An-Jung v. Rower LLC, Index No. 152694/18 (New York Co. Sup. Ct. 2018), rev’d 173 A.D.3d 488 (1st Dep’t 2019)

In this negligence and breach of contract action, plaintiff sought damages arising out of alleged excessive and improper billing by defendants over the course of their representation of plaintiff in a divorce and custody matter. Plaintiff alleged that during their one-year engagement, defendants billed her over $145,000, which she paid in full and without objection, even though defendants purportedly “accomplished little to nothing on Plaintiff’s behalf” and “did not appreciably further the interests of Plaintiff in her divorce proceeding.” She asserted a number of causes of action, including professional negligence/legal malpractice, breach of contract, breach of fiduciary duty, unjust enrichment, and fraud, and sought nearly one hundred thousand dollars in compensatory damages for each cause of action.

Defendants moved to dismiss, arguing that the complaint was insufficient as a matter of law because it failed to state a cause of action for professional negligence arising out of defendants’ services. Specifically, it did not properly allege proximate causation or that “but for” defendants’ alleged negligence plaintiff would have achieved a different result in her divorce proceeding. Defendants further contended that plaintiff’s other causes of action were duplicative of her professional negligence/legal malpractice cause of action in that each was based on the exact same facts and asserted the exact same damages as the negligence/malpractice cause of action. Alternatively, defendants argued that, to the extent plaintiff’s breach of contract cause of action was not dismissed as duplicative, plaintiff had, by making payment, acknowledged the validity of defendants’ billings and established them as an account stated, precluding that cause of action. Further, since plaintiff had accepted (and had not objected to) the billings within the required thirty days pursuant to the parties’ retainer agreement, her present allegations were deemed waived.

While the trial court dismissed the professional negligence cause of action, along with the fraud and unjust enrichment causes of action, it denied defendants’ motion with respect to the breach of contract and breach of fiduciary duty causes of action. Defendants appealed.

The Appellate Division, First Department unanimously reversed, granting defendants’ motion to dismiss the remaining breach of contract and breach of fiduciary duty causes of action and dismissing the complaint in its entirety. The First Department held that: 1) the retainer agreement required objections to be raised within thirty days after receipt; 2) plaintiff timely paid all her bills; and 3) plaintiff failed to object until two months after she received the last one. In light of these facts, the appellate court held that the account-stated doctrine precluded plaintiff’s breach of contract action. Additionally, the First Department held that the breach of fiduciary duty cause of action was duplicative and should be dismissed, since it was based on identical allegations and sought identical damages.

This appears to be the first reported decision in the Appellate Divisions of the State of New York where a court utilized the account-stated doctrine to grant a pre-answer motion to dismiss a breach of contract cause of action.

Defendants-Appellants were represented by partner Kenneth M. Labbate and associate Jason L. Ederer.