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Why file a lawsuit for Open Book is Account Stated is almost a sure thing?


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With all that I have been reading, I see (in California at least) that filing a lawsuit on Account Stated is very hard to defend against.

So I wonder why would an OC file a lawsuit on open book, which requires more work especially if one demands a BoP?

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"The essential elements of an account stated are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due." (Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600 [76 Cal.Rptr. 663], internal citations omitted.)

"The agreement of the parties necessary to establish an account stated need not be express and frequently is implied from the circumstances. In the usual situation, it comes about by the creditor rendering a statement of the account to the debtor. If the debtor fails to object to the statement within a reasonable time, the law implies his agreement that the account is correct as rendered." (Zinn, supra, 271 Cal.App.2d at p. 600, internal citations omitted.)

"An account stated is an agreement, based on the prior transactions between the parties, that the items of the account are true and that the balance struck is due and owing from one party to another. When the account is assented to, ' "it becomes a new contract. An action on it is ot founded upon the original items, but upon the balance agreed to by the parties. . . ." Inquiry may not be had into those matters at all. It is upon the new contract by and under which the parties have adjusted their differences and reached an agreement.' " (Gleason v. Klamer (1980) 103 Cal.App.3d 782, 786-787 [163 Cal.Rptr. 483], internal citations omitted.)

"To be an account stated, 'it must appear that at the time of the statement an indebtedness from one party to the other existed, that a balance was then struck and agreed to be the correct sum owing from the debtor to the creditor, and that the debtor expressly or impliedly promised to pay to the creditor the amount thus determined to be owing.' The agreement necessary to establish an account stated need not be express and is frequently implied from the circumstances. When a statement is rendered to a debtor and no reply is made in a reasonable time, the law implies an agreement that the account is correct as rendered. Actions on accounts stated frequently arise from a series of transactions which also constitute an open book account. However, an account stated may be found in a variety of commercial situations. The acknowledgement of a debt consisting of a single item may form the basis of a stated account. The key element in every context is agreement on the final balance due." (Maggio, Inc. v. Neal (1987) 196 Cal.App.3d 745, 752-753 [241 Cal.Rptr. 883], internal citations omitted.)

"An account stated need not be submitted by the creditor to the debtor. A statement expressing the debtor's assent and acknowledging the agreed amount of the debt to the creditor equally establishes an account stated." (Truestone, Inc. v. Simi West Industrial Park II (1984) 163 Cal.App.3d 715, 726 [209 Cal.Rptr. 757], internal citations omitted.)

" 'The common count is a general pleading which seeks recovery of money without specifying the nature of the claim . . . . Because of the uninformative character of the complaint, it has been held that the typical answer, a general denial, is sufficient to raise almost any kind of defense, including some which ordinarily require special pleading.' However, even where the plaintiff has pleaded in the form of a common count, the defendant must raise in the answer any new matter, that is, anything he or she relies on that is not put in issue by the plaintiff." (Title Ins. Co. v. State Bd. of Equalization (1992) 4 Cal.4th 715, 731 [14 Cal.Rptr.2d 822, 842 P.2d 121], internal citations and footnote omitted.)

"The account stated may be attacked only by proof of 'fraud, duress, mistake, or other grounds cognizable in equity for the avoidance of an instrument.' The defendant 'will not be heard to answer when action is brought upon the account stated that the claim or demand was unjust, or invalid.' " (Gleason, supra, 103 Cal.App.3d at p. 787, internal citations omitted.)

"An account stated need not cover all the dealings or claims between the parties. There may be a partial settlement and account stated as to some of the transactions." (Gleason, supra, 103 Cal.App.3d at p. 790, internal citation omitted.)

"In the common law action of general assumpsit, it is customary to plead an indebtedness using 'common counts.' In California, it has long been settled the allegation of claims using common counts is good against special or general demurrers. The only essential allegations of a common count are '(1) the statement of indebtedness in a certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3) nonpayment.' " (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460 [61 Cal.Rptr.2d 707], internal citations omitted.)

"A common count is not a specific cause of action, . . . rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness, including that arising from an alleged duty to make restitution under an assumpsit theory. When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable." (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394 [20 Cal.Rptr.3d 115], internal citations omitted.)

