By: Alexander A. Miuccio Published: March 2014

Contractor Allowed Recovery Under Account Stated Claim

An “account stated” is an agreement, express or implied, between parties who have prior dealings that a particular sum is due from one to the other. The agreement may be implied, for example, when a contractor sends regular bills or invoices to the owner and the owner keeps them without objecting to the invoices within a reasonable period of time. An objection to the invoices after litigation has been commenced is not made within a reasonable time.

In the recent case of A. & L. Construction Corp. v East Harlem Developers, LLC, the court allowed the contractor to recover monies due from the owner based on an account stated theory of liability.

Background

A&L, a general contractor, entered into a general construction contract with East Harlem, a property owner, to furnish interior framing, insulation and sheetrock. The work commenced in February of 2008 and ended in April of 2010. As the work progressed, A&L submitted periodic invoices to East Harlem, and East Harlem had submitted partial payments in response to some of those invoices. East Harlem never disputed the invoices. Nor did it claim any deficiencies in the work reflected on the invoices.

A&L sued and, ultimately, moved for summary judgment. In support of its motion, A&L noted the work it performed, the invoices it sent to East Harlem, partial payments made by East Harlem, and East Harlem’s failure to object to the invoices. For the first time in opposition to A&L’s summary judgment motion, East Harlem objected to A&L’s invoices and claimed that the work was inferior and defective. East Harlem also sought a counterclaim against A&L based on the claimed defective work.

Decision

The court granted the contractor’s motion for summary judgment, finding that the owner received and retained the contractor’s invoices for the work without making a reasonably timely objection. As for East Harlem’s counterclaim for defective work, the court ruled that East Harlem had not submitted sufficient evidence that it made any objection on that basis or any other basis upon receipt of A&L’s invoices or within a reasonable time thereafter.

Comment

If a series of invoices are sent that are not objected to within a reasonable period of time, they will be regarded as proof that the invoices stated the correct amounts. The debtor has a duty to examine the invoices to ascertain whether they are correct or not. Silence demonstrates that the debtor does not dispute the balance due. An objection to the invoices or a claim of defective work that is first made only after litigation on the account stated theory is not a defense to the account stated. An account stated claim is a useful legal remedy to collect monies due to a contractor, subcontractor or material supplier.

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