Business Credit October Journal 2014 It Can Be a Jungle in There: A Litigant's View of Small Claims Court By Janay Haas Re-published from the Oregon State Bar Bulletin Oregonians file more than 77,000 small claims cases annually in the state’s justice and circuit courts. That number is higher than all other civil cases combined and more than all criminal cases, with the exception of traffic court. That number means that thousands of unrepresented people — a number well beyond those we see struggling solo through family court — are braving the court system without much guidance about what to expect or what to do.
In This Issue
But traversing small claims court is easier than wrangling with all the rules and procedures that are part of a circuit court case, isn’t it? There’s no question the small claims process is shorter, and, in most circumstances, less expensive: no formal discovery, no arbitration in damages cases, no strict adherence to the rules of evidence. Except for the few cases in justice courts, however, the parties get only one bite of the apple — there is no recourse to the Oregon Court of Appeals. And, whether or not the rules of civil procedure, uniform trial court rules, and local court rules come into play (in many counties they do), the parties still have to prove the elements of their cases in order to prevail on their claims.
It Can Be a Jungle in There: A. Litigant's View of Small Claims Court..................................... 1
According to the state’s few remaining county law librarians, small claims court questions are among their most frequent inquiries. So, when one librarian asked me to consider writing a small claims court handbook, I said yes. Why not? Hadn’t I been referring clients and would-be clients to small claims courts for a couple of decades?
The Art of the Preference Defense ................................ 3
The only thing holding me back was that I’d never gone to small claims court. I’d never even sat in a courtroom waiting for my “real” case to start while a judge was winding up small claims hearings. I hoped to interview lawyers who had appeared in small claims matters; however, inquiring of judges whether they allowed attorneys to appear in small claims cases, I began to suspect that more Oregon lawyers have argued before the United States Supreme Court than have appeared in our state’s “people’s courts.”
Meet Clara.............................. 7
Small Claims Court According to the ORS
Chairman's Message................ 2 President’s Message................ 2
Questions from the Forum....... 5
Word Tips & Tricks ................. 8 NACM Oregon New Website is Live ....................... 13 Credit Basics: Setting Credit..... 15
I headed next to Oregon statutes for guidance on what litigants could expect. ORS 46.415(3) summarizes the goals of small claims proceedings:
The hearing and disposition of all cases shall be informal, the sole object being to dispense justice promptly and economically between the litigants… [T]he judge may investigate the controversy and give judgment or make such orders as the judge deems to be right, just and equitable for the disposition of the controversy.
In short, judges are free to do what they believe is the right thing, freedom that their colleagues in circuit court don’t necessarily have under statutory and evidentiary constraints that don’t apply in small claims cases.
continued on page 9 7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 1
Business Credit October Journal 2014 Message from the Chairman Hope you have all had a wonderful summer and are ready for an even more exciting Fall season. NACM Oregon is kicking it off in full education mode. We have several educational opportunities coming up including the continuation of the well-received Excel Series and the excellent International Business Series, "Best Practices: Managing Credit and Accounts Receivable," "Credit Enhancements," and "Establishing a Credit Card Acceptance Policy." If you don’t see one that fits your needs, please let either myself or your NACM Oregon Executive know. We are working on a couple of classes that should be offered early next year that are specifically because of member requests. I want to take a moment to thank Steve Amiel, MBA; Raeann Binau, CICP, RGCP; and Scott Smithhisler for taking so much of their own time and offering to be instructors. Not only did Scott and Raeann work tirelessly to get the International Series up and running, they were instructors of several of the classes. Thanks again Raeann and Scott! Steve not only planned, he also has been the instructor of the Excel Series. Thanks Steve for putting all this together. One of the important benefits of belonging to NACM is the ability to meet other people who work in credit. Whether they are in your industry or not, each meeting is an opportunity to learn, grow, and benefit from someone else’s knowledge. Not to mention that credit people are just plain fun. I encourage each of you to take advantage of those opportunities to meet your peers. There will be more Meet and Greets, CFDD meetings, industry trade groups, and of course conferences, and classes to attend over the next several months. Please consider attending and meeting some of those other people who work in credit and share a little knowledge, tell a few stories, and make a connection. Your next opportunity to “Meet the Members” is at the upcoming NACM Oregon Membership Breakfast, October 14. John Mitchell will be speaking and if you haven’t heard him before, you really need to plan on attending. John will be peering into his crystal ball and tell us what we can expect in the upcoming months regarding the economy. Not only will you learn something, you definitely will be entertained. I look forward to seeing you all there.
