QuestionThe insurance company mailed a check to me for a figure less than half of estimates obtained by me. When I file the claim in small claims court Jane Doe is the defendent correct? Is the name of the insurance company on the "small claims petition" anywhere?
AnswerHi Audrey,
Can you HOLD UP on that filing in small claims court for a bit? I want you to try something first, AND I also want to (1) mention how a bodily injury claim could be lost if you file, and (2) give you some tips on small claims procedures. I hope my proposal to take a little time out to consider this information makes sense to you.
I will answer your question right now: you are absolutely correct in that the only name on the small claims petition is that of the tortfeasor. You do not (yet, anyway!) have any claim versus her insurance company. (Such a claim is rare—known as a bad faith claim, and hence, something beyond the scope of your case.) I appreciate that you were smart to see that the insurer did not belong in the case, and that you took the time to ask me.
So many times people think small claims is just something that can be dealt with summarily, and later they discover to their horror that they may have lost part of their claim by not proceeding with care. Thus, I am going to give you a lot of my time this Friday night to put together some cautions and some tips for small claims. But first, let's look at what we can do to avoid going to court.
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#1. HOW can you avoid going to court?
There are two ways I can suggest to try before you have to file the small claims petition.
FIRST, why do you not simply submit this to your own insurer for payment? They have a duty to treat you fairly on a first party claim. But of course you will have to pay your deductible, but your insurer will recover that for you versus the other company in intercompay arbitration.
SECOND, if the first party claim route is not practicable for you, then send one last-ditch effort to settle with the adjuster, based upon two enclosures. Those two enclosures will be "advance copies" of a completed small claims court petition and a completed complaint form to your state insurance commissioner http://www.settlementcentral.com/links.php
You tell the adjuster to pay the FULL amount of your estimates FORTHWITH, or you will file both of these documents immediately. BTW, if you decide to file, and if you decide to go for a default judgment (as I will show you below) you DO NOT give the adjuster ANY further notice whatsoever of having filed and served the lawsuit on the tortfeasor.
The adjuster will usually suffer some sanity upon receipt of written forms like these, and decide to pay what is right. If she does not, the proceed WITH NO FURTHER NOTICE to the adjuster. You have no duty to give the adjuster notice that you have filed the small claims court petition. Why not be a good sport and give her notice? Because you might be able to get a default judgment (see below).
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#2. Potential of complications if you suffered any bodily injuries.
If you had some significant damage to your vehicle, you likely also suffered some bodily injuries. If you have any aches, by all means see a doctor ASAP. Do not delay, thinking the pain will go away. Make your medical contact NOW.
If in fact you suffered no bodily injury whatsoever, then IGNORE this section entirely. It will only confuse the issue.
On the other hand, if you did have bodily injuries, then you MUST read this part because it is likely that you cannot use the small claims court forum. I will address these complications below, but first let us look at how many times you get to sue the tortfeasor.
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#3. You have only ONE CAUSE OF ACTION versus the tortfeasor
In most states, you cannot split your cause of action and sue the tortfeasor numerous times—once for property damage, once for medical bills, and once for pain and suffering. You may have to check this out in your state, but in most states, this is prohibited: it is called splitting your cause of action.
You can understand the sense of this rule since for the economy of the court's time, and the inconvenience of the parties and witnesses, we cannot have the same case litigated more than once.
So if you sue for property damage in small claims court, you MIGHT be prohibited from later on suing for your bodily injuries. You need to check on this.
The best way around the rule is if the parties agree. Some adjusters understand that the bodily injury claim is not ready to be settled right now, and they will agree to a small claims court resolution of the property damage claim. One thing to think of here is that the adjuster cannot waive the rights of the tortfeasor, so you would want the signature of the tortfeasor on the agreement to split the cause of action.
Absent an agreement, there are THREE ways to proceed. The worst way is to write in your petition that you are suing ONLY for property damage, and that unless the defendant objects, you are reserving your rights to sue for bodily injuries in a separate action.
The second way to proceed is to go for both property damage and bodily injury in the same action. But since most small claims jurisdictional limits are around $5,000 these days, that does not give you much room for both property damage and bodily injury.
The third way is to go to the small claims court clerk and get instructions on how to sue at the next higher court. Usually this will not be a superior court, inasmuch as the small claims court usually also runs as a district court—with two BIG differences: higher limits and attorneys.
The district court (which, as I say is usually the same court personnel, courtroom, and judge) will have much higher jurisdictional limits (usually up to $35,000), and it allows attorneys to appear. One reason people like the small claims court is that attorneys cannot appear unless granted permission by the judge (see below on how to oppose attorneys if you do proceed in small claims court).
