On September 30, 2020, the Court of Appeal of Puerto Rico overturned the rulings in two (2) cases of agreement and satisfaction. The first case, Victor Cruz Perez v. Universal Insurance Company 1 was reversed due to the insurer's failure to prove that all aspects of the Accord Satisfaction had been met.
Elements of Conformity and Satisfaction:
- A statement or controversy (in the absence of repression or disadvantage from the debtor to the creditor).
- Payment offer (made in good faith: honest and clear conscience except accompanied by explanations or documents clearly indicates that the offer is for a total, complete and definitive payment).
- Acceptance of payment offer from creditor [the insured].
In Perez Universal Insurance failed with payment to Perez constituted a "total, complete and definitive" payment. The Court of Appeal considered that Accord and Satisfaction does not apply automatically, it must be proven. In the appeal, the insured claimed that the small print on the back of a check was not sufficient to prove that the insured had been informed of the consequences of Accord and Satisfaction. In this case, the insurer failed to give an explicit letter to the insured regarding the clear effect of the payment being issued as a total, complete and definitive payment. In this case, the client had also signed an "adjustment agreement" which the Court of Appeal did not consider clear to constitute a settlement agreement for a final payment and also did not provide details of the individual adjustment for each claim or amount. The agreement also stated that the payment claim may vary during the audit of the adjustment made or the coverage according to the policy and that each audit should be sent with a written notice. But just five days after the claim was made, a check was issued by the insurer for a global amount and an "X" across the box that read "Type of Payment: Final." The Board of Appeal considered that this was not sufficient to conclude ̵
The Court of Appeal held that in this case there was no evidence that the insurer had provided the insured with a detailed document of the results of the investigation and inspection or adjustment of damages. In this case, the insurer issued only a check without an explicit document, in violation of the Puerto Rico insurance code and agreement and satisfaction requirements. The Board of Appeal emphasized the fact that a check is not sufficient to express its "final", to show that the complainant was duly informed, especially in this case, where the insurer did not even provide information on the outcome of its inspection and investigation. Therefore, the Court of Appeal reiterated that all elements of agreement and satisfaction must be proven for a payment to be considered as one.
1 Victor Cruz Perez v Universal Ins. Co. Case No. CA2018CV02498 (P.R. App. Ct. September 30, 2020).
2 Haydee Flores Rodriguez v. MAPFE PRAICO Ins. Co. Case No. MZ2018CV00046 (P.R. App. Ct. September 30, 2020).