Thank you,
Marsha Johnson, CCE TEC Equipment, Inc. mjohnson@tectrucks.com
© New York Collection, Robert Mankoff. All Rights Reserved.
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 2
Business Credit October Journal 2014
The Art of the Preference Defense By Jason M. Torf “Why are we being sued? We didn’t do anything wrong. All we did was get paid!” This is a very common refrain heard from credit departments when faced with a preference demand letter or lawsuit. A preference claim is the ultimate “no fault” cause of action. When you ship goods or provide a service, you expect to be paid. When you do receive payment, you do not expect to have to return it, particularly where no extraordinary collection efforts were involved. Becoming the subject of a preference action can be very frustrating. Applying your defenses mechanically might help, but recognizing that there can be more art than science involved in calculating some preference defenses, some reasonable creativity can go a long way toward reducing or eliminating liability.
This concept applies most significantly with the ordinary course of business defense. First, consider the circumstances in many cases: a single plaintiff (whether a trustee or a debtor) may be prosecuting many preference actions (sometimes hundreds or more in very large cases) with only limited time to devote to each case. In order to deal with the volume of cases, debtors and trustees often establish a rubric for the ordinary course of business and apply it to all preference cases across the board. For instance, a plaintiff might decide to use a +/- 10-day window around the historical average time to pay as the ordinary course range, whether or not that type of range makes sense in each particular case. Given the volume of cases, the debtor or trustee simply does not have enough time to analyze each individual case. On the other hand, you are defending only your case, so you can focus on your unique set of data to come up with the best approach for the ordinary course of business defense that helps you the most. Don’t be mechanical – be creative! Depending upon the jurisdiction where your case is pending, there are many approaches to the ordinary course of business defense that have been accepted and applied by courts. Many credit departments calculate their defenses the same way every time: by calculating the historical average time to pay and using a standard +/- 10-day window around that average. This might give you a good defense in some cases, but if it does not, there are many other ways to create an ordinary course defense. Starting with this standard method, you can use a longer or shorter history which might result in a higher or lower average time to pay to your benefit. Ask yourself whether higher or lower average would help to pull more of the payments you received during the preference period into your ordinary course range. Then test your data by using longer and shorter lookback periods to determine what works best. Particularly if you have a long history with the debtor, there is no magic to using, for instance, a two-year lookback versus an 18-month lookback. In some circumstances, there might be an obvious point in the historical period when payment timing changed sharply. Such an event could provide a reasonable end point for your lookback period. In addition, sometimes a weighted average might offer a better defense than a straight average. The facts particular to your case will help dictate which method is more appropriate. If many payments occurred in vastly different amounts, a weighted average might work better. Otherwise, in that context, using a straight average, a payment in a very small amount that is an outlier based on payment timing could disproportionately affect your average. Using a weighted average, however, that outlier will be given only the weight it is due based on the small amount of the payment relative to other payments. continued on page 4 7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 3
Business Credit October Journal 2014
The Art of the Preference Defense continued from page 3
Beyond the calculation of the historical average time to pay, there is no such thing as a “standard” window for the ordinary course defense. A +/- 10-day window is commonly used by debtors and trustees, but this is arbitrary if it is chosen without reference to the particular data set. Instead, consider calculating the standard deviation during the pre-preference period. If the standard deviation is wider, consider using it if it captures more payments during the preference period. Other methods are also available that you can use to your benefit. For example, the “high-low” method uses as the ordinary course range the highest to the lowest time to pay during a reasonable lookback period, excluding obvious outliers. For example, in a data set that includes 50 payments during the historical period where 47 payments fell between 35 and 75 days after invoice and three were more than 100 days after invoice, you might use 35-75 days as the ordinary course window under the high-low method (it is easier to argue for this method where a larger number of payments were received during the historical period). This method can be helpful because it might expand your ordinary course range and improve your defense. Clearly, in the example, the range offered using the high-low method is significantly wider than the “standard” +/- 10-day window. It is always important to remember that the particular facts in each circumstances will help determine the appropriateness of a particular method of calculating the ordinary course of business defenses. With that said, the key to preparing an ordinary course defense is to be creative. If you rest on a “standard” method of calculating the ordinary course defense simply because that is how you have always done it or it is the method being used by the debtor or trustee who is trying to recover from you, a significant opportunity to reduce your liability could be missed. Instead, be creative! Test your data in various ways to figure out the best possible ordinary course of business defense and put your best foot forward when presenting your defenses to the debtor or trustee.
