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Law
Offices PRACTICAL
CREDIT MANAGEMENT TIPS by John M. Samberg, Esq. SMALL
CLAIMS COURT Part III - Handling Appeal and Collecting Your Judgment. 1. Introduction: The purpose of Small Claims Court is to allow a quick hearing in matters of relatively small amounts in dispute. No attorneys are allowed at the hearing, so generally this purpose is met. However, since you as Plaintiff chose to bring the action in Small Claims Court, if you lose, you have no right to an appeal. The Defendant on the other hand, does have the right to appeal if he or she loses. Since the Small Claims Court is a division of the Municipal Court, an appeal is heard by the Superior Court of the district in which the Small Claims Court is located. The appeal hearing is a trial de novo, or "new trial". You will receive a Notice of Appeal in the mail with the date, time and place of the appeal hearing. The matter is heard by a Superior Court Judge or Commissioner (a full time judicial officer hired by the Judges, rather than appointed by the Governor) as if the first hearing had not occurred, and attorneys are allowed at this hearing. 2. Strategy at the Appeal Hearing: Remember the old saying, "if it ain't broke, don't fix it"! If you find your case on appeal it means you won the first hearing. Just do a repeat performance at the appeal hearing. Although the results of the first hearing technically are not to be considered by the Judge, my experience is that the Plaintiff usually wins again. In simple collection matters, this is generally because the Defendant owes the money, and Judges are usually alert to unmeritorious defenses (this is a nice way of saying "worthless excuses"). The one real decision in the context of an appeal hearing is whether to have your company lawyer do the trial. You will not know in advance whether the Defendant will have his or her lawyer there, so the decision can be difficult. If the Defendant has a lawyer and you do not, you may be intimidated or lose on some technical ground. However, if you have a lawyer and the Defendant does not, the Judge may feel sympathy for the Defendant. This is a difficult decision, but generally, go with your first team; yourself, unless there are technical aspects to the case best presented by an attorney. Since you won the first time around, you will probably win the second time around and receive a judgment. This is an order of the court requiring the Defendant to pay a sum certain to your company. The judgment accrues interest at 10% and is good for 10 years. It can be renewed once for another 10 years, so unless the Defendant declares Bankruptcy, you will have 20 years to collect on the judgment. 3. Enforcement of the Judgment: Just because the judge has ordered the Defendant to pay you, that does not always mean that he or she will. It is up to you to enforce the judgment, and the law provides some powerful mechanisms to do this. The enforcement of judgments is a technical and complicated area of the law. The suggestions in this article are of a very general nature only, and I urge you to consult with your attorney if you have any questions or problems. How, when and in what order you enforce the judgment may present problems with waiver or bar of remedies. If the water gets too deep, do not hesitate to call for assistance. Five minutes on the telephone with your attorney could save you a lot of aggravation and money. Now that you are duly warned, by way of general overview, here are the three basic procedures for enforcement of judgment:
A. Recording Abstracts of Judgment: The Clerk of the Court can provide you with a form which summarizes or "abstracts" the judgment. It is a one page form that states the name of the judgment debtor, the amount of the judgment, the date it was entered, and similar information. An original Abstract can be presented to the County Recorder for filing, just like you would file any document that pertains to real property. The effect of recording an Abstract of Judgment is that it gives the judgment creditor (you) a lien on any real property owned or acquired in the future by the judgment debtor. If he or she then tries to sell the property, title must be "cleared" by satisfaction (payment) of the judgment. The Abstract is valid as long as the Judgment, and any renewal of the Judgment, is valid. You can have as many Abstracts issued as you want, and can record one in each of the over fifty counties in California. This is probably unnecessary, however. In my practice, I generally record Abstracts in the Count where the defendant resides and/or does business, as well as each County that surrounds that "home" County. B. Filing a Notice of Judgment: Just like you can file a UCC-1 with the Secretary of State, to perfect a voluntary lien against the personal property of the debtor in the State of California, you can file a Notice of Judgment with the Secretary of State to perfect an involuntary (judgment) lien against the personal property of the judgment debtor in the State of California. The forms are available from the Secretary of State, and are similar in appearance to a UCC-1. The filing is good for five years. C. Levying a Writ of Execution: The Clerk of the Court can issue a Writ of Execution to the Marshal or Sheriff of any of the counties in California authorizing that court officer to levy the writ on any assets of the judgment debtor that can be located. There are specific procedures for the levy process, and the local Marshal's office is generally very helpful to Small Claims Judgment creditors. A Writ of Execution is only valid for six months, but can be reissued at that time. Only one writ per county can be outstanding at any one time, so be careful in tracking the writs. Obviously, you can only instruct the Marshal to levy the writ on assets that you know about. If the debtor filled out a credit application with your company, or if you kept copies of checks you received in the past from the debtor, you may know where the debtor banks. If the debtor is still in business you can levy on inventory or equipment at the place of business of the debtor. If you have no asset information on the debtor, the court can order the debtor to appear in court and answer your questions under oath regarding where his or her assets are. This is called a Judgment Debtor Examination, and the Clerk of the Court can provide you with the forms and instructions regarding this procedure. The disadvantage of the procedure is that the debtor participates in giving you the information, and unless you are very quick in levying, assets may be moved or hidden. Another alternative you may want to consider is to utilize the services of a private investigator to locate the debtor's assets. Before entering the practice of law I spent many years as an investigator tracking down debtors and their money, as well as my property, such as inventory or other collateral, that my clients wanted to levy on. A thorough asset investigation can reveal the location of assets sufficient to satisfy you judgment, and unlike the Judgment Debtor Examination, the debtor is unaware that the hunt is on. Finally, once you get paid, remember to file an Acknowledgment of Satisfaction of Judgment. I hope you have enjoyed and benefited from this three part series. In an upcoming issue I will be discussing how to best anticipate and deal with preference claims, and other topics of interest. Good luck, and remember, don't get mad - get paid! Please
direct questions or comments to: John Samberg is a partner in the Woodland Hills law firm of Bisno, Samberg & Mulvaney, and is a former private investigator. Mr. Samberg's clients include businesses and financial institutions in debtor/creditor and transactional matters. Mr. Samberg is a Magna Cum Laude graduate of Southwestern University School of Law, and in addition to his busy law practice, teaches legal writing at UCLA Extension, is a Los Angeles Superior Court Arbitrator and a Municipal Court Judge Pro Tem. He has presided over hundreds of small claims trials, and is a regular speaker at CMAC functions. |
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