Court Opinion

ID: 2774038
Source: CourtListenerOpinion
Date Created: 2015-01-28 16:00:30.557006+00
Date Added: 2024-06-11T11:27:52.682599
License: Public Domain

14-1119
     Consolidated Energy Design Inc. v. The Princeton Club of New York

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 28th day of January, two thousand fifteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                ROBERT D. SACK,
 8                CHRISTOPHER F. DRONEY,
 9                              Circuit Judges.
10
11       - - - - - - - - - - - - - - - - - - - -X
12       Consolidated Energy Design Inc.,
13                Plaintiff-Appellant,
14
15                    -v.-                                               14-1119
16
17       The Princeton Club of New York,
18                Defendant-Appellee.
19       - - - - - - - - - - - - - - - - - - - -X
20
21       FOR APPELLANT:                        MICHAEL T. STOLPER, The Stolper
22                                             Group, LLP, New York, New York.
23
24       FOR APPELLEE:                         JOEL C. MACMULL, with John B.
25                                             Simoni, Jr., on the brief, Goetz
26                                             Fitzpatrick LLP, New York, New
27                                             York.
28

                                                  1
 1        Appeal from a judgment of the United States District
 2   Court for the Southern District of New York (Forrest, J.).
 3
 4        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
 5   AND DECREED that the judgment of the district court be
 6   AFFIRMED IN PART and REVERSED IN PART.
 7
 8        Consolidated Energy Design Inc. (“CED”) appeals from
 9   the judgment of the United States District Court for the
10   Southern District of New York (Forrest, J.), granting
11   defendant-appellee The Princeton Club of New York’s (“the
12   Club” or “the Princeton Club”) motion to dismiss for failure
13   to state a claim upon which relief can be granted. We
14   assume the parties’ familiarity with the underlying facts,
15   the procedural history, and the issues presented for review.
16
17        This diversity action, governed by New York law, arises
18   out of a dispute over an unpaid invoice for approximately
19   $250,000 worth of energy consulting work that CED claims to
20   have performed for the Princeton Club in 2007. CED raises
21   two arguments on appeal: (1) that the district court erred
22   in holding that its breach of contract claim was
23   time-barred, and (2) that the district court erred in
24   dismissing CED’s account stated claim on the basis that the
25   Club disputed CED’s invoice within a reasonable time.
26
27        We review de novo a district court’s grant of a motion
28   to dismiss for failure to state a claim, accepting all
29   factual allegations as true and drawing all reasonable
30   inferences in favor of the plaintiff. Lotes Co. v. Hon Hai
31   Precision Indus. Co., 753 F.3d 395, 403 (2d Cir. 2014). “To
32   survive a motion to dismiss, a complaint must contain
33   sufficient factual matter, accepted as true, to ‘state a
34   claim to relief that is plausible on its face.’” Ashcroft
35   v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp.
36   v. Twombly, 550 U.S. 544, 570 (2007)).
37
38        1. In New York, “[a]s a general principle, the statute
39   of limitations begins to run when a cause of action accrues,
40   that is, when all of the facts necessary to the cause of
41   action have occurred so that the party would be entitled to
42   obtain relief in court.” Hahn Auto. Warehouse, Inc. v. Am.
43   Zurich Ins. Co., 18 N.Y.3d 765, 770 (N.Y. 2012) (internal
44   citation and quotation marks omitted). In a breach of
45   contract action, “a claim generally accrues at the time of
46   the breach.” Id. Specifically, “where the claim is for
47   payment of a sum of money allegedly owed pursuant to a