Jason M. Torf is a bankruptcy and creditors’ rights partner in the law firm Horwood Marcus & Berk Chartered. Jason regularly represents clients in helping them solve their problems with troubled customers, both in bankruptcy proceedings and otherwise. Jason represents clients in all aspects of corporate reorganizations, restructurings, workouts, liquidations, foreclosures and bankruptcies, including working with companies who have received a preference demand letter or lawsuit. He is a frequent speaker to various NACM and CFDD groups as well as other credit groups to help them understand practical steps their companies can utilize to maximize their recovery when a customer files bankruptcy. Jason can be reached at (312) 606-3236 or jtorf@hmblaw.com.
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 4
Business Credit October Journal 2014
Questions from the Forum
Welcome to a new section of the BCJ-Questions from the Forum. We will list questions and answers we think others can learn from or frequently asked questions. Have a question for other members or experts. Log on to the NACM Oregon Portal. Click here to go to the website. Member:
Good morning, I have 2 different numbers in regards to jurisdiction and small preference matters where one publication shows the aggregate value of the transfer must exceed $6225 and another that says $5850. Does this vary by state and jurisdiction? I can't imagine the bankruptcy chapter would have anything to do with it. Thanks for your help
Expert:
The amount of a preferential payment is in fact based on the Bankruptcy Code. Under Section 547(c) (9), the aggregate value related to a debtor with commercial debts is $6,225. $5,850 was likely listed from an earlier publication. Jason Ayres
Member:
And does that aggregrate number relate to pre-or post-defense calculation? For example: If preferential demand is $10,000 but you prove new value exchanges of $7,500, would you still possibly have to pay $2,500 back if none of the other defenses were applicable?
Expert:
The short answer is that it would reduce the aggregate value and provide a defense for the claim. Of course if a trustee has filed an adversary proceeding, he will try to settle and still obtain the $2,500. Jason Ayres
Jason Ayres, Attorney Farleigh Wada Witt Jason's practice focuses primarily on commercial collections and litigation, bankruptcy matters and enforcement of creditors' rights where he protects clients' interests, rights and remedies both inside and outside court proceedings. He regularly represents equipment leasing companies and other commercial lenders in litigation and bankruptcy matters to protect their collateral and maximize their recovery, and is an active member of the Equipment Leasing and Finance Association (ELFA) and the Lease Enforcement Attorney Network (LEAN).
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 5
Business Credit October Journal 2014
Basic Accounting
If you are looking for an accounting class to help you meet your CBA certification requirements, we have found some options that fulfull that requirement. Below are listed a few local options as well as a few online courses available through NACM National. We have listed some of the requirements for each school but please double check with them to make sure you have all the information you need before registering for their classes. Portland Community College: BA211 Principals of Accounting I Introduces financial accounting theory, including the accounting cycle, analysis and recording of transactions, and reporting financial information in accordance with generally accepted accounting principles. 3.0 Credits Fees: Resident: $276 ($92 per credit) Nonresident: $660 ($220 per credit)
Fees: In-State Resident: $500 ($125 per credit) Out-of-State Resident: $869
Mandatory fees: Technology fee: $4.50 per credit - supports student and instructional technology.
Following are links to the NACM National online CBA courses:
Student activity fee: $1.70 per credit - supports student activities including student government. Distance learning fee: $20 per course - for distance learning courses only. Lab fees: Up to $45 per course - check the class schedule for fees specific to your course. College service fee: $15 per term - supports services including transcripts and book lockers. Transportation fee: $4 per term - supports transportation services.