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OK, Audrey, have I got you totally confused? Take it one paragraph at a time and hopefully what I am saying, although brand new to you, will make sense. Now let's look at one of the complications if you did have bodily injuries and you still decide to proceed in small claims court.
#3. First complication is payment of medical bills or subrogation
Complication #1 is how do you handle payment of your medical bills if you suffered bodily injuries? Either you must pay them yourself, or your auto or health insurer will pay them, or the tortfeasor's insurer will pay them.
But if you or your insurer pay these bills, you and they want to be repaid by the tortfeasor. Hence, your insurer will want to have its subrogation rights honored.
http://www.settlementcentral.com/page0459.htm
The subrogation is a special right owned by your insurer. It is for the special damages (medical costs and lost wages) that it has already paid out in your first party claim.
So you will want to make sure that the jurisdictional limits of the small claims court are high enough to accommodate all that you will have to sue for. You will have three topics that you will be suing for:
1. property damage
2. medical bills incurred (these we call "special damages"), and
3. your pain and suffering (this we call "general damages").
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#4. Second complication is the potential appearance of an attorney for the tortfeasor.
Let's say that either you did not suffer bodily injuries and hence you will proceed in small claims court, or that the jurisdictional limits are high enough to accommodate both the property damage and bodily injury claims. Hence, you are in small claims court.
As most people know, one huge advantage of using small claims court is that there are no attorneys allowed. This makes for simpler proceedings, and an informal resolution of claims.
But ten days after you serve the petition, you receive a Notice of Appearance from an attorney who will be representing the tortfeasor. What, if anything, can you do?
Here is what to expect. No ATTORNEYS are allowed in small claims court unless with specific motion and order of the court, so this is something you MUST OPPOSE.
The answer depends upon the circumstances of the case and the history of the small claims court judge in allowing representation for any claimant. My guess is that a request to allow an attorney for insurance to appear is going to be DENIED in two-thirds of the cases.
Here is how it mostly works: attorneys are NOT allowed in small claims court, UNLESS specifically allowed by the judge. And if an insurance company tries to appear in the court filing, you MUST FIGHT IT.
In fact, even before you do file, make sure that you get some kind of information from the court website or the small claims court statute to the effect that no attorneys will be allowed. Do NOT worry about asking the clerk of the court about this. Ask specifically for the reference to the statute that speaks to this topic, and get a copy.
Then, when you get that scary Notice of Appearance, write up a mini-brief to recite to the judge if it appears she is even considering allowing in an attorney to represent the other side.
State such things as:
(1) the intrusion of attorneys will undermine the purpose of small claims courts, which is the swift administration of civil justice, and
(2) if she allows that side to have an attorney, then you will have to get a delay so you can get an attorney also, and
(3) the issues here are SIMPLE and no real defense is at stake in this case of obvious negligence, and hence NO attorney is needed since the tortfeasor himself can tell his side of the accident, and
(4) as for the amount of the damages, the tortfeasor is insured and his limits are more than the maximum limits of this court, and hence it is only his insurance company that will have to pay (expect the judge to kind of reject this last argument, but make it anyway).
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#5. Go for a DEFAULT JUDGMENT—no notice to the insurer—WAIT before notifying the insurer once judgment is entered in your favor.
This section applies ONLY if two things are applicable. First, there must be some advantage to getting a default judgment (see next paragraph), and second, you must be able to wait to get your money. If either of these does not apply, then ignore this part.
A default judgment is one granted to you upon your proof to the court where the defendant does not enter an appearance or appear at the time specified for trial. It does happen occasionally in superior court insurance cases, and a bit more frequently in small claims court cases.
OK, what could be the advantage of getting a default judgment? It is this: the court will take only your testimony and consider only the opinions of your experts or your doctors. Hence, if there were a trial and the defendant could present evidence, such as an opinion, that undermines the opinion of your experts, the result is not likely going to be as good for you as if the judge were to consider ONLY your side of the evidence. Thus, many times the plaintiff (that is you) can get sufficient proof to achieve an award of the total jurisdictional limits of the court (i.e. $5,000 in many states). IN ADDITION, the prevailing party gets her costs. These are the filing fees, process service fees (bring the bill to court), professional proofs prepared (photo enlargements), etc.
If you think you would do a lot better in a default judgment setting, AND you can wait to get your money, then why not try for a default judgment? In most cases where the plaintiff gets one, the default judgment is all the way up to the jurisdictional limits of the court.
