Judgment in Small Courts has no Collateral Estoppel Effect in Superior Court

Civil Procedure - No Collateral Estoppel from Judgment in Small Claims Court
Clusiau v. Clusiau Enterprises, Inc., __Ariz. Adv. Rep.__ 1 CA-CV 09-0300 (App., Div. I, July 20, 2010) (J. Johnsen)
A JUDGMENT OBTAINED IN SMALL CLAIMS COURT HAS NO COLLATERAL ESTOPPEL EFFECT ON SUBSEQUENT SUPERIOR COURT ACTION

Plaintiff obtained a $2,400 judgment against the defendant on a breach of contract action in small claims court. Plaintiff then filed a second action regarding the same matter and defendant counterclaimed. The counterclaim sought damages in excess of the small claims jurisdictional maximum so the matter was transferred to superior court. In superior court the plaintiff argued the first small claims judgment collaterally stopped defendant from raising any issues which could have been raised in the first small claims action. The superior court granted plaintiff's motion for summary judgment on this issue. Defendant appealed and the Court of Appeals reversed and remanded.The Court of Appeals held that because of the informality of small claims court where lawyers seldom appear, there is no right to a jury, the judge or hearing officer need not have any legal education and there is no right to appeal, a judgment in that court will not have collateral estoppels effect. Under these circumstances the parties in small claims court do not have a "full and fair opportunity and motive to litigate" which is a prerequisite to finding collateral estoppels under section 28 of the Restatement (Second) of Judgments).