Author Topic: Small Claims - Got ripped off..  (Read 5805 times)

cbr shadow

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Small Claims - Got ripped off..
« on: November 01, 2012, 03:59:04 PM »
So I've sat on this problem for a while now and on my BIKE to work this morning I had an epiphany.. I'd post it here!

An aquaintance of a friend (I'll call him MIKE) deals with maintaining forclosed homes for the bank up until the bank sells those properties.  He'll update the interior, get rid of pests, lawn maintenance, etc..  I am an engineer during the day, but I'm always willing to work my ass off to make a side buck, so I emailed the guy and said I'd be willing to take on any jobs he has.  He explained that I'd get paid 30-45 days after the work was done, which I agreed to.
So last summer I ended up taking on a lot of jobs for him, mowing lawns, changing out locks, cleaning the interior of the houses, clearing gutters, clearing out some NASTY trash, etc.  The checks were slowly coming in, mostly on time, and I was continuing to make a good amount of extra cash. 
Here's how it worked..
1) Mike emails me and tells me what needs to be done and gives me an address.
2) I check out the address and give Mike a price, he agrees, I do the work
3) I take before/after pictures of the work I do, create a nice invoice and put everything in a PDF.
4) I send the PDF to Mike and I wait for my check
5) Sometimes I'm paid by the bank directly, sometimes by Mike directly.  I paid taxes on this money when I filed.

I made $5700 extra cash in 4 months just working some evenings and weekends.  He owed me another $1900 at that point, so I reminded Mike every week or so that I was still owed.  He said "give it 90 days..that's standard" which conflicts with what he had originally said, but I waited..   This year I took on a bunch more jobs from him and made a good amount of money, but I was getting nervous about the $1900 he owed me. Finally I called him and said I'm going to have to take him to court to get the money.  He reacted swiftly and had the contact at the bank send me a check right away.  The check was only for about half of the money though.. 
This has now been a full year and I haven't been paid the other $965 that I'm owed!  I no longer work for him because of this.  I've looked into what it takes to take him to small claims court and it's a little tricky..

1) I dont know if I take HIM or the BANK to court..  This particular bank pays me directly.  If I took him, couldn't he say "Hey I submitted the invoice - the bank owes him, not me".  If I took the bank couldn't they say "Hey do you have proof that the invoice was submitted to us? We have no record of getting it..".      I've spoken to the contact at the bank directly and he said he'd send a check but hurried me off the phone and didn't send anything.

2) According to what I've read online, I have to take them to court in THEIR district, which I believe is in downtown Chicago, about 35 miles from me.. this means taking an entire day off of work for that, then more for the court day(s).

Small claims court is designed so that you dont need a lawyer, but I wouldn't be opposed to hiring one and giving him/her a portion of the money to go to court for me.  Is this even an option?  I have DETAILED records of the work I did, exact dates, before/after pictures, invoices, and emails to/from the guy I send everything to.

What I think happened here is that Mike was super busy and didn't make submitting invoices a priority, or the bank mismanaged my invoices at some point.  The bank contact said something to me over the phone about it "looking bad to the bank management" that these old invoices are coming up.
Is it out of line for me to find the bank executives phone numbers and discuss it with them?  What can I do here?  $965 is a lot of money to me.


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Re: Small Claims - Got ripped off..
« Reply #1 on: November 01, 2012, 05:17:11 PM »
Try to read as much as you can about the small claims court in question. There should be Rules of Court, which would be dry to say the least, but would guide much of the procedure and be informative. Try surfing around for more information on the small claims court -- some big law firms (or small ones for that matter) may have some informative content, including information on who to name as a defendant. It's likely you could name both Mike and the Bank as defendants or that if you named just one but that one thought the other shared in responsibility, that defendant could add the other as a third party to the claim. If you have a well-documented case and are willing to invest some time in navigating the system properly, you should be able to arrive at a positive result.


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Re: Small Claims - Got ripped off..
« Reply #2 on: November 01, 2012, 06:17:50 PM »
You would be taking him to court.

I don't think any lawyer would be interested in that kind of money.  Plus a lawyer isn't going to change the outcome - it sounds like you have all you need to win at small-claims court.  Is it worth the time to see it through and even if you win, how will you collect? 

Sounds like Mike doesn't want to pay for the good work you seem to be doing.  The bank has nothing to do with it.


