Majority
Opinion
A plaintiff who chooses small claims court instead of the municipal court gives up the right to appeal an adverse decision by the
The superior court, hearing the tenants’ appeal in a trial de novo, awarded them $1,000, plus $21 in costs, but rejected the landlord’s claim against them. We consider here the landlord’s contention that the superior court erred in conducting a trial de novo. We also consider whether, as suggested by Township Homes, Inc. v. Superior Court (1994) 22 Cal.App.4th 1587 [ 27 Cal.Rptr.2d 852 ] (Township Homes), the superior court improperly entered a money judgment in favor of the tenants, who were appellants in the superior court proceeding. According to Township Homes, defendant/appellants may assert their affirmative claim only for purposes of a setoff and may not secure a monetary award in a trial de novo.
We conclude that the superior court acted correctly in conducting a trial de novo and in entering a monetary award for the tenants. We disagree with Township Homes insofar as it bars an affirmative award on the claim of a small claims court defendant/appellant. As we read the statutes, if both sides have filed claims and either appeals the other’s claim, the superior court will fully retry all claims. We deny the landlord’s petition for writ of mandate.[2]
Facts and Procedural History
In June 1996, Ike and Tina Obinna filed a claim in small claims court against their landlord, George A. Linton, seeking $1,250 as a refund of their rental deposit. They assert by declaration that they made a refundable deposit in a rent-to-own deal and were forced to withdraw their offer
1 All statutory references are to the Code of Civil Procedure.
2 Appeal may not be taken from a superior court’s de novo ruling. (§ 116.780, subd. (a).) Neither will an appellate court entertain a writ petition merely to consider a claim the superior court erred. The appellate courts may intervene, however, “in order to secure uniformity in the operations of the small claims courts and uniform interpretation of the statutes governing them.” (Davis, supra, 102 Cal.App.3d at p. 168.) We have addressed this petition by published opinion to guide the superior courts in handling appeals when both sides have filed claims in the small claims court.
Following hearing, the small claims court entered judgment for $1,000 plus $21 costs for the Obinnas and an identical judgment for Linton.
The Obinnas appealed to the superior court, but Linton did not. After trial de novo on the appeal, the superior court entered judgment of $1,000 plus $21 costs in favor of the Obinnas on their claim and judgment in favor of the Obinnas on Linton’s claim against them. The court ordered that Linton take nothing and awarded total judgment for the Obinnas of $1,021.
Linton then moved the superior court to vacate its judgment. The court denied the motion. This petition followed. We solicited opposition from the Obinnas and are now prepared to decide the matter.[3]
Small Claims Court Law
“The small claims court was created to provide a speedy, inexpensive, and informal method of resolving disputes involving relatively small sums of money, without attorneys or conventional legal procedure.” (Cal. Judges Benchbook, Small Claims Court and Consumer Law (1994) pp. 1-2 (Benchbook).)
A plaintiff commences a small claims action by filing a claim within the jurisdictional limits of the court. (§ 116.320.) A defendant may then file a claim against the plaintiff in the same action. The defendant’s claim must also be within the court’s monetary limits, but it need not relate to the same subject matter or event as the plaintiff’s claim. (§ 116.360.) In rendering judgment, “[i]f the defendant has filed a claim against the plaintiff, or if the judgment is against two or more defendants, the judgment, and the statement of decision if one is rendered, shall specify the basis for and the character and amount of the liability of each of the parties, including, in the case of multiple judgment debtors, whether the liability of each is joint or several.” (§ 116.610, subd. (d); Benchbook, supra, § 7.4, p. 183.)
Pursuant to section 116.710, “(a) The plaintiff in a small claims action shall have no right to appeal the judgment on the plaintiff’s claim . ... FID (b) The defendant with respect to the plaintiff’s claim, and a plaintiff with
3 We have not issued an alternative writ or requested oral argument because the legal issues are straightforward and we prefer not to increase the parties’ expenses for this litigation.