Mt. Hood Community College: BA211 Principles of Accounting I This course emphasizes external financial reporting for business enterprises. Information gathering, recording and financial statement preparation are covered with an emphasis on understanding, interpreting, and applying accounting information. 4.0 Credits
Accounting http://www.nacm.org/online-courses/accounting.html Financial Statement Analysis I http://clc.nacm.org/course.php?course_id=53 Business Credit Principles http://clc.nacm.org/course.php?course_id=33 Other Fees:
Textbook: $130
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 6
Business Credit October Journal 2014
Meet Clara
Clara Nemeth, CGA, CBF NACM Oregon Account Executive
“Always remember your focus determines your reality” ~ George Lucas “Go the Extra Mile, It is never crowded.” ~ Anonymous Clara has been working at NACM Oregon for 3 1/2 years. When she is not at NACM or studying for designation exams you can find Clara going on bike rides and laughing with her friends and family. Welcome to a new series in the BCJ about NACM Oregon employees. We wanted to feature some employees so you can get to know more about us. Put a face and a few facts to go along with a name. There will be a new employee every month. This year Clara studied and passed both her Credit Business Associate (CBA) and Credit Business Fellow (CBF) designations. She was also recently awarded the "Outstanding New Member" award from the Portland Credit & Financial Development Division (CFDD). Clara is a great resource for anyone thinking of further education with NACM and becoming involved with CFDD.
From Clara What is your favorite part about your job? Networking with other credit professionals and helping them be successful. Congratulations on recently earning your CBA and then soon after your CBF! What made you decide to pursue your designations? And why do you think it is important? My goal is to invest in myself and to become more educated in the credit field so I can educate others. It is important because it helps me be a better employee and the sense of accomplishment is motivating. What do you think is the most beneficial thing you have gained with your designation/education? The one most beneficial thing about my designation is the accomplishment of starting and finishing my goal to be a CBA and a CBF. In doing so, the comradery of the study groups were priceless. I not only built relationships, I made lifelong friends. What would be your advice for someone thinking about going for their designations? Commit yourself for a short while and the payoff is yours to keep no matter where you are or where you go.
continued on page 8 7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 7
Business Credit October Journal 2014
Meet Clara, Continued continued from page 7
If there was one class you would suggest to anyone to take with NACM Oregon what would it be? Business Credit Principles is the back bone of credit. It is the basic knowledge that every credit professional can learn from and uses on a daily basis. You were recently awarded at the Portland CFDD with the “Outstanding New Member” award. First congratulations on all of your achievements. What made you want to get involved in CFDD? I wanted to be part of a group to network in and learn at the same time. Why do you think others should become involved with their local CFDD chapter? It is a place to receive information but also to share information amongst others credit professionals. What is a service at NACM Oregon you think people underutilize and why is it important? Data contribution I feel is underutilized. It is a great place to reward those who pay well and a place to share when they do not. It is a tool that helps the credit community overall and wonderful leverage that a credit professional has in their back pocket. It’s a great place to give and take. How do you see your future with NACM and CFDD? I see myself growing with both organizations both professionally and personally.
Microsoft Word Tips & Tricks Text: Pressing CTRL and clicking on a sentence will select the whole sentence. Triple click in a paragraph to select the whole paragraph. Select rectangular boxes of text by holding down ALT and dragging your mouse to select text area. Type anywhere you want: simply double-click and start typing. Convert to plain text: Select the text to convert and press CTRL + Space Bar and it will change the formatting. Easily move text: hightlight the area you need to move, press F2 and then place your cursor to the new area and press enter. Shift + arrow keys: Highlight text in the direction of the arrow key. Shift + CTRL + Down/Up Arrow: Select the paragraph above or below the cursor. Shift + CTRL + Left/Right Arrow: Select a word to the left or right of the cursor.
