California Civil Code 1719 1719. (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:
NOTICE
To: __________________________
(name of drawer)
__________________________ is the payee of a check you wrote
(name of payee)
for $ ________________________. The check was not paid because
(amount)
you stopped payment, and the payee demands payment. You may
have a good faith dispute as to whether you owe the full amount.
If you do not have a good faith dispute with the payee and fail
to pay the payee the full amount of the check in cash, a service
charge of 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
passed on insufficient funds, and the costs to mail this notice
within 30 days after this notice was mailed, you could be sued
and held responsible to pay at least both of the following:
(1) The amount of the check.
(2) Damages of at least one hundred dollars ($100) or, if
higher, three times the amount of the check up to one thousand
five hundred dollars ($1,500).
If the court determines that you do have a good faith dispute
with the payee, you will not have to pay the service charge,
treble damages, or mailing cost. If you stopped payment because
you have a good faith dispute with the payee, you should try to
work out your dispute with the payee.
You can contact the payee at:
__________________________________________________________
(name of payee)
__________________________________________________________
(street address)
__________________________________________________________
(telephone number)
You may wish to contact a lawyer to discuss your legal
rights and responsibilities.
__________________________________
(name of sender of notice)
(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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