MAGISTRATE COURT TRIALS IN DEBT COLLECTION CASES

Magistrate Court Jurisdiction in Consumer Collection Cases

Under Georgia law, the Magistrate Court is an "inferior" court of limited jurisdiction. The jurisdiction of the Magistrate Court is established at OCGA § 15-10-2. OCGA § 15-10-2(5) states that the Magistrate Courts in this state have jurisdiction over "(t)he trial of civil claims including garnishment and attachment in which exclusive jurisdiction is not vested in the superior court and the amount demanded or the value of the property claimed does not exceed $15,000.00, provided that no prejudgment attachment may be granted." As consumer debt collection claims fall under the general description of "civil claims," all collection claims that seek a judgment for less than $15,000.00 may be heard and decided in the Magistrate Court.

Civil Practice Act Inapplicable in Magistrate Court

Many, if not most, of the consumer collection lawsuits in Georgia, are filed in the Magistrate Court. The decision to file a consumer collection claim in the Magistrate Court, as opposed to State Court or Superior Court is primarily due to the expedited time-frame and a lack of formality in comparison to "courts of record," such as State or Superior Court, whose proceedings adhere to Georgia's Civil Practice Act, at Title 9, Chapter 1 of the GA Code. Civil proceedings in Magistrate Court are governed according to Title 15, Chapter 10, Article 3 of the GA Code and the Uniform Rules of the Magistrate Court.

Collection Attorney's Preference for Magistrate Court

Collection lawyers and their clients benefit from filing in Magistrate Court in several ways. Consumer collection lawyers make their money by filing a large number of cases that involve relatively small amounts of money. Some collection firms file more lawsuits in one day than most lawyers handle in an entire year. By eliminating the parties' obligation to comply with the Civil Practice Act, including discovery and depositions, motions (including dispositive motions for summary judgment), and jury trials, the Magistrate Courts can dispose of cases much quicker, and with fewer resources and lower costs in time and money. The filing fees are also cheaper than other courts of record. A collection firm filing 10,000 cases per year, may save over $1,000,000.00 in filing fees alone by filing claims in the Magistrate Court. Also, the Clerks of Magistrate Courts in various counties generally adhere to a weekly or monthly schedule for calendaring the trials, which is fixed as to the day of the week and the time of day. This allows collection lawyers to resolve many cases all on the same day, and provides a measure of predictability with regard to time management and scheduling.

Expedited Proceedings Available in Magistrate Court

The overwhelming majority of litigants in the Magistrate Court are acting "pro se," and not represented by a lawyer. In fact, the Magistrate Court exists specifically for the purpose of easing the burden placed on other courts, measured in time and resources, by handling a number of specific matters, including cases involving pro se parties and low monetary amounts. "Stripping down" civil procedure in Magistrate Court to the filing of initial pleadings and a subsequent "bench trial," the Magistrate then hears and decides cases under a mandate, at OCGA 15-10-44(b), "to do substantial justice between the parties according to the rules of substantive law. All rules and regulations relating to pleading, practice, and procedure shall be liberally construed so as to administer justice."

Relaxed Procedures in Magistrate Court Trials

It's fair to say that the goal of every judge is "to do substantial justice between the parties according to the rules of substantive law." The difference between a trial in a court of record and a trial in Magistrate Court is found in the second sentence of OCGA 15-10-44(b), stating that "(a)ll rules and regulations relating to pleading, practice, and procedure shall be liberally construed so as to administer justice." This relaxation of the formalities associated with civil trials in courts of record is not only for the litigants who lack legal knowledge and training, but for the Magistrates who lack legal knowledge and training. To be a Magistrate in Georgia, you need to have a G.E.D. and be at least 25 years old. You also have to a be a U.S. citizen , a registered voter, and a resident of the county in which the court is located.

Magistrate Court as "Home Turf" for Collection Attorneys

Collection lawyers are considered "regulars" in Magistrate Court, with their collection cases taking up most of the court's calendar. While it is not uncommon in more populated counties to have more than 50 cases scheduled on a half day calendar, there is no way for a Magistrate, or even a half dozen Magistrates, to try 50 cases in half a day. For this reason most high population counties employ "mediators" to assist parties with the resolution of their claims, before going to trial. Collection attorney generally forego the assistance of a mediator, choosing to speak directly with debtors regarding the possibility of a settlement. If a settlement cannot be reached, the case may be tried or continued to another calendar date.