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 8
Business Credit October Journal 2014 It Can Be a Jungle in There: A Litigant's View of Small Claims Court Continued from cover What does that mandate look like in the courtroom? Over the course of a year I surveyed court clerks all over the state and visited 14 counties’ small claims courtrooms — from Klamath and Deschutes to Washington and Benton and Multnomah. I learned just how daunting the small claims process can be for litigants. I also learned how daunting small claims can be for the judges who preside over them; as Multnomah County Circuit Judge pro tem Steve Todd puts it, “It’s like taking the bar exam every day.” The range of the cases is staggering — business contracts and personal injury, car repairs, wage claims, home remodel problems, consumer protection, landlord-tenant, nuisance, libel, professional malpractice, debt collection, and state tort claims among them. And the cases, as Judge Todd points out, “aren’t all that small”— up to $10,000. As for how the judges manage the deluge of cases, I saw them — regular judges and pro tems — almost universally direct patience, thoughtfulness, and respect toward those seeking a resolution to their problems. I saw them applying both the law and common sense to those litigants, often explaining their decisions in ways that seemed to bring closure to both sides. I was so impressed by the quality of what judges brought to the courtroom that, two years later, I still remember the very few whose comportment didn’t meet those high standards. Small Claims Court According to the Clerks’ Office What happens in the courtroom is often the end of the story for litigants, given that most prevailing parties never collect the judgments they have obtained. Getting there can be its own challenge, as I learned when surveying court clerks. My questions to small claims clerks focused on: • filing fees and court costs; • the availability of fee waivers or deferrals; • whether the court clerk provided written instructions for litigants, and, if they did so, in what languages; • the range of forms the court offered, and in what languages; whether the court offered mediation in small claims cases; • how parties could change venue; • how long parties could expect to wait before their cases were heard; • whether the clerks were aware of local court rules relating to small claims and, if so, how litigants could learn about those rules.
In a few counties, the clerks had available not only the statutorily required claim forms and notices to defendants, but forms for alternative types of service, motions for default and satisfaction of judgment forms. Some counties had no forms beyond the required ones. Circuit court small claims departments (and the Oregon Judicial Department) make their claim forms available online. (There were no e-filing counties at the time of my survey.) As for justice courts, state law requires that plaintiffs file their cases in person; many of those courts insist that plaintiffs get the forms in person as well. The law and local practice discourage plaintiffs from out of area (and potentially plaintiffs with disabilities) from initiating cases. Just a few counties offered general written instructions about the process. Most of the instruction sheets did not mention the availability of filing fee waivers or deferrals. No county offered forms or instructions in Spanish, even though several counties have Spanish-speaking populations large enough to make limited English competency accommodation appropriate. Queries about the availability of fee waivers and deferrals met with some interesting answers. In one county, the circuit court clerk was adamant that plaintiffs could not get deferrals, but that defendants could. In a county justice court, the clerk snapped, “It costs $20 to file. Anyone can pay that.” In another justice court, the clerk seemed surprised by the idea of deferring filing fees: “I pretty much know how much everybody makes around here, so it’s never come up. But, yes, I guess I could see where it could, and we would allow that. We’d probably need to make up some kind of form.” How do small claims departments or justice courts deal with requests for a change of venue? Clerks in all the counties but one had the same response: if the court granted the change, the defendant would have to transcribe the case to the proper court. In the renegade county, the judge would dismiss the claim outright and the plaintiff would have to refile. Wasn’t it possible that the statute of limitations could run before the case could be refiled? Yes. And wouldn’t the plaintiff have to pay the filing fee in both counties? Yes. (In the courts that would allow the case to be transferred, the clerks were divided over whether the plaintiff would have to pay another fee in the proper county.) As for the time it would take for a case to be heard, the answers ranged from three to five weeks to as long as five to six months. The longer time periods tended to correlate with the opportunity for mediation. continued on page 10
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 9
Business Credit October Journal 2014 It Can Be a Jungle in There: A Litigant's View of Small Claims Court continued from page 9
And then there’s the customer service orientation. Most clerks were helpful. Some clerks were enormously generous with their time and information. Others were curt, hostile, and intimidating. Small Claims and Mediation Mediation can be a critical component of the small claims process. In Multnomah County, for example, those who were able to resolve their cases prehearing through mediation were more than twice as likely to make good on their agreements without the need for the prevailing party to resort to confusing and frustrating collections processes. Mediation also reduces the workload for time-strapped judges. Court-sponsored mediation was available in several counties; it was far from universal, however, particularly not in rural counties. But in one eastern county, the clerk said that justice court offered mediation. It turned out that the clerk was the mediator. The same clerk was also the judge. (Nothing in the Oregon Revised Statutes eliminates the right of small claims litigants to confidentiality in mediation or allows ex parte contacts in small claims cases.) Going to the Courthouse Those among us who are accustomed to walking into courtrooms may not remember how intimidating a courthouse can seem to the uninitiated. For anxious people representing themselves, the experience is completely different. They don’t know they may spend time in a line at the courthouse door, removing belts and opening purses. They don’t realize they are going to have trouble finding a place to park. People don’t know that their case is only one of several scheduled at 1:30, and so they believe they will be leaving the building again in a half-hour or so. (Adding information about these issues to hearing notices to the parties would go a long way to addressing these concerns.)
