Illinois Supreme Court Rejects Account Stated Theory Where Invoices Were Disputed

PATRICK ENGINEERING, INC. v. City of Naperville, Ill: Supreme Court 2012 - Google Scholar:

An account stated can be an easy way to collect a bill.  To recover the creditor must show that the debtor and the creditor agreed that the invoices were correct.  The Illinois Supreme Court defined it in these terms:

"¶ 56 "An account stated has been defined as an agreement between parties who have had previous transactions that the account representing those transactions is true and that the balance stated is correct, together with a promise, express or implied, for the payment of such balance." W.E. Erickson Construction, Inc. v. Congress-Kenilworth Corp., 132 Ill. App. 3d 260, 267 (1985). Further, "an account stated cannot be created merely by furnishing an account unless the creditor or debtor specifically intends to establish a balance due or to agree upon a final settlement to date between the parties."Toth v. Mansell, 207 Ill. App. 3d 665, 672 (1990). That is, an account stated is "merely a final determination of the amount of an existing debt," and an action for an account stated is founded upon a promise to pay that debt, not the original promise to pay under the contract. Motive Parts Co. of America, Inc. v. Robinson, 53 Ill. App. 3d 935, 941 (1977)."

Here the plaintiff, an engineering firm, sued the City of Naperville under an account stated theory.  The Supreme Court held that the account stated count did not state a claim because the amount was disputed.  The discussion lists all of the flaws that can doom an account stated claim to failure.

"¶ 57 Because of the discrepancy between the amounts allegedly billed and the amounts actually billed, count IV does not present a true and correct statement of the account between the parties. Additionally, because the fifth and final invoice never provided to the City a final statement of account, indicating the total amount owed by the City, count IV does not, and cannot, allege that the City promised to pay that amount. Although count IV contains an allegation that the City never objected to the five invoices, and consequently the City acknowledged their correctness, count I contains allegations that the City "failed to approve the invoices" and "failed and refused to pay" for Patrick Engineering's services. The City never acquiesced to the invoices; there was simply no meeting of the minds. We affirm the trial court's decision to dismiss count IV."

Comment: an account stated is a great legal theory because the plaintiff avoids litigation about the performance of the plaintiff.  Where the account is disputed, the account stated theory will not work.  The account stated theory might have worked in this case if there was a final invoice listing the total amount and if the city did not object to the invoice.

Edward X. Clinton, Jr.

www.clintonlaw.net

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