Secondary Sources

4 Witkin, California Procedure (4th ed. 1997) Pleading, � 515

1 Witkin, Summary of California Law (9th ed. 1987) Contracts, �� 917, 918

1 California Forms of Pleading and Practice, Ch. 8, Accounts Stated and Open Accounts, �� 8.10, 8.40-8.46 (Matthew Bender)

(New December 2005)

Edited by racecar
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372. Common Count: Open Book Account

[Name of plaintiff] claims that [name of defendant] owes [him/ her/it] money on an open book account. To establish this claim, [name of plaintiff] must prove all of the following:

1. That [name of plaintiff] and [name of defendant] had (a) financial transaction(s);

2. That [name of plaintiff] kept an account of the debits and credits involved in the transaction(s);

3. That [name of defendant] owes [name of plaintiff] money on the account; and

4. The amount of money that [name of defendant] owes [name of plaintiff].

Directions for Use

The instructions in this series are not intended to cover all available common counts. Users may need to draft their own instructions or modify the CACI instructions to fit the circumstances of the case.

Sources and Authority

" 'A book account may be deemed to furnish the foundation for a suit in assumpsit . . . only when it contains a statement of the debits and credits of the transactions involved completely enough to supply evidence from which it can be reasonably determined what amount is due to the claimant.' . . . 'The term "account," . . . clearly requires the recording of sufficient information regarding the transaction involved in the suit, from which the debits and credits of the respective parties may be determined, so as to permit the striking of a balance to ascertain what sum, if any, is due to the claimant.' " (Robin v. Smith (1955) 132 Cal.App.2d 288, 291 [282 P.2d 135], internal citations omitted.)

"A book account is defined . . . as 'a detailed statement, kept in a book, in the nature of debit and credit, arising out of contract or some fiduciary relation.' It is, of course, necessary for the book to show against whom the charges are made. It must also be made to appear in whose favor the charges run. This may be shown by the production of he book from the possession of the plaintiff and his identification of it as the book in which he kept the account between him and the debtor. An open book account may consist of a single entry reflecting the establishment of an account between the parties, and may contain charges alone if there are no credits to enter. Money loaned is the proper subject of an open book account. Of course a mere private memorandum does not constitute a book account." (Joslin v. Gertz (1957) 155 Cal.App.2d 62, 65-66 [317 P.2d 155], internal citations omitted.)

"A book account may furnish the basis for an action on a common count ' ". . . when it contains a statement of the debits and credits of the transactions involved completely enough to supply evidence from which it can be reasonably determined what amount is due to the claimant." ' A book account is described as 'open' when the debtor has made some payment on the account, leaving a balance due." (Interstate Group Administrators, Inc. v. Cravens, Dargan & Co. (1985) 174 Cal.App.3d 700, 708 [220 Cal.Rptr. 250], internal citations and footnote omitted.)

"[T]he most important characteristic of a suit brought to recover a sum owing on a book account is that the amount owed is determined by computing all of the credits and debits entered in the book account." (Interstate Group Administrators, Inc., supra, 174 Cal.App.3d at p. 708.)

"It is apparent that the mere entry of dates and payments of certain sums in the credit column of a ledger or cash book under the name of a particular individual, without further explanation regarding the transaction to which they apply, may not be deemed to constitute a 'book account' upon which an action in assumpsit may be founded." (Tillson v. Peters (1940) 41 Cal.App.2d 671, 679 [107 P.2d 434].)

"The law does not prescribe any standard of bookkeeping practice which all must follow, regardless of the nature of the business of which the record is kept. We think it makes no difference whether the account is kept in one book or several so long as they are permanent records, and constitute a system of bookkeeping as distinguished from mere private memoranda." (Egan v. Bishop (1935) 8 Cal.App.2d 119, 122 [47 P.2d 500].)

" 'The common count is a general pleading which seeks recovery of money without specifying the nature of the claim . . . . Because of the uninformative character of the complaint, it has been held that the ypical answer, a general denial, is sufficient to raise almost any kind of defense, including some which ordinarily require special pleading.' However, even where the plaintiff has pleaded in the form of a common count, the defendant must raise in the answer any new matter, that is, anything he or she relies on that is not put in issue by the plaintiff." (Title Ins. Co. v. State Bd. of Equalization (1992) 4 Cal.4th 715, 731 [14 Cal.Rptr.2d 822, 842 P.2d 121], internal citations and footnote omitted.)

