Small Claims Court Basics
Small Claims Court is a specialized division of a court system that allows individuals and businesses to resolve disputes quickly and efficiently without the need for a traditional trial. The general purpose of small claims court is to provide a streamlined process for resolving relatively minor disputes in a simplified, cost-effective manner. Small claims courts typically handle cases involving relatively modest amounts of money and/or property, with the goal of providing a simpler avenue for dispute resolution that avoids the delays and complexity of the more experience court systems.
Disputes that are commonly handled by small claims courts often involve claims arising from contracts, such as breach of contract disputes, as well as fraud, return of deposits, and collection of overdue accounts. However, some small claims courts also have the authority to hear other disputes focused on the recovery of damages, such as disputes arising out of auto accidents, damage to property, employment matters, and defaults on loans. The types of disputes that are heard in small claims courts vary from state to state.
The monetary limit on matters that can be heard in small claims court also varies by state, and often depends on the type of dispute being heard . Most states impose a cap on the amount of money or property that can be requested in the small claims court. Depending on the state, the monetary limits for small claims court can range from as low as $2,500 to as high as $25,000 or more. In general, a party is not allowed to file a claim in small claims court if the requested relief exceeds the court’s monetary limit. A party is also prohibited from consolidating multiple small claims disputes in order to obtain the relief that exceeds the monetary limit.
There are a number of reasons why someone might choose to use small claims court to resolve a dispute. The primary benefit of small claims court is that the costs are often substantially less than filing a traditional lawsuit, and the time frame for resolution is also significantly shorter. As such, small claims court is often the optimal choice for disputes that do not involve large sums of money and can be resolved without extensive discovery. Another benefit of small claims court is that you can proceed without a lawyer. In some cases, small claims courts will not allow a lawyer to represent you in court. That said, when the other party is represented by a lawyer, you may find it beneficial to have a lawyer to represent you.
What is A Counterclaim?
A counterclaim is a claim made by the defendant against the plaintiff in an action, and is heard and decided at the same time as the main application. A counter claim is only available to a defendant and may be described simply as a cross-claim by the defendant against the plaintiff in the same process.
Typically a counterclaim is filed for damages that the defendant claims he or she has suffered as a direct result of the plaintiff’s claim. For example if the plaintiff took action in the small claims court in relation to a debt and the debt was denied the defendant may wish to make a counter claim for damages that they have suffered due to the plaintiff making the action against them unnecessarily.
Often a defendant will file a counter claim when the plaintiff makes a claim in small claims court for loss of earnings due to damage to the plaintiff’s property. The defendant may make a counter claim for damage that his or her property has suffered due to action that the plaintiff has taken. Usually the most frequently litigated counter claims are in actions for breach of contract where the plaintiff has sued for monetary damages and the defendant has filed a counter claim for alleged copyright infringement and loss of reputation.
Who Can File a Counterclaim
Not everyone is eligible to file a counterclaim, nor can every type of claim be countered. The nature of the bounds for filing a counterclaim are dependent on your jurisdiction. For example, in Texas, only claims which arise out of an underlying claims presented by the plaintiff may be the subject of counterclaims. An example of this would be a plaintiff taking an employee to Small Claims Court over unpaid wages. In response, the defendant may raise as a counterclaim a claim for unpaid commissions earned during the same period. However, a claim for defamation would not be appropriate as a counterclaim. Similarly, a counterclaim which is larger in amount than the plaintiff’s claim is not allowed. In our example, the defendant could not counterclaim not for just unpaid commissions, but for defamation as well. Amounts for damages occurring later are also likely to be precluded.
How to File a Counterclaim
When you counter sue someone in small claims court, you have to file a small claims counterclaim. A small claims counterclaim is just a claim form – also called a small claims counterclaim affidavit – that sets out the basis for your counterclaim.
To file a counterclaim:
Court has to have jurisdiction
Your counterclaim has to fall within the court’s jurisdiction (in Ontario that’s under $35,000). If it’s more than that, then you can’t counter sue in small claims court. If your claim is more than $35,000, then file your counterclaim in Superior Court.
List the respondent
You list the respondent’s name and claim you’re counter claiming against. If you are counter suing two different claimants, then you need another form for the second claimant.
List the amount being claimed
You list the amount you are counter claiming.
List your facts
You set out the facts that support your claim against the person that’s suing you, not about why you’re not paying them. This is called your claim, but when I’m teaching my clients, we call it your reasons. You’re telling the court your reasons you’re claiming against the respondent and what happened. They only want the good stuff, so don’t include anything about why you’re not paying them. Just include the stuff that shows what they did to you.
Check the regulations against lawyers
In the Ontario Small Claims court rules, there are a list of exceptions that allows a lawyer to appear. If you’ve just been served with a small claims counter claim, you can pick up their affidavit in assistance to obtain legal advice from a lawyer and submit it.
Find your schedule
You search or cross reference the schedule of the court house to find out when your small claims counter claim is set to be heard in court.
Pay the fee
Once you find the court schedule, you pay the counter claim fee if you haven’t done so already. If you use the Small Claims Court Online Litigation Services, commissions do not apply.
When you counter sue someone in small claims court, you have to pay the counter claim fee. For example, when you counter sue online (like with the Small Claims Court Online Litigation Services) it will say a counter claim fee of $120. When you print the claims, it will say $25 in one column and $95 in the column beside it. That’s because the $120 includes the $25 fee to file a claim and the $95 counter claim fee.
