By Robert Harrison
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Attorneys have a curious aversion to small claims court. Perhaps because it is mistakenly perceived as a mock court, or because attorneys generally cannot appear there, or because the jurisdictional limit is low, lawyers seldom advise their clients to consider this forum to advance their rights.
Many claims of the largest and smallest clients, however, can be more safely, expeditiously and economically resolved in the small claims court than in the regular civil court. Attorneys should, consequently, consider it an ethical duty to counsel their clients about the option of small claims court and to assist them to maximize their chances of success there.
The object of this article and self-study test is to provide an introduction to small claims court, including the relief available, common remedial statutes that impose civil penalties often used in small claims courts, and proof of service issues.
The small claims court is a court of law. Replacing the original justice courts, the small claims court was established by the Legislature not as a separate court, but as a division of the superior court just like probate and family courts. Code of Civil Procedure Sections 116.110 et seq. It is presided over by judges, commissioners, and attorneys serving as temporary judges, all of whom are fully trained in the law and small claims procedure. CCP Section 116.240; Govt. Code Section 72190.
While the pleadings and evidentiary hearings in small claims court are less formal than those found in limited and general jurisdiction cases (CCP Sections 116.310 and 116.510), the issues are still decided according to law, not whim. An attorney's advice and assistance to a client before the small claims hearing is expressly sanctioned by the Legislature. CCP Section 116.530(c).
Most advantages of small claims court are obvious. Fees are minimal, discovery and related motion expense is avoided, cases come to court quickly after filing and service, and there is no right to a jury, even on appeal. CCP Sections 116.230, l16.310(b), 116.330 and 116.770(b). A business can generally appear by any nonattorney employee with knowledge of the facts (the exception being sole proprietorships, but even they can appear through an employee if the dispute is based on an account that can be proven based upon business records). CCP Section 116.540.
Judgments can include both monetary awards and equitable relief in the form of rescission, restitution, reformation and specific performance; the judgment can further be conditioned upon the performance of certain acts by either party. CCP Section 116.220(b). Monetary awards are generally limited to $5,000 when a business is the plaintiff, $10,000 if the plaintiff is an individual.
The jurisdiction of the small claims court to issue injunctions or other equitable relief was clarified in 2009 by the addition of subdivision (a)(5) to CCP Section 116.220 in cases where "a statute expressly authorizes a small claims court to award that relief." (Emphasis added.) The legislative bill also contained the language that nothing in the revision of the statute was intended to enlarge or encourage the extension of the jurisdiction of the small claims court to issue injunctions.
One such statute is Business and Professions Code Section 6412.1. This statute expressly allows injunctive or equitable relief to be obtained in a small claims court against a legal document preparer or unlawful detainer assistant who violates the code. Another is Section 17593(b), which allows a small claims court to issue an injunction against a defendant violating the federal "do not call list." The injunction is enforced by filing a new small claims action where the court can award up to $1,000 per violation of the injunction.
Advantages Big and Small
Appeals are severely limited, and small claims judgments are enforceable under the same procedures available for all civil judgments. CCP Sections 116.720, 116.780(a), and 116.820. Other advantages are more subtle.
Small claims court is an ideal place to test doubtful claims, where there is little or no written evidence. If the client loses, there is no liability for the other side's costs; even on appeal, the superior court can only minimally compensate the defendant for attorney fees and lost time (up to $300 total). CCP Section 116.780(c).
Because the cases are quickly and informally resolved without discovery and the assistance of counsel, small claims judgments have no collateral estoppel effect (except among the same parties regarding an identical claim). Perez v. Superior Court, 27 Cal. 3d 875 (1980) (homeowner could not relitigate city's
right to charge trash fees where city obtained two prior small claims judgments against homeowner for payment of fees); Pitzen v. Superior Court, 120 Cal. App. 4th 1374 (2004) (driver could not later cross-complain against second driver after losing small claims action against same driver); see also Allstate Ins. Co. v. Mel Rapton Inc., 77 Cal. App. 4th 901 (2000) (insurer's subrogation claim barred by prior small claims judgment obtained by insured for uninsured damages).
Significantly, a small claims case cannot serve as the basis for a claim for malicious prosecution. Pace v. Hillcrest Motor Co., 101 Cal. App. 3d 476 (1980). If the client loses, there is no risk of becoming mired in further litigation.
