By Julian Neiser on G+
One of the most frequent questions I receive from clients (and some lawyers) involves the differences between the different civil court “levels” in Pennsylvania and how they all connect.
In summary, a case valued at less than $12,000 can go to “trial” at three different levels in Pennsylvania: magistrate, compulsory arbitration and the general trial docket. This means the case will start over from scratch three different times before it reaches a level where appeal rights are somewhat limited.
An understanding of how the system works is vital. Otherwise, it’s almost impossible for a client to make an informed decision on how to handle a dispute. For example, a client who has a $1,000 claim against someone may want to seriously consider taking a $500 settlement offer considering that the case could be tried three different times before a final judgment is entered.
Reaching a point where a final judgment is entered is the goal.
This article provides a quick guide to the civil court system and covers appellate rights up to our intermediate appeals court, which tries to answer some of these basic questions.
The first level of Pennsylvania civil courts are our magistrates, which also are called called district justices. The jurisdictional limit for magistrate cases is $12,000. This means that a magistrate cannot issue an award for any amount exceeding $12,000. It is not uncommon for client to have a case worth more than $12,000, but they seek to start before a magistrate to save time and money.
Filing of a magistrate complaint is simple and straightforward. A plaintiff need only fill out a quick form, pay a filing fee, and provide the address of the defendants to the magistrates office. A hearing typically will be scheduled within a month of the date of filing.
The defendant needs to provide a notice that it will defend the claim five days before the scheduled hearing. A defendant also can file a counterclaim against the plaintiff, which essentially is a lawsuit within a lawsuit. For example, a plaintiff can sue a defendant for breach of contract in the amount of $10,000 and the defendant can follow counterclaim against the plaintiff for the same amount of money.
The magistrate hearing is usually a very informal affair and the rules of evidence and procedure are generally relaxed. The magistrate will often issue a ruling within a few days of the hearing.
Either side may take an appeal from the magistrate ruling if the necessary paperwork is filed within 30 days of the date of the judgment. Appeals taken after the 30 day period may not be permitted.
Note that any appeals taken from the magistrate are taken “de novo,” which means the case starts all over again and the result of the magistrate hearing means nothing.
Because appeals are taken de novo from a magistrate decision, I often recommend to my corporate defendant clients that they shouldn’t appear at the magistrate hearing at all, allow a default to be entered, and then file an appeal to compulsory arbitration. The cost of an appeal is less than $100, but the loss of productivity for the client to leave work for a hearing and then pay a lawyer for a few hours of work on a small case often justifies the taking of a default. This especially is true if the parties truly are angry with each other and an appeal is almost guaranteed either way.
If no appeal is taken, then the judgment of the magistrate can be executed on. This is a subject for another article and is a process that should be done with the assistance of a lawyer.
The next tier in the Pennsylvania court system is compulsory arbitration. Compulsory arbitration involves a trial in front of three lawyers who are selected at random from the local community. In Allegheny County, Pennsylvania, compulsory arbitration is mandatory for all cases with a value of less than $35,000 and for all magistrate appeals.
Just like magistrate claims, it is not uncommon for plaintiffs to bring a case in compulsory arbitration despite the fact that the case may be worth more than $35,000. There are a number of reasons for this. First, there is no discovery in compulsory arbitration in Allegheny County except in personal injury matters. Discovery is the process by which the parties to a lawsuit exchange information and it may involve copying many documents and taking depositions of witnesses. Discovery is often the most expensive part of any lawsuit, so the prospect of trying the case in arbitration in a lower dollar amount may actually make more sense because the discovery cost will be saved. Second, the process of trying a case in front of a panel of arbitrators is almost always less expensive than a judge or jury. The proceedings are less formal and the amount of time involved is usually much less. Finally, trying a case in front of an arbitration panel is usually an inexpensive way of learning your opponent’s theory and seeing their evidence.
