Commercial Division Blog

Posted: July 17, 2015 / Categories Commercial, Account Stated

Partial Payment for First Representation Does Not Support Account Stated Claim for Second Matter

On June 16, 2015, the First Department issued a decision in Boies, Schiller & Flexner LLP v. Modell, 2015 NY Slip Op. 05124, holding that where there was a break in an engagement, partial payment prior to the break was not sufficient to support an account stated claim for the period after the break, explaining:

Plaintiff established prima facie that it entered into a retainer agreement with defendant and sent her regular invoices pursuant thereto, and that, after plaintiff withdrew from representation, defendant paid more than $400,000 towards those bills, with a promise to pay the remainder in exchange for plaintiff's agreement to represent her a second time in the same or related matters. Accordingly, plaintiff is entitled to summary judgment on its account stated claim for the outstanding amount of $30,525 for bills dated July 31, 2012, August 20, 2012, and September 20, 2012, in connection with the first representation.

However, as plaintiff withdrew and then agreed to represent defendant again, defendant's partial payments in connection with the first representation cannot be construed as consent to the amounts due in connection with the second representation. Accordingly, plaintiff is not entitled to summary judgment to the extent the account stated claim is based on work performed and invoiced for October 2012 through February 2013, i.e., during the second representation.

While the parties agree that defendant paid the October 2012 bill, purportedly for work performed in September 2012, the record does not conclusively establish the services billed for in that invoice, including whether the invoice related to the first or second representation. Coupled with defendant's objections to and refusal to pay any subsequent invoice, the payment of the October 2012 bill does not suffice to eliminate any triable issue of fact as to defendant's consent to the amounts due under later invoices.

Moreover, defendant averred that she called plaintiff within a day or two after receiving each invoice, spoke to the lawyer primarily handling her case and her assistant, and objected that she did not understand the charges, that they appeared to be unwarranted, and that she could not pay. This evidence of defendant's oral objections is sufficiently detailed to create a triable issue of fact as to her consent to the amounts due.

As plaintiff correctly notes, numerous emails cited in an affidavit by defendant's daughter (who exercised a power of attorney on defendant's behalf) and relied upon by the motion court, when read in context, fail to raise any specific, timely objections to any bills. However, defendant's oral objections are supported by at least two emails to plaintiff from defendant's daughter, advising plaintiff on December 31, 2012, that she intended to go over the outlandish bills with her accountant, and on January 25, 2013, that she would not pay any bills until they were reviewed by the accountant.

(Internal quotations and citations omitted).