or acts clearly indicating the offer is for a total, complete, and definitive payment).
  3. Acceptance of payment offer by creditor [the insured].

In Perez, Universal Insurance failed to prove payment issued to Perez constituted a “total, complete and definitive” payment. The appellate court held that Accord and Satisfaction does not apply automatically, it must be proven. On appeal, the insured argued the small printed letters on the back of a check are not enough to prove that insured was notified of Accord and Satisfaction consequences. The insurer in this case failed to provide an explicit letter to the insured regarding the clear effect of the payment being issued to be a total, complete, and definitive payment. Also, in this case the client had signed an “Adjustment Agreement” which the appeal court considered was not clear to constitute as a settlement agreement for a definitive payment and in addition, it did not provide details of the individual adjustment for each claim or amount. The agreement also stated that the claim payment could vary upon revision of the adjustment made or coverage per the policy and that any revision would be sent by a written notice. However, just five days after the damage report was made, a check was issued by the insurer for a global amount and an “X” over the box that read “Type of Payment: Final.” The appeal court held this was not enough to conclude—even after the check was endorsed by the insured—that an Accord and Satisfaction had occurred.

The second case reversed by the Puerto Rico Court of Appeals was Haydee Flores Rodriguez v. MAPFRE PRAICO Insurance Company.2 The insured notified the insurer she was not satisfied with the payment issued and went in person to return the check, to which the insurer told her that if she rejected the payment issued she would not receive any payment at all. Under pressure from the insurer, the insured feared she would not receive any payment for her claim and proceeded to deposit the check. On the other hand, the insured also alleged that the insurer had sent a letter notifying that depositing a check would not impede her requesting the claim be reconsidered.

The appellate court held that in this case there was no evidence that the insurer had provided the insured an explicative document of the results from the investigation and inspection made nor the adjustment of damages. In this case, the insurer only issued a check without an explicit document, contrary to the Puerto Rico Insurance Code and Accord and Satisfaction requirements. The appeal court emphasized the fact that it is not enough for a check to express its “final,” to demonstrate that the appellant was duly advised, especially in this case, in which the insurer did not even provide information regarding the results of their inspection and investigation. Therefore, the appellate court reiterated that all Accord and Satisfaction elements must be proven for a payment to be considered as one.
1 Victor Cruz Perez v. Universal Ins. Co., Case Number CA2018CV02498 (P.R. App. Ct. Sept. 30, 2020).
2 Haydee Flores Rodriguez v. MAPFE PRAICO Ins. Co., Case number MZ2018CV00046 (P.R. App. Ct. Sept. 30, 2020).