Settlement In Small Claims Court

Winning without fighting.

You have verified that you have a claim that a court will hear and you think you might file a lawsuit. Or maybe you have received a demand from someone saying they have a claim against you that is headed for court. What next?

First, let's assume that you are a potential plaintiff. You have a claim or several claims against someone else and you know how much you will sue for. Here's a simple solution: Ask them for it. You may just resolve this thing without going any further. There's no harm in asking. The advantage is obvious: You may get the matter settled without further time and effort.

Asking for what is owed you can take many forms. Some people have a talent for writing demand letters with increasing degrees of seriousness. It is a simple matter to put your demand in writing. Deciding exactly what to write will help you be clear about what you want in order to resolve your dispute. Your demand letter can also guide you in defining the issues that may result in a trial if you need to sue.

What if you are the defendant? If you have received a complaint letter and you want to know what the complainer will take to get off your back, the same principle applies: Ask. If you get a demand in writing, send your response the same way. But be sure that you respond. Court cases are often the results of broken communication.

Settlement and settlement negotiations make up the middle part of the civil justice process. Ninety percent of all cases filed by attorneys are settled without trial. This is because attorneys know that their clients most often gain their best legal advantage through settlement. They know, too, that this is all any attorney can do for a client: Make their client's best legal advantage tangible. Investigating the facts and researching the applicable law with a pinch of legal experience are the means to gain the best legal outcome. And lawyers get paid very well for doing it.

If the principle of the matter in your dispute is not so great, or your ardor has faded after the initial shock of the wrong done to you, or if you take pride in your intelligence, a full investigation of settlement prospects is for you.

The law loves settlement and compromise. It is the only realistic way to unclog the logjam caused by too many cases and not enough courtrooms, personnel, or time. Small claims courts are particularly in a crunch with the increasing number of cases they are required to hear. While they want to make a court accessible to those who have valid claims that they cannot reconcile on their own, the courts simply cannot handle the volume.

So, take a moment or two for a little soul searching. Even though by now you may have realized that you want to go for it-you want your trial-you should still weigh all the advantages and disadvantages of that decision against the certainty of gaining a favorable final disposition of your claim through settlement. Whether you are the person suing or the person sued, the same principles apply. Although the defendant in any lawsuit has the advantage of not having to prove anything and may also just want a day in court, you should have at least one eye open to conciliating your case.

From now all the way to the moment before the judge announces a final decision in open court at the end of your trial, there are many reasons to seriously consider settlement. The following list is not exhaustive:

• The rules of your local court may require it. In many states and cities, the legislators that have created your courts and court rules may love settlement so much that you are required to at least try to settle your case. This means that you actually do communicate with the other side about resolving your dispute. Talk to them. You may need to let the other side see all of your exhibits and even interview your witnesses. Check with the clerk about this before you file a suit.

• You are more likely to get what you came for. History has shown that when disputing people settle a matter and one of them is going to pay money to the other as the result, the person who is to get paid is more likely to get the money. The payer is more likely to pay if he or she is free from the fear of having to pay more and from the fear of having unsavory things happen to him or her, such as seizure of a car, freezing a bank account, or seizure of wages through garnishment. All of these can result from having a judgment against him or her.

  As a plaintiff, when you win, what you get is a judgment. This is a piece of paper that says you now have the right to go out and try to collect enough of the loser's cash or other property so you can get paid. Again, if the loser has no cash or property or no promise of any, all you will end up with is your piece of paper. If you know that there is a real likelihood that the defendant has little, you may consider getting what you can and reducing your losses. Your judgment could also drive the loser into bankruptcy. If you know that the defendant has been sued many times and lost, this may be a real possibility. If he or she bankrupts, you will likely get little or nothing.

  The likelihood that you will recover all of your loss goes up when there is insurance covering it. Personal or property damage done in a home or business may be covered by homeowner's or business liability insurance. It is to the wrongdoer's advantage to tell you about insurance coverage because he or she has already paid the premium to cover your loss. If there is insurance, you will be negotiating with the insurance company's adjuster, or if a suit has been filed, with the company's attorney. The company's representative may ask you to supply them with specific information on a pre-printed form or in some other way. The small inconvenience of doing it their way far outweighs the risk of not recovering if you need to litigate your claim to the end. Play their paper game, but be sure you read and understand everything you are asked to sign. Make and keep a copy for your records.

