Demand Letter for Payment (California)

CALIFORNIA DEMAND LETTER FOR PAYMENT

Pre-Send California Practice Checklist

☐ Confirm whether this is a consumer debt (incurred primarily for personal, family, or household purposes). If yes, the Rosenthal Fair Debt Collection Practices Act (Cal. Civ. Code § 1788 et seq.) applies, requiring (among other things): no false or misleading representations, no threats of action not intended or not legally permissible, and the mandatory California Senate Bill 1477 / Civ. Code § 1788.52 "venue restriction" in any resulting suit to the county where the obligation was entered into or where the debtor resides.

☐ Confirm statute of limitations under Cal. Code Civ. Proc. § 337 (written contract — 4 years), § 339 (oral contract — 2 years), § 337a (book account — 4 years), or § 338(d) (fraud — 3 years from discovery).

☐ Determine whether amount is below $12,500 (small claims for natural persons) or $6,250 (entities/sole proprietors and more than 2 claims per year) under Cal. Code Civ. Proc. § 116.220 and § 116.231. Small claims require a pre-litigation demand under § 116.320(b)(3).

☐ Confirm whether contract contains an attorney-fee clause. Cal. Civ. Code § 1717 makes any such clause reciprocal.

☐ For construction matters, check whether a 20-day preliminary notice or mechanic's lien / stop notice procedure under Cal. Civ. Code § 8100 et seq. applies instead.

[LAW FIRM OR CREDITOR LETTERHEAD]

VIA CERTIFIED MAIL RETURN RECEIPT REQUESTED
AND VIA EMAIL TO: [____________________]

Date: [__/__/____]

[DEBTOR LEGAL NAME]
[DEBTOR ADDRESS]
[CITY, STATE, ZIP]

Re: Demand for Payment of Past-Due Amount; [BRIEF INVOICE OR CONTRACT REFERENCE]; California Pre-Litigation Notice

Dear [DEBTOR NAME]:

This firm represents [CREDITOR NAME] ("Creditor") in connection with amounts owed by you (the "Debtor") under [DESCRIBE UNDERLYING OBLIGATION, e.g., the Master Services Agreement dated __/__/____] (the "Agreement"). This letter is a formal pre-litigation demand for payment under California law, and satisfies the demand requirement of Cal. Code Civ. Proc. § 116.320(b)(3) should Creditor elect to proceed in the Small Claims Division of the Superior Court of California.

1. Amount Owed

As of [__/__/____], the outstanding balance due from you to Creditor is $[____________________] (the "Outstanding Amount"), itemized as follows:

Prejudgment / Contract Interest. Under Cal. Civ. Code § 3287(a), Creditor is entitled to prejudgment interest from the date on which the Outstanding Amount became certain or capable of being made certain by calculation. Because the Agreement does not specify a contract interest rate [OR specifies __%], interest accrues at the rate of ten percent (10%) per annum pursuant to Cal. Civ. Code § 3289(b). As of the date of this letter, accrued interest equals $[____________________], and interest continues to accrue at the daily rate of $[____________________] until paid in full.

Total Amount Now Demanded: $[____________________]

2. Basis of Obligation

Debtor's obligation to pay arises from:

☐ A written contract — Cal. Code Civ. Proc. § 337 (4-year limitations period, which will not expire before [__/__/____]).
☐ An oral contract — Cal. Code Civ. Proc. § 339 (2-year limitations period).
☐ A book account / open account — Cal. Code Civ. Proc. § 337a (4 years from last entry).
☐ A stated account — Cal. Code Civ. Proc. § 337 (4 years).
☐ A promissory note — Cal. Com. Code § 3118 (6 years).
☐ Other: [________________________________________________________]

A true and correct copy of the underlying [agreement / invoices / account statement] is attached as Exhibit A.

3. Demand

Creditor hereby demands that you remit the Total Amount Demanded within [THIRTY (30)] calendar days of your receipt of this letter, on or before [__/__/____], by one of the following means:

1. Wire transfer to: [BANK NAME], ABA [____________], Account [____________];
2. Cashier's check payable to "[CREDITOR NAME]" and delivered to [ADDRESS]; or
3. ACH credit to [________________________________________].

Partial payment or conditional tender will not constitute an accord and satisfaction unless expressly accepted in writing by Creditor. Cal. Civ. Code § 1526 imposes strict requirements on any tender purporting to be "payment in full"; any such instrument received without the 15-day notice procedure may be retained without prejudice and does not effect a settlement.

4. Consequences of Non-Payment

If you fail to remit the Total Amount Demanded by [__/__/____], Creditor will, without further notice, pursue any and all remedies available under California law, including:

(a) Civil Action in the Superior Court of California, County of [____________________], for breach of contract, common counts (goods sold and delivered, services rendered, money had and received, account stated, open book account), and — where applicable — claims under Cal. Bus. & Prof. Code § 17200 seeking restitution and injunctive relief.

