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HI Alternatives to Small Claims Court

Were you involved in a fender-bender and the other driver won't pay to have your car fixed? Is a landlord refusing to return the security deposit you paid when you leased some residential property? These are the types of disputes that are handled by the Hawaii small claims court. It's a court that's designed to be a fast, informal and inexpensive way for people to get the money they're owed.

Maybe you don't want to file a lawsuit, not even one in a small claims court. You're not alone. A lot of people don't like courtrooms or dealing with the "legal process." That doesn't mean you can't get paid. There some alternatives to filing a lawsuit in small claims court, such as:

  • Personal negotiation
  • Mediation
  • Arbitration

Any of these tactics may help you get your money without having to step foot into a courtroom.

Personal Negotiation

Personal negotiation should be your first step, even if you're prepared to file a small claims lawsuit. All this involves is a simple phone call or letter to the person who owes you money asking that she pay. Be polite and cordial. Maybe you can work out an agreement that benefits everyone.

If your first attempts don't get you anywhere, then consider writing a demand letter. It's exactly what it sounds like: A letter demanding that the other person pay you within a specific period of time, like 15 or 30 days. To be effective, the letter should:

  • Briefly explain why you think you're owed money
  • State exactly how much money you're demanding
  • Clearly state that you intend to take legal action, including filing a lawsuit in small claims court, if you're not paid within the stated time (15 or 30 days, for example)

At the very least, you should mail the letter certified mail, return receipt requested. The recipient has to sign for it, and you'll get the receipt. When you get the return receipt, make sure you keep it (along with a copy of your letter) so that, if necessary, you can prove in small claims court that the letter was received.

Mediation

Mediation is an informal meeting between you, the defendant, and a neutral third party, called a "mediator." Most of the time you'll meet together, but sometimes you and the defendant will meet separately with the mediator. The mediator's job is to help you both reach an agreement. She can suggest different options to help you reach that agreement, and she may even suggest a particular course of action, but she can't force or order either of you to do anything.

In most instances, mediation will be offered at no or little cost to you or the defendant. Depending on your and the defendant's willingness to negotiate and compromise, it can lead to a very quick and mutually satisfactory resolution of your claim. Both you and the defendant have to agree to mediation.

The courts like mediation, mainly because it saves time and court resources. In fact, in Hawaii, if you file a lawsuit in small claims court, the court may order you and the defendant to mediate the dispute. The case will go to trial and be decided by a judge only if no agreement is reached through mediation.

Some Rules to Know

There are some things to keep in mind about mediation, such as :

  • It's not binding, meaning that even if you and the defendant reach an agreement, the mediator can't enforce it. So, if the defendant later breaks or "breaches" the agreement, you may need to start the whole process over again (personal negotiation, writing a demand letter, filing a lawsuit, etc.)
  • The mediator can't provide legal or personal advice. She can only suggest possible ways to settle the matter and help you both make sure that you reach an agreement that's good for you both
  • You and the defendant make the terms of the agreement, not the mediator. The mediator will only write down or document what you've agreed to
  • The mediator doesn't make a "decision" in the case like a magistrate would in the small claims court. That is, she doesn't decide who "won." Rather, she merely helps you reach an agreement
  • At any time, either party can withdraw from mediation
  • If you and the defendant don't reach an agreement through mediation you can still file a lawsuit in small claims court. In other words, you don't waive your right to file suit simply because you agree to mediation. This is true for the defendant, too, if he has a "counterclaim" against you, that is, he claims that you owe him money
  • Attorneys are usually not present during mediation. You can, however, hire an attorney to advise you about your claim, if you'd like

Arbitration

Arbitration is very similar to mediation. Here, a neutral third party, called an arbitrator, listens to both sides of the story, just like a mediator does, in the hopes of helping you reach an agreement. However, there are some important differences between arbitration and mediation:

  • If you and the other party can't reach an agreement, the arbitrator will make a decision in the case, that is, decide if you're going to get paid and how much
  • The arbitrator's decision is binding, unless you and the other party agree beforehand that it isn't binding. This means that it can be enforced by the arbitrator and, if necessary, the courts, if you or the other party don't follow the decision
  • After going through arbitration, you can't file a lawsuit in a Hawaii small claims court
  • Arbitration can be expensive. An arbitrator may charge $125 or more for a four-hour block of time to listen to and decide your case. But, if you win, the costs of arbitration are usually added to the amount the other party owes you

As with mediation, you and the other party have to agree to arbitration. However, you both also have to agree on the arbitrator. The district court clerk in your area may have a list of arbitrators that you may contact. Or, you can contact the American Arbitration Association for a list of arbitrators in your area.

Questions for Your Attorney

  • Someone owes me money and he won't answer my phone calls or letters. Is there any benefit to offering to mediate?
  • The person who owes me money agreed to mediate my claim, but now he won't meet with or talk to the mediator. What should I do now?
  • How much will you charge me to file a lawsuit and represent me in small claims court? Will the suit and the court fees cost me less than an arbitrator?
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