Legal Question in Credit and Debt Law in California
Unsecured Note Statute of Limitations
Hello. My wife paid off an unsecured debt to her Dentist/Employer back in 1993. About a year ago she inquired into the status of her employers profit sharing plan and she was given some very vague answers.....long story short, those inquiries have lead to a DOL field investigation of the PSP due to the inconsistent reporting and taxes filed on the PSP. In retribution, the former employer has filed a small claims case against my wife for the loan from 1993, claiming she still owed him some small balance. It seem as though the statute of limitations on this debt (which was satisfied in 1993 -- he filed the small claims case claiming the debt was owing and last paid in 1993) would be a red flag to the small claims court. My wife doesn't have any paperwork, since this was all settled over 15 years ago. The small claims clerk said my wife can't respond in writing, that she still need to go to court to settle this. Am I crazy in thinking that this case could be dismissed simply by pointing out the SOL, per his complaint acknowledging he was last paid in 1993? I don't understand how one would be allowed to take up the court's time with such grasping for straws?
2 Answers from Attorneys
Re: Unsecured Note Statute of Limitations
Welcome to small claims - heck, for that matter litigation in general. Anybody with the filing fee can file a case, regardless of the merits. Small Claims Court is intended to be simple and very streamlined. Believe it or not, it is actually less burdensome to the Court to have it simply go to a trial, and dismiss the action there, than to have pre-trial motions which would get your case dismissed, but would clog the system. All pre-trial motions in Superior Court have to be reviewed and worked-up by one or more research attorneys who work for the Court, then the Judge has to review it, and then there will be a hearing on the motion. Too complex for Small Claims which is intended to be extremely user-friendly. You've found one of the many holes in the system which are irritating, but when balanced with everything else, result in a reasonably good system.
Your wife simply needs to go to Court on the trial date, indicate that the debt was paid in full, but because it was more than 10 years ago, she doesn't even have records to document that. She also needs to assert the fact that the obligation is 15 years old, and collection is barred by the Statute of Limitations. When she prevails, she should then (or even now) contact DOL and advise them of the retaliatory lawsuit - DOL is smart enough to see that this is retribution - and proceed with that. Finally, she should sue him for malicious prosecution once the case is dismissed.
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Re: Unsecured Note Statute of Limitations
Your thinking is correct. But have your wife bring bank statements for the past four years to court with her to show that she hadn't paid the dentist in those four years to restart a moribund statute of limitation. An ounce of prevention . . .
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