Additionally, the speed and low cost of small claims court makes it attractive when a defendant's ability to pay is uncertain, or where cases can be proved with simple documentation. While the jurisdictional limit for each individual small claims case is superficially low, nothing prohibits a plaintiff from filing a series of cases against the same parties based upon different obligations. For instance, if a defendant is delinquent on multiple invoices, separate claims could be filed on each invoice. Since a business can file two claims each calendar year up to $5,000 (generally $10,000 for natural persons) and an unlimited number of cases up to $2,500, the aggregate recovery against a defendant can be quite large. CCP Sections 116.220, 116.221 and 116.231.
Indeed, the "small" in small claims can be a misnomer. In a traffic collision, the driver and each passenger can each seek up to $7,500 (CCP 116.224); four plaintiffs would yield an amount in controversy typical of a general jurisdiction court. Many small claims courts will allow separate claims for bodily injury and property damage, each with a $7,500 limit, because California has long treated such claims as separate causes of action. See Holmes v. David H. Bricker, 70 Cal.2d 786 (1969); Sanderson v. Niemann, 17 Cal. 2d 563 (1941) (wife's joinder in small claims judgment for property damage did not preclude her subsequent personal injury case).
A party can also sue for all installments due under a contract at the time of filing, and can file new claims as later installments become due. Cf. Lekse v. Municipal Court, 138 Cal. App. 3d 188 (1982) (holding that landlord could not split claims for past due rent owed at time of filing into separate cases in order to stay within small claims jurisdiction). This will work unless the client has declared an acceleration of the debt (such as through a demand letter).
Small claims court is also well suited to press claims under a number of remedial statutes that impose civil penalties, many in lieu of having to demonstrate actual damages which in some cases might be difficult. These statutes, sprinkled throughout the federal and state codes, cover sundry topics; some examples are:
Treble damages up to $1,500 for passing a bad check (Civ. Code Section 1719)
- $750 for each misuse of another's identity (Civ. Code Section 3344)
- $1,000 for failing to provide access to the disabled (Civ. Code Section 54.3)
- $4,000 for unlawful discrimination (Civ. Code Section 52)
- $2,500 for negligent and $5,000 for willful disclosure of HIV status (H&S Code Section 120980)
- $5,000 for selling altered or refurbished sports trading cards without disclosure (Bus. & Prof. Code Section 21671)
- $500 for any improper cash or lobbyist political contribution or expense (Govt. Code Section 91005)
- $500 for junk faxes (47 U.S.C. Section 227; Kaufman v. ACS Systems Inc., 110 Cal. App. 4th 886 (2003); Bus. & Prof. Code Section 17538.43)
- Up to $2,000 for each act of unlawful retaliation by a residential landlord (Civ. Code Section 1942.5)
In small claims, the attorney can provide enormously valuable assistance, before doing so, however, attorneys must familiarize themselves with the idiosyncrasies of the Small Claims Act, including issues concerning service of process. For example, while personal jurisdiction rules are the same for civil actions generally, consumer contract clauses providing for jurisdiction outside of California are void. CCP Section 116.225.
Service must normally be achieved physically within the borders of California, and if attempted by certified mail, the receipt must actually be signed by the person to be served. CCP Section 116.340. Businesses using a fictitious business name must present a written declaration that the name was registered, and be prepared to prove it if challenged. CCP Section 116.430. The claim form on a debt should contain a statement showing each payment and charge on the account. CCP Section 116.222. An assignee, which is construed broadly to include anyone standing in the shoes of the original creditor, cannot bring suit in small claims court. CCP Section 116.420; Merchants Service Co. v. Small Claims Court, 35 Ca1. 2d 109 (1950) (holding that a factor was considered an assignee precluding its small claims action).
CCP Section 12c provides that when any act must be done a specified number of days before a hearing, the last day to do the act shall be determined by counting backward from the hearing date, excluding the date of the hearing. So, if it were not already clear, this is the method to use for determining when service must be completed before a small claims hearing; i.e., 15 days for a plaintiff's claim (CCP Section 116.340(b)).
With the relative ease and safety of small claims court, attorneys should reexamine their reluctance to advise and assist their clients in using this alternative forum. In the end, clients will appreciate your concern about their pocketbooks, will learn first-hand about the litigation process, and in the future should be more willing to have the attorney handle cases suited to the superior court's limited and general jurisdiction.
Robert Harrison is a commissioner in Los Angeles County Superior Court.