SMALL CLAIMS • PERSONAL REPRESENTATION • DEBT COLLECTION
IN THE VIRGIN ISLANDS
The Case That Changed How Companies Appear in Small Claims Court…..but Didn’t
How do off island creditors collect debts that are under $10,000.00 in the U.S. Virgin Islands?
On June 28, 2013, the Superior Court of the Virgin Island’s issued Newman v. MacKay, 58 V.I. 170. This case has come to be known as the case that held that businesses must appear in [small claims] matters by a [personal representative] that is either a principal owner of the business or an employee who has been authorized to bind the business in the small claims matter. However, the Newman decision was only an adjunct to the case that actually held this, Gil Ron Jewelry v. Diamond World, ST-11-SM-380, an unpublished small claims decision by Magistrate Alan Smith.
The facts of Gil Ron were simple. Mr. Newman, who was not a licensed attorney, would have his clients complete a form that assigned him as a personal representative to appear on the client’s behalf in a small claims proceeding. Mr. Newman would get a percent of any funds recovered. Magistrate Smith explained that Section 112(d) of Title 4 of the Virgin Islands code provides that no party in a small claims matter may be represented; however, as an exception, this section provides that businesses may appear by personal representative. As such, sole proprietors must appear in small claims matters personally.
Section 112(d) does not define “personal representative,” however. Magistrate Smith, in interpreting this provision to provide a “workable” definition of personal representative, explained that this section represents two competing policy interests. These policies were the prohibition of the unauthorized practice of law and allowing parties to have access to small claims matters in a simple and inexpensive manner. Section 112(d) is the only provision of the Virgin Islands Code that allows a non-attorney to appear on behalf of a business entity; but the Court cannot condone the practice of law by a non-attorney. As such, the court found it reasonable and necessary to limit personal representatives to those with an on-going relationship to the business including those with the authority to bind the business by their position as an officer or manager and those who are granted specific authorization to appear in a small claims matter. The Superior Court’s Appellate Division affirmed this decision finding the “rationale and the balance struck between these competing policies to be well reasoned and correct.” The Appellate Division further explained that personal representatives must have personal knowledge of the facts underlying the small claims complaint. In further clarification, the court explained that a power of attorney does not authorize a person to appear in a small claims matter absent an ongoing relationship with the business.
What this means for businesses trying to [collect debts] in the Virgin Islands is that each business is limited to having either an officer or manager appear or have an employee or other person with an on-going relationship appear. In an effort to help such businesses, The Law Offices of Karin A. Bentz, P.C. offers small claims counseling and help with the required forms.