Opinion
Index No. 651788/2023 Motion Seq. No. 001
09-13-2024
SUGATAN, INC., Plaintiff, v. SBLA BEAUTY, INC., Defendant.
Unpublished Opinion
MOTION DATE 09/26/2023
DECISION + ORDER ON MOTION
HON. LOUIS L. NOCK JUSTICE
The following e-filed documents, listed by NYSCEF document numbers (Motion 001) 5, 6, 7, 8, 9,10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 28, 29, 30, 31,32, 33, 34, 35, 36, 37, 38, 39, 40, and 41 were read on this motion for SUMMARY JUDGMENT.
Upon the foregoing documents, plaintiffs motion for summary judgment on the complaint is granted as to the third cause of action for an account stated, for the reasons set forth in the moving and reply papers (NYSCEF Doc. Nos. 6, 7, 40) and the exhibits attached thereto, in which the court concurs, as summarized herein. Defendant's cross-motion for leave to amend the answer and for partial summary judgment is granted to the extent of dismissing the second cause of action for unjust enrichment and/or quantum meruit as duplicative of the first cause of action for breach of contract, and is otherwise denied.
Pursuant to a Master Services Agreement (the "MSA") dated January 25, 2021, plaintiff undertook to provide certain advertising services to defendant, a maker of beauty products (MSA, NYSCEF Doc. No. 8). As relevant to the instant motion, the MSA provides that plaintiffs services "shall be provided by staff possessing the required skills and experience and that the Services shall be performed in a professional and workmanlike manner" (id, § 5 [a]). Defendant's "sole and exclusive remedy for [plaintiffs] breach of [plaintiffs] warranty shall be that [plaintiff] will reperform the non-compliant Services, or fix any non-compliant Deliverable" and will refund the cost paid by defendant for any such service or deliverable if plaintiff cannot reperform (id., § 5 [d]). Any claim under this provision requires written notice to plaintiff (id., § 5 [e]). Either party could terminate the agreement upon 30 days written notice of a breach and failure to correct (id., § 2 [b]). Upon termination, defendant agreed to pay for any services rendered through the date of termination.
Beginning in March of 2022, defendant began raising concerns about how plaintiff was managing the advertising services defendant had paid for (NYSCEF Doc. Nos. 32-35). It is difficult to form a full picture of how the conversations proceeded, as defendant has only provided snapshots of conversations on various media from March and April 2022. Finally, on May 1, 2022, and without the requisite notice of a material breach, defendant terminated the MSA (termination email, NYSCEF Doc. No. 9). There was an email exchange between the parties, during which defendant's principal stated to plaintiffs principal that defendant would "settle up" as to any outstanding amounts (NYSCEF Doc. No. 15). Plaintiff then informed defendant that there was an outstanding balance of $130,669.25 for services already rendered prior to termination, across four invoices dated May of 2022 (demand email, NYSCEF Doc. No. 10; invoices, NYSCEF Doc. Nos. 11-14). The record contains no evidence that defendant disputed the invoices post-receipt or paid the outstanding balance. On March 14, 2023, plaintiff sent defendant a pre-arbitration demand pursuant to the MSA's dispute resolution provisions. Defendants did not respond, and plaintiff then commenced this action.
Summary judgment is appropriate where there are no disputed material facts (Andre v Pomeroy, 35 N.Y.2d 361, 364 [1974]). The moving party must tender sufficient evidentiary proof to warrant judgment as a matter of law (Zuckerman v City of N.Y., 49 N.Y.2d 557, 562 [1980]). "Failure to make such prima facie showing requires denial of the motion, regardless of the sufficiency of the opposing papers" (Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986] [internal citations omitted]). Once a movant has met this burden, "the burden shifts to the opposing party to submit proof in admissible form sufficient to create a question of fact requiring a trial" (Kershaw v Hospital for Special Surgery, 114 A.D.3d 75, 82 [1st Dept 2013]). "[I]t is insufficient to merely set forth averments of factual or legal conclusions" (Genger v Genger, 123 A.D.3d 445, 447 [1st Dept 2014] [internal citation omitted]). Moreover, the reviewing court should accept the opposing party's evidence as true (Hotopp Assocs. v Victoria's Secret Stores, 256 A.D.2d 285, 286-287 [1st Dept 1998]), and give the opposing party the benefit of all reasonable inferences (Negri v Stop & Shop, 65 N.Y.2d 625, 626 [1985]). Therefore, if there is any doubt as to the existence of a triable fact, the motion for summary judgment must be denied (Rotuba Extruders v Ceppos, 46 N.Y.2d 223, 231 [1978]).
