SMALL CLAIMS LAWSUITS REVISTED â€“ YOU NEED TO KNOW YOUR OPTIONS & DEADLINES
A tenant has sued you in small claims court. What do you do? You have three options. First, you can defend yourself. Second, you can consult with us on how to defend the case, and then handle the case yourself. Third, you can retain us to defend you.
Under the small claims rules, there is a deadline for you to decide if you want us to represent you. This deadline is seven days prior to the date in the small claims summons (the court date). Under the rules, if you want us to represent you in small claims court, a Notice of Representation must be filed at least seven days prior to the trial. This rule is absolute. The Courts do not make exceptions. Thus, if you contact us about representation, but we cannot get a Notice of Representation filed seven days before the court date, the Court will not let us represent you.
If you don’t receive the summons until shortly before the court, this means that you will have to make a quick decision about how you are going to handle a small claims case. Equally as important, most small claims courts do not accept electronic filings (somebody must go to the courthouse and physically file the Notice of Representation) and require your original signature on the Notice of Representation. These requirements can add significant time (days) to the process. Accordingly, if you want us to represent you, you should contact us as soon as possible, and keep in mind that we file all court required paperwork two weeks prior to the court date to avoid being up against the deadline. Finally, please keep in mind that if we represent you, the court is almost certain to schedule a new court date. Thus, the date in your summons will most likely not be the court date.
Several factors dictate how a small claims case should be handled. How much money is the tenant claiming you owe? If the tenant is seeking $3,500 or more, you should strongly consider having an attorney represent you because the case can be defended for less than this amount. On the other hand, if the tenant is seeking $500, the cost of defense (attorneys’ fees) will be higher than the amount sought. Basic economics dictate that you shouldn’t pay more in attorney fees than the amount that the tenant is claiming in their small claims case, or any case for that matter.
No set dollar amount dictates whether you should have attorney representation. However, generally, the more damages a tenant seeks, the more you should lean towards involving us. The attorneys’ fees you pay us may or may not be recoverable in a small claims case pursuant to your lease. Some small claims courts have awarded attorneys’ fees and others have not. While we can’t guarantee the court will award attorneys’ fees or that you will be able to collect them, we try to get an award of attorneys’ fees added to the principal judgment in small claims cases that we handle. Regardless of the amount of money at stake, some clients feel more comfortable if we handle the case, or want us to handle because they have better things to do with their time.
Some clients elect to defend their small claims matter after consulting with us. The obvious advantage is that you will incur significantly less attorneys’ fees if you elect to consult with us about a small claims matter. The consultation involves reviewing the file, meeting with you to discuss applicable law, key legal arguments, and strategy. If the case isn’t complicated, you may just need to be briefed on the law, and some advice about presenting the case. The consultation is billed hourly and provides you with face-to-face attorney time for reviewing your documents and discussing the strategy to defend your case. The consultation option is ideal for smaller to mid-range dollar amount cases, and for limited issue cases because it minimizes your attorneys’ fees. This option is also appropriate for clients who prefer handling cases themselves.
Small claims cases can involve tenant files that have been placed with a collection agency. If you are sued in small claims court, you should always determine if the file is at a collection agency. If a tenant’s file has been placed for collection, you should promptly contact the collection agency and determine if the collection agency is going to handle the small claims case. Unfortunately, most (nearly all in our experience) collection agencies will not handle a small claims case even though it stems from the lease on which they are collecting. If the file has been placed for collection, and the collection agency isn’t going to handle the small claims case, you should recall the file from the collection agency.
Regardless of what the collection agency tells you, you have the absolute right to recall a collection file. If an agency won’t defend the small claims case and gives you a hard time about recalling the file, you should look for a new collection agency. You should always recall the file in writing, and issue clear written instructions to the collection agency to cease any efforts to collect the debt. Written recall and cease instructions are critical to avoid disputes. You should order the collection agency to cease collecting the debt because the debt will now become a counterclaim in the small claims case.
Regardless of how the small claims case is handled, you should assert any debt owed to you, by the tenant, as a counterclaim in the small claims case. Asserting a counterclaim in a small claims case also gives you leverage to get the tenant to settle, and may ultimately reduce any judgment awarded in favor of the tenant. Prior to asserting the tenant’s debt as a counterclaim, you should evaluate settlement. Specifically, if the tenant went away (dropped the small claims suit), would you drop pursuit of the debt owed by the tenant? If the answer is yes, then this offer should be made to the tenant. Often this will solve your problem because some tenants file small claims cases for the sole purpose of getting you to drop collection efforts.
Regardless of attorney involvement, you should determine whether to object to the small claims magistrate. Unless an Objection to Magistrate is filed, a county court magistrate is likely to preside over your small claims case. Pursuant to Colorado statute, you have the right to have any case heard by a judge. However, you must affirmatively assert this right in writing, or you lose the right to object. Like the Notice of Representation, you must file an Objection to the Magistrate at least seven days prior to trial. Whether to object to the magistrate is a key decision.
Pro-tenant bias or apparent bias is a clear reason to object. Unfortunately, some small claims magistrates have strong pro-tenant reputations. Our clients have regaled us with countless tales of small claims magistrates allegedly disregarding the law to somehow find for the tenant. One story comes to mind. In this case, the landlord sent the tenant a security deposit disposition within sixty days as required by the lease. However, the magistrate found that since the lease had gone month-to-month the landlord was required to send the disposition within thirty days, even though the lease stated that the original lease provisions were still in effect. The magistrates in various small claims courts can change frequently. If you are unfamiliar with the reputation of a magistrate in a jurisdiction, please contact us.