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Re: Small Claims - Got ripped off..
« Reply #3 on: November 01, 2012, 07:45:14 PM »
What have you done to try to get the money directly from the bank? Have you written any strongly worded letters? What sort of documentation do you have? Do you have a written contract with Mike or is it just email agreements? If you have a contract, you'll need to follow the terms of the contract. Do you have contact information for the bank? Have you tried collecting from the bank?

A lawyer probably isn't going to be interested in your case. Most contingency fee arrangements are for 1/3 and $300 won't cover an hour of a decent attorney's time. 

cbr shadow

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Re: Small Claims - Got ripped off..
« Reply #4 on: November 01, 2012, 08:49:42 PM »
I spoke to a contact at the bank, but he may be the one holding things up.  I dont think he's very high up in the company and I'm pretty sure he's just ignoring any emails from Mike about this issue.  A big part of Mike's business is working through this one contact, so I dont think he's pushing very hard to get me paid..
I dont have contact information for the bank other than the one person I've spoken to (the contact that Mike uses) but I'm sure I could look it up and find the information.
We had no written contract for my employment unfortunately.. I've kept all of the emials though.. Email of him asking me to do the work, approval for what I bid, before/after pictures, invoice, then his email saying he submitted the invoice.

You guys are probably right about the lawyer not wanting to take my case.  Part of me wants to go through with the court stuff just to stick it to this guy Mike and the contact at the bank.

I'll try the letter and/or collecting from the bank.


  • 5 O'Clock Shadow
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Re: Small Claims - Got ripped off..
« Reply #5 on: November 01, 2012, 09:37:36 PM »
There is no reason you cannot take both Mike and the bank to small claims in one proceeding. That will eliminate any chance that you end up high and dry because the lne you sue points the finger at the other.
With respect to not knowing where to send the letter or the small claims action, Most states will require a business like a bank to have an agent for service of process registered with the state. The agent has to accept any lawsuit, and would also be a good place to send a demand letter.
Don't let the lack of a formal contract bother you. Clearly, your communications with Mike form a contract, and the fact that the bank paid you directly and benefitted from your work implicates it as well.
Good luck.


  • Magnum Stache
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Re: Small Claims - Got ripped off..
« Reply #6 on: November 02, 2012, 08:02:49 AM »
If you completed work on a property you can file a mechanics lien for the amount - although it sounds like your record keeping may not be up to snuff. Mechanics liens are automatically ahead of everything else other than taxes - that will get thier attention and if not it will have to be cleared before they can sell the property.


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Re: Small Claims - Got ripped off..
« Reply #7 on: November 02, 2012, 08:53:00 AM »
Second the recommendation to write a simple demand letter.

Keep the letter completely non-personal, completely professional, even though you are pissed. It should be like describing the weather, nothing nasty or personal. Write it with the "assumption" that he simply forgot, even though you know otherwise.

Don't detail the whole history with a long explanation of why you are owed the money. Simply demand the money you are owed within 14 days, and let Mike know that if it is not received within 14 days you will file a small claims action against him. Don't make it threatening, just a matter-of-fact statement. The whole letter should be two or three short paragraphs at most.

Unless Mike is a total deadbeat who doesn't care about his reputation and has checked out, it is 99% likely you will receive the money. But if you don't, go ahead and file. It will probably cost you somewhere around $50 to file, plus you will have to have the notice "served" by the sheriff or a private process server, which will probably cost another $25-50. Once Mike is served, it is 99.99% likely you will receive the money.

If he fails to show at the hearing, you will win by default. Or you can decide if you even find it worth it to show up and pursue it. If he doesn't succumb to being sued, then as someone else pointed out, collecting your judgment is another difficult matter entirely.


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Re: Small Claims - Got ripped off..
« Reply #8 on: November 02, 2012, 10:12:45 AM »
It sounds like Mike was hired to contract work out by the bank.  If he only has one contact at the bank, it makes sense that he is hesitant to apply pressure and risk losing the job.  I think finding out who is above the bottleneck guy at the bank and writing a firm but professional letter, as DoubleDown describes, is worth a shot.  A bluff you might try is cc'ing a law firm at the bottom of the letter to give the impression you have a lawyer involved.

