Using a Written Agreement to Dismiss Cases in Small Claims Court

If you operate a business in the United States of America, sooner or later you are going to end up in Small Claims Court, either as a plaintiff trying to collect on a delinquent account or as a defendant defending against the real and imagined grievances of your customers. So it is important to understand how Small Claims Courts operate.

Small Claims Courts exist to alleviate the logjam of civil suits that would otherwise be adding to the existing avalanche of cases that already clog our courts by removing those cases where less than, say, $10,000 is at stake. Most of the litigants in these forums are not represented by attorneys, though by procedural rules, corporations must be represented by an attorney. Since many home inspectors operate their businesses through corporations, they should be aware of this requirement, lest they be defaulted for failure to defend.

Most of these courts also require that litigants try to come to some settlement on their own by submitting to a mandatory mediation process. As discussed elsewhere in this blog, home inspector defendants should be very wary of mediation because a. their clients seldom have a valid claim and b. if they have been paying any attention whatsoever to me, they have a signed pre-inspection agreement with the plaintiff that requires that any dispute arising from the inspection be brought in arbitration, thus rendering Small Claims Court - or any court, for that matter - an inappropriate forum for this dispute.

Once the mediation charade has concluded, the litigants will then appear before the judge to present and argue their cases. Your demeanor at this time should be that of the totally poised professional that you are.

When the judge takes the bench, he generally has no idea what the case is about and, since Small Claims Court Complaints are generally light on particulars, reading the Complaint is unlikely to enlighten him in any meaningful way.

He should then ask the plaintiff if he has an Opening Statement. An Opening Statement is designed to give the finder of fact - in this case, the judge - an idea of what the dispute is about.

Your plaintiff might say something like this: “Your honor, I hired Mr. Home Inspector to inspect the house that I was buying and two months after I moved into the house, the heat pump stopped working. I called a heating contractor and he told me that the unit needed to be replaced at a cost of $3500 and that this is something that Mr. Home Inspector should have discovered when he inspected the house. So, I’m suing to recover the cost of the new heat pump.”

Now, hearing this nonsense will very likely set your teeth on edge but this is when you need to summon every self-control mechanism in your arsenal of character traits. Let your client say his piece because it will likely be the last thing that he gets to say on this day and because you are going to be walking out of there very shortly.

The judge will then turn to you and say “Mr. Home Inspector, do you have an Opening Statement?”

Here’s what you say:

“I do, Your Honor. And while I obviously dispute Mr. Client’s version of events, I wish to make a preliminary motion to dismiss Mr. Client’s Complaint because prior to performing my services for Mr. Client, he and I agreed in writing that any dispute arising from the inspection had to be submitted to arbitration by the American Arbitration Association. Therefore, I move the Court to dismiss plaintiff’s Complaint due to lack of jurisdiction.”

The judge will then ask if you have a copy of the Agreement with you - which, I hope it goes without saying, you had better have - and ask to see it. Since you will have resourcefully placed a Post-it with an arrow pointing to the Arbitration Clause and another with an arrow pointing to the plaintiff’s signature on the Agreement, the judge should then ask the plaintiff, if that is his signature on the agreement. When he sheepishly admits that it is, the next thing you should hear is the judge dismissing the case and telling the plaintiff that he has to bring this claim in arbitration.