HOUSE BILL REPORT

                  HB 1771

                    As Passed Legislature

Title:  An act relating to dishonored checks.

Brief Description:  Requiring a handling fee to be paid when a check is dishonored.

Sponsors:  Representatives Hickel, Basich, Padden, Kremen, Chappell and Carrell.

Brief History:

  Committee Activity:

Law & Justice:  2/21/95, 2/28/95 [DP].

Floor Activity:

Passed House 3/14/95, 87-11.

Passed Legislature.

HOUSE COMMITTEE ON LAW & JUSTICE

Majority Report:  Do pass.  Signed by 16 members:  Representatives Padden, Chairman; Delvin, Vice Chairman; Hickel, Vice Chairman; Appelwick, Ranking Minority Member; Campbell; Carrell; Chappell; Cody; Lambert; McMahan; Morris; Robertson; Sheahan; Smith; Thibaudeau and Veloria.

Minority Report:  Do not pass.  Signed by 1 member:  Representative Costa, Assistant Ranking Minority Member.

Staff:  Bill Perry (786-7123).

Background:  Damages are statutorily provided for the holder of a bad check.   These damages are in addition to recovery of the value of the check itself and a reasonable handling fee.

If the holder has sent a notice to the drawer of the check, and the drawer has not paid within 15 days of the notice, the holder may also recover:

oInterest at 12 percent per year; and

  oUp to the lesser of $40 or the value of the check as collection costs.

If the holder prevails in a lawsuit and has given the 15-day notice, the holder may also recover:

oPrevailing party "costs;"

  oReasonable attorneys' fees; and

  oUp to the lesser of $300 or the value of the check.

The court "costs" that a prevailing party may recover include:

oFiling fees;

  oService of process fees;

  oService by publication;

oNotary fees;

  oReasonable expenses for reports and records that are introduced at trial; and

  oStatutory attorneys' fees.

"Statutory" attorneys' fees are $125.  "Reasonable" attorneys' fees are set by the court based on a variety of factors including the amount of time spent on a case and the customary hourly rate charged by attorneys in the area.

If the holder of a bad check has filed a lawsuit, but it has not yet gone to trial, the drawer can satisfy the claim by paying:

  oThe face value of the check;

  oA reasonable handling fee;

  oAccrued Interest;

  oUp to the lesser of $40 or the value of the check as collection costs; and

  oIncurred court and service "costs."

There has been some uncertainty about whether statutory attorneys' fees are recoverable as "incurred" costs when a lawsuit has not gone to trial.

Summary of Bill:  The amount that the drawer of a bad check must pay before trial in order to satisfy the claim of a holder who has filed suit is explicitly expanded to include statutory attorneys' fees of $125.

Appropriation:  None.

Fiscal Note:  Not requested.

Effective Date:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  The bill will clarify a situation where some courts now allow these fees, and some do not.

Testimony Against:  None.

Testified:  John Grimm, Washington Collectors Association (pro).