I Took A Deadbeat Client to Small Claims Court, and Won: Here’s the Story

libra I Took A Deadbeat Client to Small Claims Court, and Won: Heres the StoryIt started out innocently enough. A potential client liked my work, and had one of his employees contact me to see if I’d be interested in meeting to discuss some potential projects he wanted my help on. Several weeks after the initial meeting, he contacted me needed some emergency last-minute work done. He told me the terms over the phone and asked to meet in person the next day.

I’d had some misgivings about the client in the first place for various reasons, and a second red flag was when I learned he’d fired the full-time employee working on the project. My third red flag was when it took him five hours in our in-person meeting to explain what he wanted, and all I had walking out of that meeting was an outline I’d created myself. Start-up companies are often very disorganized, but this was excessive.

Still, I proceeded against my better judgement. I created a shared Google doc so that he could observe my work in real time, due to the time crunch, so that I could immediately make corrections. We didn’t have the luxury of a prolonged revision process.

I spent six hours putting together the manual, as requested, based on the outline I’d painstakingly compiled amidst a chaotic environment with constant interruptions. And I got feedback asking for more pages of information, though I had no idea what else to include, and for images, though copyright was an issue and we’d never discussed procuring images in our scope of work meeting.

My concerns and questions were never addressed, but were instead greeted with hostility. And so it was that midway through the project, the client decided to complete it himself. I was actually relieved at this point, and let him know that I’d simply bill him for the work I’d completed up until that point.

His response was, ”Bill? Are you kidding? For what? You did not provide me with any services. Good luck with your bill-sending exercise. All further emails will be automatically deleted.”

Fighting Back

I am a proud member of the National Writers Union, and so I contacted their grievance division to try to determine my best next step. After trying to contact the guy, who did not respond, they advised me to take the matter to Minnesota Conciliation Court (i.e. Small Clams Court.) and provided me with some advice on how to handle the Conciliation Court process.

Filing the claim was pretty easy. I simply contacted the Conciliation Court office in the county in which I was filing the claim (which was in his city, not mine). All I needed was my name and address, the name and address of the defendant’s office (or home address if it’s an individual), the amount of the claim (in my case, $845), the reason for the claim, the date it arose, and a very brief description. I also had to pay a $75 filing fee, but was told it would be added to the claim.

The Court took care of it from there, setting an actual date and time, and notifying the defendant by first class mail. Many cases are settled at this point, outside of court, but mine was not.

Luckily, the defendant did not file a counterclaim. I really did feel like I could expect anything, but did not have to deal with this particular possibility.

Gathering Evidence

My next step was to put together my case for the judge or, as they sometimes call him in small claims court, referee. This is very similar to providing information for fact-checkers when writing an article. I wrote my case out clearly on an index card, so I could summarize it in just a few sentences. I  put an asterisk next to each item, to remind myself to gather evidence for each claim. For example, the guy actually accused me of cutting and pasting from documents that he sent me, so I printed out copies of all of the documents that he sent me, most of which were highly irrelevant, and of the actual manual I had written. I put together a copy of text messages we’d sent one another, in case he tried to say that we never actually met. I put together a copy of correspondence between his coworker and I, in which I was told the company was looking for a writer to work on contract (in case he tried to pretend I had offered to work on spec or for free.) I put together screenshots of our discussion on the work I had completed, where he told me I needed to make additions and I asked him what else to include. I included a copy of the actual invoice I had sent.

Then I made three copies of the entire packet–one for me, one for the referee, and one for the deadbeat client–in case he claimed to never have seen the documents–which he did end up doing.

I was hoping to find some case law on quantum meruit, a Latin term meaning “as much as he deserved” which refers to the actual value of services performed. When no written contract exists, or when the amount due for work performed is in question, the judge calculates the amount due based on the time the project took, the usual rate of pay or customary charge, by implying a contract existed. A paper contract is always preferable, but was something I made the amateur mistake of ignoring because I was absolutely confident in my ability to rock this project, and in the integrity of the client. My bad.

I did not have to subpoena any witnesses, which costs $16.00 per person, plus a $20.00 witness fee and a travel fee calculated at 28 cents a mile. I also would have had to fill out an affidavit of service and sign it before a notary. Luckily, I had no witnesses to subpoena and so did not have to deal with the hassle.

