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Law Case file for an account stated ?


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In Hawley v Professional Credit Bureau, Inc, 345 Mich 500, 506-507; 76 NW2d 835 (1956), Michigan Supreme Court, quoting White v Campbell, 25 Mich 463, 468 (1872), observed:

The conversion of an open account into an account stated, is an operation

by which the parties ASSENT to a sum as the correct balance due from one to the other. . . . The parties may still impeach it for fraud or mistake. But so long as it is not IMPEACHED, the agreed statement serves in place of the original account, as the foundation of an action.Defendant submitted evidence that indicated her lack of awareness of the account and her dispute of its validity by submitting dispute inquiry through a credit reporting agency. All of these actions indicate someone who disputes, rather than assents, to a debt.

Defendant also argues that plaintiff failed to show that it legally acquired defendant's account from Citibank. We agree. Although plaintiff submitted a copy of a bill of sale executed by Citibank, it did not provide the portion of the assignment that indicated that this specific account was one of the accounts being assigned. Because the assignment occurred through the

contract, absent evidence of the contract showing the specific assignment, the affidavit containing plaintiff's employee bare assertion of the assignment is insufficient to establish factual support for plaintiff's claim that it acquired defendant's account by assignment.

Is this Useful against JDB's only?

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http://www.ftc.gov/os/comments/debtcollectroundtable3/545921-00017.pdf

Account Stated

An account stated is an agreed balance between the parties.It may be “defined,

broadly, as an agreement, express or implied, between the parties to an account based upon prior

transactions between them, with respect to the correctness of the separate items composing the

account, and the balance, if any, in favor of the one or the other.”

As a general rule where an account is made up and rendered, he who receives it is

bound to examine the same or to procure someone to examine it for him. If he

admits it to be correct it becomes a stated account and is binding on both parties.

If instead of an express admission of the correctness of the account, the party

receiving it keeps the same by him and makes no objection within a reasonable

time, his silence will be construed into an acquiescence in its justness, and he will

be bound by it as if it were a stated account. An account stated is conclusive upon

the parties unless fraud, mistake, or other equitable considerations are shown which make it improper to be enforced.

Minskoff v. American Express Travel Related Servs. Co., 98 F.3d 703 (2d Cir. 1996); see also Transamerica Ins. Co. v.

Standard Oil Co. (Indiana), 325 N.W.2d 210, 215 (N.D. 1982).

15 U.S.C. § 1692g.

15 U.S.C. § 1692g (B). The validation notice will be discussed in detail in another White Paper in the NARCA White Paper

Series on Consumer Debt.

Holt v. Western Farm Services, Inc., 19 Ariz.App. 355, 507 P.2d 674, 677 (Ariz.App. 1973).

R.A. Associates v Lerner, 265 A.D.2d 541, 697 N.Y.S.2d 161 (2nd Dep’t 1999).

A mere statement of a balance due including a monthly credit card account statement, if

accepted, is enough to constitute an account stated.An account stated arose “between the

issuer of a credit card and cardholders when the issuer sent monthly statements of account

transactions to cardholders and no objections were made.Once accepted,the statement

becomes a new contract.

It is well settled that a claim for an account stated is independent of the original

obligation. By its submission of unrefuted evidence of having mailed statements

of account to defendant, which statements were retained without objection for a

reasonable period of time, plaintiff established its entitlement to summary

judgment on its claim for an account stated.

Causes of action based upon accounts stated may be entered as default judgments in the

Civil Court of the City of New York so long as they satisfy the following:

A summons and complaint which qualifies for entry following CPLR § 3215,

where the cause of action is for an account stated, may be entered by the clerk

under the following conditions:

1.

The affidavit of facts or verified complaint includes a statement indicating

that an accounting was delivered or mailed to the creditor and the date of

the delivery or mailing.

2.

The affidavit of facts or verified complaint also includes a statement that

the accounting has been retained and that no objection to it has been made.