The most challenging courthouse I saw was in Oregon City. Clackamas County outgrew its historic court building more than 30 years ago. Long overdue construction is under way, but, until it is finished, entering this courthouse feels like being herded into the customs hall at the international terminal in San Francisco. There is a crush of people, some standing in ragged lines, many milling around clutching papers and desperately trying to get help. There is no shortage of signs here; there are signs everywhere, dozens and dozens of them, tacked to bulletin boards and taped to the walls lining the hallway. To its credit, this court has attractive, easy-to-see reader boards listing the day’s hearings. But they are on the second floor — not where small claims litigants would know where to look for them. Small Claims and Judges
Courthouse reality strikes soon: Did I put enough money in the parking meter? Is this courthouse security line ever going to inch forward? What do you mean, I can’t take my cell phone into the building? What am I supposed to do with it? What if the sitter calls? My kid is sick! Excuse me, do you know where my courtroom is? Do you know who would know? Many courthouses lack coherent signage to direct people to the proper courtroom, or to let people know where they can ask questions. In one small county, a person entering the front door of the courthouse sees a welcome information desk, but it’s rarely staffed. At the desk, there
is no information about where to go or what to do as an alternative. The “security” line at this courthouse isn’t visible at the entrance; it is upstairs just outside the courtroom doors, so that a person gets no timely information about what is acceptable to bring into a courtroom and what is not. In another county, the courthouse is housed in two adjacent buildings with a pedestrian bridge between them. There is almost no signage; finding the right courtroom can take 10 minutes or more — long enough for the judge to call your case and sign a default order against you.
Just as in a circuit court case, each judge I saw brought his or her own style to the small claims proceedings. In some counties, the judge would swear in all the parties and witnesses before hearing any of the cases. In others, the swearing in was more formal. In one county, a pro tem judge did not swear in any of the parties or their witnesses. In another county, the judge half-raised a hand sideways and machine-gunned do-you-solemnly-swear-to-tell-the-truththe-whole-truth-and-nothing-but–the-truth-under-penalty-ofperjury while flipping through files. We all know that some people lie under oath. Knowing that and seeing the range of approaches to decorum and the need to testify truthfully, I wondered how hard the courts should strive to convince people that the truth is important. Small Claims and the Rules of Evidence While the rules of evidence usually help us weigh the information proffered by the parties, it’s true that applying the rules in the courtroom takes time and has an impact on the cost to litigate. The main virtue of small claims court is its relative speed at low cost. For that reason, judges in small continued on page 11
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 10
Business Credit October Journal 2014
It Can Be a Jungle in There: A Litigant's View of Small Claims Court continued from page 10
claims cases don’t have to hold litigants strictly to those evidence rules.
something similar in those and other courtrooms and may rely on that information to their detriment.
How relaxed were the rules? In some courts, the judges considered everything a party offered, leaving it to the opposing party to object to questionable evidence (that letter from the brother-in-law attesting to the defendant’s honesty, for example). Some judges accepted notarized statements from people not in the room. Some judges rejected statements from those not present without relying on the other party to object. One visibly annoyed judge did not relax the rules at all, acting as both judge and objector. The parties were baffled; they did not know how to make their cases with the judge challenging their every question.
Some judges explained how the parties should proceed: who sits where, who talks first, how to offer physical evidence in support of the claim. The most thorough introduction was in Multnomah County, where, for about seven minutes, litigants listened as a group to how they were expected to present their cases and what they should expect from the judge. Even the Multnomah model had its flaws, however. Its very clear, simple language was interrupted by occasional legalese hiccoughs. And, at the end of the presentation, the clerk reading the information added, in English, “If you need this information in Spanish, please let us know.”
