Commercial Division Blog

Posted: March 3, 2015 / Categories Commercial, Account Stated

Summary Judgment Granted Based on a "Mutual Account" Between the Parties

On February 3, 2015, Justice Solomon of the Kings County Commercial Division issued a decision in Caring Professionals, Inc. v. Landa, 2015 NY Slip Op 30232(U), granting summary judgment based on a "mutual account" between the parties—a concept similar to the more familiar "account stated."

In Caring Professionals, the plaintiff, "a provider of nurses, home health aides and personal care aides," brought suit against a customer for failure to pay for close to $7 million in services for which it submitted invoices that it was undisputed the defendant received and never contested. The plaintiff moved for summary judgment arguing that the defendant’s failure to contest the invoices established an "account stated." Justice Solomon found that the parties' arrangement did not fit within the traditional definition of an account stated, but "is more in the nature of a running or mutual account, which shares attributes with an account stated." The court explained:

A plaintiff establishes its prima facie entitlement to judgment as a matter of law on its cause of action to recover on an account stated by tendering sufficient evidence that it generated account statements for the defendant in the regular course of business, that it mailed those statements to the defendant on a monthly basis, and that the defendant accepted and retained these statements for a reasonable period of time without objection, and made partial payments thereon.

The submissions show that the arrangement between the parties was not an account stated, within the classic definition of the term . The nearly 7900 page spreadsheet showing invoices and 171 payments clearly cannot match invoices to payments one to one, this is to say that each invoice did not generate a payment. This is more in the nature of a running or mutual account, which shares attributes with an account stated.

A "mutual" account is one in which two parties have agreed to a course of dealings in which each periodically furnishes something to the other, each keeping a running account of credits and debits in the expectation that the party in whose favor a balance exists will send the other a bill from time to time. Both an account stated and a mutual account arise out of an agreement, express or implied, that one party will provide goods and/or services and issue invoices and the other party will make payments. In either case, acceptance and retention of the invoices for a reasonable period without objection precludes the receiving party from objecting to the correctness of the items or the balance due.

(Citations omitted). Justice Solomon granted summary judgment to the plaintiff for the unpaid amount stated in the invoices. However, he held that entry of the judgment would have to await the court's adjudication of defendant's defense based on an alleged offset based on conduct that predated the invoices at issue.