Sid Paterson Adv., Inc. v Giuffre Auto Group, LLC

[*1] Sid Paterson Adv., Inc. v Giuffre Auto Group, LLC 2007 NY Slip Op 52164(U) [17 Misc 3d 1127(A)] Decided on October 29, 2007 Supreme Court, New York County Stallman, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on October 29, 2007
Supreme Court, New York County

Sid Paterson Advertising, Inc., Plaintiff,

against

Giuffre Auto Group, LLC, Giuffre Hyundai Ltd., Giuffre Hyundai of White Plains, Ltd., and Giuffre Suzuki of White Plains, Inc., Defendants.



601905/05



Appearances:

For Plaintiff:

Cyruli, Shanks & Zizmor, LLP

By: Alfonso DeCicco, Esq. and

Russell Shanks, Esq.

420 Lexington Avenue

New York, New York 10170

(212) 661-6800

For Defendants:

The Margolis Law Firm, LLC

By: Jed S. Freeman, Esq.

Five Becker Farm Road

P.O. Box 420

Roseland, New Jersey 07068

(973) 239-3000

Michael D. Stallman, J.

Plaintiff moves for partial summary judgment on its second, sixth, tenth, and fourteenth causes of action based on account stated, and for dismissal, pursuant to CPLR 3211 (a) (7), of the affirmative defenses and counterclaims. Defendants cross-move to dismiss the account stated causes of action pursuant to CPLR 3211 (a) (7).

BACKGROUND AND CLAIMS

Beginning in 1998, plaintiff was the advertising agency for defendant car dealerships, all of which are owned by the same persons. Plaintiff caused advertisements to appear in the Daily News [*2]and other newspapers, and billed each defendant on a monthly basis. As plaintiff's owner testified, the custom was for the dealerships to pay plaintiff the money owed to the advertising outlet. That money included plaintiff's commission. Plaintiff would take out its commission and pay the advertiser.

Defendants claim that, in 2005, they decided not to pay the bills because plaintiff failed to honor a promise for a 5% discount. Plaintiff denied making such a promise. Defendants wrote plaintiff on March 25, 2005, asking for new invoices that included the discount and terminating the relationship. Plaintiff commenced this case on May 20, 2005, asserting four causes of action against each of the four defendants, 16 causes of action in total, sounding in breach of contract, account stated, quantum meruit, and unjust enrichment.

Defendants assert six counterclaims, each seeking $224,290.93, which is the sum of (1) the 5% discount on all amounts already paid to plaintiff, and (2) the 5% discount on the amounts owed but not paid. Each counterclaim is asserted on behalf of all of the defendants.

On August 22, 2005, after this action began, plaintiff assigned its claim to part of the monies sought here to the Daily News (Paterson Affidavit, Assignment of Claim Agreement, Ex. F). The assignment was for $161,465.60, the sum that plaintiff owed the Daily News for advertising on behalf of Giuffre Auto Group and Giuffre Hyundai of White Plains that ran in the Daily News in February and March 2005. The assignment did not include plaintiff's commission.

Plaintiff moves for summary judgment in their favor only on the account stated causes of action against each of the dealerships as follows: (1) $82,936.42 against Giuffre Auto Group, based on invoices sent during February 2005 through April 2005 (second cause of action);(2) $67,001.75 against Giuffre Hyundai, based on invoices sent during June 2001 through April 2005 (sixth cause of action);(3) $142,916.94 against Giuffre Hyundai of White Plains, based on invoices sent during January 2004 through April 2005 (tenth cause of action); and(4) $38,574.51 against Giuffre Suzuki of White Plains, based on invoices sent during February 2005 through March 2005 (fourteenth cause of action).

Plaintiff seeks a total of $331,492.62, which presumably includes both what plaintiff owes to various advertising outlets and plaintiff's commissions.

ANALYSIS

As the proponent of the motion for summary judgment, plaintiff has the burden of presenting evidence which establishes its entitlement to the monies it seeks as a matter of law (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]). All the court is to do at this stage is to discern whether any material issues of fact exist (Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 [1957]). If there are issues of fact, summary judgment will be denied (id).

On a CPLR 3211 motion, the sole question for review is whether a party's allegations sufficiently reveal the existence of a cause of action (Acquista v New York Life Ins. Co., 285 AD2d 73, 76 [1st Dept 2001]). The court assumes the truth of the allegations in the challenged pleading [*3]and makes no determination of facts (id.).