Small Claims and Those Other People in the Courtroom While litigants tell their stories, everyone else in the courtroom — witnesses, friends, those waiting for their own hearings — listens with rapt attention. I saw that some judges in small claims court clearly were conscious that their role included educating the public. In a case in which an owner sold an animal and then repossessed it in violation of the parties’ contract of sale, the judge gently educated the seller (and everyone else in the courtroom) about the difference between repossession and forfeiture, and in plain language he cautioned people who bought off-the-shelf form contracts that they should make sure they know what the language in those forms means. Great advice. Fifteen people listened attentively, a few of them nodding in appreciation. In a libel case, a pro tem judge used plain English to explain the elements of libel and slander to the parties; he went point by point over the evidence the parties had proffered, and carefully explained why he ruled the way he did. Again, the audience was riveted. Unfortunately, a few judges seemed oblivious to the impact their words had on the nonlitigants. In two counties where the small claims docket was also the FED docket, the eviction cases were a part of the smorgasbord with small claims matters. In residential nonpayment-of-rent cases, judges in both counties told the litigants, “If you don’t pay the rent, you have to move.” What the judges said to the litigants based on the facts of their cases was true. But it wasn’t an accurate statement of the law with respect to nonpayment generally. (Oregon law allows residential tenants to withhold and to offset rent under some circumstances.) The 30 to 40 people in those two courtrooms left with the misconception that nonpayment for any reason is grounds for eviction. Presumably many other people have heard judges say 7931 NE Halsey, Suite 103
Portland, Oregon 97213
Most judges asked questions to clarify the issues and keep the cases moving along. There were a few outliers, however. In one county, the judge invited all of the plaintiffs to add any other claims they might have, asking defendants if they would have any objection to the surprise claims. Two debt collectors sitting next to me looked at each other in amazement, then traded mock-malicious grins. Some judges took a more hands-off approach than others. In an extreme case, once the parties had been sworn in, the judge asked the plaintiff, “So, what do you want me to know?” The plaintiff squirmed, clearly having no idea what the question meant. “Uh, pardon?” he finally squeaked. “What I mean is, what do you have that you want to tell me?” the judge continued. Another long silence. Finally the plaintiff tentatively introduced his case, getting an approving nod from the judge. There was a collective sigh from the pews: so that’s what the judge meant. I saw one case with an easily avoidable unjust result. In a rear-end collision case, the parties told the judge that their insurance companies were in the process of negotiating a settlement. The judge should have continued or dismissed the case without prejudice. The plaintiff told the judge the defendant had been stopped at a stop sign, had started forward, and had then backed into her. The defendant told the court that the plaintiff had rear-ended him. The judge did not ask if the defendant was driving an automatic or a stick shift, if the stop was on an incline, or how close behind the defendant was the plaintiff driving. The judge asked no questions at all, then complained that the parties hadn’t given her enough information to make a decision — and made a ruling in favor of the plaintiff. Now the parties were going to have to contend with the judgment that would prevent their respective insurers from finding out what really happened. continued on page 12
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 11
Business Credit October Journal 2014
It Can Be a Jungle in There: A Litigant's View of Small Claims Court continued from page 11
Small Claims and Legalese As if suddenly afflicted by a communal disease, first-year law students seem helpless to stop themselves from inserting “arguendo” and “ergo” into what used to be normal conversation. By the time we have been in practice for five years, we must exert real effort to choose vocabulary that can be readily understood by people without college educations or significant real-world experience. I listened closely for that problem in small claims court. Almost every judge in the small claims cases I watched was remarkably sensitive to the need to communicate at a real-people level. The exception sticks in my memory. The parties were in court because the defendant sought to set aside the default in the case against her. The plaintiff, saying he didn’t know what was expected, attempted to put on his case again. Cutting him off, the judge said, “I can’t address the merits until I’ve disposed of the motion to set aside.” The plaintiff said, “Pardon me, your honor? I don’t understand.” The judge hissed, “I. Said. I. Will. Address. The. Merits. After. I. Deal. With. The. Motion. To. Set. Aside. Now do you understand?” “No. Not really,” the plaintiff admitted. Giving him a disgusted look, the judge turned to the defendant to hear her explanation for not having appeared for her original court date. The judge then denied the motion. The plaintiff asked, “Now do we put on our case?” “No, you don’t. The case is over,” snapped the judge. “But what happens now?” the defendant asked. “It’s over,” the judge said. Donning the voice of everyone’s annoying 9-year-old brother, the judge then sing-songed, “You lose! You lose!” and immediately called the next case. The defendant burst into tears. Walking past me, the plaintiff’s wife said to him, “What just happened?” The plaintiff muttered, “Damned if I know. I just want to get out of here.” What just happened, I wanted to say, was the toxic combination of legalese and plain old meanness, and that I hoped they wouldn’t think what they had just experienced was typical of what they would find in Oregon’s judicial system. Because it wasn’t. We know that every judicial system is an abstract concept, made to work, imperfectly, by fallible people with their quirks and prejudices and moods. Studies in business and in courts have shown that when we think we are being watched, our behavior is better. Given how invisible the workings of small claims court are, Oregon lawyers should be proud to know that the standard of judicial conduct in these cases is generally so high. Can small claims court be improved? Clearly, some fixes are needed, some of them quick and easy. And there are questions about the equity in allowing some litigants who start in justice court to appeal their cases while denying appeals to those who start in circuit court. Improving access to those without funds and those whose English is limited is another important goal.