Beginning a case in arbitration involves the filing of a complaint or an appeal from a magistrate’s decision. An arbitration hearing date will be assigned immediately after filing the complaint or the appeal. Typically, the hearing will be scheduled within three months of filing the complaint. Either party is granted a continuance as of right one time for every arbitration case. This means that for any reason, either party can obtain a continuance from the originally-scheduled hearing date by filling out what is called a “green sheet.”
The case will be argued before a panel of three attorneys who will act as judges. The proceedings are fairly informal, but they are much more rigid than a magistrate hearing, especially with respect to the admissibility of evidence.
Also, there is a rule that allows parties in compulsory arbitration cases to offer documents as exhibits at the hearing without having a witness present to authenticate them. This rule allows parties to also sidestep hearsay objections. The idea is that this procedure will make the case easier on everyone by not requiring lots of witnesses to attend the hearing. For example, let’s say you need to offer an invoice as evidence to show damages in a construction case. That invoice is a hearsay statement, meaning that it is an out-of-court statement offered at trial. If you produce that document to your opponent at least 20 days before the arbitration hearing and you declare your intention to use it pursuant to local rule, then you can offer it as evidence as if the necessary witness were testifying live.
An arbitration hearing shouldn’t take more than one hour. The arbitrators will render a decision shortly after the hearing, and the result will likely be available online within a few hours later.
Either party can appeal a decision of the arbitrators within 30 days of the decision. Like a magistrate decision, the case starts over from the beginning — de novo — at the next level.
Keep in mind that anything can happen in arbitration. Because there is no discovery, there also is a lack of certainty. Your opponent can literally have a “smoking gun” and you won’t know it until the arbitration.
I mentioned above that it sometimes makes sense to not appear at a magistrate hearing and simply appeal from the entry of a default judgment. The same is not true with compulsory arbitration.
If you do not show up for a compulsory arbitration hearing in Pennsylvania, a default judgment will be entered and there is no right of appeal.
The next level “up” from compulsory arbitration is the Court of Common Pleas, Civil Division.
At this level, your case will be tried before a judge or jury. There is a significant difference between trying a case at this level and those mentioned above.
The first difference is the cost. While cases before a magistrate or an arbitration panel can be handled relatively cheaply and costs can be contained, the same is not true before a judge or jury. Discovery is available, which dramatically increases attorney and vendor costs. Your opponent can easily drive up costs through discovery or motions practice.
There are additional procedural steps that occur in a trial by judge or jury. Because discovery is available, motions for summary judgment (having the court rule on the case without a trial) often occur. A pretrial statement must be filed. Jury instructions or findings of fact and conclusions of law are required.
Needless to say, trying a case is much more complicated in front of a judge or jury.
With that said, I personally prefer to try cases at this level over arbitration. Because I can do discovery and can learn the details of an opponent’s case before the trial, I feel as if I’ m much more prepared. Arbitration can be the wild west and anything can happen. There are relatively few surprises in front of a judge or jury, and if there are any complicated issues that require a ruling, a judge is much more adept at doing so than an arbitration panel.
There is an ability to appeal from a decision of a judge or jury, but the standard is completely different than the de novo standard applied to magistrate and arbitration appeals. First, the case doesn’t start all over again. In fact, the appeals court will only consider very discreet issues — not the entire case. Second, there must usually be an error of law or abuse of discretion by the judge to win the appeal.
Timing and Cost
So how long does all of this take? It depends, but I would expect that a magistrate case that makes its way up to a judge or jury trial will take about two years in Allegheny County — and there is no telling how much longer an appeal to the superior court would last.
The cost is hard to gauge. I have had cases that were very economically done because the lawyers got along and were focused on the issues. I’ve had others where the costs were astronomical because every inch of ground was contested. However, if you have an adversary who is going to fight you from beginning to end, it’s best to discuss that issue with your lawyer so you can pace your budget and try to foresee how deep the case will go.
This is why cases settle so often…