SUMMARY JUDGMENT ONACCOUNT STATED

An account stated arises when one party sends another party a bill for payment of a sum certain, and the recipient fails to object to the bill within a reasonable time (Shea & Gould v Burr, 194 AD2d 369, 370 [1st Dept 1993]). By failing to object, the recipient of the bill signifies that it agrees with the sender regarding the amount owed (id.). What constitutes a reasonable time within which to object to the bill is generally a question of fact, except in cases where only one inference is reasonable, in which case a question of law is presented (Legum v Ruthen, 211 AD2d 701, 703 [2d Dept 1995]; see also Darby & Darby, P.C. v VSI Intl., 95 NY2d 308, 315 [2000]; Peterson v IBJ Schroder Bank & Trust Co., 172 AD2d 165, 167 [1st Dept 1991]). An allegation of a timely objection to the account, whether ultimately meritorious or not, will generally defeat a summary judgment motion on an account stated (Shea,194 AD2d at 371; Diamond & Golomb v D'Arc, 140 AD2d 183, 183 [1st Dept 1988]).

The court will enforce the agreement, unless the recipient shows that it does not owe the money by reason of fraud, mistake or other equitable considerations (Marchi Jaffe Cohen Crystal Rosner & Katz v All-Star Video Corp., 107 AD2d 597, 599 [1st Dept 1985]; Epstein Reiss & Goodman v Greenfield, 102 AD2d 749, 751 [1st Dept 1984]).

Here, defendants paid most of the bills without objection or question. Not until seven years into the parties' relationship did defendants discover that plaintiff had not been discounting the bills and object to said bills. However, plaintiff argues that the objections in this case came too late, given that it has been sending bills to defendants since 1998 without any objections until the ones at issue here. This argument calls for the court to consider "the factual circumstances attending the particular transactions" to determine if an account stated was created for any of the invoices or if the question needs to be tried (Interman Indus. Products v R.S.M. Electron Power, 37 NY2d 151, 154 [1975]).

John Giuffre, owner of 99% of defendants, and Sid Paterson, owner of plaintiff, have known each other for about 30 years. At Paterson's deposition, he denied ever telling Giuffre that services would be discounted (Freeman Opp. Affirm, Ex. B [Paterson EBT], at 30). Paterson testified that he had 40 to 50 clients, including 15 to 22 car dealerships belonging to the Bay Ridge Auto Group, which was owned by Giuffre's brother (id. at 27, 58, 61, 62).

All of the dealerships in the Bay Ridge Auto Group received a 5% discount (id. at 19, 58). Bay Ridge Auto Group had contracts with various newspapers, including the Daily News, but defendant franchises did not have contracts (id. at 30-31, 76). Paterson said that the advertising for the defendants with the Daily News "fell under the umbrella of the existing contract" for the Bay Ridge Auto Group (id. at 31). This arrangement "enabled[d] John to take advantage of his brother's contract with the newspaper" which saved him money (id. at 30). However, Paterson stated that "the five percent had nothing to do with the Daily News, it had to do with what I deemed right or wrong or what I wanted to do (id. at 60).

At his deposition, Giuffre testified as follows: that he was the general manager at his brother's car dealership more than 20 years ago (Shanks Affirm., Ex D [Giuffre EBT], at 17-18); plaintiff was the advertiser for the brother's business and was giving the brother a 5% discount (id. at 20, 25). Six or seven months after leaving his brother's business, Giuffre opened up his own dealership (id. at 34); six years after that, in 1998, Giuffre opened up his first franchise, one of the defendants (id. at 37, 73); two weeks after opening his first franchise, Giuffre encountered Paterson at Giuffre's [*4]brother's office (id. at 41-42); Paterson told Giuffre that he would give Guiffre the same deal as his brother (id. at 42); thereafter, plaintiff provided advertising for defendants.

Giuffre testified that he rarely looked at any bills and never at the ones from plaintiff (id. at 45-46). He never asked plaintiff about the discount (id. at 52-53). Four to six weeks before March 25, 2005, Giuffre and Paterson met to discuss advertising on television, and Paterson reminded Giuffre that some bills, the bills at issue here, had not been paid (id. at 77, 81). Giuffre indicated that he would pay them and, after the meeting, looked at the plaintiff's invoices for the first time and discovered that the invoices did not include the 5% discount (id.). Giuffre's daughter, who was in charge of paying the franchises' bills from the time that they opened, did not know about the discount (id. at 77-78). She told Giuffre that he had never told her about it (id. at 78).

Then Giuffre called Paterson to tell him that he had never received the promised discount (id. at 91). They fell out and by letter dated March 25, 2005, Giuffre wrote plaintiff requesting that the invoices be discounted by 5% and terminating the relationship (Freeman Opp. Affirm., Ex. C).

The claims therefore relate to three categories of invoices or bills: (1) the invoices paid without objection or partially paid; (2) invoices that were not paid prior to defendants' objection; and (3) unpaid invoices sent after defendants' objection.