Janay Haas, an attorney since 1983, has practiced law in Oregon since 1987. Janay Haas is the author of Using Small Claims Court in Oregon, available at www.oregonlegalguides.com. She is a long-time legal aid lawyer and currently a senior instructor in criminology and criminal justice at Southern Oregon University. She is also a contributor to several editions of the Oregon State Bar's Legal Issues for Older Oregonians, as well as to the OSB's LegalLinks webpage for public information on legal topics.
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 12
We have a New look!
Business Credit October Journal 2014
The NACM Oregon website has been given a fresh new look. We have spent the last few months redesigning the website for it to be a little more user-friendly. The website features real employees on every page. We still have tons of the same content as well as some of the resources that were locked behind the portal have been brought to the front. The Login/The Portal access is the same as has always been, so you do not have to worry about learning or figuring out any thing new. If you think the page looks a little off, or doesn't fit the screen, try refreshing or pressing F5. This should help any viewing issues. Please take a look around at www.nacmoregon.org. Our site now features a new "Live Chat" feature. This is great if you have a question that can be answered quickly about a service, or something isn't working correctly. For security purposes though we can't provide user name and password information over live chat.
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 13
Business Credit October Journal 2014
Take some time to look around the new site. www.nacmoregon.org
The Credit Resource Center is located under Credit Services. This area may look similiar to you. It is also located under the portal, but we moved it to the front of the site so you could have easy access to the resources you may need.
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 14
Business Credit October Journal 2014
Credit Basics: Setting Credit Limits
It seems that no two companies are alike when it comes to actually setting a customer's credit limit, but doing so is often more art than science. Here are some factors and strategies companies consider when they tell their buyers just how much in the way of goods or services they can borrow. -Payment Record: This works when the customer in question actually has a payment history with your company. Pay on time or early and the credit limit goes up. Pay late, or not at all, and a credit review process is triggered. This is a sales department's favorite method for setting credit limits because it incentivizes buyers that pay better to buy more. -Competition: If your competitors are offering x amount of dollars then it behooves your company to offer something similar, lest a lower limit box your company out of potential sales. This is a difficult factor to evaluate if your company is much smaller or larger than your competitors, or if it plays a different role than other suppliers. -Security: The presence of lien rights in certain transactions makes it a lot easier to set higher credit limits. -Payment Performance: Often effective when the company has a conservative risk appetite but is looking to take on new customers, this basically starts new buyers with little in the way of payment history off with a lower credit limit, but rewards them as they pay. Sales is less of a fan of this philosophy, because it slows sales growth. -Period of Time: A method wherein the amount a customer can purchase over a designated period of time, be it a week or a month or otherwise, cannot exceed the established credit limit. This can speed up the order approval process since anything that fits within the given credit threshold can be approved. -Agency Rating: Companies can create a matrix wherein a certain agency rating on a credit report garners a specific credit limit. -By Formula: When setting a credit limit companies can take into account a number of different calculations that suit their specific needs and then establish a way to combine them, divide them and then average them to set a credit limit. This depends on data availability though, as some of the more important figures on a new customer might not be available. Companies that use a formula also tend to rely on it as a preliminary tool that's then extrapolated using other methods into an actual appropriate credit limit. -Expectation of Use: This method takes the expected dollar volume of credit sales over a period of time and then divides it by the number of expected orders over the course of the same period, and the result is used as a basis for a preliminary credit limit estimate. -Collection: Like a secured investment with slightly less security, the more confident a company is that any receivable is able to be collected, the easier it is to set higher limits since whatever sales are made are expected to be collected.
Source: NACM-National
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
Page 15