Account Stated – New York Appellate Digest

Account Stated, Attorneys, Civil Procedure, Contract Law, Debtor-Creditor

THE AWARD OF PREJUDGMENT INTEREST IN A BREACH OF CONTRACT ACTION IS REQUIRED BY CPLR 5001; THE REQUEST FOR PREJUDGMENT INTEREST SHOULD NOT HAVE BEEN DENIED BASED ON A FIVE-YEAR DELAY IN BRINGING SUIT (THIRD DEPT).

The Third Department, reversing (modifying) Supreme Court, determined plaintiff attorney was entitled to prejudgment interest in this breach of contract action against defendant, a former client, seeking payment of plaintiff’s fee for legal services:

… [W]e agree with plaintiff that her motion seeking an award of prejudgment interest should have been granted. Supreme Court faulted plaintiff for waiting until 2020 to commence this action to recover monies owed as a result of a legal representation that ended in 2015 but, as prejudgment interest only compensates the judgment creditor for the loss of use of money he or she was owed and is not a penalty, the “responsibility for the delay [in bringing suit] should not be the controlling factor in deciding whether interest is to be computed” … . Rather, prejudgment interest in a breach of contract action is required by CPLR 5001, running “from the earliest ascertainable date on which the prevailing party’s cause of action existed ‘[or,] if that date cannot be ascertained with precision, . . . from the earliest time at which it may be said the cause of action accrued’ ” … . Supreme Court determined in the April 2022 order that plaintiff’s claim for breach of contract accrued when she completed her legal services on May 23, 2015. Thus, plaintiff was entitled to prejudgment interest running from that date…. O’Keefe v Barra, 2023 NY Slip Op 01829, Third Dept 4-6-23

Practice Point: This was a breach of contract action brought by an attorney against a former client for failure to pay the legal fees. The fact that the attorney stopped representing the client in 2015 and didn’t bring suit until 2020 was not a ground for the denial of prejudgment interest, which is required in breach of contract actions by CPLR 5001. The court noted that prejudgment interest is not a penalty.

April 6, 2023

Account Stated, Attorneys, Contract Law

ATTORNEY’S FEES RECOVERABLE UNDER AN ACCOUNT-STATED THEORY DESPITE TERMINATION OF THE ATTORNY-CLIENT RELATIONSHIP (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff law firm was entitled to summary judgment on the account-stated causes of action seeking payment of attorney’s fees, despite the termination of the attorney-client relationship:

Plaintiff law firm … established entitlement to summary judgment on its claim for an account stated with respect to its June invoices by production of documentary evidence showing defendants received the June invoices and defendants’ admissions in their answer that they made partial payments for those invoices … .

Plaintiff also established entitlement to summary judgment on its account stated claim with respect to the July invoices. The documentary evidence established that defendant received the July invoices … and the … affidavit established that defendants retained those invoices without making any specific objection to them … . …

… [P]laintiff’s termination does not prohibit its recovery under an account stated theory, and the law firm may recover for pretermination legal services billed to defendants at the agreed upon hourly rate, which defendants retained without objection … . Katsky Korins LLP v Moskovits, 2021 NY Slip Op 05815, First Dept 10-26-21

October 26, 2021

Account Stated, Banking Law, Contract Law, Evidence

THE BANK DID NOT PRESENT EVIDENCE THE CREDIT CARD BILLING STATEMENTS AND THE AMENDMENTS TO THE CREDIT CARD AGREEMENT WERE MAILED TO THE DEFENDANT; THE BANK’S MOTION FOR SUMMARY JUDGMENT ON THE BREACH OF CONTRACT AND ACCOUNT STATED CAUSES OF ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank’s motion for summary judgment on the breach of contract and account stated causes of action should not have been granted. The bank alleged plaintiff had not paid sums due on her credit card account. But the bank failed to demonstrate the billings statements and the amendments to the credit care agreement were mailed to the defendant:

… [T]he Stephenson affidavit laid a proper foundation for admission as business records of the amendments to the credit card agreement and the monthly billing statements (see CPLR 4518[a] …). However, no evidence that those documents were mailed to the defendant was provided. Stephenson did not attest to [*2]personal knowledge of the mailings or of a standard office practice and procedure designed to ensure that items were properly addressed and mailed, and the business records did not evince the mailing of the account documents … .

Absent evidence that the billing statements were mailed to the defendant, the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law on the cause of action to recover on an account stated … . Similarly, absent evidence that the amendments to the credit card agreement were mailed to the defendant, the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law on the breach of contract cause of action … . Bank of Am., N.A. v Ball, 2020 NY Slip Op 06740, Second Dept 11-18-20

November 18, 2020

Account Stated, Civil Procedure, Contract Law, Debtor-Creditor, Evidence

MOTION FOR SUMMARY JUDGMENT IN LIEU OF COMPLAINT SHOULD NOT HAVE BEEN GRANTED BECAUSE REFERENCE TO EXTRINSIC EVIDENCE WAS REQUIRED; STATUTE OF FRAUDS DID NOT REQUIRE DISMISSAL BECAUSE IT WAS ALLEGED THERE WAS NEW CONSIDERATION FOR THE PROMISE TO PAY THE DEBT OF ANOTHER (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the invoices submitted by plaintiff do not qualify for CPLR 3213 relief on the account stated cause of action because reference to extrinsic evidence was required, and defendants were not were not entitled to dismissal based upon the statute of frauds because there was an allegation of new consideration flowing from plaintiff to defendants:

