TeleRecovery of Louisiana, Inc. v. Rayborn

Citations: 814 So. 2d 688; 2001 La.App. 1 Cir. 0358; 2002 La. App. LEXIS 911; 2002 WL 468033Docket: No. 2001 CA 0358

Court: Louisiana Court of Appeal; March 27, 2002; Louisiana; State Appellate Court

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The appeal concerns the monetary award to TeleRecovery of Louisiana, Inc. against Kenneth Rayborn for dishonored checks issued to the Belle of Baton Rouge casino. The plaintiff, as assignee of the casino, filed a collection suit on October 13, 1998, claiming Rayborn wrote three checks totaling $5,000, which were returned by the bank marked "Account Closed." The plaintiff sought double damages under La. R.S. 9:2782, amounting to $10,000, along with service charges, attorney fees, legal interest, and court costs. After Rayborn failed to respond, a preliminary default judgment was entered on June 11, 1999. However, when the trial court confirmed the default judgment on November 10, 2000, the awarded amount was reduced to the face value of the checks ($5,000) while still including other charges. The plaintiff appealed for an increase, arguing the trial court erred by not awarding the statutory double amount. The court did not provide written reasons for the reduction, and there is no record of oral explanations. Under the applicable statute at the time, the drawer of a dishonored check is liable for double the amount due if payment is not made within 30 days of a written demand.

A payee is entitled to charge the drawer of a dishonored check a service fee, capped at either fifteen dollars or five percent of the check's face value, whichever amount is greater, upon making a written demand for payment. To initiate recovery, the payee must send a written demand via certified or registered mail to the drawer's address as indicated on the check. The demand must include specific details about the dishonored check and provide the drawer thirty days to pay the total amount owed, which includes the original check amount plus the service charge. Failure to pay within this period allows the payee to file a civil action for twice the check's value or a minimum of one hundred dollars, along with court costs and reasonable attorney fees. 

Notice sent through certified or registered mail is considered sufficient, and if the notice is returned to the sender, it serves as prima facie evidence that the drawer was aware the check would not be honored. Relevant case law indicates that gambling markers qualify as checks under Louisiana's NSF check statute, making them enforceable. The primary legal issue revolves around whether the trial court erred in not awarding double the dishonored check's value, based on the defendant's account being closed at the time of dishonor. The statute encompasses checks dishonored due to insufficient funds, which includes situations where an account is closed, rendering the check effectively without funds. Legal interpretation requires that all relevant sections of the statute be considered to avoid any portion becoming redundant.

Interpreting a statute primarily involves determining the legislature's intent behind its enactment. Under La. R.S. 9:2782, damages for dishonored checks, including those due to a closed account, are permitted, provided statutory requirements are met. Recovery of double the amount owed can only be denied if these prerequisites are not strictly followed. Specifically, subsection C(3) establishes that if a written demand for payment, sent via certified or registered mail, is returned, it serves as prima facie evidence of the drawer's knowledge of dishonor, given it is sent to the address on the check within a reasonable time. The necessary elements for double recovery include a written demand outlining dishonor notification and penalties, certified or registered mail delivery, correct address usage, proof of receipt, and non-payment within thirty days after receipt.

In this case, the demand letter was incorrectly addressed, failing to meet the strict statutory requirements, leading to inconsistencies in the trial court's judgment. Consequently, if double recovery is unavailable, associated fees would also be unjustified. However, the court cannot alter the judgment for the defendant as they did not appeal or respond to the appeal. The trial court's judgment is affirmed, with costs of the appeal charged to the plaintiff-appellant, TeleRecovery of Louisiana, Inc. Additionally, typographical errors regarding dates and the request for increased attorney’s fees were noted, with the latter deemed abandoned due to lack of briefing. Lastly, amendments to La. R.S. 9:2782 in 1999 included changes to time frames for demands and the introduction of a posted notice requirement.

An apparent conflict exists between the concurring opinion in the Major case and the Court of Appeal's holding in State v. Dean regarding the application of La. R.S. 15:428, which establishes that a dishonored check is prima facie evidence that the drawer lacked sufficient funds. The jurisprudence review highlights a case, Sangid v. Fleming, where checks were returned marked 'Account Closed.' The court amended the judgment to reflect only the face amount of the checks, denying attorney's fees due to the claimant's failure to comply with the NSF statute's requirements, particularly regarding the demand letter that must grant thirty days for payment and warn of potential liabilities. The demand letter was sent nearly two years after notice of dishonor was received, raising concerns about reasonable time. Subsection C(2) states that mailing a notice to the address on the instrument is considered receipt, but discrepancies in the addresses listed in evidence complicate matters. The demand was received by a third party, with no proof that the defendant received it, leading to a conclusion that a necessary element was missing and making further consideration of potential double recovery unnecessary.