In cases in which the defendant opposed a motion for summary judgment by alleging in a

conclusory fashion that payments were not properly credited or that he questioned certain

charges, plaintiffs’ applications were granted.

Rodkinson v. Haecker, 248 N.Y. 480, 485 (1928). See also, Philips v. Belden, 2 Edw.Ch.Rep. 1, 13-14 (1833).

Citibank (South Dakota), N.A. v. Runfola, 283 A.D.2d 1016, 725 N.Y.S.2d 246 (4 Dep’t, 2001), See also Citibank (South

Dakota), N.A. v, Currea, 2006 WL 1229919 (Conn. Super 2006).

Citibank (South Dakota) N.A. v. Poynton, 187 Misc. 2d 397, 723 N.Y.S.2d 327 (App. Term 2000).

Discover Bank v. Anderson, No. 2007-178 QC (NY App. Term 2008). [internal citations omitted]

See Directive and Procedures 158, Entry of Judgment - Account Stated, Hon. Fern Fisher-Brandveen, Administrative Judge of

the Civil Court of the City of New York, July 27, 2001.

The evidence, fairly interpreted, supports plaintiff's recovery of the credit card

debt under the theory of account stated, since defendant did not object within a

reasonable time to the itemized credit card statements. (internal citations

omitted) Defendant's argument that plaintiff was required to submit a signed

credit card application in order to establish its claim based on an account stated is

without merit.

"Defendant's opposition merely asserts he questioned several charges without giving

details. His silence is an admission."If the consumer fails to object within a reasonable time

do so, an account stated may be found.

Edited by racecar
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Thanks Racecar!

Is account stated classified as a theory of damages as opposed to one

of liability?

In Whittington v. Stanton and Nicolaysen v. Flato, cited supra, the

account stated theory is premised upon the correctness of the statement fixing the various sums which constitute the debt.

The actual debt itself must be in existence for an account stated claim to succeed - if not, the cause of action will fail.

In Oceanic International Corporation v. Lantana Boatyard,cited supra, the basic premise of an account stated action is that the action itself presupposes some indebtedness. If in fact such indebtedness arose from the breach of a promise, and the indebtedness itself is presupposed, it therefore follows that the breach of promise must also be presupposed. Accordingly,

successful account stated actions are premised upon the existence of liability on the part of the debtor.

Rendition of a statement of account to a debtor who fails to object to the accuracy of the items and statement contained therein can be used as an

admission to the existence and amount of a preexisting obligation. Once the particular elements of an account stated are shown, the account stated cause is deemed prima facie correct.

That being said, an account stated, if proven, is not conclusive, but merely presumptive evidence of the correctness of its items.

While an account rendered not objected to within a reasonable period of time may be regarded as being prima facie correct, nevertheless, a cause of action under an account stated claim will not succeed if the underlying elements are not otherwise properly pled in the complaint. Similarly, even if the elements of an account stated are properly pled, the cause will fail if they are not proven. Thus, if it is shown that there were no dealings between the parties, or there otherwise is no mutual agreement between the parties,and thus, no liability at the time the account was presented, the account stated claim will fail.

Does that make sense ?

.

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In Hawley v Professional Credit Bureau, Inc, 345 Mich 500, 506-507; 76 NW2d 835 (1956), Michigan Supreme Court, quoting White v Campbell, 25 Mich 463, 468 (1872), observed:

The conversion of an open account into an account stated, is an operation

by which the parties ASSENT to a sum as the correct balance due from one to the other. . . . The parties may still impeach it for fraud or mistake. But so long as it is not IMPEACHED, the agreed statement serves in place of the original account, as the foundation of an action.Defendant submitted evidence that indicated her lack of awareness of the account and her dispute of its validity by submitting dispute inquiry through a credit reporting agency. All of these actions indicate someone who disputes, rather than assents, to a debt.

