NAVIGATING SMALL CLAIMS COURT

NAVIGATING THE LEGAL SYSTEM ON YOUR OWN IN SMALL CLAIMS COURT

Small claims court can be useful when the amount in controversy is $7,500 or less.  It is a quick process that avoids attorney's fees and the delays of typical litigation.  There are some excellent self-help resources at the websites below if you decide to embark on the process or if you find yourself involuntarily involved.

http://www.courts.state.co.us/Self_Help/Local_Small_Claims.cfm
http://www.courts.state.co.us/Forms/Forms_List.cfm?Form_Type_ID=9

Some of the important steps and rules of the small claims court are as follows:

1. Only certain actions can be filed in small claims court, so first make sure you have a case that is allowed to be heard in small claims court.  You can see a list of the correct types of cases at Colorado Revised Statute §13-6-403 or at the self-help website. 

2. There is a limit for how much money you can sue for in small claims court.  Your amount has to be $7,500 or less, which includes interest. 

3. Your trial will be before a Judge or Magistrate.  There are no jury trials in small claims court.

4. You will sue in the county in which any of the defendants resides, is regularly employed, or is a student at a University.  In an action involving real property, such as a landlord-tenant dispute, the action may be brought in the county in which the subject real property is located.

5. You can print the forms off of the self-help website above and file them in the county that you choose.  If you are the Plaintiff, you will need to file the Notice, Claim and Summons to Appear for Trial.  You will also need to have those papers served on the Defendant(s) and file an Affidaivit of Service.  If you are the Defendant, you need to appear to the named court on the day listed on your summons.  Failure to appear could result in a default judgment against you. 

6. Service can be obtained by a Sheriff's Department or a private process server.  You must have the defendant(s) served personally.  You can recover your costs of service in a final judgment against the Defendant(s). You can also recover the filing fee as a cost.  The filing fee depends on the amount of your claim. If you are the defendant and you win at trial or you win a counterclaim, you can recover your costs. 

7. If you obtain a judgment, the court will not help you collect that judgment.  If you live near Jefferson County, there is a collection clinic taught at the courthouse every first Tuesday of the month by Arnold & Arnold, LLP. 

Kelley G. Shirk, Esq.

Differences under Chapter 7 and Chapter 13 of The Bankruptcy Code: Secured or Unsecured, payment of judgment, impairment of exemptions?

What are the Differences under Chapter 7 and Chapter 13:  Secured or Unsecured, payment of judgment, impairment of exemptions?  By Jean C. Arnold, Esq.

A.             Payment of judgment – unsecured debt.  In Bankruptcy, it is unlikely the debtor will pay the full amount of the judgment unless the underlying debt is found to be non-dischargeable under 11 U.S.C. §523 or the judgment is part of a Chapter 13 plan to pay the judgment in full or the judgment is reaffirmed by agreement with Court approval. 

Under Chapters 7 and 13, if there are non-exempt assets available for distribution, the creditor must timely file a proof of claim under 11 U.S.C. §501.  The creditor’s deadline to file the proof of claim is shown on the notice of bankruptcy, and in Chapter 7 or Chapter 13 cases, must be filed within 90 days after the first date set for the meeting of creditors under 11 U.S.C. § 341(a).  See Bankruptcy Rule 3002(c).  The bar date for Chapter 7 and Chapter 13 proofs of claim cannot be extended for excusable neglect.  In re Smartt Construction Co., 138 B.R. 269 (D.Colo.1992) and Jones v. Arross, 9 F.3d 79 (10th Cir.1993).  If the claim is allowed, the creditor will receive the pro rata distribution of assets, following payment of administrative expenses and the Trustee’s fee. 

B.                 Payment of judgment – secured debt.  Under both Chapters 7 and 13, the creditor is entitled to maintain its security interest in the debtor’s property.  The creditor may seek relief from the automatic stay under 11 U.S.C. §362 and proceed to dispose of the secured asset to satisfy its debt.  If the value is insufficient, then the creditor can seek recovery for the unsecured – undersecured – debt component through the claims process under §501. 

There are circumstances under 11 U.S.C. §363(c) allowing the Trustee and debtor to use, sell, or lease secured property.  Such as the use of “cash collateral” in the ordinary course of the debtor’s business under §§ 721 or 1304.  Then, unless the creditor consents, the debtor must comply with the requirements of 11 U.S.C. §363 by providing “adequate protection” to the creditor under §363(e).  Adequate protection generally takes the form of providing the creditor with alternative property to secure the debt.   