(b) Recovery of:
- the Outstanding Amount in full;
- contract or statutory prejudgment interest at 10% per annum under Cal. Civ. Code § 3289(b), accruing to the date of judgment;
- post-judgment interest at 10% per annum under Cal. Code Civ. Proc. § 685.010;
- reasonable attorney fees to the extent provided by the Agreement or by statute, made reciprocal by Cal. Civ. Code § 1717; and
- recoverable costs of suit under Cal. Code Civ. Proc. § 1033.5.

(c) Possible Small Claims Action. If the Outstanding Amount is within the jurisdictional limit of Cal. Code Civ. Proc. § 116.220 ($12,500 for natural persons; $6,250 for entities or where a plaintiff has filed more than two small claims actions in a year), Creditor may file a small claims action, in which case Debtor will not be permitted to be represented by counsel at trial under § 116.530.

(d) § 998 Offer. Creditor may, in conjunction with suit, serve a statutory offer of compromise under Cal. Code Civ. Proc. § 998, shifting cost-recovery consequences on Debtor if Debtor fails to obtain a more favorable judgment.

(e) Writ of Attachment. If the claim is for a fixed or readily ascertainable amount of more than $500 arising from a contract, Creditor may seek a right-to-attach order and writ of attachment under Cal. Code Civ. Proc. §§ 483.010 et seq.

(f) Judgment Enforcement. Upon entry of judgment, Creditor may pursue wage garnishment (Cal. Code Civ. Proc. § 706.020 et seq.), bank levy, Debtor examinations (§ 708.110), lien on real property (Cal. Code Civ. Proc. § 697.310), and other enforcement remedies under the Enforcement of Judgments Law.

5. Dispute Rights

If you dispute all or any portion of the Outstanding Amount, you must provide Creditor with a written explanation, including supporting documentation, within thirty (30) days of your receipt of this letter. Failure to dispute within that period will be used as evidence of Debtor's acknowledgment of the debt pursuant to Cal. Evid. Code § 1221 (adoptive admission).

6. Rosenthal Act Notice (Consumer Debts Only)

☐ Check if consumer debt. If this obligation is a "consumer debt" (incurred primarily for personal, family, or household purposes), please note:

"The state Rosenthal Fair Debt Collection Practices Act and the federal Fair Debt Collection Practices Act require that, except under unusual circumstances, collectors may not contact you before 8 a.m. or after 9 p.m. They may not harass you by using threats of violence or arrest or by using obscene language. Collectors may not use false or misleading statements or call you at work if they know or have reason to know that you may not receive personal calls at work. For the most part, collectors may not tell another person, other than your attorney or spouse, about your debt. Collectors may contact another person to confirm your location or enforce a judgment. For more information about debt collection activities, you may contact the Federal Trade Commission at 1-877-FTC-HELP or www.ftc.gov."

This notice is included pursuant to Cal. Civ. Code § 1812.700. This communication is from a debt collector and is an attempt to collect a debt; any information obtained will be used for that purpose.

7. Reservation of Rights

This letter is not a waiver, limitation, or election of any right, remedy, or defense. All of Creditor's rights and remedies at law and in equity are expressly reserved. Nothing herein shall toll or extend any limitations period except to the extent required by law.

8. Settlement Communications

Creditor is willing to consider a commercially reasonable structured resolution. Please direct any response to the undersigned at [____________________] by [__/__/____]. Any settlement discussions shall be subject to Cal. Evid. Code § 1152 (offers of compromise are inadmissible to prove liability) and, if mediated, Cal. Evid. Code §§ 1115–1128 (mediation confidentiality).

Govern yourself accordingly.

Very truly yours,

[ATTORNEY NAME], Esq.
CA Bar No. [____________________]
[LAW FIRM NAME]

Encl.: Exhibit A — [Agreement / Invoices / Account Statement]
cc: [CREDITOR CLIENT CONTACT]

Sources and References

• Cal. Code Civ. Proc. §§ 116.220, 116.231, 116.320, 337, 337a, 338, 339, 483.010 et seq., 685.010, 697.310, 706.020, 708.110, 998, 1033.5
• Cal. Civ. Code §§ 1526, 1717, 1788 et seq. (Rosenthal FDCPA), 1812.700, 3287, 3288, 3289
• Cal. Com. Code § 3118
• Cal. Bus. & Prof. Code § 17200
• Cal. Evid. Code §§ 1115–1128, 1152, 1221
• 15 U.S.C. § 1692 et seq. (federal FDCPA) for consumer debts