I have a certified check issued by chase bank by a chase customer…

I have double checked and you can sue Chase in this.

Cashiers checks are accepted by the drawee bank when they are signed by an employee; i.e., at the moment of issuance. The bank cannot revoke its acceptance by stopping payment. That is one of the principal reasons why cashiers checks are generally required at real estate closings; the issuer of the item is irrevocably committed to making the payment. The remitter's or payee's perspective is not relevant; neither is liable on the item and neither can stop payment on it.

Section 3-411(b)(i) of the UCC explains how to calculate damages if a bank "...wrongfully refuses to pay a cashier's check or certified check." In many circumstances, a holder in due course on the cashiers check on which payment is refused would be entitled to compensation for expenses, interest and consequential damages in addition to the amount of the item.

Section 3-312 of the UCC controls the reissuance requirements. As you indicate, the remitter or payee is to execute the declaration of loss. After 90 days, if the item has not been presented, the bank is obligated to reissue the check. If the original check is presented later, the drawee bank may return it unpaid using "previously paid under declaration of loss" or "reissued under 3-312" as a reason for return. Even though the bank that replaced the check has been discharged on the item by replacing it under the terms of the statute, returning the check "payment stopped" is simply wrong. (In order to get the check to reject, you might have to put a stop payment on your system, but don't confuse the mechanics with the legalities.) Again, please check the parallel provision of your state's UCC to make certain the language is comparable.

Paragraph 3-312 was added to the UCC both to protect consumers and to give banks clear guidance on how to replace a cashiers check without enhancing their own liability. Measures used prior to its 3-312's passage included indemnification agreements and indemnification bonds.

An indemnification agreement is a simple contract between the bank and the party seeking to have the check replaced. According to its normal language, the customer agrees to make the bank whole if the original check is ever presented.

The value of the indemnification agreement depends on the customer's willingness to pay and ability to pay when the day comes. Obviously, that varies substantially based on the amount and the person involved. My personal opinion is that an indemnification agreement does not reduce the risk involved in any measurable way.

An indemnification bond is issued by an insurance company. The customer buys the bond at his own expense. If the original check ever shows up, the insurance company promises to make the bank whole. Such bonds are expensive and nearly impossible to get.

Banks who want to avoid all this commonly 1) pre-print a notice on the customer's copy of the cashiers check indicating it will not be replaced for 90 days if it is lost or 2) sell checks that do not meet the definition of a cashiers check; e.g. one drawn on the bank, but signed by the customer. (Such an instrument is often called a money order, but that term has no specific meaning under the UCC.)

Can I take chase to small claims, if so how do I file against them?

Yes. You would file suit against Chase for violation of the UCC and not cashing the check.

How do they get served?

You would file suit at the local small claims court where the bank branch is located and they would serve Chase.

Can I file in the city and state where I live. I don't know what to do.

 

No, you have to file suit at the Chase branch who refused to cash the check.



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