Have you ever been blindsided by a merchant or a bank, or made a mistake yourself that caused a loss you later deeply regretted? If so, this post is for you. I want to walk through how to use legal channels to get things done at the lowest possible cost. Everything in this article is based on Orange County, California, local laws and regulations, and my own experience.
This article is the product of some serious procrastination—these events happened a year ago...
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Introduction to Small Claims Court
Small Claims Court, commonly known as small claims court, is a local court in the U.S. that handles smaller civil disputes. Every area has one. Your immigration or residency status generally does not matter: international students, residents, and citizens can all use it. If you are at least 18 years old, you can file a claim on your own; if you are under 18, you will need help from a guardian.
Compared with regular court, small claims court has a simpler process, much lower costs, and can be more efficient, since the amounts at issue are smaller and there are fewer parties. Small debts and disputes, minor contract breaches, and car accidents can all be handled through small claims court.
Why is it cheaper? The main reason is that attorneys generally cannot appear or represent parties at the initial small claims hearing; only the parties themselves may appear. Only after the initial decision, if someone wants to appeal, can an attorney step in and represent a party. Everyone knows lawyers are expensive—they practically bill by the minute. That does not mean you cannot consult one. You can still hire a lawyer to guide you through each step; you just have to appear in court yourself. That said, small claims court is designed for smaller cases and disputes, so in most situations you can get a result without needing a lawyer to take over.
Rules vary somewhat by state, but the overall framework is similar. If you meet the relevant conditions, you can bring your case in small claims court. Below, I will use Orange County, California, where I am located, as the example.
Claim Limits
In California small claims court, an individual claim cannot exceed $10,000. If the plaintiff is a company, the limit is $5,000. In addition, you can file no more than 2 claims over $2,500; if you have more than that, each additional claim over $2,500 can be awarded no more than $2,500 (citing the State of California Department of Consumer Affairs).
What You Can Sue For
Common matters that can be brought in small claims court include:
- Property damage or personal injury caused by a traffic accident
- Rental or housing-related deposits
- Property damage caused by a neighbor
- Contract disputes involving repairs or home improvement
- Unpaid debts
- Disputes over family property
- Other similar matters
This is mainly intended for local disputes, but as long as the amount involved is relatively small, many issues can generally be resolved through small claims court.
Statute of Limitations
There are filing deadlines for going to small claims court (citing California Courts). You need to make sure your case is still within the applicable time limit. Below are just some common deadlines; for specifics, you should check with the court directly.
- Injury: within 2 years from the date of injury
- Oral agreement: 2 years from the breach
- Written agreement: 4 years from the breach
- Damage to personal property: 3 years from the loss
- Fraud: 3 years from the fraud
- Claims against a government agency or public entity: 6-month deadline. These entities will decide within 45 days whether to accept your claim. After that, you can consult a lawyer for next steps.
Filing Fees
Filing fees depend on the amount of your claim, ranging from $30 to $75. However, if you have filed 12 or more claims in the past 12 months, then all of your cases are charged $100 each. Apparently, filing too many lawsuits is not ideal either.
Two Personal Examples
Before getting into the process, let me first explain the background of the two small claims cases I dealt with.
Citibank Case
As I shared previously, Citi shut down all of my credit cards for reasons unknown and confiscated all of my points.
Later, I contacted Citi, but they could not provide a clear reason for the shutdown. I also contacted a lawyer and did not get a very proactive response. After reviewing California small claims rules, I decided to sue them.
- Losses: credit card points, cash back, and damage related to my credit record (estimated at less than $10,000)
- Basis for the claim: loss of personal property; Citi’s breach of a written agreement (closing accounts without cause)
- Filing window: 1 year had passed (still within the 3-year period for breach of written agreement or loss of personal property, as described here)
As you can see, the main elements all appeared to meet small claims court requirements.
United Airlines Case
The UA case was more complicated. UA shut down my account and confiscated 20w miles. The reason was that I transferred points to a ticket broker and redeemed a PVG-SFO ticket for someone else. The passenger was then questioned by UA in PVG and said they did not know the person who helped redeem the award ticket. UA entered the entire conversation record into its system. That passenger still made it to the U.S., but my UA account was GG two or three months later. So yes, selling or transferring points carries risk—manage that risk yourself. A tip for everyone: issuing tickets for departures outside China is relatively safer, while China departures are relatively riskier.
- The WeChat ID of the points buyer/broker involved in my case was TaleMin/mty***001, just sharing this so others can avoid the same pitfall.