C.                 Impairment of exemptions.  Colorado’s listing of exempt property appears in §13-54-102, C.R.S.  However, §13-54-107, C.R.S. expressly prohibits the Bankruptcy exemptions contained in 11 U.S.C. § 522(d).   Thus, because Colorado’s state exemptions are not inconsistent with Federal Law, Colorado residents can only use the state exemptions when filing bankruptcy in Colorado.  In re Parrish, 19 B.R. 331 (D. Colo. 1982).  

I have just been ordered to mediation! What does that mean?

Courts are frequently ordering mediation before you can go to trial.  Many people have never experienced mediation and don’t know what it is.  Mediation is separate from a trial.  Mediation is a time to sit down with a mediator – a neutral third party who doesn’t have a stake in the outcome and has been trained to assist people in coming to a resolution of their conflict.  Mediators can be employed by the court or can be private mediators.  They are often attorneys or retired judges, but don’t have to have legal training at all.  Mediation is an opportunity to hear your opponent’s side of the conflict and be creative in coming to a resolution.   Sometimes mediation is the first time that you can hear the other person’s story.  Mediation often brings new facts to light, which helps people resolve their dispute.  Mediation also gives parties control over the outcome.  The disadvantage of having a judge resolve a dispute is that the judge can only rule for one party and they can only enter orders allowed under law.   There is always risk in going to court.  Mediation helps parties control that risk by having control over the outcome.

Some people dislike mediation because they may have already tried to resolve the issue themselves and think it is hopeless.  However, there is something advantageous about having to tell your side of the dispute to a third party. People are usually better behaved and don’t shout or interrupt the other person when there is a third party present.   The mediator listens to both sides equally and asks questions to try to narrow the disputed issues.  The mediator will control the discussion and can intervene and talk to one party separately if necessary.  Sometimes the conflict is centered around emotional issues, such as hurt feelings or anger, completely separate from the legal issues that are the source of the complaint.  A skilled mediator can seek to address those emotional issues and see if there can be resolution of those issues as well as the legal issues.  Often tears are shed at mediation.  I have seen the parties noticeably soften, once the conflict is resolved, and begin talking to each other after mediation.  They would hardly look at the other person when the mediation started, but afterwards they are able to look the other person directly in the eye and have a normal conversation.    This rarely happens in a courtroom. When the judge issues the order of the Court, people usually leave without talking to each other.  After a trial, both parties are unhappy because the outcome was not what they hoped for.     So be open about mediation and go ready to mediate in good faith.  You might be surprised at the positive outcome.    

By Terry Ehrlich, Esq.

New Wyoming Lien Law

Change in Wyoming lien law – Have you filed your pre-lien notice?

A number of our clients have done work or will soon be doing work or supplying goods and services for projects located in Wyoming.  Unlike Colorado, Wyoming is a pre-lien state and thus a supplier of goods and services must provide a notice to the owner and general contractor within thirty (30) days of FIRST supplying to the project.  Although the pre-lien notice has been a requirement under Wyoming lien law for quite some time, there have been a few loopholes in the statute that would allow a lien claimant to pursue their lien even if the pre-lien notice was not done.   However, the Wyoming statutes changed as of July 1, 2011 doing away with the loopholes.  Thus,  a pre-lien notice is a mandatory requirement to filing a lien in Wyoming and failure to timely do so will bar the claimant from filing a lien.  Wyoming requires that a pre-lien notice be filed even on public projects.

There have also been a number of other changes to the mechanic’s lien law. Among them is extending the time for filing a lien claim.  The old statute required that a lien claim be filed by the general contractor within 120 days of his last work and within 90 days of last work for subcontractors and suppliers.  The statutory changes have lengthened these time periods to 150 days for general contractors and 120 days for subcontractors and suppliers.  Again it is important to remember that without the pre-lien notice a claimant will not be able to file a lien at all.

There are other changes that have occurred in the statute which effect mechanic’s liens claims as well as oil and gas claims and public projects.  I have only touched on two of those changes in this blog.  If your company is doing business or planning on doing business in Wyoming it is best that you know the requirements for protecting your lien rights.  Feel free to contact our office with questions regarding the statutory requirements or any other issues you may have doing business in Wyoming.

Sources:

TITLE 29 Wyoming Statutes

Section 29-2-106 When statement of lien to be filed.

Section 29-2-112 Preliminary Notices

How to get your property back from a debtor who is not paying you.

