Litigation and arbitration, the two most frequently utilized venues to resolve legal disputes in the United States, can be and usually are expensive. A 2013 survey of trial lawyers conducted by the National Center of State Courts, the median cost of litigating a contract dispute – which is the category that most construction disputes would fall under – is $90,575. And this is in 2013 dollars. With inflation, that number as of 2023 was nearly $120,000.

There are some strategic decisions clients and their attorneys can make to try to limit the economic cost of resolving legal disputes. Two of those are where a case is filed. In California, plaintiffs generally have three choices when it comes to filing a civil lawsuit: (1) Unlimited civil court; (2) Limited civil court; and (3) Small claims court.

In cases involving federal law, or where the parties are from different states (or nations) and the amount in dispute exceeds $75,000, parties may file in federal court. However, federal courts, unlike the state courts of California, do not have different types of civil courts geared toward the amount in dispute.

Here are the differences between the various filings:

Unlimited Civil Court

Jurisdictional Amount: Most construction disputes are filed in unlimited civil court. Unlike limited civil court and small claims court, there are no dollar caps on the amount that can be sought in unlimited civil court.

Legal Counsel Representation: Parties to cases filed in unlimited civil court may be represented by legal counsel. If a party is a corporation, limited liability company, or other business entity other than a sole proprietorship, the company must be represented by legal counsel. This can be outside legal counsel (i.e., a law firm) but it can also be by in-house counsel.

Discovery: Parties to cases filed in unlimited civil court may serve discovery. This includes written discovery seeking documents from another party, responses to questions posed to another party, and admissions from another party. It also includes the ability to conduct site inspections which can be important in construction cases. And it includes the ability to conduct depositions. Parties may also seek documents from and conduct depositions of third parties. Discovery, while it can be important to a case, can also be a huge component of the overall costs of civil litigation.

Timing: The more time parties are in litigation the more money they can expect to spend on discovery, court hearings, and other costs.

In 1986, the California State Legislature passed the Trial Court Delay Reduction Act. Following passage of the Act, California courts implemented “time goals” for the disposition of cases whether by trial or otherwise.

For unlimited civil cases, the goal is for 75% of unlimited civil cases to be disposed of within 12 months; for 85% of unlimited civil cases to be disposed of within 18 months; and for 100% of unlimited civil cases to be disposed of within 24 months.
While California state judges try to meet these goals, the reality is that many unlimited civil cases can take up to five years to go to trial.

Limited Civil Court

Jurisdictional Amount: Beginning January 1, 2024, plaintiffs can file civil lawsuits in limited civil court if the amount being sought is no greater than $35,000. Depending on the amount in dispute, it may make strategic sense for a plaintiff to file a lawsuit in limited civil court even if the amount in dispute is over $35,000, to take advantage of the more limited discovery rules that apply to limited civil cases.

Legal Counsel Representation: Parties to cases filed in limited civil court may be represented by legal counsel, and if a party is a corporation, limited liability company, or other business entity other than a sole proprietorship, the company must be represented by legal counsel.

Discovery: Cases filed in limited civil court have special and more limited rules pertaining to discovery. In limited civil court, a plaintiff can serve a Case Questionnaire with their complaint to seek answers to certain basic questions. In addition, each party is entitled to serve a Request for Disclosure of Witnesses and Evidence to seek the identification of witnesses and evidence intended to be used at trial. Finally, parties may present testimony at trial, including expert testimony, in the form of affidavits or declarations signed under penalty of perjury.

While written discovery and depositions are permitted in limited civil court they are more limited. Unless otherwise permitted by the court, each party is entitled to serve a total of 35 requests for documents, answers to questions, and admissions to another party. In addition, unless otherwise permitted by the court, each party is entitled to take one deposition. Finally, parties may seek documents from, but may not depose, third parties, unless the deposition of the third party is the one deposition taken by a party.

Timing: For limited civil cases, the goal is for 90% of limited civil cases to be disposed of within 12 months; for 98% of limited civil cases to be disposed of within 18 months; and for 100% of limited civil cases to be disposed of within 24 months. Again, these are goals. It can often take longer.

Small Claims Court

Jurisdictional Amount: Beginning January 1, 2024, plaintiffs can file civil lawsuits in small claims court if the amount being sought is no greater than $12,500. However, there are several conditions. First, only individuals, and this includes individuals who own companies operated as sole proprietorships, can file civil lawsuits in small claims court for up to $12,500. For companies other than sole proprietorships, as well as government entities, the small claims court jurisdictional limited is $6,250.

Second, individuals and sole proprietorships may not file more than two (2) cases in each calendar year for amounts between $2,501 and $12,500, but, may file an unlimited number of cases no greater than $2,500. For companies other than sole proprietorships, the limit is no more than two (2) cases in each calendar year for amount between $2,501 and $6,250, and an unlimited number of cases no greater than $2,500. For government entities, there is no limit on the number cases that can be filed in small claims court up to $6,250.

Finally, for companies other than sole proprietorships, in an action against a contractor’s license bond surety or the Contractors State License Board, the cap is $5,000.

It may make strategic sense for a plaintiff to file a lawsuit in small claims court even if the amount in dispute is over the small claims court jurisdictional limits.

Legal Counsel Representation: Unlike unlimited civil cases and limited civil cases, parties may not be represented by legal counsel in small claims court, other than by in-house legal counsel. However, while attorneys, other than in house-legal counsel, cannot appear before small claims courts, attorneys can assist clients in the preparation of papers to be filed with the court and to assist clients in preparing for trial.

Discovery: Unlike unlimited civil cases and limited civil cases, no discovery is permitted in small claims court, including written discovery and depositions.

Timing: For limited civil cases, the goal is for 90% of limited civil cases to be disposed of within 75 days; and for 100% of limited civil cases to be disposed of within 95 days. It often takes longer, although not nearly as long as cases filed in unlimited civil court or limited civil court.

If you are trying to determine the best place to file your action, contact your legal counsel to assist you in determining the most financially expedient court for the filing your construction lawsuit.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.