Common Strategic Mistakes When Filing in Small Claims Court
Filing your lawsuit in small claims court is often the fastest, most efficient, and cost-effective way to resolve a dispute. However, strategically, you may want to re-think the decision to file in small claims court, especially if you expect the Defendant to appeal or offer an aggressive defense.
Just because you can file in small claims court, doesn’t mean you should. Here are four strategic mistakes often made by those filing in small claims court themselves or with a lawyer:
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- Undervaluing your case, just to fit within the “$12,000 or less” jurisdiction requirement of small claims court,
- Suing the wrong party or corporate entity (It happens often!)
- You “give more than you get,” ultimately.
Let’s talk about each of these.
1. Undervaluing Your Case
In small claims court, the judge can award you up to $12,000. This sounds like a lot of money, especially if you only loaned a friend $1,500 and you’re considering filing in small claims court to get your money back. But a surprising number of “small claims” are worth substantially more than $12,000.
The problem is: filing on the small claims court docket constitutes an admission that your case — according to you — is worth less than $12,000. So you appeal, suddenly realizing that your case is worth more, expect considerable pushback. The Defendant will constantly remind you that, from the beginning, you had said your case was worth $12,000 or less.
Some Examples Of Erroneously Low Valuation
Let’s say, for example, you paid a home improvement contractor $3,000 to paint your living room and kitchen. Only, he failed to complete the work. Plus he dripped paint on your hardwood floors. Is this one for “small claims court”?
Probably not.
Pennsylvania’s home improvement and consumer protection Act (“HICPA”) allows for a recovery of your actual damages — the cost to pay someone else to finish the job and/or fix the damage he caused — plus “treble” damages (your damages times three!) and attorney fees. Adding all that up, your claim’s value can easily exceed $12,000.
In fact, even if your case involves something other than home improvement, PA’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) can entitle you to an award for triple damages and attorney fees. Click here for more information about the UTPCPL. The same goes for personal injury claims: a claim for “pain and suffering” can easily exceed $12,000, especially after you sit down and think about all the ways your life has changed from the injury.
So be careful about boxing yourself into a corner, by filing in small claims court. Likewise, don’t think you can bring the smallest part of your claim, first, followed by the unfair trade practices claim in a subsequent suit. PA’s bars claims that could have been brought in the first action. For more, click here.
Contact a Pittsburgh lawyer at our firm to understand the advantages and disadvantages of this forum.
2. Suing the Wrong Party or Corporate Entity (This Happens Often!)
People — including lawyers — often make the mistake of suing the wrong party. But how? Here’s an example: let’s say, you sue Defendant John Smith — a common name — and you even spelled “John Smith” correctly in the lawsuit. You win in court, and get an award (reduced to a judgment) against “John Smith.” Now, you seek to execute against the assets of “John Smith.”
What could go wrong?
If the “John Smith” you sued is actually “John Smith III,” you might have a huge problem when you ask the sheriff to execute on the assets of “John Smith.” The Sheriff may ask: are you asking me to garnish (or freeze) the bank account of John Smith (grandfather), John Smith (son) or John Smith (grandson)? Plus, if two or more of the “John Smiths” live at the same address, the sheriff may ignore your request entirely, because it’s unclear whose assets are placed at issue, making your judgment worth nothing.
Suing the Defendant’s Business “Name”
Plaintiffs often sue the wrong corporate entity, as well. Let’s say you intend to sue “ABC Contracting” for failing to finish working on your deck. The company’s letterhead says “ABC Contracting” at the top.
What could go wrong?
First, ask yourself: is the Defendant incorporated? Do a PA corporation search. If no corporation exists, it’s possible that “ABC Contracting” is merely just a “DBA” – a person (not a corporation) “doing business as…” A DBA is not an entity that can be sued. More importantly, it can’t own assets, which is what you want, to satisfy your judgment. So your judgment against ABC Contracting — a mere DBA — will be worthless, unless you sue the individual person doing business as “ABC Contracting.”
Suing the Wrong Entity
Now let’s say you did a corporations search. This time you find a corporation. In fact, you find two separate corporations: “ABC Contracting, Incorporated,” plus another separate entity called “ABC Contracting, Enterprises.”
Your contract, however, only says “ABC Contracting.”
Now what?
Remember the goal is to get a judgment against every possible entity that both (a) was potentially involved in the case and (b) could have assets to satisfy a judgment. When in doubt, a Pittsburgh lawyer at our firm would recommend suing every entity that could have been involved, within reason, of course. Thus, in your lawsuit against “ABC Contracting,” you may want to sue both “ABC Contracting, Incorporated.” and “ABC Contracting, Enterprises” along with the individual owner of the company, personally, if the facts warrant it. The bottom line is, do your homework, upfront, before filing your claim in any court, or you could be wasting time, by having to re-file against the correct entity.
3. Don’t Give More Than You Get
Each Pittsburgh attorney at our firm focuses on strategy.
A good strategy requires understanding of the litigation process. First, understand that most cases settle eventually, so the key to “winning,” in litigation, is usually to make the opposing party do substantially more work than you do. Likewise, when you’re the plaintiff, you want to learn as much about the Defendant’s defenses as possible upfront, while spending as little time and money as necessary.
Thus, don’t treat the lowest level court like it’s the “trial of the century,” because either party can appeal for any reason or no reason at all. Thus, it often makes little sense to pay a lawyer — much less an expert witness — to appear for you at a small claims court hearing. Likewise, if you’re certain the Defendant is going to appeal — such that the “real trial” will occur following an appeal — to compulsory arbitration or jury trial docket (the next levels up) — then why reveal your whole case to the defendant in small claims court?
When our Pittsburgh lawyers are defending small claims court actions, we often tell our client: just go by yourself and listen to the Plaintiff’s case. This way, we can evaluate the case, cost-effectively, without attending small claims court, saving the client time and money.
Strategy.
Contact Our Pittsburgh Attorneys Today
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