Imperial Merchant Services Inc. vs. Brady G. Hunt
Filed 9/1/09
Court of Appeals Ninth Circuit
Cite as CV-06-07795-MJJ

Supreme Court Holds No Service Charge for Debt Collectors

Imperial Merchant Services Inc., a California corporation engaged in the business of Check Recovery Systems, tried to recover the service charge under section 1719 and pre-judgment interest, pursuant to section 3287 of the California Civil Code.

But the district and bankruptcy courts ruled that the remedies were exclusive and that Imperial Merchant could not recover damages under both statutes.

On appeal, the main issue which was forwarded for certification to the Supreme Court was, “May a debt collector recovering on a dishonored check impose both a service charge under section 1719 of the California Civil Code and prejudgment interest under section 3287 of the California Civil Code?”

In its reply, the Supreme Court held that the statutory damages prescribed in section 1719 are exclusive in the sense that a debt collector who recovers a service charge pursuant to section 1719 may not also recover prejudgment interest under section 3287.”

Thus, the Court of Appeals affirmed the decision of the district and bankruptcy court and Imperial Merchant cannot recover service charge nor prejudgment interest on a dishonored check.