TENANTS FILE MORE AND MORE SMALL CLAIMS COURT LAWSUITS – YOU NEED TO KNOW YOUR OPTIONS
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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 the case for you. Often, you’ll need to decide quickly because of time constraints. If you want us to represent you in small claims court, a Notice of Representation has to be filed at least seven days prior to the trial. This rule is absolute and the Courts will not make any exceptions. If you contact us less than seven days prior to trial (the court date), the Court will not let us represent you. In most counties, the Notice of Representation requires your original signature and it must be manually filed, i.e. someone must take the document to the court, along with payment of fees and file with the clerk’s office. For these reasons, it is advised that if you want attorney representation the sooner you let us know the better.
You should consider several factors in determining whether to involve us in a small claims case. How much money is your tenant or former tenant suing you for? 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 automatically dictates that you should have attorney representation. However, generally, the more damages a tenant seeks, the more you should lean to involving us. We can’t guarantee the court will award attorneys’ fees or that you will be able to collect them, but we do try to get an award of attorneys’ fees added to the principal judgment in small claims cases that we handle. The amount of money at stake aside, some clients feel more comfortable if we handle the case.
The county in which you’re being sued is another factor that you should consider. Some counties do not allow attorneys to fully represent their clients in a small claims case, and thus you lose many of the benefits of having an attorney represent you. For example, in the past, the Jefferson County Small Claims Magistrate did not allow us to cross-examine any of the witnesses nor were we allowed to ask basic questions. The Court allowed us to participate only in an advisory role. The court insisted that our client present the case. We were not allowed to speak. When a court adopts and enforces these types of Small Claims Court policies to discourage attorney representation on small claims cases, you are better off if you not represented by an attorney. Policies vary by county depending on the magistrate or judge currently assigned to the Small Claims Court. When contacted about a small claims case, we will advise you about current policies in the county where the tenant filed the case.
You will incur significantly less in 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, strategy and key legal arguments. The consultation option makes more economic sense when a county has strict small claims policies. Because our participation is limited in these counties, retaining us to consult is likely to get you the same result for substantially less money. Even if a small claims court will let us fully participate, often an hour of consultation with us will meet your needs. 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 all of your documents and equipping you with the legal expertise to defend your case. This option is excellent for the smaller dollar amount cases because your attorneys’ fees will be nominal. Overall, this option is also appropriate for clients who want to handle the case themselves, or for courts that severely limit the advantages of having an attorney.
Frequently, small claims cases involve tenant files that have already been placed with a collection agency. If you are sued in small claims court, you should always first determine if the file is at a collection agency. If a small claims case involves a collection agency file, you should promptly contact the collection agency and determine if the collection agency is going to handle the small claims case. Most collection agencies will not handle a small claims trial. If the file has been placed with a collection agency, 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 this right. 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 instructions to the collection agency to cease any efforts to collect the debt. You should order the collection agency to cease collecting the debt because the debt will now become a counterclaim in the small claims case. You should bring the tenant’s balance as a counterclaim in the small claims case to resolve all legal issues with the former tenant in one 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.
Regardless of attorney involvement, you should always determine whether to object to the small claims magistrate. Magistrates preside over small claims courts in most counties unless an Objection to Magistrate is filed. Pursuant to Colorado statute, you have the right to have any case heard by a judge. Similar to 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 is a clear reason to object. Unfortunately, some small claims magistrates are notoriously known for being pro-tenant. Our clients have regaled us with countless tales of small claims magistrates disregarding the law to somehow find for the tenant. One story clearly comes to mind; the Landlord sent the tenant a security deposit disposition within the sixty-day requirement of 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. Small Claims magistrates change frequently. If you are unfamiliar with the reputation of a particular magistrate in a jurisdiction, 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. The only evidence rule enforced in small claims is relevance, however, there is no guarantee that a small claims court will enforce even this rule, or keep out irrelevant evidence. Similar to magistrates, judges hearing small claims cases are unpredictable at best. The law is clear. 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 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. Another reason to go with the consultation option. It makes no sense to pay us two hours of drive time, an hour to sit around waiting for the case to be called, and then have us only contribute twenty minutes of value.
Because small claims court is a gamble with no reliable or predictable results, you should always seriously evaluate settlement, especially on lower dollar cases. You should always consider settlement in these cases even if 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 golden advantage of settling is certainty. You’ll have no idea how the small claims roulette will turn out. If you settle, at least you know what you get. If you can get the tenant to drop his case in exchange for you dropping your collection action against him, you might be better off in some cases. You should always consider the 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 to trial on your own (Han Solo), 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 always carry more weight than you do. For example, the contractor who replaced the lawn will, generally, have 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 landscape guy should testify about the cost of the lawn replacement and provide his expert opinion that the lawn needed to be replaced. 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.
Be realistic about your 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 bolster 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 similar to 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 all of 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 a number of 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 win if you prevail. Your time is valuable. If the case doesn’t involve a lot of money or if the tenant isn’t collectible, the winning move is to settle. 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 have to contact us before you lose the right to get us involved.