Imperial Merchant v. Hunt ( 2008 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
IMPERIAL MERCHANT SERVICES, INC.,  No. 07-15976
a California corporation doing
business as Check Recovery D.C. No.
Systems, CV-06-07795-MJJ
Plaintiff-Appellant,  Northern District
of California,
v.
San Francisco
BRADY G. HUNT,
ORDER
Defendant-Appellee.

Filed May 12, 2008
Before: Stephen S. Trott and Sidney R. Thomas,
Circuit Judges, and Michael R. Hogan,* District Judge.
ORDER
We respectfully certify the following question to the
Supreme Court of California as set forth in the attached
request:
1. May a debt collector recovering on a dishonored
check impose both a service charge under sec-
tion 1719 of the California Civil Code and pre-
judgment interest under section 3287 of the
California Civil Code?
We stay all further proceedings in this case in this Court
and the district court pending receipt of the answer to the cer-
*The Honorable Michael R. Hogan, United States District Judge for the
District of Oregon, sitting by designation.
5243
5244 IMPERIAL MERCHANT SERVICES v. HUNT
tified question. If the Supreme Court of California declines
certification, we will resolve the issue according to our per-
ception of California law.
The Clerk of the Court is hereby directed to file in the Cali-
fornia Supreme Court, under official seal of the United States
Court of Appeals for the Ninth Circuit, an original and ten
copies of this Request with a certificate of service on the par-
ties pursuant to California Rules of Court 8.548(d). Further-
more, pursuant to California Rules of Court 8.548(c), the
parties and amici are directed to file with the Supreme Court
of California copies of all briefs and excerpts of record sub-
mitted to this Court. This case is withdrawn from submission
until further order of this Court.
REQUEST FOR CERTIFICATION DIRECTED TO
THE SUPREME COURT OF CALIFORNIA
Pursuant to Rule 8.548 of the California Rules of Court, a
panel of the United States Court of Appeals for the Ninth Cir-
cuit, before which this appeal is pending, hereby certifies to
the Supreme Court of California the previously identified
question of law. The California courts provide no controlling
precedent on this question. The answer to the certified ques-
tion will be determinative of this appeal. We respectfully
request that the Supreme Court of California answer the certi-
fied question presented below. Our phrasing of the issue
should not restrict the Court’s consideration of the issue.
I. Caption of the Case
The caption of the case is:
IMPERIAL MERCHANT SERVICES v. HUNT 5245
IMPERIAL MERCHANT 
SERVICES, INC., a California No. 07-15976
corporation doing business as
Check Recovery Systems, D.C. No.
CV-06-07795-MJJ
Plaintiff-Appellant,
 Northern District
of California,
v.
San Francisco
BRADY G. HUNT,
ORDER
Defendant-Appellee.

Counsel for the parties are as follows:
Clark Garen, Law Offices of Clark Garen, Palm Springs,
California, for the plaintiff-appellant.
O. Randolph Bragg, Horwitz, Hortwitz & Assoc., Chicago,
Illinois; Paul Arons, Friday Harbor, Washington; for the
defendant-appellee.
II. Question of Law to be Answered
1. May a debt collector recovering on a dishonored
check impose both a service charge under sec-
tion 1719 of the California Civil Code and pre-
judgment interest under section 3287 of the
California Civil Code?
III. Statement of Facts
Plaintiff/Appellant Imperial Merchant Services, d.b.a.
Check Recovery Systems (“CRS”), appeals the district court’s
affirmance of a bankruptcy court’s partial grant of summary
judgment against Defendant/Appellee Brandy Hunt. Hunt
5246 IMPERIAL MERCHANT SERVICES v. HUNT
wrote a $137.15 check to Pak n’ Save, which was returned
unpaid due to insufficient funds. Safeway, Inc., which oper-
ates Pak n’ Save, referred Hunt’s check to CRS for collection.
CRS then sent Hunt a letter demanding payment of the check,
along with a $35 service charge, and $7.26 in interest. Subse-
quently, Hunt filed a Voluntary Petition for Bankruptcy, and
CRS initiated an adversary proceeding in the action, challeng-
ing the dischargeablity of Hunt’s check. The Bankruptcy
Court granted a judgment of non-dischargeability to CRS on
the dishonored check and held that CRS was entitled to a
judgment for the check amount, a $35 service charge pursuant
to section 1719 of the California Civil Code, and costs. The
bankruptcy court found that CRS was not additionally entitled
to pre-judgment interest. CRS filed an appeal in the district
court of the Northern District of California, challenging the
portion of the district court’s decision that denied prejudg-
ment interest. The district court affirmed. Hunt v. Check
Recovery Sys., 478 F.Supp.2d 1157, 1159 (N.D. Cal. 2007).
CRS then filed an appeal with this Court.
IV. The Need for Certification
All parties agree that the instant litigation is of the utmost
importance to California creditors, California consumers, and
the California economy. The only issue for resolution is one
of state law. Federal courts are bound by the pronouncements
of the state’s highest court on applicable state law. Davis v.
Metro Productions, Inc., 885 F.2d 515, 524 (9th Cir. 1989).
However, the decisions of California appellate courts provide
no controlling precedent on this issue of state law; thus, this
case satisfies the criteria for certification. See Cal. Rules of
Court 8.548(a). Resolution of the state law issue involved in
this litigation will have a substantial effect on California law
and the citizens of California, not only on the question pres-
ented by this case, but in future debt collection actions. There-
fore, principles of comity suggest that decisions about
California state law be made by California courts.
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