Turning first to defendant's cross-motion for partial summary judgment, defendant asserts that plaintiffs claims for unjust enrichment and/or quantum meruit, and account stated, are impermissibly duplicative of the cause of action for breach of the MSA. The existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter" (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 N.Y.2d 382, 388 [1987]). Here, the parties do not dispute the existence or the applicability of the MSA, and the cause of action for unjust enrichment and/or quantum meruit must be dismissed as duplicative. As to the account stated claim, however, as the Appellate Division, First Department, has recently reaffirmed, "an account stated is an independent cause of action that can be asserted simultaneously with a breach of contract claim and that an account stated claim should not be dismissed as duplicative of a breach of contract claim" (Aronson Mayefsky & Sloan, LLP v Praeger, 228 A.D.3d 182, 187 [1st Dept 2024]). As defendant offers no other argument as to why the account stated claim should be dismissed, its motion is denied on that point.
Turning to plaintiffs motion for summary judgment on its claims for breach of contract and account stated, plaintiff has established prima facie entitlement to summary judgment on its claim for an account stated. "An account stated is an agreement, independent of the underlying agreement, regarding the amount due on past transactions" (Duane Reade v Cardinal Health, Inc., 21 A.D.3d 269, 269-70 [1st Dept 2005]). "The receipt and retention of an account, without objection, within a reasonable period of time, coupled with an agreement to make partial payment, gives rise to an account stated entitling the moving party to summary judgment in its favor" (Morrison Cohen Singer & Weinstein, LLP v Ackerman, 280 A.D.2d 355, 356 [1st Dept 2001]). Thus, where a party retains invoices for a sufficient period of time without objection, an account has been stated (Musical Elecs., Ltd. v U.S. Elecs., Inc., 74 A.D.3d 691, 692 [1st Dept 2010]).
Here, the invoices in question are dated April 4 and May 2, 2022 (NYSCEF Doc. Nos. 11-14). As averred by plaintiffs Director of Finance, Josh Schleifer, defendant has never objected to the invoices, either before or after terminating the agreement (Schleifer aff, NYSCEF Doc. No. 6, ¶¶ 8-9). In this regard, the MSA provides that defendant must object to invoices within 10 days of receipt of the invoice, pay any undisputed amounts, and explain the reasons for the dispute (MSA, NYSCEF Doc. No. 8, § 4 [d]). The affidavit of defendant's Executive Vice President, Robert Koyman, lists certain complaints that defendant had regarding plaintiffs services; but does not identify any timely disputes to specific invoices, as required by the MSA. Indeed, approximately ten months after termination, plaintiff sent a pre-arbitration demand that defendant ignored. Thus, whether or not plaintiff failed to deliver its services in the contractually required manner, defendant's failure to object to the invoices in the time required, or indeed at any time thereafter, entitles plaintiff to summary judgment on its claim for an account stated. At best, defendant has raised issues of fact regarding plaintiff s claim for breach of the MSA, which do not bar summary judgment with regard to the account stated claim.
Finally, defendant's cross-motion for leave to amend the answer is denied. Leave [to amend] shall be freely given upon such terms as may be just" (CPLR 3025[b]). Absent undue delay, prejudice, or surprise, and provided the proposed amendment arises from the same transactions and occurrences as the original complaint, the motion should be granted (Fellner v Morimoto, 52 A.D.3d 352, 353 [1st Dept 2008]). A court must first, however, examine the merits of the proposed amendment (Pier 59 Studios, L.P. v Chelsea Piers, L.P., 40 A.D.3d 363, 365-66 ). Leave should not be granted where the proposed new cause pleading is "palpably insufficient or patently devoid of merit" (Yong Soon Oh v Hua Jin, 124 A.D.3d 639, 640 [2d Dept 2015]). Here, the proposed amended answer includes additional factual allegations regarding plaintiffs asserted breaches of the MSA. However, because an account stated claim is a separate agreement from that on the underlying claim, defendant's proposed amended answer would not provide a defense to the account stated claim even if defendant could establish that plaintiff failed to perform under the MSA as required. It is defendant's failure to timely object to the invoices that is the basis for plaintiffs entitlement to summary judgment, and the proposed amended answer does not set forth any timely objections to plaintiffs invoices. The proposed amendment is, therefore, palpably insufficient.
Accordingly, it is hereby
ORDERED the plaintiffs motion for summary judgment is granted as to the third cause of action for an account stated, and defendant's cross-motion is granted to the extent of dismissing the second cause of action for unjust enrichment and/or quantum meruit and otherwise denied; and it is further
ORDERED that the Clerk of the Court is directed to enter judgment in favor of plaintiff and against defendant in the amount of $130,669.25, with interest thereon at the statutory rate from May 1, 2022, through entry of judgment, as calculated by the Clerk, together with costs and disbursements as taxed by the Clerk upon submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff s claim for attorneys' fees is denied. A party may not recover its own attorneys' fees absent a contract, statute, or court rule that allows such recovery (e.g. Ambac Assur. Corp, v Countrywide Home Loans, Inc., 31 N.Y.3d 569, 584 [2018]). Plaintiff does not submit any such provision allowing them to recover attorneys' fees.
This constitutes the decision and order of the court.