The Common Law
Should I Sue in Small-Claims Court?
By Luke Ellis, Fri., Oct. 7, 2011
Yes. Filing a lawsuit (even in small claims court) is a big step. Before you move forward, you should consider a variety of factors to help analyze whether the lawsuit is appropriate.
One of the primary considerations is simple: If you win the lawsuit, will you actually collect the judgment? Sometimes the final judgment is not worth the paper it's written on. This is because even though the judge or jury rules in your favor and grants a final judgment that states your former business partner owes you money, it does not mean that the court will actually make him pay you. If the defendant does not pay, you must seek to recover the judgment through something called an "abstract of judgment" that is somewhat complicated and might require legal assistance. You must evaluate the defendant's willingness and ability to pay if you obtain a favorable final judgment. Investing the energy, effort, and resources to win at the courthouse only to never see a dime is a hollow victory.
You should also always consider the possibility of defending against a counterclaim. By filing a lawsuit, there is a chance the defendant (your former business partner) will file a counterclaim against you, while he may have otherwise dropped the matter if you didn't file suit.
There are other factors to consider. Given that your issue involves breach of contract, you should review the contractual language to determine if disputes are required to go to arbitration (or some other alternative dispute resolution procedure) before a lawsuit can be filed. It is fairly common for many contracts to contain these provisions. It is also important to know that either party has the right to appeal the small-claims court result to county court, where the county court could require the parties to relitigate the entire case again.
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Marrs, Ellis & Hodge LLP, www.mehlaw.com.
The material in this column is for informational purposes only. It does not constitute, nor is it a substitute for, legal advice. For advice on your specific facts and circumstances, consult a licensed attorney. You may wish to contact the Lawyer Referral Service of Central Texas, a non-profit public service of the Austin Bar Association, at 512-472-8303 or www.austinlrs.com.
