The Small Stuff: Small Claims Court and Limited Civil Court Jurisdictional Limits

“Coins Currency Money” by Tim Sullivan. CC0.

Sometimes the small stuff matters. 

And when it comes to legal disputes this can pose a problem for clients as well as their attorneys because litigation and arbitration, the two most frequently utilized venues to resolve legal disputes in the United States, can be and usually are expensive.

Data on the cost of civil litigation is sparse. According to a 2013 survey of trial lawyers conducted by the National Center of State Courts, the median cost of litigating a contract dispute – which is the category that most construction disputes would fall under – is $90,575. And this is in 2013 dollars.  With inflation, that number rises to nearly $120,000 in 2023, and based upon our experience litigating and arbitrating complex (and even not so complex) construction disputes, it can be many multiples over that.

So what are clients to do? Walk away and not get paid? That’s rarely a solution. Have their lawyer send a nasty letter in the hope of shaking some change from the old money tree? Send the claim to a collection agency that will likely charge a service fee and a contingency fee of anywhere between 20% to 50% for every dollar that might be collected? The economic choices aren’t great.

But there are some strategic decisions clients and their attorneys can make to try to limit the economic cost of resolving legal disputes. Two of those are where a case is filed. In California, plaintiffs generally have three choices when it comes to filing a civil lawsuit: (1) Unlimited civil court; (2) Limited civil court; and (3) Small claims court. All of these are in the state courts of California.

In cases involving federal law, or where the parties are from different states (or nations) and the amount in dispute exceeds $75,000, parties may file in federal court. However, federal courts, unlike the state courts of California, do not have different types of civil courts geared toward the amount in dispute.

Unlimited Civil Court

Jurisdictional Amount: Most construction disputes are filed in unlimited civil court. Unlike limited civil court and small claims court, there are no dollar caps on the amount that can be sought in unlimited civil court.

Legal Counsel Representation: Parties to cases filed in unlimited civil court may be represented by legal counsel. Indeed, if a party is a corporation, limited liability company, or other business entity other than a sole proprietorship, the company must be represented by legal counsel. This can be outside legal counsel (i.e., a law firm) but it can also be by in-house counsel.

Discovery: Parties to cases filed in unlimited civil court may serve discovery. This includes written discovery seeking documents from another party, responses to questions posed to another party, and admissions from another party. It also includes the ability to conduct site inspections which can be important in construction cases. And it includes the ability to conduct depositions. Parties may also seek documents from and conduct depositions of third parties. Discovery, while it can be important to a case, can also be a huge component of the overall costs of civil litigation.

Timing: Time is money. And this is certainly true in civil litigation. The more time parties are in litigation the more money they can expect to spend on discovery, court hearings, and other costs.

In 1986, with California courts facing a burgeoning backlog of cases, the California State Legislature passed the Trial Court Delay Reduction Act. Following passage of the Act, California courts implemented “time goals” for the disposition of cases whether by trial or otherwise.

For unlimited civil cases, the goal is for 75% of unlimited civil cases to be disposed of within 12 months; for 85% of unlimited civil cases to be disposed of within 18 months; and for 100% of unlimited civil cases to be disposed of within 24 months.

In our experience, while California state judges try to meet these goals, they are just goals, and the reality is that many unlimited civil cases can take up to five years to go to trial.

Limited Civil Court

Jurisdictional Amount: Beginning January 1, 2024, plaintiffs can file civil lawsuits in limited civil court if the amount being sought is no greater than $35,000. Depending on the amount in dispute, it may make strategic sense for a plaintiff to file a lawsuit in limited civil court even if the amount in dispute is over $35,000, to take advantage of the more limited discovery rules that apply to limited civil cases (e.g., amount in dispute is $40,000, but plaintiff files in limited civil court, knowing that the most they can recover is $35,000).

Legal Counsel Representation: Like unlimited civil cases, parties to cases filed in limited civil court may be represented by legal counsel, and if a party is a corporation, limited liability company, or other business entity other than a sole proprietorship, the company must be represented by legal counsel.

Discovery: Cases filed in limited civil court have special and more limited rules pertaining to discovery. In limited civil court, a plaintiff can serve a Case Questionnaire with their complaint to seek answers to certain basic questions. In addition, each party is entitled to serve a Request for Disclosure of Witnesses and Evidence to seek the identification of witnesses and evidence intended to be used at trial. Finally, parties may present testimony at trial, including expert testimony, in the form of affidavits or declarations signed under penalty of perjury.

Further, while written discovery and depositions are permitted in limited civil court they are more limited. Unless otherwise permitted by the court, each party is entitled to serve a total of 35 requests for documents, answers to questions, and admissions to another party. In addition, unless otherwise permitted by the court, each party is entitled to take one deposition. Finally, parties may seek documents from, but may not depose, third parties, unless the deposition of the third party is the one deposition taken by a party.

Timing: For limited civil cases, the goal is for 90% of limited civil cases to be disposed of within 12 months; for 98% of limited civil cases to be disposed of within 18 months; and for 100% of limited civil cases to be disposed of within 24 months. Again, these are goals, and from what we have seen, it can often take longer.

Small Claims Court

Jurisdictional Amount: Beginning January 1, 2024, plaintiffs can file civil lawsuits in small claims court if the amount being sought is no greater than $12,500. However, there are several conditions. First, only individuals, and this includes individuals who own companies operated as sole proprietorships, can file civil lawsuits in small claims court for up to $12,500. For companies other than sole proprietorships, as well as government entities, the small claims court jurisdictional limited is $6,250.

Second, individuals and sole proprietorships may not file more than two (2) cases in each calendar year for amounts between $2,501 and $12,500, but may file an unlimited number of cases no greater than $2,500. For companies other than sole proprietorships, the limit is no more than two (2) cases in each calendar year for amount between $2,501 and $6,250, and an unlimited number of cases no greater than $2,500. For government entities, there is no limit on the number cases that can be filed in small claims court p to $6,250.

Finally, for companies other than sole proprietorships, in an action against a contractor’s license bond surety or the Contractors State License Board, the cap is $5,000.

Again, sometimes it may make strategic sense for a plaintiff to file a lawsuit in small claims court even if the amount in dispute is over the small claims court  jurisdictional limits.

Legal Counsel Representation: Unlike unlimited civil cases and limited civil cases, parties may not be represented by legal counsel in small claims court, other than by in-house legal counsel. However, while attorneys, other than in house-legal counsel, cannot appear before small claims courts, attorneys can assist clients in the preparation of papers to be filed with the court and to assist clients in preparing for trial.

Discovery: Unlike unlimited civil cases and limited civil cases, no discovery is permitted in small claims court, including written discovery and depositions.

Timing: For limited civil cases, the goal is for 90% of limited civil cases to be disposed of within 75 days; and for 100% of limited civil cases to be disposed of within 95 days. Again, these are goals, and from what we have heard from clients, it often takes longer, although not nearly as long as cases filed in unlimited civil court or limited civil court.