If you are owed money and the individual or company who owes it (the soon to be “defendant”) has stopped responding to your emails or calls, or has told you they refuse to pay, then you must take legal action to get the money back
93A Demand Letter- For cases when the Defendant is a business, Mass General Laws Ch. 93A provides that if a business engaged in a deceptive act which cost another to lose money, than that business may be liable for up to three times the money lost plus legal fees incurred in recovering the money. In order to preserve your right to be awarded “93A damages”, you or your attorney must send a letter where you provide a brief description of the events that occurred and when, and how much money you are owed as a result. You also state that failure to respond within 30 days with a reasonable offer of settlement will result in you filing a law suit where you will be seeking triple damages and legal fees. Sending this letter preserves your right to be awarded triple damages later on if you win your case since you gave the defendant fair warning and they didn’t respond with a reasonable offer. Even if they haven’t been responding to your earlier communications, a demand letter warning of your intent to seek damages under 93A may prompt a defendant to settle your claim.
To be eligible for 93A damages, the defendant must have engaged in an act that goes beyond mere non-payment of a debt. For example, if you loaned a business money which was to be repaid in six months, and the business is having a slow season, while you still have a right to your money back, these facts alone don’t justify 93A damages. If the business, on the other hand, sold you fake goods, or lied about their assets to induce you to loan them money, these facts may entitle you to 93A damages.
Even when 93A damages are not warranted, in some cases having an attorney send a letter demanding the base amount (and in many cases interest and attorney’s fees), and outlining the claims, may lead to settlement. In other cases, where sending a warning appears futile and where 93A doesn’t apply, the next step is to file a law suit.
Filing the Law Suit- If you are owed under $7,000.00, filing a claim in small claims court might be your best option as this is the fastest way to have your case decided by a court. It involves you filing out the appropriate forms from your local small claims court. After filing the forms you will get a date to come in and present your case where you can bring any relevant evidence (contacts, emails, text messages, pictures, etc.). This post focuses on cases where more than $7,000.00 are owed.
The Complaint: Your case will begin by your filing a complaint in court. A complaint is a document, typically in numbered paragraphs/allegations, which state the facts that occurred, the nature of your claims, and your demand for payment. E.g. 1) On December 21, the Defendant agreed to purchase 2,000.00 widgets from the plaintiff at a price of $3 per widget. 2) The defendant failed to make payment when due, etc. A complaint can be a page long or it can be 50 pages long depending on how complicated the case is.
Once you file the complaint with the right court, you will need to have a sheriff or constable serve the defendant with a copy of the complaint and a summons. The defendant will have 20 days, unless he/she requests additional time from you or the court, to answer the complaint. The defendant will have to answer the complaint by admitting or denying each numbered allegation, and may also assert affirmative defenses or a counterclaim.
Default- If your Defendant fails to answer the complaint, you will need to request that they be defaulted, and then file a motion for default judgment. If this happens it can significantly reduce the length of legal proceedings.
Summary Judgment- Sometimes you and the Defendant both agree on the facts of what happened, but still disagree on whether or not you are entitled to judgment. For example, if your complaint alleges that the Defendant borrowed $20,000.00 and failed to pay it back, and the Defendant answers by admitting that he borrowed the money, but also says that he shouldn’t have to pay it back because his business partner stole it from him, then you can file a motion for summary judgment. This is a way to win your case without a trial (something similar is a motion to dismiss which is not discussed here). There is no point in having a trial in this situation since a trial is for the purpose of presenting evidence from both sides and having a judge or jury decide whose version of the facts is true. Since here both sides agree on the facts, but disagree on the law, it’s up to the judge to decide what the law is and in whose favor judgment should enter. Sometimes the law in a given situation can be complicated and sometimes it can be simple. Here, the law is simple and the Defendant will lose. He borrowed the money and promised to pay it back. Under the law it is irrelevant about what happened to the money after the Defendant received it. He must repay you, and then can assert his own claims against his partner.
Summary judgment, where appropriate, can be a way to shorten the length of the legal proceedings.
Discovery- In some cases you may have all the evidence you need from the beginning, but in other cases you or the Defendant might need to do discovery to obtain more evidence. If the Defendant doesn’t deny owing you money, but denies the amount of money owed, then you may want to request proof of payments, such as cancelled checks or bank statements, that the defendant claims have been made but not credited. The Massachusetts Rules of Civil Procedure allow for a very broad scope of discovery. Parties are allowed to request documents and information so long as the requested items are relevant to the issues at hand. Discovery can come in the form of written questions to the opponent, document requests, or depositions where the opponent or potential witnesses must answer questions in person under oath while a stenographer types their answers. These answers can be used to prepare for trial or to support a motion for summary judgment.
Trial- Most cases resolve before a trial, but in the event your case can’t be settled, it will need to be decided by a judge or jury. Either party has a right to request a jury trial which will be granted unless in some cases where the parties entered in a contract where one side waived the right to a jury trial. A trial is time for both sides to present evidence which can be through documents, testimony of witnesses, etc. If the judge or jury believes your side of the case, you will be awarded a judgment. Sometimes defendants will voluntarily pay the judgment, and other times they wont which is when you will need to begin the collection process which is discussed on the “debt collection” page of this site.
Mediation- The parties can agree to mediate their case at any point, and this very often a helpful way for the parties to come to a resolution and avoid a potential lengthy litigation process which may involve extensive discovery, motions, and a time consuming trial. Some courts offer free mediation services, and there are also many private mediators available in Massachusetts. The process usually takes a half or full day, with each side typically splitting the mediator’s fee in the case of a private mediation. The mediator is neutral and will listen to both parties version of the facts, and will try and help to the parties come to a practical resolution. There is no obligation to resolve the case during a mediation, if one side feels the other side hasn’t compromised in any way, and the parties are free to continue with the litigation if they wish. Nothing said during a mediation can be used against the other party at trial. Mediation in my experience, where both parties are reasonable, has been a very efficient way to resolve disputes.
Note- In this article when I say that you can file a document or motion, “you” implies you or your attorney handling the case.