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November 28, 2007

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New Rules Adopted For Simple Collection Cases
by Russell H. Rapoport
Plotkin, Rapoport & Nahmias, P.C.
Encino

If you want to commence a lawsuit to collect a sum certain in the amount of $25,000 or less, new rules make the procedures a little more user friendly.  This is pretty straight-forward.  The new California Rules of Court provision is quoted verbatim below. 

Rule 3.740. Collections cases
(a) Definition
"Collections case" means an action for recovery of money owed in a sum stated to be certain that is not more than $25,000, exclusive of interest and attorney fees, arising from a transaction in which property, services, or money was acquired on credit. A collections case does not include an action seeking any of the following:
(1) Tort damages;
(2) Punitive damages;
(3) Recovery of real property;
(4) Recovery of personal property; or
(5) A prejudgment writ of attachment.

(b) Civil Case Cover Sheet
If a case meets the definition in (a), a plaintiff must check the case type box on the Civil Case Cover Sheet (form CM-010) to indicate that the case is a collections case under rule 3.740.

(c) Exemption from general time-for-service requirement and case management rules
A collections case is exempt from: 
(1) The time-for-service requirement of rule 3.110(b); and
(2) The case management rules that apply to all general civil cases under rules 3.712-3.715 and 3.721-3.730, unless a defendant files a responsive pleading.

(d) Time for service
The complaint in a collections case must be served on all named defendants, and proofs of service on those defendants must be filed, or the plaintiff must obtain an order for publication of the summons, within 180 days after the filing of the complaint.

(e) Effect of failure to serve within required time
If proofs of service on all defendants are not filed or the plaintiff has not obtained an order for publication of the summons within 180 days after the filing of the complaint, the court may issue an order to show cause why reasonable monetary sanctions should not be imposed. If proofs of service on all defendants are filed or an order for publication of the summons is filed at least 10 court days before the order to show cause hearing, the court must continue the hearing to 360 days after the filing of the complaint.

(f) Effect of failure to obtain default judgment within required time
If proofs of service of the complaint are filed or service by publication is made and defendants do not file responsive pleadings, the plaintiff must obtain a default judgment within 360 days after the filing of the complaint. If the plaintiff has not obtained a default judgment by that time, the court must issue an order to show cause why reasonable monetary sanctions should not be imposed. The order to show cause must be vacated if the plaintiff obtains a default judgment at least 10 court days before the order to show cause hearing.

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