Communications between Insurance Companies and their insureds are always important, and copies of these are requested to understand insurance claims when filing a complaint. Recently, the Puerto Rico Court of Appeals ruled on an Accord and Satisfaction case in which Plaintiff presented a memo received from the insurer that contradicted its allegations against the Plaintiff’s Hurricane claim.

In Prieto Castillo v. MAPFRE Pan American Insurance Company,1 Plaintiff alleged that the insurer (MAPFRE) underpaid her Hurricane Maria claim and engaged in unfair practices, violating the Puerto Rico Insurance Code. MAPFRE denied all allegations and filed a Motion for Summary Judgement claiming they had complied with their contractual obligations and with the Insurance Code by investigating, estimating the covered damages, and paying the policyholder the final amount of $5,604.28, which the Plaintiff accepted and therefore extinguished any further obligation because an Accord and Satisfaction had been fulfilled in this case. Plaintiff responded that even though the check had been deposited, she had not given a knowing consent because MAPFRE did not include a letter with the check explaining the consequences of depositing the check, and advising her of her right to request a reconsideration if she believed the amount on the check was incorrect (underpaid). Plaintiff also alleged she had not accepted that check as a final payment and that she had later hired a Public Adjuster and an attorney to represent her and continue with her insurance claim.

MAPFRE then, opposed to Plaintiff’s response to Summary Judgement alleging Plaintiff had submitted a reconsideration but it had been denied by the insurer and she proceeded to deposit the check without any other complaints regarding the payment. Based on the evidence presented the Court of First Instance (trial court) ruled in favor of MAPFRE’s allegations of Accord & Satisfaction and determined that the payment constituted a total and definitive liquidation of the Plaintiff’s claim. In disagreement, Plaintiff filed a Motion for Reconsideration and argued:

[T]he idea of Accord and Satisfaction is not compatible with Puerto Rico’s Insurance Code and a Summary Judgment is not the appropriate vehicle to use in evaluating a claim under Accord and Satisfaction.

In addition, Plaintiff submitted new evidence and requested to take a deposition of MAPFRE’s Sales Vice-President. Along with the deposition request, Plaintiff attached a memo sent by MAPFRE in April 2018, that stated the following:

The collection of the check sent is perfectly compatible with any subsequent review.

MAPFRE in response to the deposition request and new evidence responded that since the Plaintiff never presented a request for review before or after depositing the check, then the interpretation of the memo was irrelevant to her claim. The Court of First Instance denied Plaintiff’s Motion for Reconsideration.

The Plaintiff took her case to the Court of Appeals and claimed that the First Instance Court had erred in its ruling:

The First Instance Court errored on determining that all the necessary elements to apply Accord and Satisfaction had been fulfilled and that no material facts existed in controversy, therefore, proceeding to rule in favor of the Motion to Dismiss or grant Summary Judgment, dismissing the complaint

As I have discussed in a prior blog,2 and as ruled by Puerto Rico’s Supreme Court,3 the following elements are required for Accord and Satisfaction to exist:

  1. A claim must have a monetary value or a bonafide controversy must exist.
  2. The debtor makes a payment offer.
  3. The creditor accepts payment offer.

In this case, the appellate court determined the case should not have been resolved through Summary Judgment because a controversary existed regarding two of the necessary elements to fulfill an Accord & Satisfaction.

First, it was clear there was a controversy regarding the payment, but it was not clear if the offer made by MAPFRE complied with the Insurance Code and was made in good faith because there is no proof MAPFRE explained in detail the damages they were denying coverage or the terms to request reconsideration of the claim. Neither did MAPFRE warn the Plaintiff of the legal consequences of accepting and depositing the check. MAPFRE made an offer without providing all the necessary information for the Plaintiff to provide a consent with full knowledge.

Second, although the Plaintiff did deposit the check, it is unclear if the Plaintiff had accepted the payment as a partial or total payment for her claim. The check did have printed the following message on the back side:

The endorsement of this check constitutes the total and definitive payment of all obligation, claim or account of the concept indicated in front

The Appeals Court determined that this message in itself did not confer full knowledge to the Plaintiff when she endorsed and deposited the check. The Plaintiff even hired a private firm to adjust the damages after she had deposited the check, therefore, it was unclear if she really understood the consequences of MAPFRE’s offer and if the check was a partial or final payment.

Before concluding its ruling, the Appeals Court pointed out the contradiction caused by MAPFRE through the memo prepared and sent by MAPFRE’s Sales Vice- President to all insureds, in which he explained the reconsideration process for hurricane claims. As mentioned before, this memo included the following message:

The collection of the check sent is perfectly compatible with any subsequent review.

This phrase seemed to indicate that depositing a check from MAPFRE did not close an insurance claim. MAPFRE caused confusion by first stating that the insured had indeed requested reconsideration, but they had denied it and then in response to Plaintiff’s Motion for Reconsideration, they stated that the memo was irrelevant to this claim because the Plaintiff had never requested a reconsideration.

This brought two more facts into controversy:

  1. Could the check be deposited without understanding that this action would close the claim?
  2. Did the Plaintiff request a reconsideration for the amount paid based on the covered damages by the insurer?

The Court of Appeals ruled that these controversies could not be resolved through Summary Judgment and that it was necessary to continue with the discovery process to determine if an Accord and Satisfaction applied to this case.
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1 Prieto Castillo v. MAPFRE Pan American Ins. Co., Appeals Court, Panel III, Case number KLAN202000835 (Ruling January 12, 2021).
2 https://www.propertyinsurancecoveragelaw.com/2019/07/articles/insurance/accord-satisfaction-will-my-insurance-claim-be-dismissed-if-i-deposit-a-payment/ (July 21, 2019).
3 H.R. Elec., Inc v. Rodriguez et. al, 114 D.P.R. 236, (1983).