MA follows PA

[newryman]

The Massachusetts Supreme Judicial Court announced last week that it has changed some of the rules governing the use of small claims courts. The Court said that the changes were made specifically to address the volume of debt collection cases that are filed in small claims courts.


The rules changes come on the recommendation of the Small Claims Working Group, a panel of legal experts that was convened in 2006 to “examine and improve current small claims practices.” The Working Group was created, in large part, in response to a series of articles that appeared in the Boston Globe chronicling the perceived imbalance of debtors and collection law firms in small claims courts, which allow cases with remedies of up to $2,000.

In a press release detailing the changes, the Supreme Judicial Court (SJC) noted that “While the rules [changes] apply to all small claims matters, there will be a major impact on debt collection cases.” The changes 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.


Adam Olshan, an attorney with Law Offices, Howard Lee Schiff, P.C. in Worcester, Mass., agrees that some collection law firms will be affected. “This will impact the high-volume collection law firms,” he told insideARM.


But Olshan, who was on the Working Group representing credit card issuers, noted that most collection law firms – including his own – do not utilize small claims courts. Olshan noted that he wanted to participate in the group to make sure the revamped process would be fair for everyone.


According to the new rules, 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.


The changes also add increased scrutiny to default judgments that are entered. They introduce a checklist for magistrates and judges of the specific factors that the law requires to be satisfied before entering a default judgment.

New small claims laws require 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. According to the SJC, 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.

Olshan said that he agrees with the changes that were made, but he hopes that “the courts interpret the new rules as they were intended.”

Another collection lawyer, that asked to not be identified, told insideARM that he feels the new rules will unfairly punish collection lawyers that currently abide by the rules.

“This does nothing to weed out the bad actors,” he said. “It just places extra hurdles in front of those that already play by the rules.”

Other changes to the rules include:


•Requiring 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.
•Directing 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.
•Authorizing 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.
•Delaying 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.