SELF-HELP REPOSSESSION

A creditor can only use self-help repossession if it has a security interest (UCC filing or a title)  in personal property.   If a creditor has a perfected (it has been filed with the Secretary of State) security interest, it is entitled to use self-help under the UCC.  Section 4-9-609 C.R.S. allows a secured party to take possession of the personal property (collateral), without an order from the court, if the creditor can do so without breaching the peace.  If the collateral is behind a locked door or gate, then repossession would breach the peace.  If the collateral is unreachable or the location is unknown, a creditor can file a replevin action under Rule 104, C.R.C.P.   Rule 104 requires the following to be filed with the Court:

1.         A verified complaint alleging that the Plaintiff is the owner of the property or is entitled to possession, attaching a copy of the document entitling the Plaintiff to possession;

2.         An allegation that the property is being detained by the defendant against the Plaintiff’s right to possession thereof and the specific facts constituting detention against the right of the Plaintiff to possession;  

3.         A particular description of the property, a statement of its actual value, a statement of the location of the property, and;

4.         a statement that the property has not been taken for a tax assessment, or fine; or seized under an execution against the property of the Plaintiff.

The Court reviews the Verified Complaint and issues a show cause order directed at the Defendant to show cause why the property should not be taken from the Defendant and delivered to the Plaintiff.  The hearing shall be not more than 10 days from the date of the issuance of the order and the order must be served on the Defendant at least 5 days prior to the hearing date.  The Plaintiff may request a hearing date longer than 10 days, which waives the right to a hearing not more than 10 days after the date of the order. This hearing takes precedence over all civil actions, except other cases to which special precedence is given by law.  If the Defendant fails to appear for the Show Cause hearing, then the Court will issue an order granting possession of the property to the Plaintiff.

The Court can grant an Order for Possession prior to the hearing, if:

a)                  the defendant gained possession of the property by theft;

b)                  the property consists of negotiable instruments or credit cards;

c)                  the property is perishable or the defendant may destroy, dismantle, remove parts from or in any way substantially change the character of the property; or will conceal or remove the property from the jurisdiction of the court; or

d)                  the defendant, by contract, voluntarily, intelligently, and knowingly waived his right to a hearing prior to losing possession of the property.

The Court can require a bond, in its discretion, not to exceed double the value of the property. The Court can also order the Defendant to preserve the property.

The order for possession will describe the specific property and specify the probable location or locations where the property can be found. The sheriff is directed to take the property and retain it in his custody.  The sheriff can deliver the property to the Plaintiff, after receiving his fees.  The sheriff can also cause a building or enclosure to be broken into, if necessary. The Sheriff generally will require a Writ of Assistance for this. The Sheriff then serves a copy of the order for possession upon the Defendant.

Submitted by Terry Ehrlich, Esq.

HELP! MY TENANT STOPPED PAYING RENT - The Quick Guide to Eviction

HELP! MY TENANT STOPPED PAYING RENT!

The Quick Guide to Eviction

If you are a landlord having trouble collecting your rents, this is a quick guide to eviction.  You can also read Colorado eviction instructions and find the necessary forms by following our link at http://www.arnoldarnold.com/Resources.shtml or going directly to http://www.courts.state.co.us/Forms/Forms_List.cfm?Form_Type_ID=28.

Step #1- You need to post either the Demand for Compliance (if the tenancy has a specified termination date) or the Notice to Quit (if the tenancy does not have a specified termination date).  This posting should be on the door of the property.  The notice should be posted for the applicable time period before filing any court action.  The forms can be found at the above links.

Step #2- Once the time period has passed from posting the Demand for Compliance or Notice to Quit, you are ready to file an action for Forcible Entry and Detainer in the County Court where the property is located.  The "plaintiff" filing the action should be the named landlord on the lease.  The maximum amount of damages you are allowed to request is $15,000.00.

Print the Summons, Complaint, and Affidavit of Service forms available at the above links.  You are the plaintiff and the tenant(s) are the defendant(s).  You can request all back rent owed plus late fees if they are specifically mentioned in your signed lease.  You need to attach a copy of the signed lease to the complaint.  You can also request all costs for filing the action in your judgment.  This would include filing and service fees.

Filing- Once all the paperwork is filled out, you need to go to the courthouse and file it with the clerk of court.  They will give you a case number and a court date. There is a fee. 

