Saturday, December 11, 2010

A small claims fiasco

Although small claims cases may seem easy to manage, attorney's would be wise not to underestimate the challenges that can arise in such cases. So many things can go wrong with a small claims case. First, the fact that a low dollar amount is at stake sometimes tends to give one a false sense of ease. When you have lawsuits with high dollar potentials sitting on your desk and screaming for you attention, you tend to put small claims on the back burner. Second, in many cases you are not even getting paid or getting paid very little. Some of the small claims cases that I handled were on a pro bono basis for friends. Basically, I felt bad charging for cases where the dollar amount was merely in the hundreds. But, as my friend Steve always says, "you get what you pay for." Third, a pro se party is often involved, and judges tend to be sympathetic. And, if the pro se party happens to be the Plaintiff, you may not even know by examining the complaint or even after the party presents its case in court what exactly the suit is all about. And, if you don't know what the party is suing for, you don't know how to defend it. Fourth, judges have discretion per Supreme Court Rule 286b to conduct an informal hearing. And, just how they conduct this informal hearing is anyone's guess. Every small claims judge I have been in front of, handled the situation differently.

Recently, I had a case where a pro se Plaintiff handed my client cash to bail her son out of jail. My client got a receipt and put his name on the slip for the check to be returned to his address. The check didn't come back to his house for three months. In the meantime the individual who was bailed out of jail borrowed substantial sums of money from my client. My client apparently lent the individual all this money because he was promised he could keep the check that was coming back from the bail money. The Plaintiff, of course, insisted the money was hers and that her son had no authority to use this money to secure loans from friends.

My initial impression of the case was that we were gonna lose big time. Every small claims hearing that I had attended was conducted very informally with Rule 286b being invoked by the judge himself. And, every time this happened the judge focused less on procedure and rules and more on getting to the truth of the matter. This meant as 286b says "At the informal hearing all relevant evidence shall be admissible and the court may relax the rules of procedure and the rules of evidence." Furthermore, the Plaintiff had a cancelled check from an account that was clearly hers made out to cash in the bail amount and that was dated from the day that bail was posted. Also, my client was going to have to stipulate that she handed him the money. I assumed this because I believe the judge was going to ask him this question regardless of whether the Plaintiff knew how to cross-ex him or not. This was how my other experiences had been.

So, with all that in mind, I took the approach that I was going to have to invoke Rule 286b if the judge didn't do so himself and try to get hearsay evidence in to demonstrate that representations were made to my client by the individual who was bailed out of jail. To my surprise the judge did not invoke the rule. This was the first time this happened to me in small claims with a pro se defendant. I was worried that the Plaintiff could win her case because I didn't think she had to prove that much to prevail and I figured that the judge would still go easy on her. My thought was that the only way I could win was if I could raise doubt over the source of the money that was handed to my client. And, the only way I could adequately do that was to bring in hearsay evidence. So, I invoked the Rule. The judge looked surprised and asked "Counsel, are you sure you want to do that?" I said I was sure. Looking back, that was probably a mistake but I couldn't have known that at the time. As things turned out, the judge was pretty hard on her. He limited her testimony significantly. She did manage to get the bail receipt and cancelled check in to evidence. I didn't object for reasons explained above. And, I stipulated that my client received cash from her.

When I cross examined her, I tried to raise doubt about the source of the funds handed to my client and I tried to ask questions that would make it look like my client could have legitimately believed that the money belonged to the individual bailed out jail and not the Plaintiff. Finally, I questioned my client about hearsay statements made by the individual bailed out jail. The judge stopped me instantly. "Mr. Krause, what is the relevance of all this." I tried to explain the probative value of my questions. "Mr. Krause, I don't want to get into these hearsay conversations that your client participated in." I responed, "your honor, I invoked Rule 286b?" The judge said, "I said I would relax the rules of evidence, not throw them out." So, it became clear to me that hearsay wasn't neccesarily welcome even in 286b situations. I thought "all relevant evidence" was allowed. That is not neccessarily the case. In fact, I am still not sure what the law on this matter is but I know I can't take it for granted in the future. After that, I thought I was going to lose. To my surprise, the judge found in favor of my client. He said the Plaintiff didn't meet her burden of proof. I actually still don't know what kind of case it was. Was it a conversion or trover case? The judge didn't mention what elements she had to meet or that she failed to meet. Whatever it was, I completely failed to spot the issue but still managed to prevail. In any event, I know small claims is nothing to take lightly.

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