After compiling all of the paperwork mentioned above, I put it in three manilla folders and moved on with my life, since there were several months until the court date and I had lots of fun projects with paying clients. I can’t say I wasn’t worried, though. What if the judge automatically sided with the guy since, well, he’s a CEO and they’d likely both be male and I felt like a powerless little girl? What if he asked to see a written contract we didn’t have? (The guy actually had the nerve to send me an e-mail saying, “File away. Make sure you show them the contract.”) Would the judge hear me out and see my paper trail? Would I get to speak without jerkface interrupting me?

In some ways, though, I felt that there was some value just in trying, despite the result. To advocate for myself and really put it out there that no, it’s not okay to hire me to do work and then not pay me for what I did… just like it’s not okay to go to a restaurant and order a burger and decide not to pay for it because you only ate half and changed your mind midway through and decided you wanted to go home and cook yourself and didn’t have a written contract. (I, myself, once decided not to use a web designer after she had begun her project–and I paid her for the work she had done until that point, even though I never saw it, let alone used it.) And so I realized I’d already won even if I lost the case. At least I’d inconvenience my deadbeat client and show him that if you mess with a National Writer’s Union member, you’ll end up in small claims court! It’s still nice to get money owed to you, though.

My Day In Court

My boyfriend was cool enough to go to court with me, which helped take my  mind off of all the things that could go wrong. Of course, he’d get me there on time and help me maintain my composure. To prepare, I tried on my court outfit and reviewed my case. The day of, I put on makeup and my fancy suit and pearls. My deadbeat client took forever to get there, which made me a bit nervous. What if he’d hired one of the fancy lawyers in the room? Turns out that he was just incredibly late. I was pretty stunned when he arrived and was wearing a red long-sleeve shirt and khaki pants. But even if he had brought a fancy lawyer, it’s worth noting that the judge wasn’t too impressed by fancy lawyers and was incredibly fair.

In addition to looking like he worked at Target, the guy also had no paperwork with him. The judge was super impressed by the sheer amount of paperwork I provided and that I brought up case law on quantum meruit. The defendant was smug and self-righteous, even prompting the judge at one point to tell him that if he had anger issues with me he needed to take it up with me outside of the court. The guy also flat out lied about multiple things and then backpedaled, lost his temper and got in the judge’s face. Classy.

I was very glad that I brought tons of paperwork, because when the defendant tried to lie under oath (which he did repeatedly), I had the documentation to prove it. For example, when he tried to pretend he had written the manual which I wrote, I had his time-stamped comments on the Google doc to prove him wrong.

After seeing that things weren’t going his way, he said he was going to appeal. The judge basically said, “Good luck with that, because you brought no paperwork.” We saw him as we were leaving, and he screamed, “Good luck collecting!” to me as his elevator door closed. Despite that, I was still pretty stoked that I presented my case well, maintained my composure and presumably got the judge on my side. And though this was about justice and collecting payment due to me, and I prefer smooth, seamless interactions with clients, I have to admit that it was pretty nice seeing the guy who’d wasted so much of my time visibly rattled.

Then What?

But next was the waiting game, as this judge in particular said he would mail his decisions to people and not announce them right away. It was supposed to get to me by a certain date, but did not. When I called, I was told the judge took it under advisement, which meant he had 3 more months. Why the BLEEP would he take it under advisement when his mind was already made up? And he even asked me not to leave any paperwork, which made me wonder if he could’ve changed his mind or forgotten the case or something.

A couple of weeks later, I received a letter stating that the judge decided my client owed payment for the time I spent preparing the material, but not for the travel time. I had originally invoiced $390 for preparing the material, $325 for the meeting, and $130 for the travel time, for a total of $845. The judge stated that the defendant owed me a total of $500, plus $75 for the filing fee.

Thinking he had made a mathematical error (since $845 minus $130 is not $500, but rather $715), I wrote a letter to the judge, who said that it was not in error but he simply decided upon the figure based on the merits of the case. My next order of business was to try to collect payment… but first I had to make sure my client wasn’t going to appeal this to district court.

Appealing the decision is $320, or $420 if he wants a jury trial. Any lawyer would cost more than the judgement. Most lawyers charge $100+/hour, and anything involving district court would obviously take more than 3 hours. When you have someone who clearly has a ton of money but doesn’t want to even pay people he has hired, you never really know how things will pan out, but luckily, he did not appeal.

Where’s The Money?

