• A Primer on Bounced Check Penalties Available Under Ohio Civil Law
  • April 13, 2017 | Author: Andrew C. Voorhees
  • Law Firm: Weltman, Weinberg & Reis Co., L.P.A. - Cleveland Office
  • Many business owners have dealt with the frustration of being paid with a check that bounces due to insufficient funds in the customer's bank account. This is particularly heinous when the check was used to pay for goods or services already performed. If the business owner is lucky, the bounced check was accidental and is cleared up immediately. But what if the customer doesn't pay? What if they stop returning phone calls and emails?

    Can I Sue?
    Passing bad checks is a criminal offense, however, police officers may not place a high priority on solving check fraud cases. Fortunately, Ohio law provides civil recourse on bounced checks. Ohio Civil Rule 2307.60 permits a civil lawsuit to be filed on cases involving criminal acts, and says:

    (A)(1) Anyone injured in person or property by a criminal act has, and may recover full damages in, a civil action unless specifically excepted by law, may recover the costs of maintaining the civil action and attorney's fees if authorized by any provision of the Rules of Civil Procedure or another section of the Revised Code or under the common law of this state, and may recover punitive or exemplary damages if authorized by section 2315.21 or another section of the Revised Code.

    Can claims, such as for attorney’s fees and punitive fees, be made on bounced checks? Ohio Revised Code 2307.61 permits a civil lawsuit to be filed for willful damage or theft for those offenses specifically mentioned in Ohio Revised Code 2913.01. Ohio Revised Code 2913.01 specifically identifies Ohio Revised Code 2913.11 as a “theft offense.”

    Ohio law, under Ohio Revised Code 2913.11, outlines the theft offense of “passing bad checks” and says no “person, with purpose to defraud, shall issue or transfer or cause to be issued or transferred a check or other negotiable instrument, knowing that it will be dishonored or knowing that a person has ordered or will order stop payment on the check or other negotiable instrument.”1

    Not only does the law’s prohibition of passing bad checks fall within the scope of Ohio Revised Code 2307.60 and .61 in permitting civil penalties in theft offenses, but the law offers additional aid for the bounced check recipient. Ohio Revised Code 2913.11 explains what a “check” is and says:

    (A) As used in this section: (1) "Check" includes any form of debit from a demand deposit account, including, but not limited to any of the following:

    (a) A check, bill of exchange, draft, order of withdrawal, or similar negotiable or non-negotiable instrument;

    (b) An electronic check, electronic transaction, debit card transaction, check card transaction, substitute check, web check, or any form of automated clearing house transaction.

    The law includes electronic checks and transactions. And the law holds the drawer and signer of the check liable. Ohio Revised Code 2913.11(C) says:

    (C) For purposes of this section, a person who issues or transfers a check or other negotiable instrument is presumed to know that it will be dishonored if either of the following occurs:

    (1) The drawer had no account with the drawee at the time of issue or the stated date, whichever is later;

    (2) The check or other negotiable instrument was properly refused payment for insufficient funds upon presentment within thirty days after issue or the stated date, whichever is later, and the liability of the drawer, indorser, or any party who may be liable thereon is not discharged by payment or satisfaction within ten days after receiving notice of dishonor.

    The law provides more teeth for the enforcement of a bad check claim by assuming the check will not be honored. While this assumption is rebuttable, the law allows ways to pressure the bad check writer to make payment.

    Getting Paid
    Now that bounced check claims can lead to civil penalties, what specific damages are allowed by law? Ohio Revised Code 2307.61 says:

    (b) Liquidated damages in whichever of the following amounts is greater:

    (i) Two hundred dollars;

    (ii) Three times the value of the property at the time it was willfully damaged or was the subject of a theft offense, irrespective of whether the property is recovered by way of replevin or otherwise, is destroyed or otherwise damaged, is modified or otherwise altered, or is resalable at its full market price.

    The law also permits "reasonable administrative costs," "the costs of maintaining the civil action" and "reasonable attorney's fees" to be collected.2 In sum, a successful civil lawsuit over a bad check could lead to (1) three times the face value of the check, (2) administrative costs (bad check fees), (3) attorney’s fees, (4) and any court costs in maintaining the action.

    It is important to note these claims for money for bad checks are not automatic. Ohio law requires the plaintiff to provide a written statement to the person(s) who wrote the bad check. In order to possibly recover the above-described damages in a civil action, the recipient of the bad check must ask in writing for payment at least 30 days prior to suing. This request must be sent via certified mail and contain the following:

    (1) The willful property damage or theft offense that the person allegedly committed;

    (2) That, if the person makes payment of the amount specified in the demand within thirty days after its service upon the person or enters into an agreement with the property owner during that thirty-day period for that payment and makes that payment in accordance with the agreement, the person cannot be sued by the property owner in a civil action in relation to the willful property damage or theft offense;

    (3) That, if the person fails to make payment of the amount specified in the demand within thirty days after the date of its service upon the person and fails to enter into an agreement for that payment with the property owner during that thirty-day period or enters into an agreement for that payment with the property owner during that thirty-day period but does not make that payment in accordance with the agreement, the person may be sued in a civil action in relation to the willful property damage or theft offense;

    (4) The potential judgment that the person may be required to pay if the person is sued in a civil action in relation to the willful property damage or theft offense and judgment is rendered against the person in that civil action;

    (5) That, if the person is sued in a civil action by the property owner in relation to the willful property damage or theft offense, if the civil action requests that the person be required to pay the reasonable administrative costs, if any, of the property owner that have been incurred in connection with actions taken pursuant to division (A)(2) of this section, the cost of maintaining the action, and reasonable attorney's fees, and if the person prevails in the civil action, the person may recover from the property owner reasonable attorney's fees, the cost of defending the action, and any compensatory damages that can be proved.

    Failure by the bad check recipient to send the written request with all required information may result in forfeiting all claims for money and even in dismissal of the civil lawsuit.3

    Payment Options
    The law, under Ohio Revised Code 2307.61, provides one other way for the person who passed the bad check to avoid civil penalties. The bad check recipient cannot sue for the additional civil penalties if the person who passed the bad check sends full payment, or agrees to a payment plan covering the money owed, within the 30-day period after the notice was sent.

    An Attorney Can Help
    While the frustration and annoyance of having to deal with a bad check can cost a business owner considerable resources, fortunately, Ohio law does provide some relief. As the goal should be to have the bad check paid for in full as quickly as possible, the law provides leverage to help with this, so long as all parts of the law are followed correctly. Contact a commercial collections attorney today for additional information on this law and for aid in following each of these steps accurately.

    Andrew C. Voorhees is an attorney in the Commercial Collections Group of Weltman, Weinberg & Reis Co., LPA, which provides comprehensive collection, legal and collateral recovery services to companies with commercial accounts. He is a graduate of the University of Akron School of Law, and a member of the Ohio State Bar Association and Akron Bar Association. Mr. Voorhees has been selected for six consecutive editions of Ohio Rising Stars (2012-17) by Super Lawyers Magazine.

    1 Ohio Revised Code 2913.11(B)
    2 Ohio Revised Code 2307.61(A)(2)
    3 Ohio Revised Code 2307.61(C)