Defendant also argues that plaintiff failed to show that it legally acquired defendant's account from Citibank. We agree. Although plaintiff submitted a copy of a bill of sale executed by Citibank, it did not provide the portion of the assignment that indicated that this specific account was one of the accounts being assigned. Because the assignment occurred through the

contract, absent evidence of the contract showing the specific assignment, the affidavit containing plaintiff's employee bare assertion of the assignment is insufficient to establish factual support for plaintiff's claim that it acquired defendant's account by assignment.

Is this Useful against JDB's only?

The account stated part can be used against any Plaintiff. The bill of sale part only applies to JDBs.

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Truth In Lending Act: Defendant‘s failure to exercise an option to object to the billings is irrelevant.

1. THE TRUTH IN LENDING ACT DOES NOT WAIVE CONSUMERS‘ RIGHTS

a. Plaintiff‘s frequently rely on the Fair Credit Billing portion of the TILA, 15 U.S.C. § 1666. That provision imposes liability on plaintiff were it not to comply with the statutory billing error procedures. §1666(e). The Fair Credit Billing Act does take away consumers‘ rights to claim that they do not owe what is stated on a periodic bill. It does not mandate that consumers avail themselves of those dispute procedures -- unless they want to seek statutory damages for their violation -- nor does it provide that consumers lose claims or defenses if they call to complain -- as most do -- rather than write. Congress did not take away consumers‘ defenses as a penalty for not invoking the statutory billing error procedures, undoubtedly because imposing a writing requirement places a burden, sometimes insurmountable, on a portion of TILA‘s intended beneficiaries. See, White and Mansfield, Literacy and Contract, 132 Stanford Law & Policy Rev. 233 (2002). While the majority of the population may be able to draft a dispute letter, a

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significant minority unfortunately does not have that capability, for lack of either literacy or English language skills. See, National Institute for Literacy, the State of Literacy in America: Estimates at the Local, State and National Levels (1998), available through http://www.nifl.gov. Plaintiff‘s efforts to import the optional consumer protection of the Fair Credit Billing Act as a sword against the consumer turns that consumer protection statute upside down and inside out.

This above is from an attorney in Texas, good info here.

http://www.law.gonzaga.edu/academic-program/Files/cle/Folder/Jarzombek_Defending_Debt_Collection_Suits.pdf

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Beyond just TILA, the FDCPA offers some protection there as well from 809© The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

The nice thing about this is that it binds the court from making the determination that if you did not dispute it, then poof there is an account stated like the JDBs want.

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  • 3 months later...
Beyond just TILA, the FDCPA offers some protection there as well from 809© The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

The nice thing about this is that it binds the court from making the determination that if you did not dispute it, then poof there is an account stated like the JDBs want.

VERY HELPFUL - Thank you, Can you please expand on this 809©.... and point me in the direction of where TILA would protect for Failure to dispute. Thanks so much!

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You really need to research it specifically for the state you live in. Here in Texas there is an old state Supreme Court precedent that defines all different types of accounts. It has defined "account stated" as an agreement between only two parties. It can be interpreted that a credit card account cannot be an "account stated" because each transaction involves multiple parties (consumer, merchant, consumer's bank, merchant's bank, the bank that issued the credit card etc.)

Of course this is of no use for anyone in any other state so everyone should try to find anything similar that may apply to their own state.

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Here's a good source for Massachusettes pro sers : http://www.masslegalservices.org/system/files/Substantive_Defenses_to_Consumer_Debt_Collection_Suits_t.pdf

Has sample pleadings for Discovery, etc.

The paper states, on page 3 (pdf file page 11), that under account stated claims can not collect contract interest because these types of claims are brought "independent of any contract provision" or assess attorney fees.

I also read, can't recall where, that absent a duty to speak, silence to a 1692g letter (dunning letters) does not in and of itself establish liability. One can plead the common law defense of "mistake, surprise, neglect" because it's normal to toss letters from JDB (whom you've never done business with) based on the return address alone as junk mail. So prove I got it. Just because you said you sent it doesn't mean diddly without proof.

In short, if they plead common count then you can plead common law defenses.

