Prevailing party in small claims case can't appeal.

Byline: Matt Chaney

Defendants who prevail in an action in small claims court can't bring any compulsory counterclaims that would exceed that court's jurisdictional limit via an appeal since another avenue for relief already exists, the North Carolina Court of Appeals has ruled in a matter of first impression.

Although the ruling is nominally a loss for a tenant who was bringing counterclaims against her landlord, an attorney for the tenant said that the court's ruling provides a roadmap for how to successfully file counterclaims in small claims court and fills a gap that existed within the state's statutes and its existing case law.

In November 2017, Maria Stevenson was sued by her landlord, J.S. & Associates Inc., in small claims court in Mecklenburg County. The lawsuit sought to eject Stevenson from the rental property, but in December the trial court ruled in Stevenson's favor.

Even though she won, Stevenson filed an appeal of the court's judgment to the district court in an effort to assert counterclaims against JSA which arose from their alleged failure to maintain the rental property. JSA's motion to dismiss was granted in April 2018, when the district court held that Stevenson was not an aggrieved party and had no right to appeal the small claims court judgment, which she again appealed.

Judge Chris Dillon, writing for a unanimous panel, said that the issue on appeal was a unique one, but that in this situation, a proper avenue for redress already exists.

Small claims courts have jurisdiction over claims for summary ejectment of a tenant or matters which involve dollar amounts under $10,000, Dillon said. This bars defendants in small claims courts from bringing any counterclaim, cross-claim or third-party claim against a plaintiff if the claim would "make the amount in controversy exceed the jurisdictional amount."

Aggrieved parties who lose in small claims court can appeal to the district court for trial de novo, and bring any counterclaims, cross-claims or third-party claims, Dillon said. Rule 13 of the Rules of Civil Procedure says that counterclaims that arise out of the transaction or occurrence that is the subject matter of the opposing party's claim must be brought in the same action, or they are lost.

Stevenson argued that it is unclear what remedy is available to parties in situations where they prevail in small claims court but still wish to bring such compulsory counterclaims. Dillon said that Stevenson's proposed remedy...