                                  2
 1   contract, the cause of action accrues when the party making
 2   the claim possesses a legal right to demand payment.” Id.
 3   (internal quotations marks omitted); see also New York
 4   C.P.L.R. § 206(a) (“[W]here a demand is necessary to entitle
 5   a person to commence an action, the time within which the
 6   action must be commenced shall be computed from the time
 7   when the right to make the demand is complete.”).
 8
 9        The Princeton Club takes the view that the limitations
10   period began on the day that CED terminated its work. CED,
11   on the other hand, is vague about what it believes to be the
12   triggering date: sometimes it suggests that the invoice date
13   is controlling, other times it suggests that the limitations
14   period commences a “reasonable period of time after issuing
15   [an] invoice.”
16
17        In any event, New York law is clear: “the cause of
18   action accrues when the party making the claim possesses a
19   legal right to demand payment,” Hahn, 18 N.Y.3d at 770--not
20   on the actual demand date, and certainly not a “reasonable
21   time” thereafter.
22
23        In this case, CED had a “legal right to demand payment”
24   as soon as it completed its work under the oral contract.
25   See, e.g., Hahn, 18 N.Y.3d at 770. So, the limitations
26   period began on the final date of the actual work. See,
27   e.g., Phillips Constr. Co. v. City of New York, 61 N.Y.2d
28   949, 951 (N.Y. 1984) (“The Statute of Limitations prescribed
29   in [C.P.L.R. § 213(2)] began to run on completion of the
30   actual physical work even though incidental matters relating
31   to the project remained open.”). Hence, in this case, the
32   statute of limitations began to run on October 12, 2007, and
33   CED’s breach of contract claim is time-barred.
34
35         For these reasons, the district court’s dismissal of
36   CED’s breach of contract claim is affirmed.
37
38        2. CED also brings a claim for an account stated. To
39   state such a claim under New York law, “the plaintiff must
40   plead that: (1) an account was presented; (2) it was
41   accepted as correct; and (3) [the] debtor promised to pay
42   the amount stated.” IMG Fragrance Brands, LLC v. Houbigant,
43   Inc., 679 F. Supp. 2d 395, 411 (S.D.N.Y. 2009) (internal
44   quotation marks omitted). Importantly, “[t]he second and
45   third requirements . . . may be implied if ‘a party
46   receiving a statement of account keeps it without objecting
47   to it within a reasonable time.’” Id. (quoting LeBoeuf,

                                  3
 1   Lamb, Greene & MacRae, LLP v. Worsham, 185 F.3d 61, 64 (2d
 2   Cir. 1999)).
 3
 4        The Club argues that even accepting all of the
 5   allegations in the complaint as true, the only plausible
 6   inference is that the Club objected to the invoice in a
 7   timely manner. The district court agreed. We do not, and
 8   reverse.
 9
10        The complaint alleges that CED “submitted an invoice to
11   the club for the services rendered,” which reflected “full
12   and true accounts of the indebtedness due and owing by the
13   Club.” Compl. ¶¶ 38-39. The complaint then alleges that
14   “[t]he invoice was delivered to and received and retained by
15   the Club without any objection to the contents of said
16   statements.” Id. ¶ 39; see also id. ¶ 2 (“Defendant ignored
17   the invoice, without basis or explanation.”); id. ¶ 20 (“Mr.
18   Hines opted to ignore the invoice.”). These allegations are
19   sufficient to state a claim for an account stated: (1) “the
20   account was presented,” IMG Fragrance, 679 F. Supp. 2d at
21   411, and “[t]he second and third requirements” are “implied”
22   because the “party receiving a statement of account ke[pt]
23   it without objecting to it within a reasonable time.” Id.
24   (internal quotation marks omitted).
25
26        The district court referred to allegations of fact
27   which, if proved, would show that the parties met to discuss
28   the invoice, and concluded that “[t]hese facts demonstrate
29   that the parties disputed payment of the invoice.”
30   Possibly. But if the Club did not pay the invoice even
31   after CED’s owner followed up by telephone, by email, and by
32   in-person meeting, as alleged, that does not compel the
33   inference that the district court drew in the Club’s favor.
34   Another possible inference is that the Club never actually
35   objected, but was simply stalling. That would support an
36   account-stated cause of action. Because both inferences are
37   plausible based on the facts alleged in the complaint,
38   drawing all inferences in the plaintiff’s favor as we must,
39   the account-stated claim was adequately pled, and dismissal
40   of the complaint on this basis was improper.
41
42        Finally, the district court also relied on a comment
43   from CED’s owner, suggesting that the Club objected to the
44   invoice in 2011. But CED submitted the invoice in 2008, so
45   any objection in 2011--three years later--appears not to
46   have come within a “reasonable” amount of time under New
47   York law. See, e.g., Kramer, Levin, Nessen, Kamin & Frankel

                                  4
 1   v. Aronoff, 638 F. Supp. 714, 720 (S.D.N.Y. 1986) (holding
 2   that three years of silence after receipt of an invoice
 3   “amounts to an implied acquiescence to the stated account”
 4   under New York law). At the very least, the
 5   “reasonableness” of the belated objection should not be
 6   resolved against the plaintiff at the motion-to-dismiss
 7   stage.
 8
 9        For the foregoing reasons, and finding no merit in the
10   parties’ other arguments, we hereby AFFIRM IN PART, REVERSE
11   IN PART, and REMAND for further proceedings consistent with
12   this order.
13
14                              FOR THE COURT:
15                              CATHERINE O’HAGAN WOLFE, CLERK
16

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