Plaintiff’s motion for summary judgment in lieu of complaint should have been denied. The invoices do not qualify for CPLR 3213 relief because it is necessary to consult extrinsic evidence aside from the invoices and proof of nonpayment in order for plaintiff to establish its entitlement to summary judgment on its account stated claim … . Plaintiff has failed to establish, based on the invoices themselves, that defendants, as opposed to nonparty Impact Sports, are liable based on an account stated claim.

Defendants are not entitled to dismissal of the action based on the statute of frauds (GOL § 5-701[a][2]) as plaintiff has sufficiently alleged that there was new consideration flowing from plaintiff to defendants, which is an exception to the requirement that a promise to pay the debt for another be in writing … . Peter R. Ginsberg Law, LLC v J&J Sports Agency, LLC, 2020 NY Slip Op 01468, First Dept 3-3-20

March 3, 2020

Account Stated

PLAINTIFF ENTITLED TO RECOVER THE FULL AMOUNT OF THE INVOICE UNDER AN ACCOUNT STATED THEORY (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that plaintiff was entitled to full payment for beer delivered to defendants under an account stated theory:

At trial, the plaintiff established that the defendants received the first invoice and made partial payment on it. While the defendants claim that the number of cases of beer and manner of shipping did not conform with their order, there is no evidence in the record that they raised that objection prior to the commencement of this lawsuit, or that they ever disputed the invoice. Accordingly, the evidence presented at trial warranted a determination in the plaintiff’s favor in the principal sum of $12,345 on the cause of action to recover on an account stated based on the invoice … . Stardom Brands, LLC v S.K.I. Wholesale Beer Corp., 2019 NY Slip Op 04018, Second Dept 5-22-19

May 22, 2019

Account Stated, Attorneys

THE ABSENCE OF A RETAINER AGREEMENT DOES NOT PRECLUDE RECOVERY OF ATTORNEY’S FEES UNDER THE ACCOUNT STATED THEORY (FIRST DEPT).

The First Department determined the absence of a retainer agreement did not preclude recovery of attorney’s fees under the account stated theory:

… “[F]ailure to comply with the letter of engagement rule (22 NYCRR 1215.1) does not preclude . . . recovery of legal fees under a theory of account stated” … . The record before us shows that, after receiving the benefit of Carling’s services, Peters invoked the absence of a retainer agreement in an effort to evade her payment obligations, and the court was right to award him the amounts reflected in his bills. Carling v Peters, 2019 NY Slip Op 01713, First Dept 3-12-19

March 12, 2019

Account Stated, Contract Law

ALTHOUGH THERE WAS NO ENFORCEABLE CONTRACT TO INSTALL SOLAR PANELS, PLAINTIFF WAS ENTITLED TO SUMMARY JUDGMENT ON ITS ACCOUNT STATED CAUSE OF ACTION BASED ON INVOICES SENT TO DEFENDANT FOR THE SOLAR PANELS (THIRD DEPT).

The Third Department, reversing (modifying) Supreme Court, determined plaintiff’s breach of contract action was properly dismissed but plaintiff should have been granted summary judgment on its account stated cause of action based upon the submission of invoices for $1.9 million. There was no executed agreement between plaintiff and defendant for the installation of solar panels. However, defendant did not object to the invoices for the solar panels:

Plaintiff attempted to raise “material questions of fact” with proof that it had already entered into an agreement to install one solar system at the complex, that defendants expressed interest in having plaintiff install the two additional systems, and that plaintiff purchased solar cells and performed other work in the expectation that it would do so … . These submissions did not, however, raise any question on the dispositive issue of whether the parties reached agreement on the material terms of a contract to install the additional systems … . …

We reach a different result with regard to plaintiff’s claim for an account stated, which is “an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items and balance due, and may be implied from the retention of an account rendered for an unreasonable period of time without objection and from the surrounding circumstances” … . In the course of the unsuccessful negotiations over an agreement to install the two proposed systems, plaintiff purchased approximately $1.9 million worth of solar cells for one of the projects and, beginning in December 2011, periodically invoiced defendants for the purchase price and storage costs of the cells. The initial invoice stated that the solar cells were “purchased and held pursuant to agreement with” defendants, and noted that defendants’ representative had “acknowledge[d] receipt of [defendants’] inventory.” Plaintiff’s chairperson averred that defendants’ chief executive officer and a consultant had acknowledged receipt of the solar cells on behalf of defendants, and attached purchase documents for the solar cells bearing what plaintiff’s chairperson stated were the initials of those two individuals.

In response, defendants admitted that they had never objected to the invoices, which “is deemed acquiescence and warrants enforcement of the implied agreement to pay” … . Solartech Renewables, LLC v Techcity Props., Inc., 2018 NY Slip Op 08739, Third Dept 12-20-18

December 20, 2018

Account Stated

ATTORNEY ENTITLED TO THE REMAINDER OF HER FEE UNDER AN ACCOUNT STATED THEORY (SECOND DEPT).

