smallclaimsdepartment.com
NSF Checks, What to do? Go after Treble Damages!
December 2010
2ndnsf
714 W. Olympic Blvd. #639
Los Angeles, California 90015
Dear Clients, Friends, Affiliates,

How many of you have been burned by NSF checks? Most of us get on the phone and contact the maker of the check and make arrangements. However, what if the individual or company that wrote the check has suddenly disconnected their phone and/or won't return your e-mails or letters. Unfortunately for me, this scenario has played out many times over the last 20 years. Many of you are aware of the Treble Damages laws in California pertaining to collection on NSF checks. However, I also know that many of you are not aware. I write this because we have processed scores of Small Claims cases whereby the Plaintiff is only asking for the face amount of the check. If you follow the correct procedure, you can file a Small Claims suit for the face amount of the check, plus Treble Damages (up to 3 times the amount of the check!!) What are Treble Damages?? Read Below!

Sincerely,

David Laneaux
President
smallclaimsdepartment.com
smallclaims@aaasvc.com

nsfcheck imageCollect Treble Damages on NSF Checks
So you've tried to contact the individual or company that has written you an NSF Check. Your letters, calls, e-mails have gone unanswered. What to do? Well, did you know that the maker of the check can be liable for the amount of the check plus three times the amount? Here's the shortened version. The full text of the law is posted below this article.
  • Mail a written demand via Certified mail to the person/company that includes: the provisions of CCP Code Sec. 1719, the amount of the check and the amount of the service charge payable to the payee and the cost to send the Certified Letter.
Click here for a sample letter
  • If this person/company fails to pay in full the amount of the check, the service charge payable to the payee, and the costs to mail the written demand within 30 days from the date demand letter was sent, the writer of the check will than be liable for:
1. The amount of the check
2. The Bank Service charge
3. The cost to send the Certified Letter
4. Treble Damages in the amount
of no less than $100 nor more than $1,500.

What does this really mean? Here's an example:

A client gives you an NSF check for $250. You send the demand letter and the client does not respond within 30 days from the day the letter was mailed.

Here's the amount you can now recover
:

1. $250.00 check
2. $35.00 your bank service fee
3. $6.00 cost to send certified letter
4. $750.00 treble damages (3 X the amount of check)
________
Total $1,041.00



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Here's a few sections of the applicable Code of Civil Procedure (CCP)for you experts.
Article Subtitle
TITLE 5. EXTINCTION OF CONTRACTS
PART 3. OBLIGATIONS IMPOSED BY LAW
SECTION 1719

SEC. 1719 - California Civil Code:

(a)

(1) Notwithstanding any penal sanctions that may apply, any person who passes a check on insufficient funds shall be liable to the payee for the amount of the check and a service charge payable to the payee for an amount not to exceed twenty-five dollars ($25) for the first check passed on insufficient funds and an amount not to exceed thirty-five dollars ($35) for each subsequent check to that payee passed on insufficient funds.

(2) Notwithstanding any penal sanctions that may apply, any person who passes a check on insufficient funds shall be liable to the payee for damages equal to treble the amount of the check if a written demand for payment is mailed by certified mail to the person who had passed a check on insufficient funds and the written demand informs this person of (A) the provisions of this section, (B) the amount of the check, and (C) the amount of the service charge payable to the payee. The person who had passed a check on insufficient funds shall have 30 days from the date the written demand was mailed to pay the amount of the check, the amount of the service charge payable to the payee, and the costs to mail the written demand for payment. If this person fails to pay in full the amount of the check, the service charge payable to the payee, and the costs to mail the written demand within this period, this person shall then be liable instead for the amount of the check, minus any partial payments made toward the amount of the check or the service charge within 30 days of the written demand, and damages equal to treble that amount, which shall not be less than one hundred dollars ($100) nor more than one thousand five hundred dollars ($1,500). When a person becomes liable for treble damages for a check that is the subject of a written demand, that person shall no longer be liable for any service charge for that check and any costs to mail the written demand.

(3) Notwithstanding paragraphs (1) and (2), a person shall not be liable for the service charge, costs to mail the written demand, or treble damages if he or she stops payment in order to resolve a good faith dispute with the payee. The payee is entitled to the service charge, costs to mail the written demand, or treble damages only upon proving by clear and convincing evidence that there was no good faith dispute, as defined in subdivision (b).