• You will feel better. This is not an insignificant or silly reason. When you submit your dispute to a third person for a decision, you lose control of it. There is a psychological principle at work here. In our society, where mature, thinking individuals ought to be able to go through life resolving their problems without outside interference, we believe that if we must give up a problem to someone else, we have failed. This is not true, but the perception is there, nevertheless. If you settle, you control the outcome, and to whatever extent it is significant, you will have maintained control over that part of your life that is represented by this particular challenge.

• Justice is nearly blind. Only you and your witnesses know what really happened a month, two months, or six months before your trial. Memories always fade and get muddled, more so when the events are complicated. There is a legal legend about the car crash at an intersection. Witnesses on each of the four corners tell a completely different version of the incident at the scene of the accident, and each has a strangely different version from even his or her own original story when it is related at the trial. By comparing them, someone hearing them could not even be sure the information was about the same event.

  Even if your witnesses remember every detail, there is no way that a judge can know all that really happened based on 15 to 30 minutes of testimony, and a quick look at all of your other evidence. At best, the verdict will be based on a mere thumbnail sketch of the whole story. Part of what judges do in making decisions is to decide whom to believe. The judge is a stranger to you and your controversy. He or she is just as likely at the outset to believe your opponent as to believe you. The judge may choose to believe the other party's witnesses or give greater weight to their documents and photographs. He or she may disregard or discount what you feel is the strongest part of your case, and give great credit to your adversary's version of things.

  It does not matter so much that your cause is right and true; the important thing is how it will be perceived. This raises a serious question about justice. In support of this concept, tell the truth, the whole truth, and nothing but the truth. There is some weakness in every claim. If you tell your story with its flaws exposed, the judge is much more likely to believe it.

• Judges are human. Being a judge, I know that deep down inside, every one of us has a heart of gold. It may just take considerable digging to reach it. Because judges are human, they may, from time to time, make a mistake in judgment. There is no magical mathematical or other fixed formula for making a decision in your case that is "correct" in some universal sense. So-and attorneys will tell you this-there is always some unpredictability in submitting a case to a judge or a jury at trial.

  There are other intangibles to consider. I have not done any research on this, but I am suspicious that even the best judges may unconsciously favor certain kinds of people over others. For example, unusually attractive people, widows, orphans, and little old ladies tend to be favored over unusually unattractive or hard-edged, brassy people, used car salesmen, and drug dealers. Nasty people probably lose more than nice people. As I say, this hunch is just a hunch, based totally upon speculation.

  When I was leaving my law office one day on the way to the courthouse to preside in small claims court, there was a man sitting in the reception area waiting for another lawyer in my office. When I told the receptionist that I was headed over to court, the man offered, "Good luck-you never know what those crazy judges and juries are going to do." He's got the idea!

• Try as everyone may, the playing field may not be level. Though the civil justice system is based on an underlying principle of equality, some classes of citizens are favored in the law. It may be from the nature of their work, the power of their lobby in the legislature, or simply a matter of public policy that a group is favored.

  You recall that some classes of workers have a right to a special claim on your property, a lien. Auto mechanics and other persons who repair and otherwise add value to their customers' property often have the right to keep the property until they are paid. This is a possessory lien. This is true even when the bill is contested. Similarly, plumbers, painters, roofers, and other construction trades may have a right to place a mechanic's or materialman's lien, a public notice of claim on your real estate to secure payment for work on your house, even where the quality or value of the job done is disputed.

  Banks, insurance companies, and doctors are favored owing to their political clout. Preferences for them are written into the law. Banks are protected by provisions of the Uniform Commercial Code, which is adopted in most states. Ordinarily, there are technical legal hoops you must jump through before you can sue a doctor or other professionals for malpractice.

  By greater experience in business or the law, the other party in your dispute may have placed themselves in a superior position in their contract with you. It is in the fine print. You may have pledged your furniture, appliances, and even your family dog as collateral on a loan, and may be legally helpless if they are repossessed. Landlords or tenants may have an advantage based on the strength of their lobbies and the extent to which your state is urbanized.

  Is your potential opponent a member of a favored class in your state? Are you?

• There may be more pain than gain. If your claim is against a long-time friend, business associate, or relative, nothing will more quickly destroy the relationship than the prosecution of a lawsuit. Whether you are the plaintiff or the defendant in a legal dispute, you have an emotional investment in its outcome. Plaintiffs universally want to be made whole. Defendants want their reputations restored after having been sued on what they may consider a frivolous complaint. To some extent, both feel victimized.

