Legal Malpractice

What is an Account Stated in New York?

By (Andrew Lavoott Bluestone)

Billing disputes between attorneys and clients fuel the legal malpractice cycle.  Attorney seeks to enforce a bill, client responds with a legal malpractice claim, and the litigation clock starts.  Each side seeks and looks for shortcuts, or checkmates.  One checkmate, which may cut off a legal malpractice action at the beginning is the principal of account stated.

In Brooks Banker,v. Esperanza Health Systems, Ltd., , 05 Civ. 4115 (DAB) (JCF) Magistrate James C. Francis writes:
 

"To recover on a claim for an account stated under New York law, the plaintiff must show that: "'(1) an account was presented; (2) it was accepted as correct; and (3) [the] debtor promised to pay the amount stated.'" Camacho Mauro Mulholland LLP v. Ocean Risk Retention Group, Inc., No. 09 Civ. 9114, 2010 WL 2159200, at *2 (S.D.N.Y. May 26, 2010) (alteration in original) (quoting IMG Fragrance Brands, LLC v. Houbigant, Inc., 679 F. Supp 2d 395, 411 (S.D.N.Y. 2009)). A debtor's agreement to pay can be inferred from its failure to raise a timely objection to the amount due. See Wesco Distribution, Inc. v. Anshelewitz, No. 06 Civ. 13444, 2008 WL 2775005, at *6 (S.D.N.Y. July 16, 2008). Conversely, "[a]n allegation of a timely objection to the account, whether ultimately meritorious or not, will generally defeat a summary judgment motion on an account stated." Sid Paterson Advertising, Inc. v. Giuffre Auto Group, LLC, No. 601905/05, 2007 WL 3378349, at *2 (N.Y. Sup. Ct. Oct. 29, 2007) (citing Shea & Gould v. Burr, 194 A.D.2d 369, 371, 598 N.Y.S.2d 261, 262 (1st Dep't 1993)). However, "[u]nsubstantiated claims of oral objections do not create a material issue of fact" sufficient to defeat summary judgment. White Diamond Co. v. Castco, Inc., 436 F. Supp. 2d 615, 624 (S.D.N.Y. 2006); see Lankler Siffert & Wohl, LLP v. Rossi, 287 F. Supp. 2d 398, 408 (S.D.N.Y. 2003) ("conclusory and unsubstantiated" objections to account stated insufficient to defeat summary judgment), aff'd, 125 Fed. Appx. 371 (2d Cir. 2005); Darby & Darby, P.C. v. VSI International, Inc., 95 N.Y.2d 308, 315, 716 N.Y.S.2d 378, 382 (2000) (holding that "selfserving, bald allegations of oral protests were insufficient to raise a triable issue of fact"). The party challenging the account must "raise specific allegations of protest, indicating when, how, and/or to whom objections were made, along with some indication of the content of the conversation(s) had." Goldberg & Connolly v. Hancock Industries, Ltd., No. 11258/06, 2007 WL 1532294, at *2 (N.Y. Dist. Ct. May 29, 2007)."

Full post as published by New York Attorney Malpractice Blog on February 15, 2011 (boomark / email).