In New Jersey, a plaintiff pursuing a monetary claim that does not exceed $15,000 must file suit in the Special Civil Part of the Superior Court, while monetary claims that exceed $15,000 are brought in the Superior Court’s Civil Part.  Even smaller claims – those that are for less than $3,000 – are to be filed in the Small Claims Section of the Special Civil Part.  A defendant in a Special Civil Part action must file an answer, including any possible counterclaims, to the complaint within thirty-five days after service of the complaint, while a defendant in a proceeding in the Small Claims Section is barred from filing an answer.  A plaintiff in a Special Civil Part action can apply to transfer the case to the Civil Part when it appears likely that recovery on the claim will exceed the court’s $15,000 jurisdictional limit, and a defendant can similarly seek such a transfer when a counterclaim exceeds the Special Civil Part’s monetary limit.  These and other rules governing practice in the Special Civil Part and Small Claims Section were at issue in Alexander Holdings, L.L.C. v. Abdi, No. A-1606-10 (App. Div. Aug. 24, 2011).

On September 3, 2010, the plaintiff filed a complaint in the Small Claims Section charging that the defendant did not pay the balance owed on a plumbing contract.  The summons that the defendant received advised him that he did not have to file an answer to the complaint and that if he disputed the complaint’s allegations he had to appear in court on the listed trial date.

Plaintiff’s representative and defendant appeared for trial on October 6, 2010.  The defendant advised the judge that he wanted an adjournment so that he could file a counterclaim for poor workmanship and consumer fraud.  Although he was not certain of his damages, he estimated that they were at least $6,000; therefore, they exceeded the limits of the Small Claims Section.  The judge asked the defendant if he had previously filed a counterclaim and the defendant replied that he had not.  The judge then decided to proceed with trial over the defendant’s objection.  Following the bench trial, during which the counterclaim was not adjudicated, the judge awarded the plaintiff $922.

The Appellate Division reversed, holding that the trial court had abused its discretion in not adjourning the trial to allow the defendant to file a counterclaim and transfer the case to the Special Civil Part.  After noting that, pursuant to Rule 6:3-1, a defendant in an action pending in the Small Claims Section is prohibited from filing an answer, the Appellate Division reasoned that the rule had “the effect of prohibiting – or at least deterring – a defendant from filing a formal counterclaim, because a counterclaim is normally included as part of a defendant’s answer.”  In addition, the Appellate Division pointed out that the summons that the defendant received informed him that he did not need to submit a written response to the complaint; instead, “he could simply come to court on the trial date and tell the judge his side of the story.”  Accordingly, the Appellate Division concluded that based on “the Court Rules and summons, [defendant] had no reason to suspect that he would have been required to file any pleadings before the trial date in order to have his counterclaim heard.  Yet that is what the judge demanded of him, and it was an abuse of discretion to do so.”