  As your case gets closer to trial, your emotional investment will either grow or shrink. The smaller it gets, the more rational your decisions concerning settlement will become. If it grows, or is recognizably monstrous already, you should weigh the potential winning of the case at trial against the damage it could do to your relationship with the other party. In my court, I have seen brother against brother, and daughter against mother. Though a decision was rendered in each case, nobody won.

  If the emotional investment in your case grows, it may also interfere with the rational preparation and presentation of your case at trial. To the extent that you are immobilized by anger, frustration, or any strong emotion, you will be a less effective litigator. High emotions can interfere with your getting the best legal outcome. In one case, the plaintiff was so angry that after he had called the defendant as a witness and grilled her for 15 minutes, he called no other witnesses and forgot to prove any part of his case.

• The human factors may not be in your favor. Look at yourself. Look at your opposition. Look at everyone who is likely to testify in your case. When you relate your version of the facts at trial, and when your witnesses do the same, will they be convincing? This may be only a minor concern. Most people are good storytellers when the story is true. But the very young or very old witness may become flustered. Non-English speaking or inarticulate witnesses simply may not be understood, thus their testimony may discounted.

  All you have seen and heard about civil trials may fill you with fear about testifying under oath in a courtroom before a person wearing a black robe. This may be true even though your fear has been diminished by your careful preparation and all the knowledge gained by reading this book. Consider settlement as a real possibility at any point in the process that you realize you may not be able to win.

  While I firmly believe that any citizen in ordinary circumstances has the wherewithal to successfully prepare and try a case in a small claims court, it may simply not be for you. If you decide it is not, don't give up! And don't sell your soul to reach a settlement at any cost. Your goal remains to reach a resolution of your dispute to your best advantage under all the circumstances. Your personality is just one factor. If you don't want to work out the settlement details, you can always hire a lawyer to worry and to work them out for you.

• Your time is worth something. It is worth a lot! Our time, whatever it is, is all we have. It is a nonrenewable resource. Preparing your case for trial and presenting it at trial is challenging and educational. Once done, it's fun. But when you evaluate your case and look at the time and effort it will take to investigate, prepare, and try your case, and also consider the value of your time, you may be better off going fishing, joining a community chorus, rebuilding that '49 Ford pickup in your garage, volunteering, or spending a couple of hours with your family or at work.

  The prospect of a reasonable settlement may be more valuable if your investment of time, attention and effort is greater than the value of the return it will provide.

  If you are a defendant, you may want to consider a settlement to avoid the time and effort necessary to defend even a groundless claim. Giving this advice flies in the face of all I believe about individual responsibility and the necessity to fight injustice wherever you find it; nevertheless, it is still sound advice.

  You could win! What you win is a judgment, a piece of paper that says you now can start the collection process. Usually, the court will not collect your judgment for you. Often, the time and effort involved in the collection process is as much or more as the amount of time taken up by preparation and trial.

• You could lose. Your dispute may have started because you made an avoidable mistake, one you would not have made if you had been reasonably diligent. Courts will not protect you from yourself. If you are the author of your own misery, you will be responsible for reaching the conclusion of your story.

  There can be only one winner. Even though you are convinced that you have the perfect case, open and shut, there is always a possibility, no matter how remote, that you could lose. I have seen lawyers come out of courtrooms shaking their heads, with looks of disbelief on their faces after getting totally unexpected negative results in "sure-win" cases.

  Remember, in order to win, your total evidence must be stronger than that of your opposition. For plaintiffs or defendants asserting a counterclaim, you have a burden to prove your case by the greater weight of the evidence. It needs to be only slightly greater, but greater nonetheless. The scales of justice need to be tilted at least slightly in your favor.

  After you know all you can reasonably know about your case, witnesses, and exhibits, and you know all you can about the case for the other side-its weaknesses and especially its strengths-you should be fairly certain you will win. This gives credit to all the uncertainties of trying a case and submitting it to a judge or jury for consideration. Your certainty level can be lower when your case is being pursued mainly on a matter of principle. If you have a valid, substantial, and provable claim and cannot reach a satisfactory agreement with the other side to resolve it, head for the courthouse. That is why it was built.

Negotiation tactics are covered in the next chapter. If you do reach an agreement, put it in writing. There are forms in the back of this book to help. If your small claims suit has already been filed, you should submit your agreement to the judge for approval. At least notify the clerk that your case has been settled, and ask what you should do next.