Carol-Lynn

Edited by SkippieB
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Major law firm Morgan, Lewis & Bockius LLP loses account stated claim on no proof of mailing invoices:

Morgan Lewis moves for summary judgment on its account stated claim. It is well-settled that the receipt and retention of an invoice without objection within a reasonable period of time may give rise to an account stated claim. Werner v. Nelkin, 206 AD2d 422 (2d Dept. 1994); Rockefeller Group, Inc. v. Edwards & Hjorth, 164 AD2d 830 (1st Dept. 1990). However, "[a] key element of a prima facie account stated claim is evidence that [the plaintiff] delivered one or more invoices for the amount claimed to defendant, so that he received them." Commissioners of State Insurance Fund v. Kassas, 5 Misc 3d 1012A (N.Y.C. Civ. Ct. 2004).Where a plaintiff's evidence fails to establish that the invoices were properly addressed and mailed, there should be no presumption of receipt, and summary judgment on an account stated claim is inappropriate. Morrison Cohen Singer & Weinstein, LLP v. Brophy, 19 AD3d 161 (1st Dept. 2005); Citibank (S.D.), N.A. v. Martin, 11 Misc 3d 219 (N.Y.C. Civ. Ct. 2005)(the plaintiff on an account stated claim must show mailing of the account or alternate proof showing the account was received).

Judged by these standards, the Court concludes that Morgan Lewis has failed to meet its prima facie showing that it is entitled to summary judgment on its account stated cause of action. Morgan Lewis's claim to summary judgment is supported only by an affidavit of Morgan Lewis partner David J. Sorin. In that affidavit, Sorin states, in conclusory fashion, that Morgan Lewis submitted periodic invoices to IBuy.[3] There is no evidence submitted, however, of the basis for Sorin's knowledge that the bills were in fact mailed, or any proof that they were mailed on a particular date. Of course, the date of mailing is crucial in determining whether the bills were held for a unreasonable time without objection.[4] Nor is there any prima facie showing of a regular office procedure for outgoing mail.

In light of these deficiencies, Morgan Lewis's motion for summary judgment on the account stated claim must be denied.

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States currently exempted from Regulation Z are Connecticut, Maine, Massachusetts, Oklahoma, and Wyoming. The rules apply to creditors, not consumer.

§ 161. Correction of billing errors

(a) If a creditor, within sixty days after having transmitted to an obligor a statement of the obligor's account in connection with an extension of consumer credit, receives at the address disclosed under section 127(B)(10) a written notice (other than notice on a payment stub or other payment medium supplied by the creditor if the creditor so stipulates with the disclosure required under section 127(a)(7)) from the obligor in which the obligor.........etc.

This has no language that says anything about a requirement to file disputes on the part of the consumer. It sets out the time frames for the creditor, not the consumer.

TILA 226.13 reinforces this.

(B) Billing error notice.28 A billing error notice is a written notice29 from a consumer that:

(1) Is received by a creditor at the address disclosed under § 226.7(k) no later than 60 days after the creditor transmitted the first periodic statement that reflects the alleged billing error;

(2) Enables the creditor to identify the consumer's name and account number; and

(3) To the extent possible, indicates the consumer's belief and the reasons for the belief that a billing error exists, and the type, date, and amount of the error.

© Time for resolution; general procedures. (1) The creditor shall mail or deliver written acknowledgment to the consumer within 30 days of receiving a billing error notice, unless the creditor has complied with the appropriate resolution procedures of paragraphs (e) and (f) of this section, as applicable, within the 30-day period; and....etc.

You are not required by law to file a dispute. It should be written if you do, but there is no prohibition against calling them. In fact, they always provide a phone number on billing statements, don't they?

This where JDBs and OCs have a hard time with account stated. They always throw in that you kept the statements without dispute for an unreasonable amount of time, or some such language, when there is no such language in the statutes to support the contention. Also, these are consumer protection statutes, not lender protection statutes. I find it amusing that lenders try to use these statutes against consumers.

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