Legal Question in Business Law in California

Is this a small calims court matter??

My small corp. of 15 workers is in dispute with our workers comp insurance over added charges.They decided to allocate all our employess to a higher rate class for the whole year after an inspection was done 3 months to the end of the policy.We feel we should only pay the changed rate from the inspection on.The added charges they seek total $7000.We are willing to pay them $2200, the charge from the inspection on, leaving $4800 in dispute.The CA insuranc commition reviewed the case and said there is No law saying what the insurance company is wrong, but they also say there is No law saying that they legaly can ask for the whole year paymet.My question is, is this a case for small claims.Can a corp. go to small claims court?Would the insurance company first have to accept the $2200 to go below the $5000 limit. The main reason for these questions is because we would rather settle this in small claims, rather than a regualr trial in which lawyers would be needed and a much highr cost would be incured.The insurance company has already threated to take us to court, because they feel strongly they are right in this matter,but i want to see if i can tell them to settle this in small claims court.


Asked on 1/05/01, 12:47 pm

3 Answers from Attorneys
Christopher Enge Law Offices of Christopher J. Enge

Re: Is this a small calims court matter??

Unfortunately, a corporation may not appear in court in California without representation by an attorney. This is because a corporation, in the eyes of the law, is a separate person. If the people who run the corporation are not lawyers, they cannot represent it in court. On the up side, I just got in a case with very similar facts. If I could handle both your case and that case together, I might be able to save some costs for both clients. For example, some of the research could be divided among the two of you. Let me know if you would like help.

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Answered on 1/10/01, 11:33 am
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Is this a small calims court matter??

A corporation may be either a defendant or plaintiff in a small-claims action in California. Code of Civil Procedure section 116.540(b) says "a corporation may appear and participate in a small claims action only through a regular employee, or a duly appointed or elected officer or director, who is employed, appointed, or elected for purposes other than solely representing the corporation in small claims court."

However, I believe your corporation cannot bring its case as a plaintiff, since with exceptions not important here, a small-claims court has jurisdiction only of actions "for recovery of money" (Code of Civil Procedure section 116.220(a)(1). It is the insurance company, not you, that is seeking to recover money. Your action would be either for a declaratory judgment interpreting the contract in your favor, or possibly for specific performance, neither of which are forms of relief within the jurisdiction of a small-claims court. Therefore, the insurance company can sue you, but you can't sue them; and it has not to do with the amount at issue or the corporate nature of the parties, but with the type of relief required.

Perhaps you can ask the insurance company to sue you in small-claims court and then you can present your arguments for your interpretation of the insurance contract as a defendant. The result should be the same. Of course, the insurance company has a right to file and sue in regular court and very likely will.

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Answered on 1/10/01, 4:05 pm
Shai Oved The Law Offices of Shai Oved

Re: Is this a small calims court matter??

If you really want to get into small claims court, you can pay the entire $7,000 and then sue for the "overpayment" in small claims court. (This probably does not sound attrative but it is a possibility.)

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Answered on 1/23/01, 11:33 am


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