Although I did violate UA’s terms, I still could not accept having all of my miles confiscated. So I looked at the following points:
- Losses: 200,000 UA miles (estimated at less than $10,000)
- Basis for the claim: loss of personal property; UA’s breach of a written agreement (closing the account without cause and confiscating miles)
- Filing window: 1 year had passed (still within the 3-year period for breach of written agreement or loss of personal property, as described here)
After organizing everything, I decided to file both cases in small claims court.
Steps to File a Claim
The California courts website already explains the process, so here is the link:
The most important part is completing and submitting the claim form.
Below, I will use my two cases to walk through the steps.
Identify Your Defendant Information
The benefit of figuring this out first is that once you have the necessary details, you can fill out Form SC-100 in one go. Of course, you can also review the form first and then gather the information needed to complete it. Either approach works. I will follow the steps laid out on the official website.
In my case, Citibank forcibly closed all of my bank card accounts, and United Airlines locked my account and confiscated all of my miles. So in my two cases, one defendant was Citibank and the other was United Airlines. Both were businesses, and both were large companies. From here on, I will use United Airlines as the example.
- Business name
- Business information (including address and phone number)
- Person or Agent authorized for service of process / recipient for the company’s legal documents (1505 Corporation)
You can find all of this information on your state government’s website. In California, the newer website is called bizfileonline.
Once you enter the site, just click Search in the menu on the left to reach the Business Search page shown below.
After the search results come up, find the closest match and click it. All the information you need will then appear on the right side of the page, and you can fill out your forms accordingly.
BTW, the Agent for many large companies is CT CORP.
The government website also explains how to locate a company’s new address after it moves, but I won’t cover that here.
Find the correct small claims court jurisdiction
This is very important. If you pick the wrong one, the trip is wasted and you will need to prepare the forms all over again.
Generally speaking, the proper jurisdiction is where the injured party lives or the business address of the harmed business, usually the county. In my case, that was Orange County, California. During the pandemic, all small claims cases in the county were handled at the Central Justice Center in Santa Ana (700 Civic Center Drive West, Santa Ana, CA 92701).
This is the court where you submit your forms and where your hearing will take place.
You can file in person, by e-file, via the drop-box outside the relevant courthouse, or by mail. But in my opinion, since the county usually is not that far, filing in person is best because you can complete everything on the spot. Remember to bring cash for payment.
SUBMISSION OF ALL SMALL CLAIMS RELATED FILINGS
All filings for small claims matters can be submitted by any of these ways:
- In person at the Center Justice Center (700 Civic Center Drive West, Santa Ana, CA 92701) .
- By electronic filing using the Civil eFile website https://www.occourts.org/directory/small-claims/efiling.html .
- By drop-box located by the front entrance of the Central Justice Center. Provide a phone number for the court to contact.
- By US Mail to 700 Civic Center Drive West, Santa Ana, CA 92701.
When filing by drop-box or US Mail, be sure to include an additional copy of the forms you are filing, a self-addressed envelope with postage, and the filing fee or fee-wavier request.
Fill out the forms
As the Plaintiff, the most important form is SC-100.
Leave the first page blank; the court fills that part in.
Starting on the second page, first fill in the defendant’s information. If the defendant is a business, refer to the section above on how to find business information.
Next, fill in your own information as the plaintiff.
Then enter the amount you believe you are claiming. If the loss involves equivalents such as credit card points or airline miles, you can estimate their value in U.S. dollars and enter that amount, then explain in the form why you are claiming it and how you calculated it. I won’t go into detail here because everyone’s situation is different. Fill it out based on your own case. I used UA’s price for selling miles to estimate the value.
After completing the form, keep a copy for your records. The court will keep the original and print out an official version for you on the spot with the first page completed. It will include your case number, case name, and the time and place of the trial. In 2021, all of mine were remote hearings, and the court provided instructions.
Make sure you keep this carefully. You will need to make a copy of this official SC-100 and provide one to the Defendant.
Serve Your Claim / Serve the defendant
You might think the court will notify the defendant after you file the lawsuit, but in reality, you need to complete or arrange service yourself. The court will not proactively do this for you, and you also cannot require the sheriff/county sheriff to serve the papers for you. Below are three common methods:
- Personal Service
- Substituted Service
- Service by Certified Mail by the Court Clerk
USPS certified mail is the cheapest option, but it is also the least reliable. Try not to waste money on it; that is what the court clerk told me too. The defendant can refuse the letter, or someone else can sign for it, both of which make service invalid. If that happens, the summons is considered not to have been served on the defendant, your lawsuit becomes ineffective, and you have to start over.
Substituted service is only used in special circumstances.
I chose a Process Serving company in Orange County. At the time, it was $75 for one document and $50 for the second. After taking my money, their attitude was terrible, and they did not send me the proof of service for a long time after completing service. I had to keep following up before they finally emailed me a copy. So I do not recommend that company. Just google one with good reviews.
