KIN & Company Inc. v. Matte Projects LLC

Background

KIN & Company Inc. brought claims against Matte Projects LLC for breach of contract and account stated. KIN alleged that Matte failed to pay recruiting fees for candidates KIN introduced, including Shah, Kocourek, Barlage, and Sebban. KIN relied on a December 2019 “Terms of Business Permanent & Contract” and a substantially similar updated version sent in March 2021. KIN did not allege that Matte signed either document.

The terms stated that acceptance could occur by continuing to instruct KIN after receiving the terms. They also described KIN’s services, when a fee would be earned, the fee amounts, and the payment deadline. Matte hired KIN-introduced candidates and requested additional recruiting services. Matte made some partial payments but disputed that it owed the full amounts claimed by KIN.

Matte moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to support a legally plausible claim. The court applied New York law because the parties briefed the motion under that law, even though the term sheets contained California choice-of-law provisions.

Breach of Contract

The court denied Matte’s motion to dismiss the breach-of-contract claim. Under New York law, a plaintiff must allege an agreement, its own performance, the defendant’s breach, and resulting damages.

The court concluded that KIN adequately alleged the existence of an enforceable agreement even without a signature. Under the authorities discussed in the opinion, a party may accept written terms through conduct or acquiescence when it receives the terms, does not clearly object, and accepts the benefits of the other party’s services. KIN alleged that it repeatedly gave Matte the term sheets before performing work, and that Matte accepted KIN’s services, hired candidates KIN provided, and requested further services under the same terms. Those allegations were sufficient at the motion-to-dismiss stage to support an inference that Matte assented to the terms by its conduct.

The court also rejected Matte’s arguments that the terms were too vague to form a contract and that the agreement was barred by New York’s Statute of Frauds. The court found that “engagement” was defined in the term sheets and that “employ” had a commonly understood meaning. It also held that the provision referring to the usury laws of the state where the candidate was employed or engaged did not make the contract impermissibly vague. The court further determined that the parties’ obligations were capable of being performed within one year, so the Statute of Frauds did not bar the claim. The court found Matte’s other arguments insufficient to require dismissal.

Account Stated

An account stated is an alleged agreement about the correctness of an account and the balance owed from prior transactions. To plead this claim, KIN had to allege that it presented an account, Matte accepted it as correct, and Matte promised to pay the stated amount. Acceptance and a promise to pay may sometimes be inferred from retaining an invoice without timely objection or making a partial payment.

The court held that KIN adequately stated an account-stated claim concerning the Shah Invoice. Although Matte said Shah’s start date had been delayed, KIN did not allege that Matte disputed the amount of the invoice. KIN also alleged that Matte said it would pay that amount.

The court also held that KIN adequately stated an account-stated claim concerning the Barlage Invoice. KIN alleged that Matte agreed to pay the invoice in installments and made partial payments toward it.

The court held that KIN adequately stated an account-stated claim concerning the Kocourek Invoice. KIN alleged that Matte received the invoice, did not object to its amount for nearly ten months, and repeatedly promised to pay it. Those allegations supported an inference that Matte accepted the invoice as correct.

The court dismissed the account-stated claim concerning the Sebban Invoice. KIN alleged that Matte objected to the invoice amount on July 31, 2021, shortly after receiving it, by arguing that the fee should be 15 percent rather than 20 percent of Sebban’s salary. Because KIN alleged a timely dispute about the amount owed, the court found that KIN had not adequately pleaded an account stated for that invoice.

Disposition

The court denied Matte’s motion to dismiss the breach-of-contract claim. As to the account-stated claim, the court granted the motion insofar as it sought dismissal of the claim concerning the Sebban Invoice and otherwise denied the motion. The court stated that KIN may move for permission to file an amended complaint concerning the Sebban Invoice, and required any such motion to be filed by July 5, 2023, with a legal memorandum and a marked-up proposed complaint. The case otherwise remained referred to Magistrate Judge Netburn for general pretrial management. The order resolved docket entry no. 10.