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MN Alternatives to Small Claims Court

Were you in a fender-bender and the other driver won't pay to have your car fixed? Is a former landlord refusing to let you get some belongings you left behind, or maybe refusing to refund all of your security deposit? These are the types of legal disputes that are handled by the Minnesota conciliation courts, or "small claims" courts. They're designed to be a fast, informal and inexpensive way for people like you to get the money they're owed or to have their property returned.

What can you do, though, if you're like a lot of people and you don't want to file a lawsuit, not even in a conciliation court? There are some alternatives to filing a lawsuit in small claims court, such as:

  • Personal negotiation
  • Mediation
  • Arbitration

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

Personal Negotiation

This should be your first step, even if you're prepared to file a small claims lawsuit. All this involves is one or two a simple phone calls or letters to the person who owes you money or has your property (he'd be called the "defendant" if you filed a lawsuit against him) asking that he pay what's owed to you. Be polite and cordial. Maybe you can work out an agreement that benefits everyone.

If your initial calls and letters aren't getting 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 the other person owes you money or why the property you want rightfully belongs to you
  • State exactly how much money you're demanding, or exactly what property you want
  • Clearly state that you intend to take legal action, including filing a lawsuit in small claims court, if you're not paid or don't get the property within 15 or 30 days, or whatever reasonable period of time you allow

At the very least, you should mail the letter certified mail, return receipt requested. This requires the other person to sign for the letter when it's delivered to him. After it's delivered, you'll get the return receipt. Make sure you keep it, together with a copy of your letter, so that, if necessary, you can prove later that the letter was in fact delivered.

Mediation

Mediation is an informal meeting between you, the other person, and a neutral third party, called a "mediator." Most of the time you'll meet together, but sometimes you and the other person 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 settlement agreement, 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 other person. Depending on everyone's willingness to negotiate and compromise, it can lead to a very quick settlement of your claim that makes everyone happy.

The courts like mediation, mainly because it saves time and helps clear the courts' busy schedules. In fact, if you file a lawsuit in a Minnesota conciliation court, on the day you and the defendant show up for the hearing or trial, the judge will try to get you and the defendant to settle your case. In some courts, you and the defendant may be asked if you're willing to have the case go to a mediator to try and work out a settlement. Only if you don't settle the matter with the judge's help, or if you both don't agree to mediation, or if try mediation and it doesn't work, will there be a hearing.

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 other person reach an agreement, the mediator can't enforce it. So, if the other person 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
  • It's you and the other person who 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 judge or referee would if the case went to trial in a small claims court. That is, the mediator doesn't decide who "won." Rather, she merely helps you reach an agreement
  • At any time, either party can withdraw from mediation
  • If you 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 other person, 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 defendant 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 defendant 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 defendant don't follow the decision
  • After going through arbitration, you can't file a lawsuit in a Minnesota small claims court
  • Arbitration can be expensive. An arbitrator may charge over $125 for a four-hour block of time to listen to and decide your case

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

Questions for Your Attorney

  • I can't get the other person to answer my phone calls or letters. Is there any benefit to offering to mediate?
  • The person whom 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? I mean, will the suit and the court fees cost me less than an arbitrator?
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