So what should you do? Actually, it is what you do NOT DO. You do not make a big announcement that you have filed a claim and served the tortfeasor. You DO NOT have to send the insurer a copy of your lawsuit. You can break off communications without any notice whatsoever of a lawsuit.
Remember that letter I want you to send to try to settle? That letter is sufficient notice since in it you just told them that you would like your demand paid in full or you will be forced to consider filing in small claims court. I would tell the adjuster that you need the full value of your estimates or the small claims court limits (i.e. $5,000) IN YOUR POCKET or you will sue in small claims court. That is it—nothing else need be said. If they pay up, fine; if not, say no more—just sue.
NO NOTICE OF LAWSUIT is REQUIRED to be given to the insurer. You are required to send a notice or demand to the tortfeasor, but NOT to the insurer. There is a chance (maybe only 15%) in small claims insurance cases to get a default judgment versus the tortfeasor. Why? I guess that the insured often thinks that his company is handling it, I suppose.
Hence, once you decide to go forward with the lawsuit, you do not initiate any further communications with the insurer UNTIL 40 days AFTER a default judgment has been entered in your favor.
Yes, you will serve the tortfeasor via a process server. Hire it done by a PROFESSIONAL EXPERIENCED civil process server instead of using the sheriff. Why? Because you might have to serve by statutory substituted service, and the professional knows best how to make the affidavit. You will present his bill as part of your costs, although some courts do only reimburse you a lesser statutory amount.
If the defendant shows up, good—just present your evidence. Have a copy of the estimates (and if you have bodily injuries, then also the medical treatment notes) to give to the court. Organize your presentation and have demonstrative evidence (i.e. photos, etc.) for as much proof as possible.
If the defendant does not show, the court will sit you down until the docket is done and then call the tortfeasor's name again, and at that time you will get to present your case to the judge, who will then order a default judgment in the entire amount that you have proved. Be sure to ask for costs, such as the filing fee, AND the process server's fee (BRING HIS BILL TO COURT). The court staff will prepare the judgment and mail it to you. YOU SHOULD NOT GIVE ANY NOTICE TO THE INSURER OR DEFENDANT AT THIS TIME. LAY LOW.
The defendant can set aside that judgment for good cause shown and alleging a good defense. This can be done at any time up to one year. But that can be tough if there is no good cause or if there is no real defense to the case. Still, they WILL prevail if they make their motion to set aside the judgment soon after it is entered. The court does not want to penalize someone for inattention, so if they were to come in two days after you got the judgment and file a motion to set it aside, the judge may grant it.
But if they were to come in six months after the judgment was entered, the judge is less likely to have sympathy since the degree of inattention is greater. You will thus WAIT to give notice to the tortfeasor (again, NO NOTICE is to be given to the insurance adjuster) a minimum of forty days after the date shown on the judgment.
There are two reasons to wait the forty days. The first, as just stated, is that the longer the time it takes the tortfeasor to make a motion to set it aside, the better for you. The second reason is that forty days likely precludes any appeal by the defendant. I do not know what rights of appeal exist in your state, but most states do allow an appeal from small claims court.
Hence, the insurer would prefer to just appeal the judgment and so this is another way the defendant can set aside the default judgment is to appeal it to superior court. But the rights of appeal usually EXPIRE thirty days following entry of the judgment. You best check on this to be sure, but whatever the time for filing the appeal (i.e. the thirty days), wait at least another ten days before you give notice of the judgment.
Once you get the judgment in the mail, take note of the date of entry thereon. For safety, give yourself ten days beyond the 30 day appeal right and then send a copy of the judgment to the defendant asking him how he wants to pay it. Do not bother sending anything to the adjuster.
IGNORE the court's instructions on the judgment form or attached to it regarding giving notice to the defendant ASAP. Those are for cases wherein you will want to transfer the judgment to a court of record. Since you are going to collect from an insurance company, you can just wait until you give the defendant notice of entry of the judgment. Lay low and bide your time until the 40 days has elapsed, and THEN spring the news of the judgment upon the defendant.
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#6. Small Claims Court Terms—FYI good stuff to know:
http://consumer-law.lawyers.com/Small-Claims-Court-Terms.html
OK, Audrey, I bet you never thought there was so much to think about in what most consider a simple process. But you can see that there is great advantage to knowing the information I have given you. Best wishes for a smooth and quick recovery of monies due to you.
I trust that my extra time here has produced some information that has been of value to you, and thus I would respectfully request that you take the time to locate the FEEDBACK FORM on this site and leave some feedback for me.
Best Wishes,
David,
Dr. Settlement, J.D. (Juris Doctor)
http://www.SettlementCentral.Com