As to invoices already paid, defendants are not entitled to a 5% discount, even if the Court were to assume the truth of Giuffre's statements. The recipient of an account is duty bound to examine it (Marchi Jaffe Cohen Crystal Rosner & Katz, 107 AD2d at 599; Epstein Reiss, 102 AD2d at 751). Plaintiff began sending invoices in 1998, but Giuffre did not look at any invoice until 2005. He also never informed an employee about the discount. Since for several years defendants paid the bills without protest or even inquiry and were not laboring under any material mistake of fact when they did so; therefore, the voluntary payment doctrine bars defendants' claims to recover a discount on what was owed and paid voluntarily (see Eighty Eight Bleecker Co. v 88 Bleecker St. Owners, Inc., 34 AD3d 244, 246 [1st Dept 2006]).

A different conclusion is required regarding the other categories of bills. Allegations of oral objections to an account are sufficient to defeat summary judgment, where the defendant can specify the circumstances of the objection (1000 N. of NY Co. v Great Neck Med. Assoc., 7 AD3d 592, 593 [2d Dept 2004]). Here, Giuffre is specific regarding the circumstances under which he discovered the alleged errors in the bills and made the objection.

Giuffre allegedly objected orally to the invoices at the middle or end of February 2005; Paterson claims that, at no time until March 2005 did defendants ever suggest that they were entitled to any discount (Patterson Aff. in Further Support ¶ 6). Although the date Giuffre objected is disputed, Giuffre's allegations are sufficient to rebut the inference of an agreement to pay the third categories of invoices, those sent after the objection.

As to invoices that were sent but were not paid at the time of defendants' objection, the question is whether the lapse of time between the receipt of the invoices and the objection, constituted, as a matter of law "an unequivocal assent to the balance[s] stated" (Epstein Reiss & Goodman v Greenfield, 102 AD2d 749, 750 [1st Dept 1984]). A lapse of two months between the receipt and the objection is not so long as to constitute such an assent (see Herrick, Feinstein LLP v Stamm, 297 AD2d 477, 478 [1st Dept 2002]), nor a lapse of three months (Kellar v Carney, 88 AD2d 1026, 1026 [3d Dept 1982]). However, a lapse of five months has been deemed sufficient to give rise to an account stated, as a matter of law (Shea,194 AD2d at 371), as has a lapse of more than [*5]four and a half months (Engel v Cook, 198 AD2d 88, 89 [1st Dept 1993]).

Regarding the second category of invoices, those outstanding at the time of the objection, four and a half months is a reasonable length of time within which to object to an account. Even if the Court were to accept that Giuffre raise objections in the middle of February 2005, any invoices sent four and a half months prior to the middle of February (i.e., invoices dated before October 2004) constitute accounts stated as a matter of law. Invoices sent from October 2004 until the date of the objection that were not paid do not constitute an account stated, except for invoices that were partially paid. By making partial payment, defendants acknowledged the correctness of the accounts (see Cohen, Tauber, Spievak & Wagner v Alnwick, 33 AD3d 562, 562 [1st Dept 2006]; Morrison Cohen Singer & Weinstein v Waters, 13 AD3d 51, 52 [1st Dept 2004]).

Applying these principles to the specific invoices sent to defendants, plaintiff's motion for summary judgment must be decided as follows:

As against Giuffre Auto Group, summary judgment is denied. All of the invoices for Giuffre Auto Group are dated from February 28, 2005 to April 30, 2005, which means they came after the objection. In addition, since the invoiced amounts include the assignment to the Daily News, plaintiff has no standing to seek the total amounts of the invoices, and may seek to recover only the amount of its commissions. An account stated, which presumes the correctness of the amount due, would not reflect plaintiff's right to recover only commissions due on the amount, if any.

As to Giuffre Hyundai, the Court finds that accounts stated arose as matter of law as to the three unpaid invoices, for a total of $4,309.40: invoices dated June 30, 2001 ($2,563.98), October 31, 2003 ($1,593.66), and January 31, 2005 ($151.76.). An account stated arose a matter of law with respect to an invoice dated January 31, 2005 for $38,288.88, of which all but $151.76 was paid by Giuffre Hyundai. Prejudgment interest runs at the statutory rate from the date of each invoice (Music Sales Corp. v Mark Music Service, Ltd., 194 AD2d 470, 471 [1st Dept 1993]). Summary judgment is denied on the rest of the invoices which date from February 28, 2005 through April 30, 2005.

