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United Capital Funding Corporation v. New York City Department of Education

January 30, 2012

UNITED CAPITAL FUNDING CORPORATION, PLAINTIFF-APPELLANT,
v.
NEW YORK CITY DEPARTMENT OF EDUCATION, DEFENDANT-THIRD-PARTY-PLAINTIFF-COUNTER-DEFENDANT-APPELLEE, WILLIAM DEASE, THIRD-PARTY-DEFENDANT-COUNTER-CLAIMANT-APPELLEE, RED-E SET GROW P.T.O.T.S.P., LLC, THIRD-PARTY-DEFENDANT-APPELLEE.



Appeal from a judgment of the United States District Court for the Southern District of New York (Sidney H. Stein, Judge).

10-4383-cv

United Capital Funding Corp. v. New York City Dep't of Education, et al.

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.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York, on the 30th day of January, two thousand twelve.

PRESENT: JOSE A. CABRANES, CHESTER J. STRAUB, DEBRA ANN LIVINGSTON, Circuit Judges.

UPON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the District Court is AFFIRMED.

United Capital Funding ("UCF"), a Florida commercial finance company specializing in factoring,*fn1 filed a complaint for an account stated against the New York City Department of Education ("DOE"), seeking recovery of sums allegedly due for services provided to the DOE by Red-E Set Grow, LLC ("RESG"), a vendor providing special education related services to New York City schoolchildren. In its complaint, UCF alleged that the DOE had failed to remit payment of $1,022,372.50 to it for outstanding invoices for services rendered by RESG. Following a bench trial, the District Court entered judgment in favor of the DOE, principally on the grounds that UCF had failed to prove, by a preponderance of the evidence, that the DOE had agreed that UCF's statement of account was correct. We assume the parties' familiarity with the underlying facts and the procedural history of the case.

On appeal from a judgment entered after a bench trial, we review the District Court's findings of fact for clear error and its conclusions of law de novo. Amalfitano v. Rosenberg, 533 F.3d 117, 123 (2d Cir. 2008). In reviewing factual findings for clear error, "we are not allowed to second- guess either the trial court's credibility assessments or its choice between permissible competing inferences." Ceraso v. Motiva Enters., 326 F.3d 303, 316 (2d Cir. 2003); see also Anderson v. City of Bessemer City, 470 U.S. 564, 574 (1985) ("Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous."); Diesel Props. S.r.l. v. Greystone Bus. Credit II LLC, 631 F.3d 42, 52 (2d Cir. 2011) ("It is within the province of the district court as the trier of fact to decide whose testimony should be credited."). "The obligations of the court as the trier of fact are to determine which of the witnesses it finds credible, which of the permissible competing inferences it will draw, and whether the party having the burden of proof has persuaded it as factfinder that the requisite facts are proven." Diesel Properties, 631 F.3d at 52 (quoting Cifra v. General Electric Co., 252 F.3d 205, 215 (2d Cir. 2001)).

I.

"An account stated is a manifestation of assent by debtor and creditor to a stated sum as an accurate computation of an amount due to the creditor." Restatement (Second) of Contracts § 282(1) (1981); see also 1 N.Y. Jur. 2d Accounts & Accounting § 10 (West 2011) (defining "account stated" as "an agreement, express or implied, . . . . independent of [any] underlying agreement, as to the amount due on past transactions."). Under long-settled New York law, which governs in this diversity action, a party who receives an account (that is, a statement that a certain sum is due to another party) is bound to examine it and, if the party agrees that the account is correct, it becomes an "account stated" and is binding on both parties. See Lockwood v. Thorne, 11 N.Y. 170, 173-74 (1854); Interman Indus. Prods., Ltd. v. R.S.M. Electron Power, Inc., 37 N.Y.2d 151, 153 (1975) ("Judge Cardozo wrote as follows: 'the very meaning of an account stated is that the parties have come together and agreed upon the balance of indebtedness . . . so that an action to recover the balance as upon an implied promise of payment may thenceforth be maintained.'") (quoting Newburger-Morris Co. v. Talcott, 219 N.Y. 505, 512 (1916)).

As a general rule, "an account which has been rendered and to which no objection has been made within a reasonable time should be regarded as admitted by the party charged as prima facie correct." Gurney, Becker & Bourne, Inc.. v. Benderson Dev. Co., 47 N.Y.2d 995, 996 (1979). However, "[r]ecovery premised upon an account stated will fail where a dispute about the account can be shown to have existed." Farley v. Promovision Video Displays Corp., 603 N.Y.S.2d 476, 477 (1st Dep't 1993).

II.

Here, the District Court found that UCF sent the DOE a "statement of account" on February 19, 2009, seeking payment of $1,022,372.50 in fees owed to RESG for services rendered. Although the DOE did not immediately object to the February 19 demand after it was received, the District Court found that this did not amount to an implicit agreement to the account because the DOE had already stated its objections to UCF in an e-mail dated February 3, 2009. In that e-mail, the DOE's chief administrator for vendor research informed UCF that there was "serious doubt regarding the legitimacy of [RESG's] billings," which led the DOE to believe that "money may be due back to the DOE." The e-mail further stated that, "[u]ntil the DOE is ...


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