SUPREME JUDICIAL COURT APPROVES AMENDMENTS
TO TRIAL COURT SMALL CLAIMS RULES;
MAJOR IMPACT ON DEBT COLLECTION CASES
The Supreme Judicial Court has approved amendments to the Trial Court’s Uniform Rules on Small Claims (Trial Court Rule III), effective October 1, 2009. The amendments reflect proposals made by the Trial Court’s Small Claims Working Group and comments on those proposals from the public and the bar.
The Small Claims Working Group was established by District Court Chief Justice Lynda M. Connolly with the approval of Chief Justice for Administration and Management Robert A. Mulligan to examine and improve current small claims practices. While the rules apply to all small claims matters, there will be a major impact on debt collection cases. The Working Group consisted of clerk-magistrates and staff attorneys from the three Trial Court departments with small claims jurisdiction (the Boston Municipal, District, and Housing Court departments) as well as representatives of the Legislature, the Massachusetts Bar Association, consumer groups and collection attorneys. Both the Working Group’s report and the rules changes as originally drafted were published for comment and some proposals were modified in response to those comments.
The amendments address many of the issues identified by the Working Group in collection cases, and four in particular: increased certainty of service, insufficiently detailed claims, increased scrutiny of default judgments, and notice to the court when a judgment is paid.
Amended Rule 2(b) now requires that creditors filing a small claim arising out of their trade or commerce or who are collecting an assigned debt must certify that they have verified the defendant’s current address in one of several specified ways. If the plaintiff fails to verify the address, the court may not enter a default judgment if the defendant later fails to appear for trial. Requiring a verified current address is expected to eliminate concerns that because of outdated addresses some debtors never receive notice of a small claim pending against them. Since this problem is largely confined to debt collection cases, the new requirement applies only to business plaintiffs and assigned-debt collection cases, not to consumer plaintiffs.
Rule 2(a) requires all plaintiffs to state separately any amounts sought for damages, for statutorily-authorized multiple damages or penalties, or for attorney’s fees or court costs. Rule 2(b) requires business creditors also to include the last four digits of the account number and the amount and date of the last payment, if any, as well as the name of the original creditor, if different. This identifies and provides the defendant with the details of the amount being claimed and assists the court in determining the proper amount of any award.
When a defendant fails to appear for trial, the plaintiff is entitled to ask for a default judgment. An amendment to Rule 7(d) ensures that such requests are appropriately scrutinized. It introduces a checklist for magistrates and judges of the specific factors that the law requires to be satisfied before entering a default judgment. The codification of these factors in the rule will help the court to determine legal liability and calculate the amount of any award correctly. This will insure fairness and consistency in the entry of default judgments even though the defendant is not present.
Rule 9(e) requires plaintiffs to notify the court in writing when a small claims judgment has been paid in full, or be responsible for any reasonable costs incurred by the defendant in later establishing that it was satisfied. This will alleviate the difficulty that consumer defendants may experience, sometimes years later, in proving that small claims appearing in their credit reports were paid in full.
Other changes to the rules include:
- Rule 7(a) now requires that the magistrate or judge review the terms of any agreement for judgment with the parties if they are present in court. It also requires that such agreements must be recorded on a court form which lists income sources that are exempt by law. This insures that the court does not order or otherwise endorse any private payment agreement that relies on exempt sources of income.
- Rule 7(c) directs that a judgment for the defendant (rather than a dismissal) is to be entered if the defendant appears, the plaintiff is not prepared to proceed to trial, and there is no good cause for a continuance. This is consistent with the parallel provision for a default judgment for the plaintiff when the defendant fails to appear.
- Rule 7(e) authorizes a party to be represented by substitute or covering counsel, but requires such counsel to file a special appearance slip. All notices will continue to be sent to counsel of record.
- Rule 7(k) delays the issuance of the Writ of Execution that authorizes a sheriff to enforce a judgment by attaching the debtor’s property until after the initial payment hearing, or if no payment hearing is scheduled, until the expiration of the usual 30-day payment order. This avoids any unfair surprise to the defendant by delaying any levy on the judgment until the defendant has had an opportunity to pay as ordered or to attend a payment hearing.
The text of the Uniform Small Claims Rules and commentary, as amended, is attached and also can be found at www.mass.gov/sjc.