As to Giuffre Hyundai of White Plains, an account stated arose as a matter of law with respect to five unpaid invoices, for a total of $5,219.11: invoices dated January 31, 2004 ( $1,644.75), April 30, 2004 ( $2,500), June 30, 2004 ($434.28), July 31, 2004 ($81.84), and August 31, 2004 ( $558.24). For the invoices dated from November 30, 2004 through April 30, 2005, which includes assigned claims, summary judgment is denied. As discussed previously, plaintiff assigned to the Daily News its right to recover against Giuffre Auto Group for advertising placed in February and March 2005, except as to its commission.

Summary judgment is denied against Giuffre Suzuki, as all of its invoices date from February 28, 2005 through March 31, 2005.

SUMMARY JUDGMENT DISMISSING AFFIRMATIVE DEFENSES AND COUNTERCLAIMS

Defendants' first affirmative defense is failure to state a claim upon which relief can be granted. The second asserts the statutes of limitations. The third asserts the statute of frauds. The fourth asserts plaintiff's alleged failure to mitigate damages. The fifth asserts unclean hands. The sixth asserts that plaintiff allegedly committed an earlier breach thus excusing any by defendants. The seventh requests sanctions against plaintiffs and its counsel. The eighth asserts defendants' right to amend their answer (which is neither an affirmative defense nor counterclaim). The ninth asserts [*6]estoppel. The tenth asserts setoff or recoupment.

Defendants' opposition to summary judgment dismissing the affirmative defenses is cursory. They come forward with no evidence to raise a triable issue of fact as to the merits of any of the defenses. Therefore, they are all dismissed.

Plaintiff also moves to dismiss the counterclaims, which are based on defendants' demand for the 5% discount on all sums paid to plaintiff. The first counterclaim asserts breach of contract. The second (mislabeled as the third counterclaim in the answer) claims breach of the covenant of good faith and fair dealing for all. The third (mislabeled the fourth) claims conversion. The fourth (mislabeled the fifth) claims unjust enrichment, money had and received, and constructive trust. The fifth (mislabeled the sixth) seeks an accounting.

The counterclaims are based on all the invoices that defendants paid starting in 1998 and, apparently, on all the amounts that were billed but not paid. Defendants do not appear to distinguish between the two categories. As explained above, no defendant may recover a discount related to any paid invoice. Because discounts related to invoices already paid are the only damages that defendants are seeking, none of their counterclaims have any merit.

Because the exact date of the defendants' objection is disputed, it is possible that other accounts stated may arise if plaintiff proves that defendants began objecting to invoices only as of March 2005. It also remains to be seen whether plaintiff may recover the amounts of the objectionable invoices under alternative theories of liability, and whether a discount applies to those theories. Defendants have no claims against plaintiff. Plaintiff's motion to dismiss the counterclaims is granted.

Defendants' cross motion to dismiss the causes of action for account stated is denied, in light of the foregoing analysis.

CONCLUSION

Accordingly, it is hereby

ORDERED that plaintiff's motion for partial summary judgment on its second, sixth, tenth, and fourteenth causes of action, and for dismissal of the affirmative defenses and counterclaims is determined as follows:

(1) on the second cause of action, summary judgment is denied as Giuffre Auto Group, LLC;

(2) on the sixth cause of action summary judgment is granted in favor of plaintiff and against defendant Giuffre Hyundai, Ltd., the cause of action is severed, and the Clerk shall enter judgment against defendant Giuffre Hyundai, Ltd. in the amount of $4,309.40, together with interest to be calculated by the Clerk of the Court from the follow dates until entry of judgment as follows :

a) 9% interest on $2,563.98, as of June 30, 2001;

b) 9% interest on $1,593.66, as of October 31, 2003;

c) 9% interest on $151.76., as of January 31, 2005;

and interest thereafter at the statutory rate, and the motion is otherwise denied;

(3) on the tenth cause of action summary judgment is granted in favor of plaintiff and against defendant Giuffre Hyundai of White Plains, Ltd., the cause of action is severed, and the Clerk shall enter judgment against defendant Giuffre Hyundai of White Plains, Ltd. in the amount of $5,219.11, together with interest to be calculated by the Clerk of the Court from the follow dates until entry of judgment as follows: [*7]

a) 9% interest on $1,644.75 as of January 31, 2004; b) 9% interest on $2,500 as of April 30, 2004;c) 9% interest on $434.28 as of June 30, 2004;d) 9% interest on $81.84 as of July 31, 2004;e) 9% interest on $558.24 as of August 31, 2004;

and interest thereafter at the statutory rate, and the motion is otherwise denied;

(4) on the fourteenth cause of action partial summary judgment is denied as against defendant Giuffre Suzuki of White Plains, LLC;

(5) summary judgment is granted dismissing the affirmative defenses; and

(6) summary judgment is granted dismissing the counterclaims; and it is further

ORDERED that defendants' cross motion is denied.

Dated:10/29/07

New York, New YorkENTER:

s/

J.S.C.