What to do about an out-of-state lawsuit?
Question Details: We are NJ based tile, kitchen cabinetry, counter top supplier. This individual purchased kitchen cabinetry and counter tops from us. We billed him at his NY address but the job site and delivery made to his PA house. Since it was out state sale and delivery no sales tax applied. It was all cash deal, when we received the order we collected 50% cash in advance and when we delivered the cabinets, the balance of the cabinets plus the 50% of the counter top was collected. We use third party fabricator installer on countertop work. Upon their installation, we asked our remaining balance of the counter top, $1,239. The guy said that he paid all in full when we delivered the cabinets. When we said otherwise, he acted puzzled and later he apologized, he accepted to pay us in the following week the amount in cash since he has no money in his account and no credit card, and wrote and signed a note to my name that he owes me that amount. The following day, he called and claimed that he has a proof that he paid that amount and sent me the invoice we issued with only his signature on it saying that paid in full. He kept saying that the one that our delivery guy signed but kept it to himself. Firstly, we never take the invoice to the job sites when we make deliveries only the packing list which we did on his delivery as well, that packing list even shows what he paid as a balance with his signature. I sent him a detailed email with all this and gave him one week to pay this balance. No reply came so far. Where do I need to sue him? Here in NJ where we are located or in NY where he was billed or in PA where the material and service delivered? Will that be a small claims court? Once I get a judgement in our favor, how I should proceed to collect the amount?
Since he contracted with and bought from a NJ company, you could sue him in NJ--but not in small claims court. Small claims is a court of local jurisdication, and only has power over defendants within the same county as the court. So you'd have to sue him in "special civil" or "law division," which is more complicated and a bit more costly (and much slower), or else sue him in small claims in the county where he lives in PA (and so have to travel there).
If he does not pay after you get a judgment, you could try to garnish his wages, put a lien on his home, or execute on his bank account(s) (have money taken out). All of these things are difficult to do with an out-of-state defendant and will take additional time (and if you hire an attorney to help you, cost you more than you'll get).
In my experience (10 years practicing law), there is simply no cost effective way to sue somone in another state for $1,239. Try to settle with him--anything he pays will be a win. And if he won't settle, you are better off talking to your accountant about whether you can take this as a tax loss or write off.