After service is completed, remember to get the Proof of Service Form SC-104. This document is completed by the server, and then you bring it to the court to notify them that service has been completed.
How long the case takes
In most cases, the hearing will take place within 30-40 days after filing, but definitely not within 20 days or after 70 days. Most hearings are held during weekday daytime hours, but some may be scheduled in the evening or on Saturday.
Go to court or settle out of court
Based on my experience, the merchants (CITIBANK and UA) both had their legal or relevant departments contact me directly to discuss the matter.
My thinking was that it would cost them a lot to have a company representative appear in court against me, and even more if they used attorneys for an appeal. If they felt they might be in the wrong, they would be willing to settle privately. If they believed they were legally compliant, they would usually outline their evidence for you, make you feel that you would not win, or persuade you to withdraw the case.
If you cannot reach a settlement, then go to Trial at the time and place set by the court and see who can better persuade the judge.
Out-of-court settlement
Citibank Case:
Citi could not provide a clear reason for shutting down the cards and only said it was the bank’s decision. However, they contacted me and agreed to send me a check based on the compensation amount I had requested in my claim, and I accepted. At the same time, I explained that Citi’s forced closure of several of my credit cards had a major negative impact on my credit report and asked them to make up for that as well. On that point, Citi said they would remove all credit card records related to this incident from all three major credit bureaus, and they did in fact do that. Afterward, those credit card records completely disappeared from my report, and my credit score quickly jumped back by nearly 100 points. This was very important, because it affects your ability to apply for other credit cards in the future, and if other banks see that one bank forcibly shut down your accounts, they may also close your accounts to reduce their risk. I then asked Citi to reimburse all of the costs I incurred in bringing the lawsuit.
After you reach a settlement, the other side will ask you to fill out the Request for Dismissal Small Claim Form L-1203. On the form, you would select dismiss Entire Action with Prejudice, which means You canot sue again on the same cause of action. In other words, you are dismissing the case and agreeing not to sue the other party again for the same reason. After completing L-1203, you need to take it to the court to file it. After the court files it and makes a copy, you can get it back, then make another copy and email it to the Citi department that had been in contact with me.
Citi did eventually send the check. But what was really infuriating was that Citi sent me a 1099-MISC at the end of the year?!?!?! They compensated me, and I still had to pay taxes on it.
United Airlines Case:
The passenger at PVG got caught by UA, and said they did not know the person who helped redeem the mileage ticket. UA entered the conversation records into its system. The UA Mileage Plus Compliance department printed out all of those records and mailed them to me, along with printouts of the rules and terms that had been violated. They were basically telling me outright that I had violated the rules. In that situation, even if I went to court, I would most likely lose, and it would also increase the risk of a countersuit, so I had no real choice but to admit I was in the wrong and voluntarily dismiss the case. However, on the L-1203 I selected Without Prejudice (You can sue again on the same cause of action), although I probably was not going to pursue anything further afterward anyway.
Going to Court
Do not imagine a Small Claim Court trial as something overly serious. A few years ago, I appeared in one trial on behalf of my employer to collect a debt. It was just a regular court. All the parties with cases scheduled during that time period sat inside and waited for the judge to call their case numbers. When your case is called, you go up and present your side. The whole process takes less than 10 minutes. If possible, dress a bit formally to show that you are taking it seriously, but there is no strict dress requirement. The judge will review the summary of your case, ask some questions, and then make a decision based on your answers and evidence.
About the Judgment
If you win, the court's judgment will usually allow a period of time for the losing defendant to satisfy the judgment.
There are several ways to enforce or collect on a judgment, and the government website also lists them here: Tips for Collecting Your Judgment
The best outcome is for the defendant to pay voluntarily. If not, you can hire a collection agency or even ask the court to enforce the judgment.
Other
For disputes with banks, you do not necessarily have to go straight to small claims court. You can first consider BBB and CFPB, and then consider speaking with an attorney who specifically deals with banks. For more information on that, you can check out my previous article:
In addition, buying and selling miles does indeed violate airline terms. So if you insist on doing it, I would suggest finding a more professional broker who has issued many tickets before. They will pay attention to the kinds of things airlines may investigate and will tell the traveler what precautions to take. Please keep your eyes open and do not get lured by a temporarily high price, only to get burned by a ticket broker instead.
Summary
Small claims court is actually a very convenient way to resolve smaller-dollar disputes, such as friends or classmates refusing to repay money they owe, monetary disputes with landlords or tenants, or minor car accidents where the other party refuses to pay. In a society like the United States, where the rule of law is relatively well established, knowing how to use small claims court is a very useful tool.
If you have had similar experiences or have questions, feel free to share and discuss them with us in the comments.