My Business Is Being Sued in Small Claims Court, Now What?

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Explore:  Small Claims Court

Perhaps you have an unhappy customer, a disgruntled employee or a dispute with a supplier.  You’ve tried to resolve the dispute, but just cannot come to an agreement.  Now, the sheriff or a constable is knocking at your door with a summons.  You’re being sued.  Now what?

First, take a deep breath.  For most  successful companies, this will not be your last trip to court.  Getting upset will not be productive.

Next, sit down and read the papers.  Look for the deadlines for your response.  This is important- mark the dates on your calendar.  If you miss the deadline or don’t show up to the hearing, a default judgment could be entered against you.  (A default judgment is an automatic loss for a failure to respond- you don’t get the chance to give your side of the story.  The court will open default judgments only under certain circumstances.)

If you have an attorney that your business works with, consult with them immediately.  It will be beneficial to you and your business to have someone handle the heavy lifting and stress associated with even a small piece of litigation. An attorney understands the laws involved and will be able to help you plan the best strategy for your situation.

However, if you wish to represent your business yourself, this article will provide some general advice. It should not be construed as legal advice and does not constitute a lawyer-client relationship.

In Pennsylvania, if the amount at issue is under $12,000, chances are that you will be before your local magisterial district judge (i.e. the “MDJ” or “small claims” court).  The magisterial district judge rules for Pennsylvania are online http://www.pacode.com/secure/data/246/partitoc.html . In other states, the rules about claim amounts may differ, so be sure to check.

Pay attention to the rules regarding who may represent the business before the magisterial district judge.  In Pennsylvania, an attorney or a partner/officer of the corporation may represent the business at the hearing. An employee or other authorized agent can also represent the business at the hearing, but the court requires that the representative have personal knowledge of the matter at issue, and written authorization from the business (forms are available on the Administrative Office of Pennsylvania Courts website).  Your state probably has similar restrictions.

In Pennsylvania, when you are served with the MDJ complaint, you will also receive a hearing date.  You must tell the court, at least five days prior to the hearing date, that you intend to defend the case.  If you have a counterclaim against the person who is suing you, you need to file that complaint at least five days prior to the date of the hearing as well.

On the date of the hearing, appear on time.  If there are documents you wish to present, have at least three copies of each document – one for you, one for the judge, and one for the opposition.  Be polite and neatly dressed and show the proper respect to the judge and the court.  Do not be rude to the staff- it will get back to the judge.

During the hearing, stand when you are speaking (unless the court tells you that you may sit).  Do not interrupt the judge or your opposition.  Speak clearly and loudly.  Do not become upset or emotional.  Present the facts, be succinct, and avoid tangents.  Above all, tell the truth.

In Pennsylvania, the MDJ may give his or her decision at the end of the hearing, or may issue it within five days.  Both sides have the right to appeal within 30 days of the date of the decision (make sure you calendar this deadline).  You do not have to give a reason for the appeal.

In Pennsylvania, if there is an appeal, the case moves to Compulsory Arbitration in the Court of Common Pleas.  Should the case reach this point, then your business is required to have an attorney represent you in the matter.  Your state probably has similar rules, and you will need to make sure what they are.