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Received cease and desist letter from insured

Our company is a contents "personal property" moving and storage facility that contracts with the insured, is referred to the job by insurance or the restoration company. We have a contract with insured, we move out their stuff, store , and move back. The insurance company on this claim stopped paying the bills because they flagged it as possible insurance fraud from the insured and the restoration company. We then had to go after the insured for the outstanding payment for several months and no payment. We then finally placed a lien on their property for the amount after several attempts. Insurance paid the customer a small check for our pack back services and the insured sent us a cease and desist letter (which has so many faulty statements) and will not pay us that check or the remaining balance, And on top of that they want us to withdraw our lien. Can someone call me so i can talk out the situation and possible options or other similar stories?

1 reply

Dec 30, 2019

When a customer (or their insurer) refuses to make payment for work performed, recovering payment is an uphill battle. Filing a mechanics lien can be a powerful step toward getting paid (when lien rights are available). But, if that doesn't do the trick and force payment, then pursuing additional legal remedies may be necessary. And, threats of legal action may be enough to get paid all by themselves.

Last-ditch recovery options before legal action becomes necessary

For one, if there's a valid and enforceable mechanics lien in place, then sending a document like a Notice of Intent to Foreclose may be helpful in jarring payment loose. A Notice of Intent to Foreclose is a threat to proceed with a lien enforcement lawsuit, and thus the possible foreclosure of the property. Considering how serious a lien enforcement suit is, owners will often prefer to resolve the lien claim before a lawsuit becomes necessary. Further, more generic demand letters can be helpful, too. Sending a payment demand letter that puts a deadline on making payment and notifies the recipient that you're prepared to take legal action can do the trick. And, claims like breach of contract, prompt payment claims, or others may be available. Because everyone hates battling a lawsuit, owners will often be willing to come to the bargaining table if they know they won't get away with keeping the insurance check for themselves.

If all else fails, a lawsuit can force a customer to pay

It's not always possible to avoid a lawsuit. Filing suit - whether to pursue the enforcement of a lien claim, contract claims, prompt payment claims, or whatever other claims may be available - is a necessary evil sometimes. Of course, before deciding to pursue any particular course of action, it'd be wise to consult a local construction attorney (such as one of these California Construction Payment Experts). They'll be able to review your situation and advise on the best options for proceeding. Particularly, if a lien enforcement action will be considered, it'd be important to review the filed lien to ensure that it was properly filed with a sound basis for the claim.

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