Small Claims for Small Business

Ellie owns a small flower shop in Salt Lake City. In addition to the regular individual customers who paid cash for their flowers, Ellie had several customers who bought their flowers on open accounts. This system of credit purchases worked quite well for Ellie and her shop. However, she had one client, Reese, who had purchased $1,500 worth of flowers for her wedding more than two months ago and had not yet paid. Despite her best efforts to collect the outstanding balance, Ellie was unable to collect the past due amount from Reese. Fearful that hiring an attorney and going to court would cost more than the amount due to her from Reese, Ellie decided to cut her losses, never do business with Reese again, and cease trying to collect the amount due.

Does this situation sound familiar? As a small business owner, you may encounter situations that you think could benefit from the legal system. However, the mere thought of hiring an attorney and going through the pain of litigation may give you pause, especially when you consider the cost of hiring an attorney. Often, the amount of money at issue is far less than the expense to get recovery and this alone may cause you to chalk it up as a loss. But, it doesn’t have to be this way. There is a way to pursue unpaid debts without spending a lot of money.

You have probably heard of small claims court, but may still be confused as to how to proceed in small claims court in order to collect your debt. In Utah, small claims court is designed for less expensive and swifter resolution of monetary legal matters. If a claim is less than $10,000.00 and does not involve claims for possession of real property or eviction of a tenant, you can utilize this system with relative effectiveness – without a lawyer and without huge legal fees. Unlike district court, in small claims court a director, officer, or other employee of the business may represent the business. While it is always prudent to seek legal advice from a licensed attorney before proceeding with any legal matter, claims brought in small claims court can be handled many times without an attorney.

Before you begin, you need to know if you are suing in the right place. Knowing where the defendant resides or where the claim arose is important because that is where your claim must be filed. Utah law provides that the case must be filed in the Justice Court where the defendant resides or where the claim arose. For example, if the defendant resides in Ogden, then the small claims action must be filed with the Ogden Justice Court. If you are suing a corporation, the corporation resides wherever it has its principal place of business. Please note that there are several municipalities which do not have a justice court. In those cases, the affidavit should be filed with a different court. The Utah State Court’s website has information regarding where these claims should be filed. For example, if the defendant resides in Farmington, the claim must be filed with the Davis County Justice Court.

Next, you will need to complete an affidavit of complaint and summons. Forms of these documents can be found on the Utah State Court’s website. You, as the plaintiff, then file the completed affidavit with the court clerk. There will be a filing fee that you will have to pay to the court. The amount of the filing fee will depend on the amount claimed in the affidavit. These fees currently range from $60.00 to $185.00. Once the claim is filed and the filing fees are paid, the clerk will complete the summons and issue a court date.

Now, it is time to serve the defendant with a copy of the affidavit. Service of the affidavit can be done in two ways. You can pay to have the sheriff, a constable or other process server serve the defendant personally, or you can send the affidavit in the mail. Please note that if you serve by mail it must be sent by a method that requires the defendant to sign a receipt and provides that the receipt is returned to you. Service should be carried out as soon as possible, but no later than 30 calendar days before the trial date. Additionally, proof of service of the affidavit must be filed with the Court within 10 days after service on the defendant. If the sheriff completes the service, the proof of service must be filed by that individual; however, if service is made by mail, the plaintiff is required to file the proof of service with the Court.

Once in front of the judge, the hearing will be informal. Both sides should plan what they are going to say. You should make it brief and provide a concise review of the issues. Don’t get bogged down in too many details or bring in unrelated points. Providing witnesses or physical evidence, such as documents and other paperwork, is not only permissible, it is recommended. Make sure to bring enough copies of all documents for the judge, the other party, and yourself. After the judge has heard the arguments, he or she may ask questions and either issue a decision at that time or take the matter under advisement, which means the matter will be looked into further and a decision issued at another time.

If the judge rules in your favor, you will be given a judgment. The court will not collect on the judgment for you, however, this judgment will aid in collection efforts. A lien may be placed on the defendant’s property or his or her wages may be garnished. Either the plaintiff or the defendant may appeal the judgment rendered by the court, however, a notice of appeal must be filed within 30 days of the entry of judgment. It’s important to decide quickly if an appeal will be filed. The Notice of Appeal must be filed with the court that issued the judgment.

There are many resources to help you with your small claim. The Utah Code Annotated section 78A-8-102 and the Utah Rules of Small Claims Procedure, which can be found online, provide a detailed description of the rules and requirements for proceeding with a small claim. Additionally, the Utah State Courts have a great web site where information and necessary forms can be found.

Filing a claim in small claims court shouldn’t cause worry or a loss of sleep because with a little preparation and legwork you could actually collect on debts you thought were hopeless. With a little effort, you can make small claims court work for you and your small business.

If you need assistance in the litigation or defense of a small claims action, please contact our office. Additionally, if you have small claims judgment we can help you try to collect that judgment.

Skoubye, Nielson, Johansen Attorneys Salt Lake City Utah

Kevin Bischoff