Section 116.770 provides that “(a) [t]he appeal to the superior court shall consist of a new hearing” whose scope, “(d). . . shall include the claims of all parties who were parties to the small claims action at the time the notice of appeal was filed. The hearing shall include the claim of a defendant which was heard in the small claims court.”
Contentions
Linton contends that the Obinnas’ appeal to the superior court contravened section 116.710, subdivisions (a) and (b) and that the superior court exceeded its jurisdiction by hearing the appeal and entering judgment for the Obinnas. He asserts that the small claims court had no discretion to phrase the judgment in such a way as to generate an appeal. The small claims court should have left the parties where it found them, awarding nothing to either side. When neither litigant recovers, neither is aggrieved by the other’s claim and neither has a right to appeal, according to Linton. He argues that the small claims court should apply the same rule as for other civil actions. The court should render a single net judgment, not separate judgments for plaintiff and defendant.
Statutory Analysis
Linton ignores the wording of section 116.610, subdivision (d), quoted above, which directs the small claims court to specify the basis for and the character and amount of the liability of each of the parties when a defendant files a claim against the plaintiff. The small claims court benchbook elaborates on this statutory directive: “If the defendant also has a claim, the judgment should reflect a separate adjudication of each party’s claim, as it does in other civil actions. The small claims judge should avoid a lump-sum judgment. Separately stating the amount awarded to each party makes the decision more understandable to the parties and to any judge who hears the case on appeal.” (Benchbook, supra, §7.14, p. 189.)
The small claims court complied with the directive of the statute and with the benchbook’s advice. For his contradictory view, Linton relies upon
It is clear that the small claims court formulated its award in accordance with the governing statutes. It follows, then, that the Obinnas properly appealed for trial de novo on Linton’s $1,021 award against them and that the superior court properly took jurisdiction and properly reheard the claim. As required by section 116.770, the superior court hearing also included trial de novo of the Obinnas’ own claim against Linton.[6] The superior court’s award of $1,021 to the Obinnas was correct in all respects unless the court was compelled to apply Township Homes'% contradictory interpretation of the law.
Township Homes
While researching Linton’s arguments, we discovered the Third Appellate District’s opinion in Township Homes, supra, 22 Cal.App.4th 1587 , which casts considerable doubt upon the superior court’s affirmative award for the Obinnas. We requested from the Obinnas points and authorities in opposition to the petition and we expressed our concerns about the superior court’s award. The Obinnas’ reply presented grounds for distinguishing Township Homes. We believe, however, that relying upon a factual distinction between this case and Township Homes would disserve the development of small claims court law. Township Homes applied a rule with no statutory basis and
4 “If a claim asserted in a cross-complaint is established at the trial and the amount so established exceeds the demand established by the party against whom the cross-complaint is asserted, judgment for the party asserting the cross-complaint must be given for the excess; or if it appears that the party asserting the cross-complaint is entitled to any other affirmative relief, judgment must be given accordingly. . . .” (§ 666.)
5 Gerstein v. Smirl (1945) 70 Cal.App.2d 238 , 240 [ 160 P.2d 585 ], and Shelley v. Hart (1931) 112 Cal.App. 231 , 243 [ 297 P. 82 ], applied the net judgment principle in determining who should recover costs. Neither KGM Harvesting Co. v. Fresh Network (1995) 36 Cal.App.4th 376 , 380 [ 42 Cal.Rptr.2d 286 ], nor Boyd v. Oscar Fisher Co. (1989) 210 Cal.App.3d 368 , 372, 383 [ 258 Cal.Rptr. 473 ], mentioned the net judgment requirement, but both appeared to apply it in determining who receives prejudgment interest or costs.
6 Section 116.770, subdivision (d) provides in part: “[T]he hearing shall include the claim of a defendant which was heard in the small claims court.” Although they originally were plaintiffs, in this appeal, the Obinnas were “defendants” because they were appealing Linton’s claim against them. Subdivision (d) calls for simultaneously rehearing their claim against Linton along with the appealed claim.
