Commercial Division Blog

Posted: April 27, 2016 / Categories Commercial, Account Stated

Account Stated Claim Properly Dismissed; Invoice Relied Upon Sent After Parties Were in Dispute

On April 20, 2016, the Second Department issued a decision in Episcopal Health Services, Inc. v. POM Recoveries, Inc., 2016 NY Slip Op. 02959, affirming the dismissal of an account stated claim because the invoiced amount was in dispute, explaining:

An account stated is an agreement, express or implied, between the parties to an account based upon prior transactions between them with respect to the correctness of account items and a specific balance due on them which is independent of the original obligation. A cause of action for an account stated has been described as an alternative theory of liability to recover the same damages allegedly sustained as a result of the breach of contract.

An essential element of an account stated is that the parties came to an agreement with respect to the amount due. While the mere silence and failure to object to an account stated cannot be construed as an agreement to the correctness of the account, the factual situation attending the particular transactions may be such that, in the absence of an objection made within a reasonable time, an implied account stated may be found.

POM did not assert an agreement as to the amount due. Rather, it asserted that the plaintiff, without justification, ignored POM's commission statements and refused to open same, indicating that the plaintiff never agreed that the commission statements were accurate. Further, although POM asserted that over $1,000,000 was owed pursuant to an account stated, the only invoice in the record, dated February 28, 2013, after this action was commenced, is for $307,211.98. In view of the foregoing, POM failed to state a cause of action for an account stated, and its fourth counterclaim, which alleged an account stated, was properly dismissed.

(Internal quotations and citations omitted).