Can acceptance of disputed rent payments create an accord and satisfaction? Dishinger v. Potter Explained

In Dishinger v. Potter, the Utah Court of Appeals addressed whether a landlord’s acceptance of disputed rental payments can create an accord and satisfaction that bars an unlawful detainer claim, providing important guidance for commercial lease disputes.

Background and Facts

The Dishingers operated a frozen yogurt shop under a commercial lease requiring renewal at “the then prevailing rental rate of similar buildings in the Main Street area of Park City.” When they exercised their renewal option, the landlord Potter demanded $30 per square foot while the Dishingers’ appraisal supported $19 per square foot. The Dishingers paid based on their lower appraisal, clearly noting payments were for “New Base Rent.” Potter accepted these payments for nearly a year while simultaneously pursuing breach of lease and unlawful detainer claims. A jury ultimately found the prevailing rate was $25 per square foot.

Key Legal Issues

The case turned on whether the three elements of accord and satisfaction were met: (1) an unliquidated claim or bona fide dispute over the amount due; (2) payment offered as full settlement of the entire dispute; and (3) acceptance of payment as full settlement. The court also addressed whether lease waiver provisions could prevent accord and satisfaction.

Court’s Analysis and Holding

The Court of Appeals found all three elements satisfied based on the jury’s special verdict findings. Crucially, the court held that Potter’s conduct in negotiating the checks constituted acceptance as a matter of law, regardless of her subjective intent or simultaneous litigation efforts. The court distinguished cases requiring restrictive endorsements, noting that the “New Base Rent” notation combined with the disputed context was sufficient. The lease’s waiver provision did not prevent accord and satisfaction because it addressed waiver of defaults, not accord and satisfaction of disputed amounts.

Practice Implications

This decision highlights significant risks for commercial landlords accepting disputed rental payments. Even when pursuing litigation, a landlord’s acceptance of payments tendered in full satisfaction can create an accord and satisfaction that bars unlawful detainer remedies. The court’s emphasis on conduct over intent means landlords cannot rely on simultaneous legal actions to preserve their rights. Commercial lease practitioners should advise landlord clients to either reject disputed payments entirely or accept them with explicit written reservations of all rights to avoid unintended accord and satisfaction.