The Second Department determined plaintiff attorney was entitled to her fees from the defendant client under an account stated theory and the defendant’s counterclaim for legal malpractice was properly dismissed:

The plaintiff represented the defendant from January 2009 through June 2011, and periodically sent invoices to the defendant for legal services rendered in accordance with a retainer agreement executed by the defendant. The defendant received the invoices and made payments with respect thereto through October 22, 2010. Thereafter, he made no further payments to the plaintiff. …

” An account stated is an agreement between parties, based upon their prior transactions, with respect to the correctness of the account items and the specific balance due'” … . “Although an account stated may be based on an express agreement between the parties as to the amount due, an agreement may be implied where a defendant retains bills without objecting to them within a reasonable period of time, or makes partial payment on the account” … . The “agreement” at the core of an account stated is independent of the underlying obligation between the parties … . Holtzman v Griffith, 2018 NY Slip Op 04540, Second Dept 6-20-18

ACCOUNT STATED (ATTORNEY ENTITLED TO THE REMAINDER OF HER FEE UNDER AN ACCOUNT STATED THEORY (SECOND DEPT))/ATTORNEYS (FEES, ACCOUNT STATED, ATTORNEY ENTITLED TO THE REMAINDER OF HER FEE UNDER AN ACCOUNT STATED THEORY (SECOND DEPT))

June 20, 2018

Account Stated, Debtor-Creditor

CITIBANK NOT ENTITLED TO SUMMARY JUDGMENT UNDER AN ACCOUNT STATED THEORY TO COLLECT A CREDIT CARD DEBT.

The Second Department determined plaintiff bank (Citibank) was not entitled to summary judgment on its account stated cause of action. Defendant's credit card balance increased substantially every month when he failed to pay, The bank increased the interest rate from 3.99 and 6.99% to 29.99%. Between May and November, the credit card balance increased from under $24,000 to over $27,000. Defendant made a $75 payment at some point:

Citibank … failed to establish its prima facie entitlement to judgment as a matter of law on its cause of action for recovery on an account stated. An account stated is an agreement between parties, based upon their prior transactions, with respect to the correctness of the account items and the specific balance due … . Although an account stated may be based on an express agreement between the parties as to the amount due, an agreement may be implied where a defendant retains bills without objecting to them within a reasonable period of time, or makes partial payment on the account … . The “agreement” at the core of an account stated is independent of the underlying obligation between the parties … . Here … Citibank alleged an account stated of $26,985.85. In support of its motion, Citibank submitted proof that it mailed regular monthly statements to the defendant through October 7, 2009.

Citibank failed, however, to establish that the defendant retained this final monthly statement without objecting to the “total new balance” contained on the statement within a reasonable time. In her affidavit, the Citibank employee averred that the “attached Account Statement does not reflect any outstanding disputes on the account.” However, the fact that the final statement did not reflect a protest does not prove that the defendant did not dispute the statement, since any protest would necessarily come after the statement was received by the defendant. Moreover, the record does not establish when the defendant sent a partial payment of $75, and, in any event, that payment was so small in relation to the alleged amount due that it does not give rise, prima facie, to an inference of assent to the total amount alleged to be due … . Citibank (South Dakota), N.A. v Abraham, 2016 NY Slip Op 03133, 2nd Dept 4-27-16

April 27, 2016

Account Stated, Debtor-Creditor

PLAINTIFF ENTITLED TO SUMMARY JUDGMENT UNDER AN ACCOUNT STATED THEORY IN AN ACTION TO COLLECT A CREDIT CARD DEBT.

The Second Department determined plaintiff, who had purchased defendant's credit card debt of over $16,000, was entitled to summary judgment under an account stated theory. The court explained the elements:

” An account stated is an agreement between [the] parties to an account based upon prior transactions between them with respect to the correctness of the account items and balance due'” … . To establish its prima facie entitlement to judgment as a matter of law to recover on an account stated, a plaintiff must show that the defendant received the plaintiff's account statements for payment and retained these statements for a reasonable period of time without objection … .

In the case of existing indebtedness, the agreement may be implied as well as express … . “An agreement may be implied where a defendant retains bills without objecting to them within a reasonable period of time, or makes partial payment on the account” … . Cach, LLC v Aspir, 2016 NY Slip Op 02046, 2nd Dept 3-23-16

ACCOUNT STATED (PLAINTIFF ENTITLED TO SUMMARY JUDGMENT IN ACTION TO COLLECT A CREDIT CARD DEBT)/DEBTOR-CREDITOR (PLAINTIFF ENTITLED TO SUMMARY JUDGMENT UNDER AN ACCOUNT STATED THEORY IN AN ACTION TO COLLECT A CREDIT CARD DEBT)/CREDIT CARDS (PLAINTIFF ENTITLED TO SUMMARY JUDGMENT UNDER AN ACCOUNT STATED THEORY IN AN ACTION TO COLLECT A CREDIT CARD DEBT)

March 23, 2016