Sued neighbor in small claims court -- should I agree to arbitration option?

Small claims court judges' dockets are busy -- should a claimant opt for arbitration, instead?

Question

My neighbor and I mostly get along, but we are having a major disagreement. He hired a contractor to renovate his bathroom, and the contractor accidentally broke a pipe. Water flooded into my apartment and ruined my carpet, causing about $2,000 in damages. I’ve repeatedly asked him to pay me, but he’s refused. So I finally had to sue him. When I got to court, the clerk told me that I could have my case decided by an arbitrator. Should I?

Answer

Most small claims courts include a court-annexed arbitration program. An arbitrator is an experienced lawyer with special training in small claims cases. Arbitrators and judges apply the same law to your case, but a hearing before an arbitrator is usually less formal than a court proceeding.

Arbitration is entirely voluntary. So if either you, as the claimant who brought the lawsuit, or your neighbor, as the defendant, would prefer to see the judge, you will not be forced to go to arbitration.

That said, arbitration offers some benefits. Because there are more volunteer arbitrators available to hear cases than there are judges – especially given all of the budget cuts for judiciaries in recent years – an arbitrator usually will hear your claim sooner than a judge would. Judges’ dockets are crowded, and small claims courtrooms can be loud, fast-paced, and stressful.

Arbitrations usually take place in a small, private room in the courthouse. You and your neighbor would each present your arguments to the arbitrator about why you are (or are not) entitled to recover the $2,000 in damages for your carpeting. The arbitrator would listen and, perhaps, ask questions of each of you.

Like in a trial, you would be asked to substantiate your damages. This means you would need to bring, for example, an estimate from a carpeting company showing how much it cost to remove the destroyed carpeting and replace it with new carpeting.

Importantly, once an arbitrator determines a case, the decision is normally final. Unlike in a trial, there are no further appeals available to either you as the claimant or your neighbor as the defendant.

While this finality might seem worrisome, it can also be good news, for two reasons. First, assuming you are confident about the merits of your case, you would not need to worry about your neighbor delaying payment while he appeals. Second, it allows both of you to quickly put the whole incident behind you and restore a civil relationship. This can be a substantial benefit, compared to having to see your courtroom “enemy” for months of protracted litigation and appeals.

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