The House Judiciary Committee is considering a bill that ups the ante in small claims court from $3,000 to $8,000.
In its original form, SB 269, introduced by Sen. Tonya Schuitmaker (R-Lawton), gave small claims courts jurisdiction to hear cases where up to $10,000 was at stake.
It was not smooth sailing in the Senate.
The Senate Judiciary Committee whittled the jurisdictional limit down to $8,000. The Senate defeated proposals to further lower the amount to $5,000 or to create a two-tiered limit — $8,000 where a credit union or financial institution was involved and $3,000 for everyone else.
The House Judiciary Committee will take up the bill tomorrow.
Legislative analyses from the House and Senate Fiscal Agencies reveal the bill’s pros and cons.
The legislative analysts say that increasing the jurisdictional amount could result in more cases being filed as small claims, which would give district courts the capacity to handle larger claims and more complex cases. Financial institutions and businesses are looking to save on litigation costs when dealing with defaulted loans, overdrawn accounts and fraud.
The downside, according to legislative analysts, is that small claims court staff could wind up with a lot more to do. As it stands, court workers frequently find themselves explaining many things to folks who have never been to court before. More small claims cases could compound the problem. And, unlike the general civil division courts, where parties handle their own service of process, small claims courts are responsible for delivering the goods to defendants.
Opponents also claim the proposed increase is excessive. The Senate Fiscal Agency analysis summarizes the argument this way:
In 1999, it made sense to raise the limit from $1,750 to $3,000 because the district court’s jurisdictional ceiling had been increased from $10,000 to $25,000 a year earlier. That factor is not present now.
Nevertheless, it would be appropriate to adjust the jurisdiction of the small claims court based on inflation, since the current limit has been in place for nearly 12 years. An inflation-based adjustment would bring the limit to approximately $3,800. Also, providing for an annual inflationary adjustment would enable the court’s jurisdiction to keep pace with cost increases.
Expect a big debate about small claims in the House.
The Michigan Lawyer 