ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

JUDGE JOSEPHINE LINKER HART

DIVISION I

RONALD CUNNINGHAM and WILLIE MAY CUNNINGHAM

APPELLANTS

V.

J.M. CRITES

APPELLEE

CA01-00185

October 3, 2001

APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT, THIRD DIVISION

[NO. CV-00-1121]

HONORABLE JOHN WARD, CIRCUIT JUDGE

AFFIRMED

Appellants, Ronald and Willie May Cunningham, appeal the circuit court's order dismissing their cause of action for breach of contract and granting damages to appellee, J.M. Crites, on his counterclaim. For reversal, appellants first argue that the circuit judge erroneously determined that the total purchase price for the home did not include the builder's fee of $12,500. Second, appellants argue that the court erred in ruling that the appellants' withdrawal of $2,750 from the construction account was a material breach that justified appellee's failure to perform by the specified date, and third, that an attempted accord and satisfaction did not settle the builder's fee issue.

We conclude that there was an accord and satisfaction regarding the builder's fee. Because our conclusion disposes of appellants' claim that the builder's fee was included in the total purchase price, we do not address this issue. At trial, appellants did not raise their

second

argument that their breach was not material and we do not address that issue on appeal.

In June 1999, appellants entered into a contract with the appellee for the construction of their home for a total purchase price of $105,000. Appellants were to pay their own closing costs and receive a $30,000 credit at closing because they owned the land on which the home was constructed. According to the contract, the construction loan was for $75,000. In separate paragraphs, the contract provided that appellee would receive a builder's fee of $12,500 and set a closing date of no later than seven days after October 30, 1999. Construction, however, was not finished until February 2000.

The parties met in late January 2000 to discuss closing the sale of the home and paying the outstanding bills, and a dispute arose concerning the $12,500 builder's fee. The parties, however, reached an agreement that appellants would pay $10,000 worth of outstanding bills for the home and appellee would drop his claim for a $12,500 builder's fee. A new closing date was also set, but on that date, appellee neither appeared nor signed a required lien waiver that would have enabled appellants to complete the closing.

On February 9, 2000, appellants filed suit alleging breach of contract by the appellee as a result of failing to complete construction of their home within the time prescribed and exceeding the authorized construction allowance. Appellants further alleged that the accord and satisfaction was ineffective to settle their dispute because appellee failed to sign the lien release and prevented appellants from closing. Appellee answered and counter-claimed, alleging that the appellants had breached a portion of the contract by using money from the construction loan to pay their initial closing costs. Appellee also alleged that appellants'payment of closing costs from the construction loan fund was a breach of the accord and satisfaction, and thus, he was entitled to a builder's fee of $12,500 as set forth in the original agreement.

The circuit court determined that the contract was unambiguous and that the builder's fee of $12,500 was not included in the total purchase price. Further, the judge determined that appellants were first to breach the contract by withdrawing $2,750 from the builder's account to pay closing costs in contravention of the agreement and that this breach excused the appellee's failure to complete construction as required by the contract. The trial court also found that the parties had reached an agreement concerning the disputed builder's fee when appellants agreed to pay $10,000 of construction debts and appellee agreed to forego his claim for a $12,500 builder's fee. The court, accordingly, concluded that the agreement was an accord and satisfaction of the builder's fee only and did not encompass the withdrawal of funds by the appellants for payment of closing costs. The court awarded appellee a $2,750 judgment for the amount withdrawn from the construction account by the appellant. From that order comes this appeal.

I. Standard of Review

The standard of review in a bench trial is whether the trial judge's findings were clearly erroneous. Schueck v. Burris, 330 Ark. 780, 957 S.W.2d 702 (1997). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court is left with a definite and firm conviction that a mistake has been made. Wade v. Arkansas Dep't of Human Servs., 337 Ark. 353, 990 S.W.2d 509 (1999).

II. Materiality of Breach

Appellants assert that the trial judge erred in concluding that appellants' withdrawal of $2,750 from the construction account to pay closing costs constituted a material breach of the contract and that appellee was, therefore, justified in failing to complete the construction on the date specified in the contract. Although this court notes that the amount involved in the closing costs is only a small percentage of the total purchase price, appellants did in fact breach this portion of the contract. Appellants, however, failed to raise at trial the issue of whether the breach was material. No evidence was presented regarding the materiality of the breach, and the trial court never made a ruling on this point. It is well settled that an issue must be presented to the trial court at the earliest opportunity in order to preserve it for appeal. Fuller v. State, 316 Ark. 341, 872 S.W.2d 54 (1994). Thus, we decline to address this issue.

III. Accord and Satisfaction

Appellants also contend that the trial court erred in holding that the issue of the builder's fee was settled by an accord and satisfaction. Accord and satisfaction involves a settlement in which one party agrees to pay and the other to receive a different consideration or smaller sum than the latter is entitled. Hardison v. Jackson, 45 Ark. App. 49, 871 S.W.2d 410 (1994). There must be a disputed amount and a consent to accept less than the amount in settlement of the whole before acceptance of the lesser amount can be an accord and satisfaction. Mademoiselle Fashions, Inc. v. Buccaneer Sportswear, Inc., 11 Ark. App. 158, 668 S.W.2d 45 (1984). The validity of an accord and satisfaction is generally dependent

upon the same basic factors and principles that govern contracts. Helms v. University of Missouri-Kansas City, 65 Ark. App. 155, 986 S.W.2d 419 (1999).

Here, the accord and satisfaction involved was the agreement between the parties that appellants would pay $10,000 toward the outstanding bills and appellee would drop his claim to the $12,500 builder's fee. Both parties testified that the appellants did in fact pay the $10,000 toward the outstanding bills. An accord and satisfaction must have all the elements of a valid contract: offer, acceptance, and consideration. In determining that all of these elements had been met, the trial judge found that the accord and satisfaction had been reached and only encompassed the issue of the builder's fee. Having made such a finding, the judge ruled that the $2,750 in dispute for closing costs was not covered by the accord and satisfaction.

According to appellant, Ronald Cunningham, he made the payment of $10,000 to settle everything so that he could close. Even though $4,000 remained unpaid, he asserts that after payment of the $10,000, appellee was left with $71,000 in debts to be paid from the $73,250 in the construction loan. Appellee acknowledged that he dropped his claim to the $12,500 builder's fee and testified that he had paid construction costs of $82,000 to third parties. It was only when appellee prepared to close that he learned of appellants' removal of $2,750 for closing costs from the $75,000 in the account.

There was sufficient evidence for the trial judge to determine that the appellee was unaware of the removal of the $2,750 from the construction account at the time the parties reached the agreement concerning the builder's fee; thus, the accord and satisfaction covered

only the $12,500 builder's fee and did not extend to the closing costs. There was substantial evidence to support the trial judge's finding and we affirm.

Affirmed.

Stroud, C.J., and Jennings, J., agree.