Failure to Demonstrate Mailing of Invoice Dooms Account Stated ClaimPrint Article
- Posted on: Jun 22 2022
By: Jeffrey M. Haber
It has been more than two years since this Blog has written about the account stated cause of action (here). On June 21, 2022, the Appellate Division, First Department gave us the opportunity to do so again. Hess 938 St. Nicholas Judgment LLC v. 936-938 Cliffcrest Hous. Dev. Fund Corp., 2022 N.Y. Slip Op. 03989 (1st Dept. June 21, 2022) (here).
“An account stated 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.”1 An account stated is predicated upon a transaction between the parties such that it creates a debtor and creditor relationship, prior to the statement of the account.2 To make an account stated, the indebtedness must refer to an existing debt; it cannot be made to create a liability where none existed before.3 A cause of action alleging an account stated cannot be used to collect under a disputed contract.4
The agreement to pay may be express or implied.5 An agreement may be implied if a party receiving a statement of account keeps it without objecting to it within a reasonable time because the party receiving the account is bound to examine the statement and object to it, if there is an objection.6 Silence is deemed acquiescence and warrants enforcement of the implied agreement to pay.7 An agreement may also be implied if the debtor makes partial payment. The partial payment is considered acknowledgment of the correctness of the account.8
To state a cause of action for an account stated, a plaintiff must allege that: (1) the defendant is indebted to the plaintiff for a specific amount, constituting the sum of one or several billing invoices delivered to the defendant over a particular period of time; (2) the plaintiff’s demands have not been complied with; (3) the account remains outstanding; and (4) there is an absence of objection from the defendant. In the absence of fraud, mistake or other equitable considerations making it improper to recognize the agreement, if the foregoing elements are satisfied, then the account is conclusive.9
A prima facie case on a claim for an account stated is established with proof that the plaintiff prepared and sent invoices to the defendant in the ordinary course of business and that the defendant did not object to the invoices in a timely fashion.10
A cause of action for an account stated will fail where the defendant has rendered to the plaintiff its objections to its obligation to pay the amounts billed within a reasonable time.11 For purposes of a claim of account stated, whether a bill has been held without objection for a period of time sufficient to give rise to an inference of assent is typically a question of fact, and becomes a question of law only in those cases where only one inference is rationally possible.12 However, generalized objections advanced by a defendant after receiving a plaintiff’s billing statements do not constitute objections to the billing statements.13
In Hess, plaintiff failed to establish, among other things, that the invoices for the delivered oil were mailed to defendant.
Hess involved the delivery of home heating oil by plaintiff to defendant during the period June 2012 through February 2013. Defendant purportedly failed to fully pay for the oil. As a result, on April 17, 2015, plaintiff commenced the action, asserting causes of action for breach of contract and account stated. Plaintiff sought damages of $48,276.86.
On September 6, 2018, plaintiff assigned all of its rights, title and interest in the matter to Hess 938 St. Nicholas Judgment LLC (“Hess 938”). Defendant answered the complaint and asserted a counterclaim for champerty against Hess 938. [Ed. Note: this Blog discussed the claim of champerty here and here.] It also commenced a third-party action for champerty against Maverick Real Estate Partners, LLC. (“Maverick”), the owner of Hess 938.
Hess 938 and Maverick moved for summary judgment on, inter alia, plaintiff’s causes of action for breach of contract and an account stated against defendant. The motion court denied the motion.
The motion court held that plaintiff failed to establish, among other things, that the invoices were properly addressed and mailed to defendant.14 In fact, said the motion court, “Plaintiff has provided no evidence that this was ever done.”
On appeal, the First Department affirmed.
The Court held that “Plaintiff failed to establish its prima facie entitlement to summary judgment on its claim for account stated against Cliffcrest, the owner of the premises, as it established neither retention of bills without objection nor partial payment….”15 The Court explained that “Plaintiff provided no evidence that it properly addressed and mailed account invoices to [defendant], and in fact, the invoices were billed to a different entity.”16 “Accordingly,” concluded the Court, “plaintiff should not be afforded the presumption that [defendant] actually received the invoices.”17
[Ed. Note: There is a “common law rule … that a letter properly stamped, addressed, and mailed is presumed to have been delivered.”18 “The presumption is founded upon the probability that the officers of the government will do their duty”.19 It may “be created by either proof of actual mailing or proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed”20 “A mere allegation of non-receipt is not sufficient to rebut this presumption of receipt.”21 “In addition to a claim of no receipt, there must be a showing that routine office practice was not followed or was so careless that it would be unreasonable to assume that the notice was mailed.”22 This Blog examined the presumption of mailing here, for example.]