"Although such an action is one at law, it is governed by principles of equity. It may be brought 'wherever one person has received money which belongs to another, and which "in equity and good conscience," or in other words, in justice and right, should be returned. . . . The plaintiff's right to recover is governed by principles of equity, although the action is one at law.' " (Mains v. City Title Ins. Co. (1949) 34 Cal.2d 580, 586 [212 P.2d 873], internal citations omitted.)

"ince the basic premise for pleading a common count . . . is that the person is thereby 'waiving the tort and suing in assumpsit,' any tort damages are out. Likewise excluded are damages for a breach of an express contract. The relief is something in the nature of a constructive trust and . . . 'one cannot be held to be a constructive trustee of something he had not acquired.' One must have acquired some money which in equity and good conscience belongs to the plaintiff or the defendant must be under a contract obligation with nothing remaining to be performed except the payment of a sum certain in money." (Zumbrun v. University of Southern California (1972) 25 Cal.App.3d 1, 14-15 [101 Cal.Rptr. 499], internal citations omitted.)

" 'As Witkin states in his text, "[a] common count is proper whenever the plaintiff claims a sum of money due, either as an indebtedness in a sum certain, or for the reasonable value of services, goods, etc., furnished. It makes no difference in such a case that the proof shows the original transaction to be an express contract, a contract implied in fact, or a quasi-contract." ' A claim for money had and received can be based upon money paid by mistake, money paid pursuant to a void contract, or a performance by one party of an express contract." (Utility Audit Co., Inc. v. City of Los Angeles (2003) 112 Cal.App.4th 950, 958 [5 Cal.Rptr.3d 520], internal citations omitted.)

"In the common law action of general assumpsit, it is customary to plead an indebtedness using 'common counts.' In California, it has long been settled the allegation of claims using common counts is good against special or general demurrers. The only essential allegations of a ommon count are '(1) the statement of indebtedness in a certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3) nonpayment.' " (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460 [61 Cal.Rptr.2d 707], internal citations omitted.)

"A common count is not a specific cause of action, . . . rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness, including that arising from an alleged duty to make restitution under an assumpsit theory. When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable." (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394 [20 Cal.Rptr.3d 115], internal citations omitted.)

Secondary Sources

4 Witkin, California Procedure (4th ed. 1997) Pleading, � 522

1 California Forms of Pleading and Practice, Ch. 8, Accounts Stated and Open Accounts, �� 8.20, 8.47 (Matthew Bender)

12 California Forms of Pleading and Practice, Ch. 121, Common Counts (Matthew Bender)

4 California Points and Authorities, Ch. 43, Common Counts and Bills of Particulars (Matthew Bender)

(New December 2005)

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Because the majority of debt collection lawsuits move to judgment based on the failure of the consumer to appear. Without an appearance, a judge does not rule on the validity of the debt or the lawsuit. So the credit card companies win yet again.

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  • 3 months later...
It's called throw a big pile of s**t on the wall and cling with all your life to the one turd that sticks. The two are very similar in nature, they just want to cover their bases. They can win with any one count.

What is the best defense against account stated and open complaints?

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With all that I have been reading, I see (in California at least) that filing a lawsuit on Account Stated is very hard to defend against.

So I wonder why would an OC file a lawsuit on open book, which requires more work especially if one demands a BoP?

The reason I see for using the Open Book v Account Stated is that you state the OC/ Original Creditor is filing the suit. Typcially means they will have all the statements and someone from the company will be available to testify.

Account Stated is more typically used by JDB, who know they won't be getting a witness from the OC.

Thus assumes the OC still controls the account and it hasn't been sold, only assigned to an attorney collection agency.....

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Hmmm. I'm being sued by an OC (T**G***NatBk) on account stated (and unjust enrichment) and they've sent a wad of hearsay statements. I wonder if this means they don't plan to produce a witness. They never have, as far as my research shows on the local court website. But then, the defendants didn't fight back.

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