Ted Nugent would love small claims because it’s usually a free-for-all. The tenant tells their story. You tell your story. Almost all documents are admitted into evidence, regardless of relevancy, authenticity, or whether they are pure hearsay. Like magistrates, judges hearing small claims cases will admit into evidence all or almost all evidence. Even if a judge hears a small claims case, the small claims’ rules of evidence apply. Again, these rules are extremely informal. However, some judges may take the position that when you request a judge, the county court rules of evidence apply. If the county court rules apply, you need to meet technical legal requirements to get evidence admitted. Finally, keep in mind that some small claims courts set very limited and strict time frames for cases. For example, the tenant gets ten minutes, and you get ten minutes to respond. This is another reason supporting the consultation option. If we can only contribute 20 to 30 minutes of value at trial, it doesn’t make sense to pay us two hours of drive time and an hour to sit around waiting for the case to be called.
Because small claims court is a gamble with no reliable or predictable results, you should always seriously evaluate settlement, especially on lower dollar cases. For economic reasons, you should consider settlement even in cases where the tenant is totally wrong. If you waste $500 of your time to prevent paying a tenant $200, this is a net loss. Your time and your staff’s time are valuable. The advantage of settling is certainty. You’ll have no idea how the small claims roulette will turn out, or how much of your time it will suck down. When you go to court, you may have to wait around a lot. Most counties now require mediation for small claims, which results in extra time spent and additional cost. If you settle, at least you know what you get, and how much time and money will be spent. If you can get the tenant to drop his case in exchange for you dropping your collection action against him, you probably are better off in most cases. You should always consider dollar amount and collectability in deciding to settle a small claims case. Lower dollar amounts owed by a tenant or non-collectability (regardless of amount owed) are both strong indicators that you should settle the small claims case. If you settle a small claims case on your own, don’t hesitate to contact us if you need help in writing the settlement.
If you are going Han Solo in a small claims case, you need to evaluate your evidence and the strongest way to present your evidence. Even in small claims court, third party (e.g. vendor) witnesses carry more weight than you do. For example, the contractor who replaced the carpet usually has more credibility than you. If a witness is going to testify, you should always take full advantage of the witness’s expertise and personal knowledge of the facts. The carpet vendor should testify about the cost of the carpet replacement and provide his expert opinion that the carpet needed to be replaced. Again, keep in mind that the rules of evidence generally don’t apply. This means you could offer a signed written statement from the carpet vendor if he won’t show up and support you. Before and after pictures carry significant weight, i.e. the beautiful green lawn when the tenants moved in versus the brown lawn scattered with weeds when the tenants moved out. Some courts won’t award damages based on estimates because you’re not out-of-pocket yet. Receipts and invoices with proof of payment are always the strongest and safest evidence of actual out-of-pocket damages.
Landlords need to be more realistic about their damages. If you overreach, even on some damages, you can substantially hurt your credibility on all damages. Small claims court is unpredictable. The small claims magistrate or judge ruling against you is much more predictable if you overreach. If your carpet is 10 years old, you won’t get full replacement value (likely nothing) even if the tenant caused huge stains. If the tenant’s dog or cat peed all over the carpet and destroyed it, you should always preserve and bring a small carpet sample to supplement your photos. Similarly, if your tenant lived in the property for four years, the Court is not likely to award painting damages even if the tenant’s kids used the wall as their personal canvas. Small claims courts rarely award damages for your time and effort (labor). Thus, you’re not going to get damages for the time your son spent watering the lawn to try to save it, especially if you didn’t pay him. In our experience, you will almost never get the full amount you are asking for from a former tenant in small claims court. Keep this in mind when evaluating your settlement position.
Small claims court is like Judge Judy or the People’s Court with Judge Marilyn Milian. It’s not the Microsoft Anti-Trust Trial. Each side tells their story. Both sides show the court their documentary or physical evidence. Depending on the Court, the judge or magistrate will allow each party to ask the other party questions. Some Courts will only allow a narrative from each side, with the magistrate or judge asking the questions. After hearing each side and looking at each side’s documents, the Court determines the winner. This is the whole shooting match.
You can increase your chances of winning in small claims court in several ways. First, promptly evaluate your options. Don’t wait until the last minute to decide if you want an attorney involved, or to object to the magistrate. If you delay, you are likely to blow the deadlines for exercising these options. Obviously, don’t miss the court date if you are handling yourself. This happens more often than you would think. If you do miss the court date, contact us immediately. No guarantees, but we can try to get you another chance.
Second, be realistic in evaluating whether it’s worth fighting in the first place, and what you are likely to get if you win. Your time is valuable. If the case doesn’t involve a lot of money or if the tenant isn’t collectable, the winning move is to settle. Settling can mean writing a check to someone who is wrong and that you may not like. Realistically evaluate your damages when deciding to settle. Third, if you are going to fight, make sure that you don’t bring a knife to a gunfight. Make sure that you have the necessary documents and witnesses to present to the Court. Always remember that we are here to assist you in evaluating your small claims problems, but you must contact us before you lose the right to get us involved.View Resource »