Sen. Julianne Ortman, head of the Senate Tax Committee

Glen Stubbe, Star Tribune

Whistleblower: Minnesota small claims cap soon will rise to $15,000

  • Article by: KELLY SMITH
  • Star Tribune
  • May 26, 2012 - 7:26 PM

A homeowner with a $19,000 dispute over a contractor's work had a choice: take the dispute to a costly trial in district court or recoup less than half the amount by going to conciliation court.

For 18 years, $7,500 has been the limit for most conciliation court, or small claims, disputes in Minnesota. That's why state Sen. Julianne Ortman, R-Chanhassen, the lawyer on that case years ago, sought to raise the cap this year.

The new law, signed by Gov. Mark Dayton this month, bumps up the limit in August to $10,000, the same as in eight other states, including Wisconsin, Illinois and North Dakota. In August 2014, the cap will increase to $15,000 -- second only to Tennessee for the highest small-claims limits in the nation.

"We want Minnesotans with disputes to reach an early, cost-effective result," Ortman said. "The courts just needed to adjust with the times and the jurisdictional amount."

Renters or homeowners with a beef against a landlord or contractor often take the dispute to conciliation court because they don't have to pay for a lawyer and because filing fees are lower than for district court. While the higher small-claims limit had broad bipartisan support in the Legislature, some advocates still have concerns about whether it will make things more difficult for the little guy.

Ron Elwood, supervising attorney for Legal Services Advocacy Project, said it could open up more cases brought by companies or individuals who can hire a lawyer -- even though they don't need one -- against those who can't afford one.

"The issue we were most concerned about was creating an imbalanced system," Elwood said. "It's not a little sum of money anymore."

Nationally, small claims limits vary, ranging from $2,500 in Arizona, Rhode Island and Kentucky to $25,000 in Tennessee. After the limit rises to $10,000, according to Elwood's count, two-thirds of states will have lower limits than Minnesota, with a third of all states at $5,000. In 2014, the state's $15,000 cap will equal that of Delaware and Georgia.

"Where does the line become that is it no longer a small claim?" Elwood said.

Litigants could still appeal a decision to district court. Conciliation court claims against consumers by credit card companies and other debt buyers will remain capped at $4,000.

The Minnesota State Bar Association considered opposing the hike, but didn't end up taking a stance. But the Minnesota Supreme Court Civil Justice Reform Task Force supported it in a report last December, advising a limit raise to $15,000.

"Increasing the limit to only $10,000 is not a significant change for impact purposes," the report stated. "Litigants from businesses to consumers discount claims to get under the current limits, and this is persuasive evidence that a change should be made. Raising limits would mean less discounting and greater access to the courts."

Sen. John Marty, DFL-Roseville, another bill sponsor, said the claim increases will be a "reasonable change." Ortman added that she would have been "comfortable" raising the limit to $20,000 or $25,000.

In a House fiscal note, the courts estimated the $10,000 limit will result in more expenses, but also an anticipated surge in revenue thanks to more people taking advantage of lower filing fees to go to conciliation court, bringing in $54,000 more in 2013 and $82,000 in 2014.

In 2011, 53,000 conciliation court cases were filed in Minnesota. In Hennepin County, conciliation court filings have generally decreased over the last 10 years, from nearly 19,000 in 2002 to about 10,000 in 2011. Court managers in the state's largest county are bracing for a jump in conciliation court files, a spokeswoman said, but aren't sure by how much.

For attorneys like Steve Aggergaard, who gives free advice to low-income clients preparing for a hearing through the Volunteer Lawyers Network, conciliation court makes sense for those who are fighting disputes such as recovering security deposits from landlords.

"It's frontline justice," said Aggergaard, an attorney with Minneapolis law firm Bassford Remele. "It seems to be a good use of court resources."

Suzanne Pontinen, executive director of the Volunteer Lawyers Network, said it could increase court access, but she also worries conciliation courts may get overloaded, stalling cases such as for unpaid wage claims.

"Who will this really help?" she said. "We're not sure how it's going to play out."

Kelly Smith • 612-673-4141 Twitter: @kellystrib

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