Personally if this was the only payment missed and payments since then were handled as they should be, I would have written it off and kept going.  The $900 you're out is nothing compared to the lost future income of not getting the work anymore.  Of course if your view from the ground is that this missed payment from the past indicated that the likelihood of being paid going on from now was too shaky to be worth it then I respect that.

Do you have any more leads to get any other information about the situation?  Who knows, maybe the holdup is because the bank is unhappy with Mike and you could snag the work out from under him!  Or maybe someone could put you in touch with other project leaders or whatever Mike's job would be called and you would have your nice portfolio of pictures to show how good you are at your job!  The steps you take might not lead directly to getting the money owed you, but they might start an interesting conversation.  (further reading: MMM's post on trust)  Don't forget, a nice part of being mustachian is that you don't need that $900 so badly that you have to burn bridges in an attempt to get it.
That said, I understand no one wants to look like a patsy, so go get 'em, tiger!


  • Bristles
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Re: Small Claims - Got ripped off..
« Reply #9 on: November 02, 2012, 11:10:23 AM »
everyone knows Mike's are always kind and honest and always fulfill their contracts. I resent the alias choice. I think the friends named should be Pete.

I think the demand letter is a good idea and I doubt a lawyer would be interested unless u have a buddy lawyer willing to do it for beer. Every time I have asked about taking legal action, a letter is the first thing suggested so that is probably sound advice.

Matt F

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Re: Small Claims - Got ripped off..
« Reply #10 on: November 02, 2012, 12:40:56 PM »
Not a legal expert, but do work with sub contractors, etc.  Unfortunately, small claims court is normally pretty crappy.  You would certainly pay as much in legal fees as you are looking to get back if you hired an attorney.  You could try to represent yourself, but without a written contract I bet that is going to have the potential to be very difficult. 

Honestly, the first route I would go is what was said previously, send a very formal letter to the bank (copy the "Mike") indicating the exact problem with dates and amounts, attach the pictures.  Then list the attempts you have made to collect the money including invoice dates and people you have contacted at the bank and at the "Mike".  Finally, say that the amount is now XX days past due and that if the amount is not paid within 30 days, you will be contacting the State Better Business Bureau to notify them of the fraudulent activity of the bank and of the "Mike" (might want to check with the BBB if they will accept that type of complaint, if they do not, say you are prepared to file in small claims court). 

You want to at least get some kind of response from the Bank about why they are not paying you, that way at least if you represent yourself in small claims court you know what their argument will be.

My two cents. take with a grain of salt.


  • 5 O'Clock Shadow
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Re: Small Claims - Got ripped off..
« Reply #11 on: November 26, 2012, 07:07:56 PM »
Go with the legal demand letter.

If it does not work within the designated time then there is only one thing that you should do.

"Walk away Renee"

Even if you win there is no way to be sure that he is going to pay the judgement.  Don't increase your financial and emotional loss.  It is a little amount of money that should result in a big learning moment.  Next time have a contract, get receipts and post dated cheques.

On the other hand go back to the bank or another one and offer your services.  Document the jobs that you have done and apply for the job.  It makes sense that if he screwed you he may have poor relations with the bank.  You may want to even canvass Real Estate companies as they often have listed properties that need maintenance.

If you like doing it and it is worthwhile financially then keep doing it.  If necessary get your own partner.

Good luck

thurston howell iv

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Re: Small Claims - Got ripped off..
« Reply #12 on: November 27, 2012, 01:52:53 PM »
x10 on a simple demand letter...

A few things to consider:
1. name "mike" and the bank (they can argue amongst themselves. you just want your money)
2.  make it short and sweet, no long drawn out tome
3. set a date certain (ie: money in your hand by x date and time )
4. Send correspondence via "certified return receipt" (that way you have proof you sent and he received)
5. When you send the letter, operate on the assumption that he's not going to follow through and use this time to get all your ducks in a row (find out what forms you need, what documents/evidence you'll need, who gets served (ie:registered agent), how much the sheriff's service fee is, etc...) You want to do this now because it's likely he will ignore you and you want to follow through immediately when he has not responded to your demand.
6. File your complaint! (assuming no one has paid you)
7. Usually a sheriff showing up to deliver papers has a magical effect on people- you may actually receive a phone call and maybe some cash...
8. If no payment has been received, make sure you show up with all your stuff organized and ready to rock. Dress properly for Court.
9. Win your case!!

Good Luck