Legal Malpractice

A Primer in Jurisdiction and Account Stated

By (Andrew Lavoott Bluestone)

Client from outside New York is sued in Federal Court in New York.  Client hires a NY attorney, and then the case shifts focus to a London Arbitration.  When does the billing in NY end, when does the London case take over, and what happens when there is a billing dispute later?  Justice Edmead's decision in Eaton & Van Winkle LLP v. Midway Oil Holdings Ltd. sets forth a well written explanation of jurisdiction and account stated.

How much must take place in NY for the out of state defendant to be jurisdictionally available in NY?  The short answer is:  enough to satisfy due process.  The longer answer is:  The burden of proving jurisdiction is on the party asserting it.  Long arm jurisdiction is found at CPLR 302(a)(1), and allows for jurisdiction over any non-domiciliary who "transacts any business" within the State, provided that the cause of action arises out of that transaction of business.  A single act will suffice, so long as there is a substantial relationship between that transaction and the injury. The test is the totality of circumstances when determining the existence of purposeful activity. Such acts may include contract negotiations between the parties, meetings, letters or phone calls.  For a fuller description see the decision at pp. 10-13.

The decision also sets forth a full description of the account stated principal.  Where an agreement between the parties holds that when the bill is presented, the recipient is bound to examine it, and if the accounting is admitted as correct, it becomes binding upon both parties.  Receipt and retention of a law firm bill , without objection within a reasonable time, gives rise to an actionable account stated, thereby entitling a firm to summary judgment.

How long is too long? "A lapse of two months is not so long as to constitute such an assent, nor a lapse of three months.  However, four months..."  For a longer explanation, see p. 31-34 of the decision.

Full post as published by New York Attorney Malpractice Blog on March 23, 2010 (boomark / email).