In May, the national legal reform organization HALT released a “report card” on the states, rating each one’s small claims court system. Unfortunately, North Carolina had the eighth lowest score of all, earning a D.
Small claims court is the alternative to the regular system of civil justice. The crucial difference is that in small claims court, the litigants represent themselves, thus avoiding the high cost of representation by a lawyer. Often, the availability of small claims court makes the difference between being able to obtain justice and merely having to swallow a loss caused by another person or company.
Suppose, for example, that a family contracts with a roofing company for a new roof on its home. The firm replaces the old roof with new shingles and the family pays $6,000 for the job. But the next time there is a heavy rain, the new roof leaks badly. When the family complains, the roofer refuses to do anything to remedy the problems.
The homeowner might think about suing the contractor. In North Carolina, however, the limit in small claims court is $4,000. If he pursues his claim there, he automatically drops $2,000 of his loss. He could go into the regular court system, but there the procedures are more complicated and hiring a lawyer is, even though not legally required, a virtual necessity. The trouble is that a lawyer will charge a substantial fee to take the case and probably insist on a good chunk of money up front. Trying to recover the $6,000 might mean legal bills of half that amount.
Cases like that are ideal for small claims court and it’s too bad that North Carolina hasn’t done more to make that option available and user-friendly.
HALT’s analysis is based on six factors: the dollar limit on claims, the extent to which the system has advisors to help people navigate it, convenience (such as evening and weekend sessions), availability of mediation, assistance to winning parties in collecting judgments, and whether judges can use remedies other than money damages, such as injunctions. On the first two criteria, which count for 60 percent of the grade, North Carolina earned Ds. On the last four, the state got Fs.
Among other states in the southeast, North Carolina is put badly to shame by Georgia and Tennessee, ranked as the best and sixth-best respectively by HALT. On the other hand, North Carolina’s small claims court rating is just slightly worse than Alabama’s and a bit better than Louisiana’s.
What could the General Assembly do to make North Carolina more friendly toward small claims court? The biggest thing would be to raise the cap on the dollar amount. As HALT’s Senior Counsel Thomas Gordon said, “A $4,000 limit on small claims leaves many people stuck in a legal no-man’s land with a dispute that is too large for small claims court, yet not large enough to hire an attorney.”
In Georgia, the claims limit is $15,000, allowing far more people to use these courts. HALT advocates that all states go to $20,000. In Alaska, the cap was just raised from $7,500 to $10,000. What is North Carolina dong? The current cap of $4,000 has been in place since 1999, when it was increased by $1,000. Last year, a bill passed in the Senate (SB 577) that included an increase in the limit to $5,000, but that bill has lain in the doldrums in the House.
The sponsor of SB 577, Sen. Daniel Clodfelter, states that the problem in the House isn’t over the increase in the small claims court limit and thinks the bill may pass this year. He also believes, however, that more substantial increases in the limit would run into stiff opposition from district court judges and clerks. They tend to see small claims courts as competitors.
When it comes to the administration of justice, the state has a near monopoly. Except in instances where people have agreed to arbitrate a dispute, they need to be able to use the court system. Small claims court is the option individuals must have in cases where the extent of their loss is too large to simply forget about, but too small to warrant the expense of hiring a lawyer.
In the interest of bringing justice within reach of more North Carolinians, the state should take steps to make our small claims court system more accessible and user-friendly.