Big problems in small claims court awards

By Harvey Graves Empire Wholesale Lumber Co.

EIECAUSE maximum awards have Irnot 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 wuth the effort to pursue a small claim. In a regular court, claimants 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 debL

A bad debt complaint can usually be heard in a small claims court within a month. Most wholesalers, retail lumber dealers and home centers are satisfied with the speed, low filing fees, infomrality, and, above all, fairness of small claims cdurts, 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 the state level, some states have higher maximum small claims court awards 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. Minneso0a, as of January 1993, has a $6,000 maxinum 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 all small claims court limits raised, so that more people can take advantage of these courts. Atomey 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 the 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 limits, saying, "People can't afford to spend a lot of money to get back a relatively small sum." The former California Superior Court Judge has testified before the California legislature on this issue.

Because of the relaxed procedural format, often without a lawyer, 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

Maximum Small Glaims Gourt Awards by State

Story at a Glance

Why smallclaims court maximum awards have failed to keep up with inflation action some states have taken to remedy problem ... what wholesalers and retailers can do to make system work for them.

are filed, according to a study by ttre National Center for State Courts. By contrast the wait for a trial can be years in regular courts.

Because some state legislators are hesitant to raise the maximum dollar amount on individual consumers, the maximum awards in many cases remain low only because of concern for consuner protection. Some states have developed a two tier maximum with a smaller limit for individuals and a cap as high as $10,000 for small businesses and proprietorships.

North American Wholesale Lumber Association and the National Association of Credit Managment are among those pushing and supporting raising the maximum award to $10,000, but it won't happen unless all wholesalers, retail lumber dealers and home centers Ake time to write to the governor, chairman of the state judiciary committee, chainnan of the small business affairs committee, representatives and senators for their states.

Remind these people that the less a company wites off in bad debts, the more tax revenues each state will receive. Include a copy of this article. Don't wait for the other fellow to do it. There is too much apathy these days. It's up to you. Your influence counts. Use it if you want change and a $10,000 maximum small claims court award in your sca0e.