Small Claims Business FAQ

Identifying the correct legal name is crucial for properly suing a business in California small claims court. Start by checking the California Secretary of State's business database at bizfileonline.sos.ca.gov for corporations and LLCs. This free search reveals the entity's exact legal name, registered agent for service, and status.

For businesses using fictitious names (doing business as or DBA), search the county clerk's fictitious business name records where the business operates. Review contracts, invoices, and business cards for clues about the legal name. For sole proprietorships, the owner's personal name is the legal name. For general partnerships, you'll need to identify the partners individually. Using the wrong name can result in your case being dismissed or an unenforceable judgment.

Serving a California corporation with small claims papers requires following specific rules to ensure valid service. You can serve:

• The corporation's registered agent for service of process
• An officer such as the president, CEO, or secretary
• A general manager
• Any person authorized to receive process

For California corporations, you can also serve by leaving papers at the corporation's principal office during business hours with someone apparently in charge, then mailing copies to the same address. Service by certified mail with return receipt is allowed if you mail to the corporation's address listed with the Secretary of State. Do not simply serve any employee at a store location. Complete the Proof of Service form and file it with the court before your hearing.

You can sue both a business entity and its owner personally in California small claims court, but you'll only recover from the owner individually if specific legal conditions are met. Generally, corporations and LLCs provide liability protection. However, you can sue the owner personally if:

• They personally guaranteed a contract or debt
• They committed the wrongful act themselves (fraud, tortious conduct)
• They operated as a sole proprietorship without proper entity formation
• The entity was a sham or alter ego with no real separation
• Corporate formalities weren't followed (pierce the corporate veil)

When filing, name both the business entity and the individual owner as separate defendants. Serve each defendant separately. Present evidence supporting personal liability at the hearing.

When an individual sues a business in California small claims court, the individual can seek up to $12,500 in damages. However, if a business entity sues another party, the business plaintiff is limited to $6,250 per claim. This asymmetry exists because the legislature designed small claims court primarily for individual citizens with modest claims.

The lower limit for businesses prevents companies from using small claims court as a routine collection mechanism. If you're an individual suing a business, you can claim the full $12,500. If your damages exceed this amount, you can waive the excess and proceed in small claims court, or file in regular civil court for the full amount. If you're a sole proprietor suing for business-related damages, courts may treat you as a business and apply the lower limit.

When a business is sued in California small claims court, specific rules govern who can appear on the business's behalf. Unlike regular civil court, attorneys generally cannot represent parties at small claims hearings:

• Corporations: An officer, director, or employee with authority to bind the corporation
• LLCs: A member, manager, or authorized employee
• Partnerships: A general partner or authorized employee

The representative must have personal knowledge of the facts and authority to settle the case. The person appearing cannot be an attorney hired solely to represent the business. If the representative lacks settlement authority, the judge may continue the case. If no authorized representative appears, the court may enter a default judgment against the business.

Collecting a judgment from a business requires identifying and levying on business assets. First, conduct a judgment debtor examination by filing Form SC-134 to compel a business representative to disclose assets including bank accounts, accounts receivable, equipment, inventory, and real property.

With this information, pursue collection methods such as:

• Bank levies using Form EJ-150 to seize funds in business accounts
• Levies on accounts receivable to intercept payments owed to the business
• Equipment and inventory levies through the sheriff
• Real property liens by recording an Abstract of Judgment
• Till tap levies for cash-based businesses

If the business is defunct, investigate whether you can pierce the corporate veil to collect from owners personally.

Suing a closed or bankrupt business in California involves special considerations. If a business has simply closed without formal dissolution, you can still sue it and collect from any remaining assets. The entity legally exists until properly dissolved, so identify its last known address and registered agent for service.

If the business filed for bankruptcy, an automatic stay immediately halts all collection efforts and lawsuits. You cannot proceed in small claims court while bankruptcy is pending. Instead, file a proof of claim with the bankruptcy court. For formally dissolved corporations or LLCs, California law allows claims against dissolved entities for a limited period, typically four years for corporations. You may also pursue claims against individual owners if they received distributed assets or can be held personally liable through alter ego theories.

When suing a California business operating under a fictitious name or DBA (doing business as), you must identify and name the actual legal entity, not just the DBA. Search the fictitious business name records at the county clerk's office where the business operates to find who filed the DBA statement.

In your small claims complaint, list the defendant as the legal name followed by DBA and the fictitious name, for example: "ABC Corporation dba The Corner Store" or "John Smith dba Quick Fix Plumbing." File Form SC-103 (Fictitious Business Name Attachment) along with your complaint if you're including DBA information. Serve the papers on the actual owner or entity, not just at the business location. Naming only the DBA without the legal entity name may result in an unenforceable judgment.

If a business fails to appear at your California small claims hearing after proper service, you can request a default judgment. First, confirm that service was properly completed and your Proof of Service is filed with the court. At the hearing, inform the judge that the defendant business did not appear.

The judge will ask you to briefly present your case, including evidence of what the business owes you and proof of your damages. Even without the defendant present, you must prove your case. After reviewing your evidence, the judge will enter a default judgment for the amount proven. The judgment is immediately enforceable since businesses cannot appeal small claims decisions as defendants. Begin collection efforts quickly by identifying business assets through a judgment debtor examination.

You can sue an out-of-state business in California small claims court if the business has sufficient contacts with California to establish jurisdiction. Valid grounds include:

• The business regularly does business in California
• The contract was formed or was to be performed in California
• The injury or damage occurred in California
• The business has offices, stores, or agents in California

For out-of-state corporations registered to do business in California, serve their registered agent listed with the Secretary of State. For businesses without California registration, serve them at their out-of-state headquarters by certified mail with return receipt. Service must be completed at least 20 days before the hearing for out-of-state defendants. Collecting from an out-of-state business may require domesticating your judgment in their home state.