QUESTION: The governor recently signed a bill into law that increases the maximum monetary claim that may be filed in small claims court to $5,000 from $3,500. What impact will this have on small claims filings?
ANSWER: Now that cases with a monetary amount up to $5,000 can be filed in small claims court (rather than in regular District Court), we should see an increase of cases in small claims court and an equivalent decrease in regular claims court.
Q: Which kind of cases are typically settled in small claims court?
A: All kinds — property damage, breach of contract, security deposit, personal loan, car repair, defective product, personal injury and so on.
Q: What are the pros of going through small claims court?
A: Settling a case in small claims court is quick and inexpensive because you don’t have to hire an attorney. In addition, you have two options to settle your dispute with the other party: You can work out a mutually acceptable agreement with the assistance of a neutral mediator of the Mediation Center of the Pacific, or you can have your day in court and let the judge decide.
Q: What are the cons?
A: First, in small claims court there is no right to appeal. If the judge decides how your dispute should be settled, you must accept that decision — whether you like it or not. Second, keep in mind that winning in court and getting your money are two different things. If you win, the judge is not going to cut you a check. The burden to collect is still yours.
Q: How does small claims court work in Hawaii?
A: When you file a claim in small claims court, the clerk will set a date for your trial. From that point on, you are the plaintiff, and the person you are suing is the defendant. Next, you have to serve the court papers on the defendant — in person, by mail, through the sheriff or a civil process server. One way or another, you have to notify the defendant both about your claim and the day of the trial.
If you have served the defendant properly and he or she shows up in court on the day of the trial, the Judge will ask him/her a simple question: "Do you admit or deny that you owe X dollars to the plaintiff?" If the defendant answers, "I admit," there is automatically a judgment against him or her for the amount claimed, plus court and service costs. If the defendant says, "I deny — I do not owe the plaintiff anything" or "I owe the plaintiff something, but not the entire amount of the claim," the judge will send both of you to mediation.
Q: If a defendant is ordered to pay the plaintiff and the defendant refuses, what recourse does the plaintiff have?
A: If the defendant is ordered to pay but he doesn’t, the plaintiff can take several steps. Typically, he could garnish the defendant’s wages or try to find some other assets, like bank accounts. In Hawaii, as in other states, there are specific laws stating what the plaintiff can and cannot do to collect money from the defendant. Since I am a mediator and not an attorney, I am afraid I cannot give you more specific information on this issue.
Q: What does mediation in small claims court entail?
A: The purpose of mediation is to give you and the defendant the opportunity, A, to present your perspective, B, to listen to the other party’s perspective, and, C, to identify all issues that need to be resolved. Once you have that information, you can decide whether it is in your best interest to work out an agreement that both of you think is fair, or let the judge decide.
The beauty of mediation is that you and the defendant have total control over your settlement. Not only can you decide how much money should change hands and within how many days, weeks or months; you can also resolve any misunderstanding or miscommunication issues — for example, with a verbal or written apology. If you are able to reach a mediated agreement, the mediator will write down its terms, and the judge will check with you that everything you have agreed on is crystal clear.
Q: What are the benefits of mediation?
A: You (the plaintiff) are more likely to receive all agreed-upon payments. The defendant avoids having a judgment entered against him or her, which could affect his/her credit rating for years to come. And both of you have an opportunity to preserve your relationship. Also, mediation takes place right there in small claims court on the same day of the trial.
Q: Who pays for the mediation if the judge sends the parties to a mediator?
A: The Hawaii Judiciary has a contract with different mediation centers on each island — for Oahu it is the Mediation Center of the Pacific — to provide mediation services in small claims court. Thus, the cost of mediation is not paid by either party (plaintiff or defendant). It is paid by the Hawaii Judiciary (i.e., by Hawaii taxpayers).
Q: What happens if you are not able to work out an agreement in mediation?
A: The judge will decide how your dispute should be settled. In that case, nothing you said or offered during mediation can be used against you in court, because mediation is confidential.
Q: If you have to go to trial, what should you expect?
A: If you are the plaintiff, you have the burden of proof that, A, you suffered a monetary damage and, B, the defendant is liable for it. The way you do that is through your testimony, your evidence (documents, receipts, invoices, pictures) and your witnesses.
To be safe, make sure to print out any pictures, emails or documents you have on your computer or cellular phone. As for your witnesses, they must be present in court so the judge can determine their qualifications and credibility.
And finally, be aware of what the judge will do if your dispute — like many disputes — is not black and white, but there is a gray area because neither you nor the defendant can prove conclusively who said or did what. In this case the judge will apply a little-known legal concept called "preponderance of evidence." It works like this: If the judge believes you 51 percent and the defendant 49 percent, you win. But if the judge believes the defendant 51 percent and you 49 percent, you lose. Perhaps this is another reason small claims court judges prefer that you and the defendant reach your own settlement agreement in mediation.
— Interviewed by Alan Yonan Jr.
Editor’s note: "Akamai Money" seeks out local experts to answer questions about business in Hawaii. If you have an issue you would like us to tackle, please email it to email@example.com.