While we here at NCAPB concern ourselves with all things appellate, rarely do we have occasion to blog about appeals from decisions made in Small Claims Court. Cue up the Court of Appeals’ unpublished decision in Gupta v. Carter to help us address this gap in coverage.

Five weeks after entering a 12-month residential lease, landlord Gupta filed an action in Wake County Small Claims Court against tenant Carter seeking summary ejectment, overdue rent, and court costs. At the hearing the Magistrate ruled in favor of landlord and entered an order ejecting tenant and awarding damages.

On that same day, tenant filed a notice of appeal in Wake County District Court and sought a trial de novo pursuant to N.C. Gen. Stat. § 7A-228. Tenant also filed her own small claims action against landlord seeking the return of her security deposit and first month’s rent. She alleged that she never moved into the residence and that landlord breached the lease by failing to make certain promised repairs.

Subsequently, the Magistrate dismissed tenant’s Small Claims action due to the pending appeal of landlord’s original suit and the trial de novo on landlord original claims followed ten days later. At the new trial the District Court entered judgment for tenant and awarded her $1500, pre- and post-judgment interest, and court costs. Landlord appealed to the Court of Appeals.

Before the Court of Appeals, landlord argued that the District Court lacked subject matter jurisdiction to consider tenant request for damages because (1) tenant did not assert her claim for damages as a counterclaim in the First Small Claims Action; and (2) while tenant asserted a claim for damages in the Second Small Claims Action, she failed to appeal the Magistrate’s dismissal of her complaint in that action to district court. Landlord also argued that there was insufficient evidence to show that he had breached the lease.

The Court of Appeals rejected all of landlord’s arguments. On the jurisdictional questions, the Court explained that the District Court had the authority to allow the parties to litigate all of the issues raised in both small claims under N.C. Gen. Stat. § 7A-229, which provides that:

[u]pon appeal noted, the clerk of superior court places the action upon the civil issue docket of the district court division. The district judge before whom the action is tried may order repleading or further pleading by some or all of the parties; may try the action on stipulation as to the issue; or may try it on the pleadings as filed.

Id. The precise method the District Court used to consider Landlord’s claim – i.e., repleading, further pleading, stipulation as to the issue, pleadings as filed – was unclear to the Court because the record on appeal was incomplete. Accordingly, the Court of Appeals refused to presume error on the part of the District Court in its consideration of tenant’s claims. Similarly, the incomplete record also doomed landlord’s argument concerning the sufficiency of evidence as the Court did not possess “an adequate record that would enable [it] to conduct meaningful appellate review of [that] issue.”

This unique case provides a couple of takeaways for our readers who occasionally address a small claims matter.   First, appellate practitioners are well-advised to consider the unique parameters and dynamics of the trial de novo. Second, cost considerations are of paramount importance in the deciding whether to pursue a small dispute beyond the District Court. Appellate work can be costly and one has to believe that the amount in dispute here influenced the quality of the record that landlord was willing to pay for and ultimately present to the Court of Appeals. (Indeed, tenant did not present a brief to the Court and still prevailed.)

— Eric Snider