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Old West Enterprises, Inc. v. Reno Escrow Co.

    Brief Fact Summary. An attorney assigned a bill for legal services to a collection agency.  The collection agency claimed that the bill was an "account stated."

    Synopsis of Rule of Law. To turn an account rendered into an account stated "because of silence on the part of the one receiving the account, the circumstances must be such as to support an inference of agreement as to the correctness of the account."

    Facts. The Respondent-Plaintiff, Reno Escrow Company (the "Plaintiff"), was a collection agency.  An attorney assigned a claim for legal fees against the Appellant- Defendant, Old West Enterprises, Inc. (the "Defendant") in the amount of $6,836.89 to the Plaintiff.  The Defendant questioned the propriety of the charges.  The Plaintiff claimed the amount owed by the Defendant was an account stated, because the Defendant did not object to the amount of the account rendered.  The lower court granted summary judgment in favor of the Plaintiff.

    Issue. Can the account rendered between an attorney and their client be given the force of an account stated?

    Held. Broadly put, an account stated is "an agreement based upon prior transactions between the parties with respect to the items composing the account and the balance due, if any, in favor of one of the parties."  It can be either express or implied.  In order for an account stated to be effective, "the outcome of the negotiations must be the recognition of a sum due from one of the parties to the other with a promise, express or implied, to pay that balance. The amount or balance so agreed upon constitutes a new and independent cause of action."  To turn an account rendered into an account stated "because of silence on the part of the one receiving the account, the circumstances must be such as to support an inference of agreement as to the correctness of the account. Such an inference may be rebutted."
    •    Based on the facts of this case, the court found that the Defendant had not agreed to the amount.  The court then recognized a special rule when it comes to accounts between attorneys and their clients.  Generally, based on the confidentiality involved in the attorney client relationship, the lawyer must demonstrate that the contract was fair and reasonable.  As such, a triable issue of fact is present and summary judgment is not appropriate at this point.

    Discussion. An account stated in the context of the attorney client relationship is very unique.  "* * * Although a sum due for attorney's services may properly be the subject of an account stated, the omission to object to an account rendered raises only a rebuttable inference that the debtor consents to such account, giving rise to a triable issue; * * * In such a case, the value of the professional services rendered and the amount thereof unpaid are to be assessed before a jury * * *"


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