If you are cross claiming against two respondents, then you have two affidavits of claim. There is no fee associated with the affidavit of claim, so you would only pay for the counter claim.
After you submit your claim(s), you get a stamp back and you will have to file it within 30 days after the hearing date.
Respondent serves reply
The respondent has to serve the reply by the date on the stamp.
Reply
You make your reply in writing and you can either amend the affidavit or you can submit a brand new affidavit of reply to the affidavit of counter claim. It won’t cost you anything extra if you do it at the same time as your affidavit of claim or counter claim.
Small claims court filed
You file your reply by the date on the stamp, which is usually the date of your hearing. The clerk will place it on the judge’s desk and the judge will look to see whether there are any issues of law. If the judge sees that both parties were fairly served, and there are no issues of law (meaning everything was filed properly), then your matter will be at a point that it is going to be heard at trial.
Building Your Case
After a response to a small claims lawsuit is filed against you, you may see an opportunity to counteract with a claim of your own. Often the strategy is to use counter-suing as a way to get the other person to settle or come up with a better resolution to the original lawsuit. Whatever your reason for filing a counter lawsuit, preparation is key to success. Here are several steps to help you prepare for the counter suit presentation:
Pick Your Claim(s)
Once you’ve decided to move forward with a counterclaim, it’s essential to identify the claim(s) you’ll be making. Just like the suing party, relevant claims must be from a cause of action, and arise from the same facts necessary to support either party’s claim. Be cautious of including claims that are not related to the event at issue. Claims could include fraud, breach of contract, personal injury, negligent nondisclosure, unjust enrichment, promissory estoppel, interference with contractual relations.
Gather Your Evidence
Once you know what claims you’ll be making, it’s time to gather and organize your evidence. Be sure to obtain any documents or physical evidence such as videos or tapes that support your claim . If witnesses are necessary, be sure to obtain their names, addresses and exact testimony. It also helps to obtain statements in which your witnesses detail what they observed, and when it occurred.
Preparing Your Documents
The next step is to prepare the documents you’ll need for your case. For instance, a complaint should give enough factual information concerning your claim, as well as legal reasons for why the defendant is responsible so that the court understands how you arrived at the counterclaim. Be sure to bring two to three copies of all documents to the hearing.
Prepare Your Testimony
If you’re planning on providing personal testimony or the testimony of your witness, plan on telling the story from your perspective. As you prepare, consider what the court needs to know in order to understand the events that occurred. Consider practicing your testimony out loud. If you’re using a witness, hold a practice session with him/her and have them answer questions that you may ask during the hearing. For best results, plan on making your presentation brief but specific. Avoid getting sidetracked by irrelevant information and don’t exaggerate or make up facts.
Outcomes of a Counterclaim
The first possibility is that the court may not allow the counterclaim to proceed and may also strike out the original claim. The court may do this if it is convinced that an improper motive was at play when the original was filed, such as to get more evidence into the trial and intimidation. This rarely happens if the original claim is a small amount in a small claims court, but occasionally will happen in larger claims.
The court may combine the counterclaim with the original claim and hear both cases that way. It can happen if the evidence of one strengthens the other. It can also happen if the parties are disputing one core issue. Once the claim has been combined the parties will not be allowed to raise that issue again.
The court may choose to split the trial and have two separate claims. A court may do this if there are different types of claims at stake, such as a legal entitlement claim and a tort claim. The court may also consider which claim is the stronger of the two and may opt to hear the stronger one first.
A counterclaim could also be heard at the same time as a third party claim. This is a claim against someone who is not a party to the original claim but is or may be liable to one of the parties. Combining or splitting the trial with a third party claim can make sense if the issue at dispute is very closely related.
Legal Help and Resources
It’s always prudent to seek legal counsel to consider the ramifications before making any counterclaim in small claims court. For the most part, counsel will not be used in small claims actions where the amount in controversy is below a given limit (typically $2,000, absent special circumstances). So, how can you find suitable counsel? The best place to look for a lawyer is either the local Bar Association or a legal aid society. Alternatively, a quick search online can reveal a wealth of free resources.
Bar Associations
The various bar associations in the United States serve as gatekeepers to members of the public looking for qualified counsel. Most have websites where you can punch in your local zip code and find lawyers that practice in your area. Many localities, including New York, also have "Meet the Lawyer" events where anyone interested in speaking to a lawyer can show up (no appointments necessary) and ask any questions they may have. The most important thing when searching for counsel is to be persistent. It usually takes multiple phone calls to find a suitable counsel.
Legal Aid Societies
There are many legal aid societies nationwide that provide free legal advice . For example, The Legal Aid Society in New York provides free legal services and advice for lower income individuals who qualify for public assistance. To qualify for free legal assistance, the Society requires that single individuals earn less than $31,650 annually. For a couple with children, the Society sets the annual limit at $60,350. If eligible, prospective clients must fill out a Financial Eligibility Form in order to obtain legal services. A similar program, called the Volunteer Lawyers for The Arts, Inc., provides free legal assistance to qualifying individuals in New York to help identify and obtain legal services for artists.
Online Resources
A wealth of information is also available online. For example, in New York, the small claims court has a clear breakdown of the small claims procedure and what can be done as a defendant. A quick Google search can also bring you to sites such as FindLaw, LegalZoom or Nolo. Although these sites do not compare to consulting a licensed attorney, they can provide some guidance on the small claims process, particularly if you have a simple matter that requires no extensive legal knowledge.