(4) Notwithstanding paragraph (1), a person shall not be liable under that paragraph for the service charge if, at any time, he or she presents the payee with written confirmation by his or her financial institution that the check was returned to the payee by the financial institution due to an error on the part of the financial institution.

(5) Notwithstanding paragraph (1), a person shall not be liable under that paragraph for the service charge if the person presents the payee with written confirmation that his or her account had insufficient funds as a result of a delay in the regularly scheduled transfer of, or the posting of, a direct deposit of a social security or government benefit assistance payment.

(6) As used in this subdivision, to "pass a check on insufficient funds" means to make, utter, draw, or deliver any check, draft, or order for the payment of money upon any bank, depository, person, firm, or corporation that refuses to honor the check, draft, or order for any of the following reasons:

(A) Lack of funds or credit in the account to pay the check.

(B) The person who wrote the check does not have an account with the drawee.

(C) The person who wrote the check instructed the drawee to stop payment on the check.

(b) For purposes of this section, in the case of a stop payment, the existence of a "good faith dispute" shall be determined by the trier of fact. A "good faith dispute" is one in which the court finds that the drawer had a reasonable belief of his or her legal entitlement to withhold payment. Grounds for the entitlement include, but are not limited to, the following: services were not rendered, goods were not delivered, goods or services purchased are faulty, not as promised, or otherwise unsatisfactory, or there was an overcharge.

(c) In the case of a stop payment, the notice to the drawer required by this section shall be in substantially the following form:

... [ see, USLF form CA-402N ] ...

(d) In the case of a stop payment, a court may not award damages or costs under this section unless the court receives into evidence a copy of the written demand that, in that case, shall have been sent to the drawer and a signed certified mail receipt showing delivery, or attempted delivery if refused, of the written demand to the drawer's last known address.

(e) A cause of action under this section may be brought in small claims court by the original payee, if it does not exceed the jurisdiction of that court, or in any other appropriate court. The payee shall, in order to recover damages because the drawer instructed the drawee to stop payment, show to the satisfaction of the trier of fact that there was a reasonable effort on the part of the payee to reconcile and resolve the dispute prior to pursuing the dispute through the courts.

(f) A cause of action under this section may be brought by a holder of the check or an assignee of the payee. A proceeding under this section is a limited civil case. However, if the assignee is acting on behalf of the payee, for a flat fee or a percentage fee, the assignee may not charge the payee a greater flat fee or percentage fee for that portion of the amount collected that represents treble damages than is charged the payee for collecting the face amount of the check, draft, or order. This subdivision shall not apply to an action brought in small claims court.

(g) Notwithstanding subdivision (a), if the payee is the court, the written demand for payment described in subdivision (a) may be mailed to the drawer by the court clerk. Notwithstanding subdivision (d), in the case of a stop payment where the demand is mailed by the court clerk, a court may not award damages or costs pursuant to subdivision (d), unless the court receives into evidence a copy of the written demand, and a certificate of mailing by the court clerk in the form provided for in subdivision (4) of Section 1013a of the Code of Civil Procedure for service in civil actions. For purposes of this subdivision, in courts where a single court clerk serves more than one court, the clerk shall be deemed the court clerk of each court.

(h) The requirements of this section in regard to remedies are mandatory upon a court.

(i) The assignee of the payee or a holder of the check may demand, recover, or enforce the service charge, damages, and costs specified in this section to the same extent as the original payee.

(j)

(1) A drawer is liable for damages and costs only if all of the requirements of this section have been satisfied.

(2) The drawer shall in no event be liable more than once under this section on each check for a service charge, damages, or costs.

(k) Nothing in this section is intended to condition, curtail, or otherwise prejudice the rights, claims, remedies, and defenses under Division 3 (commencing with Section 3101) of the Commercial Code of a drawer, payee, assignee, or holder, including a holder in due course as defined in Section 3302 of the Commercial Code, in connection with the enforcement of this section.


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All-American Attorney Service, Inc. was founded in 1993. Most of our clients were (and are) attorneys utilizing our firm for various court filing and Service of Process purposes. At the same time, we have been assisting individuals and companies in all aspects of the Small Claims court. From filing new cases to levying on bank accounts, we did it all. Almost three years ago smallclaimsdepartment.com was created to be a dedicated website for "everything" Small Claims. There is no other website in California that offers as many Small Claims services as ours.

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714 W. Olympic Blvd. #639
Los Angeles, California 90015
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213.746.8010
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