Township Homes involved a dispute between the seller and the buyer of a home in Rocklin. Seller filed a small claims court action to be reimbursed for repairs and for installing a cabinet and skylight. Buyer filed a defendant’s claim, alleging seller’s failure to complete warranty repairs. The small claims court awarded seller $1,000 on its claim but ordered that buyer take nothing on hers. Buyer appealed and the superior court made an award in buyer’s favor for $3,319, offset this award by $2,681 buyer owed seller for repairs, and made a net award to buyer of $638. Thus, the buyer/appellant, who had lost both her claim and the seller’s claim and owed $1,000 in small claims court came out $638 ahead because she appealed for a trial de novo. (22 Cal.App.4th at pp. 1589-1590.)
Township Homes analyzed the statutes and evolving case law and concluded that the buyer/appellant could use her claim as an offset in the de novo trial on the seller’s claim, but could not use it to obtain an affirmative award in superior court. The appellate court ordered the superior court to reduce buyer’s award to zero. (22 Cal.App.4th at pp. 1590-1595.) At this point in the analysis, we note the parallel posture of our case. The superior court did not merely treat tenant/appellant Obinnas’ claim as an offset to the claim by Linton, from which the Obinnas had appealed. The superior court entered an affirmative award of $1,021 for the Obinnas on their claim. The superior court did for the tenant/appellant Obinnas what Township Homes would not permit the Placer County Superior Court to do for the buyer/ appellant.
Township Homes's analysis began by noting that “[s]mall claims court procedures have long precluded the plaintiff from appealing an adverse judgment on the plaintiff’s claim while permitting the defendant to appeal,]” a result found constitutional because “although plaintiffs voluntarily choose the trade-off of a quick and inexpensive method of trial and judgment in exchange for forfeiting the right to jury trial and appeal, defendants do not.” (Township Homes, supra, 22 Cal.App.4th at p. 1591.) The court then cited and quoted from this division’s opinion in Davis, supra, 102 Cal.App.3d 164 , which held that a small claims defendant could not appeal an adverse decision on his own affirmative claim. Township Homes then noted recent changes in the small claims statutes intended to preserve our Davis holding. (Township Homes, supra, 22 Cal.App.4th at p. 1592.) Up to that point in its analysis Township Homes's reasoning was sound.
7 The California Department of Consumer Affairs recently analyzed the statutes and reached the same conclusion about Township Homes. (See 1 Consumer Law Sourcebook (1996) §§ 15.41, 15.57, pp. 276-278, 282-284.)
With little explanation of its analysis, Township Homes held that “. . . the superior court remains limited by sections 116.130 and 116.710 from entering an affirmative award of damages to a defendant appealing a judgment in favor of the plaintiff.” (22 Cal.App.4th at pp. 1593.)
We disagree with Township Homes's interpretation of the statutes. The statutes neither explicitly nor implicitly impose such a limitation. Section 116.130 merely defines small claims court terms, stating that the term “plaintiff’ includes a defendant who has filed a claim against a plaintiff (subd. (a)) and the term “defendant” includes a plaintiff against whom a defendant has filed a claim (subd. (b)). Section 116.710, which we quoted earlier in the opinion (ante, at p. 1101), provides for appeals by defendants but not by plaintiffs. These statutory definitions and appeal rights do not address the scope of the appeal hearing or the superior court’s authority to award damages during a trial de novo.
Township Homes dismissed section 116.770’s injunction that the court “rehear the claim of a defendant” by stating that this meant only that the court “must rehear the defendant’s claim in order to determine whether to enter judgment in favor of the plaintiff.” (22 Cal.App.4th at p. 1593.) Without attributing the limitation’s source, the court read into the statute an undue limitation on the scope of the rehearing on the defendant’s claim.
As it is not found in the statute, Township Homes’s limitation must have stemmed from its perception that it would be unfair for the buyer to lose her affirmative claim in small claims court and then revive her lost claim during an appeal for trial de novo in superior court. Township Homes apparently found it fair or not too unfair for the buyer to revive her claim as a setoff but unfair for a court to award her money based on the revived claim.
