Big problems in small claims court awards

By Harvey Grevcs Empire Wholesale Lumber Co.

DECAUSE maximum awards have lJnot kept up with inflation in the last 20 years, we have a big problem in small claims courts.

With the backlog in today's judicial system, many small businesses find it not worth the effort to pursue a small claim. In a regular court, cliaimants often wait 12 to 15 months to hear a credit collection lawsuit. This can make the difference between a recovered account receivable and an uncollectible bad debt

A bad debt complaint can usuallY be heard in a small claims court within a nonth. Most wholesalers, retail lunber dealers and home cent€rs are satisfied with the speed, low filing fees, infornality, and, above all, fairness of small claims courts, but, although a full 507o of collection problems for wholesalers and retail lumber dealers are for $10,m0 or less, they are not cost effective.

The average small claims court dollar limit is a shockinglY low $2,671. Because maximum dollar limits are legislated at tbe state level, some states have higher maximum small claims couft awafds than others. Florida and Tennessee recently increased the maximum to $10,000 with Tennessee allowing $15,000 if the county population is over 700,000. Minnesota, as of January 1993, has a $6,000 maximum and will go to $7,500 in 1994. Alaska, California Georgia, New Mexico and Pennsylvania have raised limits to $5,000.

Some consumer justice reform advocates want to see dl small claims court limits raised, so tbat mofe peo' ple can take advantage of these courts. Acomey Ralph Warner, Publisher of Nolo Press which produces self help guides for the legal system, states, "We badly need to get them pushed up higher because this is really the one sane place in our court sys- tem for tbe average person to go."

Judge Wapner, whose television program, "The People's Court," turned small claims court cases into popular fare, has joined in calling for higher lirnits, saying, "People can't afford o spend a lot of money o ga back a relatively small sum." The former California Superior Court Judge has testified before the California legislature on $is issue.

Because of the relaxed pmcedural format, often without a liawyer, and judges who require parties to make their cases simple and brief, small claims cases are typically resolved within about 42 days of the time they

Marimum Small Clalms Gourt Awards by State

Story at a Glance

Why small claims court marl' mum awards have failed to keep up wlth inflatlon ... actlon somc states have taken to remedy ptoblem what wholcsalers and retallers can do to make system workiorthem.

are ftle4 amuding to a sudy by tbe National Center for State Courts. By contrast the wait for a trial can be yean in regulr coufts.

Because sone state legislaors are hesitant !o raise the maximum dollr amount m individual cmsumen, the maximum awards in many cases remain low only because of concem for onsumer protectio. Sme states have developod a two tier naximum with a smaller limit for individuals and a cap as high as $10,00 for small businssas and propicmships.

North American Wholesale Lumber Association and the National Assciation of Credit Mmagment are among those pushing and supporting raising the maximum award to $10,(X)0, but it won't happen unless all wholesalers, retail lumber dealers and bome centers take time to write to the governor, chairman of the state ju<liciry cqnmittee, chairmm of tbe snall business atrairs coNnmitee, rcp resentatives and senaton for their states.

Remind tbese peopb that the less a company writes off in H debts, the more 0ar revenues each state will receive. Include a copy of this article. Don't wait fa the o6er fellow to do it. There is too much apathy these days. It's up to yon. You inllrcnce counts. Use it if you want ctange and a $10,000 maximum small claims court award in your state.