Service- you can either post the summons and complaint with the attached lease on the door of the property again OR you can have the defendant(s) personally served.  If you just want the tenants evicted, you can just post the paperwork on the door.  However, if you want to request a money judgment from the court, you must have them personally served.  The county sheriff or a private process server can do this for you.  The person serving the documents cannot be the named plaintiff or anyone related to the named plaintiff.  It needs to be a neutral person with no interest in the case.  If you serve the defendant(s) personally, the server will have to fill out the affidavit of service, sign it in front of  a notary and have it notarized. 

Step #3- Go to court on the day your summons states and bring copies of all your documents.  Make sure to bring the original signed and notarized affidavit of service and give it to the court clerk upon arrival.  You will either meet with the defendant(s) and try to work out a deal or the defendant(s) will need to file an answer.

If the defendant(s) do not file an answer or do  not show up at court, you can request judgment against them.  If you had them personally served, you can request judgment for possession and the money judgment.  If you only posted the paperwork on the door, you can only request judgment for possession.  This means you can evict the tenants.  You will need to get a Writ of Restitution from the Court and take this to the county sheriff's department. 

Step #4- Once the sheriff has the writ of restitution, they will serve this upon the tenants and give them 3 days to get out or be forced out.  You may need to have people ready to move the tenants out.  The sheriffs will usually only give you one hour to do this. Be prepared.

Kelley G. Shirk, Esq.

GETTING TO YES WHEN YOU WANT TO SAY NO - JOINT PAYMENT ARRANGEMENTS

GETTING TO YES WHEN YOU WANT TO SAY NO

JOINT PAYMENT ARRANGEMENTS

Jean C. Arnold, Esq.

Whether selling materials, renting equipment, or providing labor, consider whether your customer has the financial ability to pay without funds from the project.  Perhaps, establish a "joint payment" arrangement with either the owner or general contractor when you want to say “no” to the customer, but “yes” to the project.  Beware, however, of some pitfalls.

Joint Check Agreements.  First, analyze your customer’s contract.  Check the contract for “pay-when” and “pay-if” paid terms that could impact when and if payment will occur. 

Second,  understand the joint payment agreement is a contract creating rights and obligations.  In White Construction Company, Inc. v. Sauter Construction Company, Inc., 731 P.2d 734 (Colo. App. 1986), a sub-subcontractor was held liable to the general contractor for work not performed in a workmanlike manner because the general contractor and the sub-subcontractor had entered into a joint check agreement.  In Buttermore v. Firestone Tire and Rubber Company, 721 P.2d 701 (Colo. App. 1986), the owner was held to be personally liable to subcontractors because of a joint check arrangement on a project.

Finally, employ caution when using the owner’s or general contractor’s joint payment agreement form.  Many owners and general contractors, in order to limit liability to suppliers, will include such language as: "This arrangement is made merely as an accommodation to the supplier and is not intended to be relied upon by the supplier or to prove any contractual obligations owing from contractor to supplier."  Others will include language:  (1) limiting their payment obligation to the amount due the subcontractor; (2) incorporating arbitration or other dispute resolution conditions stated in the subcontract agreement; and (3) language waiving mechanic’s lien rights or other supplier’s payment remedies.  If you are a supplier, beware of these limitations.   

Remitting joint payments to your customer.  Some material suppliers remit portions of the joint check proceeds to their customers even though they are still owed money for materials for the project.  A materialman can make loans to his customer, but not with the owner's or general contractor’s money intended to avoid liens against the property.  Section 38-22-127, C.R.S.  Additional language would need to be added to the joint payment form if you are planning to remit funds to your customer from joint payments received.  Be sure to keep the owner or general contractor apprised as to the amounts remitted.

Payment application.  Often suppliers will apply joint payments received to oldest invoices rather than to the invoices for the project – even knowing the source of funds.  In the case of Jackson v. A.B.Z. Lumber Co., 155 Colo. 33, 392 P.2d 288 (1964),  the Colorado Supreme Court found that a lumber supplier could not maintain its mechanic’s lien against the property because the lumber company knew the source of funds used by the subcontractor to pay the delinquent material bill even though the subcontractor never directed the lumber company how to apply the payment.

Submitted June 16, 2011.

Copyright 2011.  Jean C. Arnold.  All rights reserved.  No portions of this textual material may be reproduced without the prior written permission of Jean C. Arnold, Arnold & Arnold, Attorneys at Law, LLP, 7691 Shaffer Parkway Suite A, Littleton, CO 80127 720-962-6010.

e-mail:  jeanarnold@arnoldarnold.com.