What to Expect at Trial

Where there is no settlement and no continuance of the case, it will be called for trial. This is where consumer collection cases become interesting. Banks, finance companies, and high volume debt collectors very often have their headquarters in other states. Due to the volume of cases filed by these companies, there are likely to be hundreds, if not thousands, of cases scheduled in multiple states on any given day. In Magistrate Court cases, all claims are less than $15,000.00. The total of all settlement amounts is much lower. The total amount actually recovered under the settlements is even lower than the total of all settlement amounts. While the availability of Zoom conferencing has resulted in some changes, the resources needed to make qualified, knowledgeable witnesses available for trial on every court calendar across the country is impracticable.

Ready to Proceed With No Plaintiff

This being the case, how does a collection attorney avoid the dismissal of a collection case for want of prosecution, and proceed with the trial, when the plaintiff has failed to appear? In a court of record, the collection attorney can file a motion for summary judgment, relying on affidavits and business records, in the hope of resolving the case before trial. However, in Magistrate Court, the Civil Practice Act is inapplicable pursuant to OCGA 15-10-42. Further, motions for summary judgment are specifically prohibited in Magistrate Court under Uniform Magistrate Court Rule 31. The answer can be found at OCGA 24-9-902(11).

"Authentication" of Records Under OCGA 24-9-902(11)

While the Civil Practice Act is inapplicable in Magistrate Court, the rules of evidence under Georgia law are applicable. OCGA § 24-9-902(11) was enacted in 2011 as part of an overhaul of Georgia's evidence code to more closely resemble federal rules of evidence. OCGA § 24-9-902(11) works in conjunction with OCGA 24-8-803(6) to allow for a pre-trial exchange of documents that are alleged to be “self-authenticating,” where “(a) party intending to offer a record into evidence under this paragraph shall provide written notice of such intention to all adverse parties and shall make the record and declaration available for inspection sufficiently in advance of their offer into evidence to provide an adverse party with a fair opportunity to challenge such record and declaration.” The purpose of this statute is to allow the parties to review documentary evidence and make the court aware of any objections to their admissibility before trial, to avoid interruptions or delays during the trial, while previously unseen documents are reviewed and hearings held on their admissibility. Collection attorneys have created a different purpose for this procedure.

"Stuffing" the OCGA 24-9-902(11) Declaration

By elevating form over substance, collection attorneys purportedly following the procedure allowed at OCGA 24-9-902(11) have concocted a scheme whereby unwary litigants and inattentive, inexperienced, or complicit Magistrates, are participants in a "trial" that, while often resulting in a judgment for the plaintiff, never actually takes place. How does a plaintiff's collection lawyer use this rule to win a judgment in a Magistrate Court trial without having his client in attendance, without ever swearing in a witness, and over the objection of defendants, who have appeared through their attorney and announced they are ready to proceed with the trial? The answer: by taking advantage of the factors discussed above.

Records Custodians & Personal Knowledge in Collection Cases

Consumer collection lawyers represent large financial institutions and lenders who can provide them with an immediate and never ending source of potential revenue. These entities also have decentralized locations, thousands of employees, and automated transmittal and storage of financial transactions and records that preclude any individual from having direct personal knowledge of the facts and events at issue in these collection cases. While the plaintiff's presence at trial is seen as essential in almost every other area of the law, collection cases are decided largely on the completeness and accuracy of business records. The informality and liberalization of "rules and regulations" in Magistrate Court, together with the prevalence of pro se defendants and/or unsuspecting lawyers, and the commonality of heavy caseloads scheduled on short trial calendars, creates the perfect environment for the collection attorney's gambit, which rests on the affidavit of a records custodian.

Serving the OCGA 24-9-902(11) Records & Declaration

The first step by the plaintiff's attorney is to serve the defendant or his lawyer with copies of the alleged "self-authenticating" documents, together the sworn "declaration or affidavit from the plaintiff's records custodian, establishing that the documents qualify as "business records" under OCGA 24-8-803(6). Under OCGA 24-9-902(11), the documents and declaration have to be served "in advance" of trial, to "provide an adverse party with a fair opportunity to challenge such record and declaration.” The defendant's failure to memorialize the objections in writing and through notice to the plaintiff and the court may result in waiver of any objections to the admissibility of the documents at trial.