The next step after winning a court case is pursuing payment. Many people who win cases in small claims court never even see a dime. I wanted to at least try my hardest. My first step was to obtain a money judgement. This began by having the Conciliation Court transcribe the judgement to the District Court. This actually puts a lien on the client’s property, which doesn’t necessarily mean you’ll ever get paid (especially if they do not sell their home or have other liens ahead of yours), but it’s something. Next, I had to obtain the judgement debtor’s assets, such as bank accounts. I had no idea where he banked, because he never paid me, so I had no canceled checks. So I filled out an Order for Disclosure from the court, which required the debtor to disclose what assets he has. I had to track down the home address for this, which took a little bit of elbow grease. The form cost $5.00 for the Court to mail to his home and $5.00 to mail to his place of business.

Next, I had to wait for the form to be returned to me. If it was not received within 16 days, my next step was to fill out an Affidavit in Support of an Order to Show Cause. This would require the guy to appear in court to fill out the form (or explain why he couldn’t fill it out). The order needs to be personally served by someone not interested in the case. It can be served by the County Sheriff for a fee. If the judgement debtor doesn’t come to court, the judge can issue an order for a Writ of Attachment, which is a warrant for the debtor’s arrest for civil contempt of court. It costs $55, and the Writ is held on file in the chance that the debtor is arrested or detained–again, no guarantees there–in which case they must fill out the form before being released from custody.

If the form is filled out, or if you find the debtor’s assets (bank account, employment, etc.), you can actually put a levy on the bank account or garnish their wages. You need a Writ of Execution for this, though, which costs $55 and is served by the Sheriff of the county where the debtor works or bank account is located. Having the papers served is an additional fee, and garnishing wages requires an additional form, a ten-day notice of intent to garnish. That needs to be served via certified mail (an additional fee). The good news is that any collection fees paid to the Court or Sheriff’s Office by the judgement creditor are added to the judgement and owed by the debtor–but again, there is no guarantee they will get paid.

Luckily for me, I received a check for $575 from the deadbeat client. This entire process was very time-consuming. I’d originally invoiced him on August 5th, and didn’t see a dime until the following May. In addition to the $75 in court fees (which he did pay), I also had to pay $40 for the transcript of judgement, $10 for the order of disclosure ($5 each for his work and home), and $5 to file a partial satisfaction of judgement. The guy has refused to pay this additional $55 owed (what a surprise!), and because it would cost me an additional $55 to seek wage garnishment, I have decided to simply drop it–though the court records will indicate he never paid in full, and the amount still owed will be reflected as unpaid on his credit report.

UPDATE: After this guy was ousted from his own company, the new owners paid the remaining amount due.

Lessons Learned

  • Always get a contract in writing, no matter what. Not that this will stop deadbeats from being deadbeats, but it could help further down the road. The contract in question should also explain what will happen if a project is not completed to the client’s satisfaction. Some people use kill fees, and some do not. Regardless, these details should be hammered out ahead of time–no matter what the timeline is.
  • Trust your intuition on seemingly sketchy clients, and red flags. I wish I would have, as I’d rather spend the time working with one of the many amazing clients I have who manage projects well, explain clearly what they’re looking for, and love the work I do as much as I love doing it.
  • Don’t be afraid to pursue pay for work completed. The National Writers Union (United Auto Workers Local 1981, AFL-CIO) is a great resource for this. The ASJA also has a grievance division for writers. Writers Weekly has a Whispers and Warnings section. And many professional organizations informally warn each other about these types of clients. Also, Kelly James-Enger, an amazing lawyer-turned-writer, has a template for a “pay-or-die” letter on her blog.
  • Consider seeking payment, or at least partial payment, up front. Most of my clients are magazines, and not corporate clients, so this is not something I’m accustomed to…but maybe that should change! I tend to be very informal in my business meetings, often bringing baked goods to share and sealing deals with handshakes or hugs, but I’m coming to learn that no matter how much confidence I have in my work or how much benefit of the doubt I want to give my client, that this is not always the best idea! And while a simple project description via e-mail can serve as a contract, you can easily whip a more formal one up on sites such as Our Deal.
  • Standing up for yourself is worth it! In this instance, I risked losing $75 to earn the $845 due to me. I came out with $445 I otherwise would not have gotten, but it felt good to stand up for myself, and $445 is a month’s rent!

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Comments

  1. Hi there. I’m in a similar situation. Were you able to sue for the time you used to prepare for the case? Also, were you allowed to charge interest? Thanks!

  2. Nope. I didn’t even try, honestly…

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