In Florida, There Can Be an Upside to Bounced Checks

A statutory tool that is sometimes applicable in collections actions is the worthless check statute. The statute provides that, where a person makes payment with a check or debit card but the paying institution refuses the check or debit card transaction because of lack of funds, lack of credit, or lack of an account, or because the person making payment stops payment on the check or debit card transaction with intent to defraud, the person who made the payment with the check or debit card may be liable for the amount of the payment that was not honored plus triple the amount of the payment plus court costs and the attorney’s fees of the person to whom the payment was issued but refused.

In Big Bang Miami Entertainment, LLC v. Moumina, Case No. 3D13-2234 (Fla. 3d DCA 2014), Big Bang Miami Entertainment, LLC (“Big Bang”) borrowed money from Ayman Moumina (“Moumina”). Big Bang gave Moumina a promissory note, agreeing to repay the amount borrowed. Carlos Ojeda (“Ojeda”), apparently was the “CEO and president” of Big Bang. Ojeda gave Moumina a personally guaranty on the promissory note.

On January 11, 2013, three checks were given to Moumina for the full amount due under the promissory note. The account holder identified on the checks was Big Bang Miami Entertainment, LLC. Ojeda signed each of the checks, although nothing on the checks indicated that he had signed them as a representative of Big Bang. The checks were dishonored for insufficient funds.

Prior to filing suit, Moumina served Big Bang and Ojeda with a notice required by Florida Statutes, section 68.065. In the notice, Moumina informed that the checks were dishonored and provided Big Bang and Ojeda 30 days to tender payment in cash for the full amount dishonored plus statutorily established service fees. The notice also warned that failure to pay that amount would entitle Moumina to file suit for the dishonored checks, plus three times the amount of the dishonored checks, court costs, reasonable attorney fees, and any related bank fees incurred. Big Bang and Ojeda apparently did not comply with the notice and did not make good on the checks. Moumina filed suit.

Neither Big Bang nor Ojeda responded to the complaint. The court entered a default judgment against both of them. Both Big Bang and Ojeda filed to have the trial court set aside the judgments, arguing that the judgments were void. The trial court denied the motions. Big Bang and Ojeda appealed.

The appellate court ruled that the judgment against Big Bang was valid and, therefore, affirmed the trial court’s ruling as to Big Bang. However, the appellate court determined that, because the complaint that Moumina had filed against Ojeda did not properly plead a cause of action against Ojeda, the judgment entered against Ojeda based on that complaint was void.

Under Florida law, when an authorized individual signs a check on behalf of an entity, the individual is not required to indicate on the check that she is signing the check in the her representative capacity. That is, the authorized individual signing the check does not have to indicate agency status. Additionally, by signing a company check, only the company is bound. The authorized individual who signs the check is not. The problem with Moumina’s complaint against Ojeda was that it did not include a claim based on Ojeda’s personal guaranty but, instead, alleged that Ojeda was personally liable on the three checks that were drawn on Big Bang’s account.

If you have ever seen a lawsuit, you may have been astonished at the variety of “counts” alleged and defendants sued. The Big Bang case provides an example of why attorneys frequently cast a wide net in their complaints. Doing the opposite by taking a streamlined approach might miss the target who will get the judgment paid.

Because Ojeda was authorized to sign the three dishonored checks drawn on Big Bang’s account, the judgment against him was reversed. However, Moumina used Florida Statute, section 68.065 to obtain a valid judgment against Big Bang for four times the amount lent to Big Bang and probably obtained an award of interest, attorney’s fees, and court costs as well. The statute inflicts quite a hefty penalty for issuing worthless checks. Of course, the trick after obtaining a judgment is collecting on it. But, since the judgment against Big Bang was obtained by default, i.e., without any opposition in the trial court, it is likely that Moumina made relatively little investment to get the judgment. That can make investing money to collect on the judgment more palatable.

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