The Obinnas suggest that Township Homes is distinguishable because they have not revived a claim they lost in small claims court. In Township Homes
We consider it important, however, to address the validity of Township Homes’s holding, which prohibits affirmative awards for appellants in small claims actions. The prohibition imposes a peculiar restriction on the scope of a de novo superior court trial. Without textual support, Township Homes has, in effect, amended the Legislature’s directive to “rehear the claim of a defendant” and has prescribed an unprecedented partial hearing of the claim.
The scope of the trial de novo in a crisscrossing claims case, specifically the Obinnas’ and other appellants’ opportunity to recover on their claims in a trial de novo should not depend upon whether their opponent has also filed an appeal, as it does under the Township Homes prohibition.[8] The Legislature has decreed that if only plaintiff has filed a claim only a defendant may institute an appeal. However, as we read the statutes, if both sides have filed
8 Although Township Homes’s prohibition on affirmative awards for appellants may appear logical and fair in some respects, in others it appears arbitrary and unfair. With this prohibition in force, a litigant’s ability to secure an affirmative award on appeal would depend largely upon luck. It would depend upon whether the opponent also appealed, an entirely fortuitous event in many cases. Had Linton appealed in this case and had the seller appealed in Township Homes, the issue of an affirmative award to the appellant would never have arisen in either case. The Obinnas could have reasserted their claim in Linton’s appeal and the buyer in Township Homes could have reasserted her claim in the seller’s appeal. Both the Obinnas and the buyer in Township Homes would have been entitled to an affirmative award from the superior court if the other side had appealed. The scope of the de novo trial should not depend upon whether one party has had the foresight or good luck not to appeal. Linton’s failure to appeal and the Township Homes seller’s failure to appeal may have been due more to luck than analysis or acceptance of the small claims court’s result. Given that litigants are not permitted to use attorneys in small claims court, luck, not foresight, will often dictate the result. Luck and a little knowledge could prevent even a sorely aggrieved litigant from appealing an opponent’s successful claim. A litigant with no knowledge of the statutes probably would appeal reflexively, detrimentally if he were Linton and the Township Homes prohibition applied. On the other hand, a litigant with a little knowledge of the statutes but not of Township Homes might have the good fortune to mistakenly think a cross-appeal would be redundant. A litigant like Linton reading only the statutes would reasonably expect that the Obinnas’ appeal would reopen their claim against him. He might then not bother to file his own appeal from their claim. If he made this lucky assumption he would then reap an unexpected Township Homes dividend. He would deprive the Obinnas of the opportunity to recover on their affirmative claim. By failing to appeal, he would be better off than had he appealed, a curious result for an aggrieved litigant.
Had Linton wished to prevent the Obinnas from taking their claim beyond the small claims court, he could have done so by forgoing his own claim. Having filed his claim, however, he could not deny the Obinnas the opportunity to recover in superior court on their claim. For better or for worse, he gave them a second choice of courts.
The petition for a peremptory writ of mandate is denied.
Phelan, P. J., and Corrigan, J., concurred.
Petitioner’s application for review by the Supreme Court was denied May 21,1997. Kennard, J., and Brown, J., were of the opinion that the application should be granted.
9 We recognize that permitting a full retrial in superior court sows the seeds for possible abuse. A plaintiff unsatisfied with the results on a large claim could take another chance in superior court even if the defendant had recovered only $5 on a small defendant’s claim. However, risks are inherent in any trial de novo and the risks run in both directions when claims run both ways. The plaintiff could lose a favorable award from the small claims court and the defendant’s minor claim could produce a major recovery in superior court.
Cases cited
- Davis v. Superior Court 102 Cal.App.3d 164 at 170 p. 1099, p. 1103
- Township Homes, Inc. v. Superior Court of Placer County 22 Cal.App.4th 1587 p. 1099, p. 1102