Update: the demand letter was delivered on March 3, and, surprise surprise, LL has not sent us a check. So it looks like we will be suing to get our $1013 back.
Two questions for this group:
(1) Can we cash the check he DID send without it negatively affecting our case? I feel like I read somewhere that cashing a check was akin to agreeing/accepting the amount sent.
(2) Should we sue for (treble) damages (treble = $3039), or just the amount we are owed from our security deposit? How can/should we account for the travel expenses we will incur to go fight this in California?
What a pain!
Correct, do not cash the check.
In California, this topic actually presents an interesting potential application of the doctrine of "implied repeal". In modern times, when a legislature changes the statutory law, it explicitly repeals the old statute. However, historically speaking, legislatures were less reliable about explicitly repealing the old law, so there was a well-known principle in the common law that if a new law on a topic is passed, the old statute is implicitly repealed to the extent of the inconsistency, even though the legislature doesn't make the repeal explicit. This principle is also part of the law in the USA, although it rarely comes up because legislatures are pretty good about explicitly repealing old laws.
However, this check cashing topic in California is actually an example where the legislature failed to repeal an old law.
Cal. Civ. Code § 1526 provides that cashing a check marked payment in full generally
does not result in settlement of the dispute if the creditor strikes out the notation on the face or the check or cashes the check without knowledge of the notation. This statute was enacted in 1987.
On the other hand, Cal. Commercial Code § 3311 provides that generally if the creditor cashes a check tendered in full payment of the claim and amount of the claim was unliquidated or subject to a
bona fide dispute, then the claim is fully settled. This statute was enacted in 1992.
One statute tells you that cashing the check ends the dispute. The other one tells you it does not. This situation is indicative of pretty poor work on the part of the legislature, but the doctrine of implied repeal tells us that the passage of the 1992 statute probably implicitly repealed the 1987 one, meaning that the 1992 statute is probably the law in California.
Another interesting point is that the 1992 statute provides that the claim has to be unliquidated or subject to a
bona fide dispute in order for the check to be an effective means of settling the claim. A claim for the recovery of an illegally withheld security deposit would appear to be a claim for liquidated damages, although it is not entirely clear. Although the landlord clearly disputes whether he owes the OP the security deposit, the
bona fides of that dispute are up for debate. The landlord would appear to have no legally cognisable argument against returning the security deposit in full. If the claim is for a liquidated amount and there is no
bona fide dispute over that amount, then cashing the check is safe even under the 1992 statute.
That said, I would certainly not recommend cashing the check, and this post should not be interpreted as advice to cash the check -- it is just discussion of some interesting arguments.