Objecting to the OCGA 24-9-902(11) Declaration

Upon inspection, almost every declaration or affidavit provided in consumer collection cases includes testimony that is formulaic and rote, with fill in the blank fields, and generalized conclusory statements. As a matter of right under OCGA 24-9-902(11) may make any arguable objections, which may be directed at the sufficiency of the affidavit, the authenticity or completeness of the documents, etc., and may include a demand to voir dire the witness regarding the truth and accuracy of the statements in the declaration or affidavit. The defendant's position may be strengthened by serving the plaintiff's attorney with a witness subpoena. If a witness shows at trial, a careful cross examination will often reveal the individual's lack of any personal knowledge with respect to the content of documents provided, or the location and content of documents missing from the records.

Plaintiff is Required to Appear at Magistrate Court Trial

If the plaintiff's attorney is feisty, they may file a motion to quash the subpoena. If granted by the Magistrate, the next step is a motion to dismiss the lawsuit, based on the plaintiff's failure to appear at the trial. The plaintiff’s presence at the trial is required under OCGA § 15-10-43(e)(3) and OCGA 15-10-44(c). Pursuant to OCGA § 15-10-43(e)(3), “(i)f the plaintiff fails to appear for a hearing scheduled pursuant to either subsection (c) or (d) of this Code section, the court on motion of the defendant, or on its own motion, may dismiss the plaintiff's complaint, with or without prejudice, in the discretion of the court.” Under the heading, “Trial Procedure,” OCGA § 15-10-44(c) also specifically states that, “(i)f the plaintiff fails to appear, the action may be dismissed for want of prosecution, the defendant may proceed to a trial on the merits, or the case may be continued as the judge may direct.” Just as the plaintiff has the burden of proof at trial, the defendant has a statutory right to cross examine the plaintiff and its witnesses under OCGA 24-6-611. While case law has developed in courts of record, allowing the plaintiff to appear at trial through counsel, where the case can proceed in the plaintiff's absence, that is not the case in Magistrate Court. Under OCGA § 15-10-43(e)(3), only the defendant can appear in Magistrate Court through an attorney, as shown by the statement that, “no default judgment shall be granted if the defendant appears at trial through counsel.”

Magistrate Procedure Protects Right to cross Examination Under OCGA 24-6-611

The statutory requirement for the plaintiff to appear at trial in Magistrate Court is to protect the defendant's right to confrontation and cross-examination. As result of the truncated procedures applicable to civil claims filed in Magistrate Court, the trial is the defendant's first and only opportunity to confront and refute or disprove the plaintiff's claims. OCGA § 15-10-44(c) immediately follows OCGA § 15-10-44(b), which provides that “(t)he judge shall conduct the trial in such manner as to do substantial justice between the parties according to the rules of substantive law. All rules and regulations relating to pleading, practice, and procedure shall be liberally construed so as to administer justice.” Under the rules of statutory construction at OCGA 1-3-1, the inclusion of these provisions as subsections of the same statute, and giving all words their usual and ordinary meaning, is read to mean that trials in the Magistrate Court shall be conducted in a manner as to do “substantial justice,” and that “rules and regulations” may be “liberally construed,” subject to the proviso that the trial cannot be conducted where the plaintiff fails to appear.

Designated Agents as Plaintiff's Representative at Trial

Where the plaintiff is a limited liability company or other type of incorporated entity, the plaintiff must appear through an individual, authorized as a “designated agent” under UMCR Rule 31. A "designated agent" is defined as “(a)ny full-time officer or employee of a corporation, sole proprietorship, partnership or unincorporated association may be designated by such entity as agent for purposes of representing it in civil actions to which it is a party in magistrate court.” Should the plaintiff offer allegations or proof that its attorney is a “designated agent” under UMCR Rule 31, the defendant should assert the right to have the attorney sworn in and required to provide any testimony under oath, subject to cross-examination.

Conclusion:

While this post may be most meaningful to attorneys dealing with a particularly stubborn collection case, it also serves to caution unrepresented debtors of the more complex dynamics and intricacies that underlie the apparent simplicity of Magistrate Court proceedings.