If they have not complained to you about your work, have not paid you and have not responded to your demands for payment, they are most likely experiencing financial difficulties. The first thing you need to do is find out if they are still in business. If they have gone belly up or are insolvent any court judgment you obtain against them will be difficult to collect. The court does not act as a collection agency. It determines whether a debt is justly owed. If the defendant has no assets, you can not get blood out of a stone. If you do obtain a worthwhile judgment against them you need to follow your state's procedue to enforce the judgment. Usually that means having an execution (court order) issued by the court for a small fee which empowers a sheriff/marshal or other law enforcement official to levy on a bank account, wages, accounts receivable or to seize and sell non-exempt personal property to pay your judgment.
If you determine that the defendant is solvent, and worth suing, you next need to determine whether you were dealing with a corporation, limited liability company, general partnership, limited partnership or individual. Each has slightly different requirements for service of process depending on the state in which you or they reside. If you are within the jurisdiction of small claims court, the requirements of service of process are relatively simple.It is set up for people to proceed on their own without attorneys in the most simple way possible. Usually in small claims cases it is only a matter of paying a small filing fee, filing the complaint, and showing up to testify on the day of trial.
If on the other hand the amount of your claim puts you up into the next tier of court (Superior Court in Connecticut), you will almost certainly need a lawyer because you will be held accountable to the same rules of evidence and civil procedure as a lawyer. If your own company is a corporation, limited liability company or other entity recognized by your state as having a legal identity separate from you personally, you will almost certainly need a lawyer because in most states a non-lawyer cannot represent these entities without engaging in an unauthorized practice of law. In Connecticut an exception is made for small claims court.
In any event you will need to know the exact name of your client in order to write it on the court pleadings. This is important because if you win your case, and want the court to issue an execution, you will want the execution to match the client's name on the bank account, wages or accounts receivable that you are garnishing. This is also true as to the name on the defendant's personal property to be sold or the deed for real estate that is to be taken or sold at public auction after foreclosure to pay your judgment. Very often you can get this information by checking the webpage for the Secretary of State in which the defendant is located. There are also other sources for this information.
Now that you have determined that the defendant is solvent and worth suing ,and have determined the exact name of the defendant, you have to decide where to sue the defendant. If the defendant is located in the same state as your business, you can sue him in your state without too much of a problem. If the defendant is located in a different state, has not appointed the Secretary of State for your State or some other entity in your state to receive service of process or has not engaged in other conduct which would render him subject to the jurisdiction of your state's court, you will probably need to sue the defendant in his native state. There was a very long discussion on this issue last month on this board. If you do a search it may answer a number of your questions.
If the defendant is located in a foreign state, choosing a court in which to sue him may be a dilema. If you sue the defendant in your state, he is almost certain to test the jurisdiction of the court with a motion to dismiss. That is the first question that any good defense attorney will ask when he represents a client located outside the forum state. However, the defendant may not be represented by counsel, and may not know enough to file this motion or he may otherwise submit to the jurisdiction of your state's court. You may or may not win. If you lose on this issue you will need to refile the case in the court of the Defendant's native state. You will then need to pay the court's filing fee and any associated expenses for service of process a second time. In my opinion a plaintiff is always better off suing a foreign defendant in his native state because it eliminates the defendant's ability to challenge the court's jurisdiction on the basis of his location.
If you win the suit the courts of most states will allow you to recover your filing fees and sheriff's/marshal's fee for service of process in addition to your damages.
You will also almost certainly be able to collect legal interest on the amount of the judgment if the defendant fails to pay your judgment immediately. In some states the interest will accrue from the date of judgment. In other states it will accrue from an earlier date. You can actually make money on the deal, and recover some of the costs of litigation through the legal interest. I won a case several years ago in which the defendant delayed in paying the judgment. By that time another $1,300.00 in legal interest had accrued. I found a really vicious female marshal to serve the property execution. She threw on another 10% of the judgment on top of it for her fee. We received payment in full within a matter of days after she served the execution.
However, waiting to collect your judgment can be a gamble if the defendant is experiencing money problems. In this case you would want to execute on the judgment immediately. Whether you wait or proceed immediately to execute the judgment, you will want to secure the judgment by immediately filing/recording a judgment lien with the appropriate authority. In Connecticut that would be the Secretary of State for personal property and the Town Clerk in which the defendant's real estate is located. Filing/recording the judgment lien will protect you as a secured creditor in the event that the defendant bankrupts. It will also make it difficult for him to sell real estate or personal property with the lien attached to it or the buyer may become subject to the payment of your judgment. It will also impact on his credit rating if he is applying for a loan or other extension of credit.
Whether you can also recover attorney's fees depends on the law of the state in which the court is located. In Connecticut for instance you would need to have a written contract or statute that provided for recovery of attorney's fees, but the laws of the state in which you sue the defendant may differ. There are also alternate theories of recovery other than contract breach which may provide for the recovery of attorney's fees.
If you have to sue the defendant in another state and need an attorney it is a simple matter of making a telephone call to a law firm in the defendant's location. Law firms are very used to getting calls like this from out of state client's, and legal representation can be easily arranged. You will need to travel to the other state to testify at trial, and there will be travel expenses involved. You will need to consider whether this expense is justified by the amount you are trying to collect when making a decision as to whether or not to sue the defendant. However, in debt collection cases the defendant very often folds up, defaults and loses immediately by not appearing in the case or not pleading a response to your complaint. In this situation it becomes very easy to obtain your judgment at minimal expense.
So, to summarize:
1. Determine if the defendant is still in business or insolvent.
2. Make certain that you have the exact name of the defendant
drafted on your court pleadings and executions. Do not use part
of the corporate name or limited liability company. Very often
people forget to include the "Inc." or the "LLC" after the
defendant's name. Do not sue the defendant under a trade
name or fictitious name alone.
3. Decide in which state to sue the defendant, and then observe the
procedures of that court.
4. If you win, have the court issue the appropriate order (An execution
in Connecticut) to enforce the judgment, and refer it to the appropriate
authority for collection.
This probably seems like a lot of information to digest, but that's the legal biz.
to post a reply:
login - or -
register