Hess shows that for a plaintiff to prevail on an account stated claim, he/she must demonstrate an account for which (a) he/she sent an invoice to defendant, (b) he/she demanded the specific amount sought in the complaint, and (c) defendant failed to object within a reasonable time. The failure to demonstrate any of the foregoing will result in dismissal of the claim or, as in Hess, denial of summary judgment in favor of the plaintiff.
Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.
This article is for informational purposes and is not intended to be and should not be taken as legal advice.
- Jim-Mar Corp. v. Aquatic Constr., 195 A.D.2d 868, 869 (3d Dept. 1993) (citations omitted); Citibank (S. Dakota) N.A. v. Jones, 184 Misc. 2d 63, 64 (Dist. Ct., Nassau County 2000).
- Bank of New York-Delaware v. Santarelli, 128 Misc. 2d 1003, 1004 (County Ct., Broome County 1985).
- Ryan Graphics, Inc. v. Bailin, 39 A.D.3d 249, 250 (1st Dept. 2007).
- Ross v. Sherman, 57 A.D.3d 758 (2d Dept. 2008).
- Chisholm-Ryder v. Sommer, 70 A.D.2d 429, 431 (4th Dept. 1979).
- Id. (citations omitted).
- Id. (citing, inter alia, Parker Chapin Flattau & Klimpl v. Daelen Corp., 59 A.D.2d 375, 377 (1st Dept. 1977). See also Shea & Gould v. Burr, 194 A.D.2d 369 (1st Dept. 1993) (receipt and retention of account without objection within a reasonable time coupled with a partial payment gives rise to an actionable account stated entitling plaintiff to summary judgment).
- EPF Intl. Ltd. v. Lacey Fashions, Inc., 170 A.D.3d 515 (1st Dept. 2019).
- Joe O’Brien Investigations Inc. v. Zorn, 263 A.D.2d 812 (3d Dept. 1999).
- Accent Collections, Inc. v. Cappelli Enterprises, Inc., 94 A.D.3d 1026 (2d Dept. 2012); Whiteman, Osterman & Hanna, LLP v. Oppitz, 105 A.D.3d 1162, 1163 (3d Dept. 2013).
- Costopoulos v. DeCoursey, 151 A.D.3d 1452 (3d Dept. 2017).
- Bank of America, N.A. v. Ball, 188 A.D.3d 974 (2d Dept. 2020); Citibank (S.D.), N.A. v. Brown-Serulovic, 97 A.D.3d 522 (2d Dept. 2012).
- Slip Op. at *1 (citations omitted).
- Id. (citing, Penthouse Global Media, Inc. v. Exec. Club LLC, 187 AD3d 410, 411 (1st Dept. 2020), lv. dismissed, 36 N.Y.3d 1115 (2021); Morrison Cohen Singer & Weinstein, LLP v. Brophy, 19 A.D.3d 161, 161-162 (1st Dept. 2005)).
- 5421 Sylvan Ave. Associates Corp. v. New York City Conciliation and Appeals Bd., 100 A.D.2d 812, 813 (1st Dept. 1984); see also, Trusts & Guarantee Co. v. Barnhardt, 270 N.Y. 350, 352 (1936).
- News Syndicate Co., Inc. v. Gatti Paper Stock Corp., 256 N.Y. 211, 214 (1931) (internal quotation marks omitted).
- Progressive Casualty Ins. Co. v. Infinite Ortho Prods., Inc., 127 A.D.3d 1050, 1051 (2d Dept. 2015) (citations and internal quotation marks omitted).
- 5421 Sylvan, 100 A.D.2d at 813.
- Nassau Ins. Co. v. Murray, 46 N.Y.2d 828, 829-30 (1978) (citation omitted).