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Wednesday
Sep152010

Important Small Biz Legal Should-Know's 

In New York alone last year, companies shortchanged their freelancers to the tune of $4.7 billion dollars, according to MediaBistro.  For most small businesses and independent contractors, those amounts are the difference between keeping their lights on and (not) working in the dark. Collecting in court is often a long, protracted legal battle, and freelancers looking to sue larger companies often find themselves against well-paid, highly-trained legal teams.  In Massachusetts, small claims court, part of the District Courts, is an option, but up until August, the most anyone could sue for was $2,500.

As of August 5, 2010, a new law was signed that increases the maximum limit for small claims to $7,000 in single damages and offers a new filing fee structure.  For small claims of $500 or less, the filing fee is $40 (it was previously $30); up to $2,000, a $50 filing fee applies (up from $40); up to $5,000, a filing fee of $100 applies; and up to $7,000, a $150 fee applies.

Barbara Y. Burton, Esquire, Acting Clerk Magistrate of the Hampden County District Court, speaking to the Hampden County Bar Association on August 26, said that there has been an increase in small claims filings, but she’s not sure whether it’s a shift from District Court.

Nevertheless, the new limit on small claims can make it easier to file suit for breach of contract actions.  The $7,000 limit does not include punitive damages, such as double or treble damages that may be allowed under certain statutes.  The limit also does not include attorneys’ fees, so if a business does need to hire an attorney for a small claims action and prevails, reasonable attorneys’ fees can be awarded.

This is not the first time that the small claims rules have changed.  When the law was changed in October to increase requirements, the first requirement to change was the statement of small claims itself.  This now requires specificity in filing the claims, particularly with claims arising out of a plaintiff’s trade or commerce.  The claim must include the original creditor’s name (if different from the plaintiff’s), the account number if the claim originates from a debt, and the date and amount of the last payment made to the plaintiff.  This assists the court and defendants in distinguishing this claim from other debts or accounts held from the same plaintiff.

Along with that specificity, plaintiffs should also separately identify single, multiple, and punitive damages and attorneys’ fees.  A breakdown of what the claim includes must be included.  Also, if the defendant fails to appear at the small claims hearing, the clerk cannot enter a default if the information regarding the claim is missing.

Claims arising from the plaintiff’s trade or commerce must include an address verification form, to be filed with the statement of small claims.  A default cannot enter without an address verification form.

More information and the appropriate forms can be found on the Court’s website at http://tinyurl.com/36zpedv.  More information on small claims law in Massachusetts is available at http://tinyurl.com/3xz8uul.

Disclaimer: This is not to be construed as legal advice or the establishment of an attorney-client relationship.  If you have a specific legal question, please consult your attorney.

Christine Parizo is a freelance copywriter with nearly two decades of writing and editing experience.  Christine has worked for nine years as a paralegal and legal assistant at various law firms in Massachusetts.  At Christine Parizo Communications, she writes press releases, blog posts, articles, newsletters, brochures, website copy, training manuals, and direct mail and email campaigns.  Visit her website at www.christineparizo.com for more information.



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