Help Please - Issue With Client & Possible Check Fraud / Contract Breach

[kalvarez]

California - Palm Springs Area

Hi, I have a question about a situation that we're facing and need some help. We have a small IT business, where we provide a wide range of IT services to clients. Recently, we did some work for a client, for whom we performed services twice for.

The first time that we provided and completed services, the client provided payment in the form of a check and everything cleared and went fine. The second time, upon completion of the services, the client provided us with another check but apparently had put a stop payment on that check without notifying us, we only found out through our banking institution and it's about $2000 worth of invoice due.

When we attempted to contact the client, we found that he had changed his number and has also moved and put his home up for sale. We do not know the new location of residence.

Our question is, in an attempt to collect, can we put anyone on notice, such as his realtor or anyone, to put a hold on the sale of the house (not a lien on the individual himself)? Because at this point we are not able to find him. Any help or guidance with this would be much appreciated.

 

[Zigner]

California - Palm Springs Area

Hi, I have a question about a situation that we're facing and need some help. We have a small IT business, where we provide a wide range of IT services to clients. Recently, we did some work for a client, for whom we performed services twice for.

The first time that we provided and completed services, the client provided payment in the form of a check and everything cleared and went fine. The second time, upon completion of the services, the client provided us with another check but apparently had put a stop payment on that check without notifying us, we only found out through our banking institution and it's about $2000 worth of invoice due.

When we attempted to contact the client, we found that he had changed his number and has also moved and put his home up for sale. We do not know the new location of residence.

Our question is, in an attempt to collect, can we put anyone on notice, such as his realtor or anyone, to put a hold on the sale of the house (not a lien on the individual himself)? Because at this point we are not able to find him. Any help or guidance with this would be much appreciated.

You can't put any type of hold on the sale of his house at this time.
Have you notified the police about the bad check? They may have some sort of bad check unit they can refer you to.

 

[kalvarez]

We have not done that, thank you! Will definitely do that today.

 

[adjusterjack]

Here are the statutes for bad checks in California.

Civil Code 1719:

Law section (ca.gov)

Penal Code 476a:

Law section (ca.gov)

It's a felony. Try reporting to the police first. If they locate him and arrest him you may be able to find out his current location for serving a lawsuit. If you can get a judgment before the house gets sold, the judgment can become a lien on the house.

Act quickly. In today's real estate market, the house could be in contract within a matter of days and close within a month.

 

[kalvarez]

Thank you so much, will do asap!

 

[zddoodah]

Our question is, in an attempt to collect, can we put anyone on notice, such as his realtor or anyone, to put a hold on the sale of the house (not a lien on the individual himself)?

You can put anyone you like on notice of anything you like. However, in the absence of a judgment or right to attach order and consequent service of a writ of execution or attachment (and, in the case of a judgment, the recording of an abstract of judgment), no person whom you might put on notice would have any legal obligation to do anything in response to your notice.

Because at this point we are not able to find him.

Well...what you really mean is that you have not, at this point, been able to contact him. That doesn't mean you lack the ability.

I would suggest two things. First, review Civil Code section 1719 and, if you determine it expedient to do so, send out a demand under that section. Second, file suit in small claims court.

P.S. It is unlikely that the police or district attorney will care much about a check on which the maker has stopped payment. They are only likely to care about NSF checks (which is the only thing to which the Penal Code section previously cited applies).

 

[kalvarez]

Thank you very much, this is very helpful! We were able to contact him via phone through his wife's number yesterday, but he hung up on us after giving us a fake address. We don't know where to send a demand since he's moved and put his home up for sale.

 

[Zigner]

P.S. It is unlikely that the police or district attorney will care much about a check on which the maker has stopped payment. They are only likely to care about NSF checks (which is the only thing to which the Penal Code section previously cited applies).

The penal code section cited above includes the following:

(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

(emphasis added)

Additionally, the California OAG has information here: https://www.oag.ca.gov/consumers/general/bad-checks

 

[kalvarez]

This is so helpful, thank you so much

 

[kalvarez]

Can anyone provide recommendations for how we should proceed with serving the client with the both the demand letter and for small claims if we don't know where he currently resides? We only have the address of the home that he recently put up for sale. Or do we just need to show proof that we sent via certified mail to the address that we do have for him?

 

[zddoodah]

Send the CC 1719 letter to the last known address (which I assume is also the address on the check).

 

[PayrollHRGuy]

Additionally, the California OAG has information here: https://www.oag.ca.gov/consumers/general/bad-checks

This is likely the best avenue to take.

 

[kalvarez]

When we file for small claims, do we put just the check amount or do we ask for punitive damages in the initial filing if fraud is found?

 

[adjusterjack]

Just the check amount. You don't get punitive damages in small claims court. You probably wouldn't get it in regular court either.

 

[Zigner]

Just the check amount. You don't get punitive damages in small claims court. You probably wouldn't get it in regular court either.

Actually, they're not "punitive damages", they are statutory damages and should be included in the demand letter and the eventual small claims suit.

EDIT: Read the statute referred to above. It includes a template for the demand letter.