Houghtaling v. SUPERIOR COURT OF SAN BERNARDINO CTY. , 21 Cal. Rptr. 2d 855 ( 1993 )

Opinion

DABNEY, Acting P. J.

In this case we decide an issue which has been the subject of considerable uncertainty in the courts of this state, but which, by its nature, has until now escaped review. We hold that in a proceeding conducted under the Small Claims Act (Code Civ. Proc., § 116.110 et seq.¹), relevant hearsay evidence is admissible subject only to those limitations contained in Evidence Code section 352 and the law of testimonial privileges. The trial court then exercises its sound discretion in determining the weight to which the evidence is entitled. Accordingly, in this case we hold that the trial court erred, and grant the relief requested by petitioner.

Propriety of Review

As a matter of procedure, we explain the route by which this case reached this court. Petitioner Leo R. Houghtaling brought an action in the small claims court against defendants Anthony Rossi and Tony Rossi, doing business as Rossi Automotive Marine & Transmissions (hereinafter sometimes Rossi). Judgment was rendered for petitioner, and defendants appealed. (§ 116.710.) After a trial de novo, the superior court rendered judgment for defendants. (§§ 116.770, 116.780.)

This judgment was not subject to appeal by Houghtaling. (§ 116.780.) However, due to the informal nature of small claims proceedings, no precedential decision can ever be rendered in proceedings governed by the act. Thus, if law is to be made settling significant issues of small claims law or procedure, the appellate courts must have jurisdiction to entertain petitions for extraordinary review in appropriate instances. (Davis v. Superior Court (1980) 102 Cal.App.3d 164,168 [162 Cal.Rptr. 167].) We think this is such an instance, and therefore consider Houghtaling’s petition on the merits.

Statement of the Case

Petitioner’s claim against defendants involved Rossi’s allegedly negligent repair of a vehicle owned by Houghtaling. It appears that after the work was done by Rossi, the vehicle developed further problems while located in the State of Nebraska, and was there presented to a mechanic for repair. (It was eventually sold, allegedly for far less than its value had it been in proper condition.)

In the original small claims proceeding, the docket indicates that petitioner was permitted to introduce a notarized statement from the mechanic who worked on the vehicle in Nebraska, separately signed by the owner of the repair facility. This statement included the opinion that the vehicle’s later malfunctioning was due to improper work done by Rossi.

In the superior court, at the hearing de novo, the trial court refused to accept this evidence. According to the petition, the court stated that it operated “under Superior Court rules of procedure” and that no evidence could be presented from a witness who was not subject to cross-examination.²

Discussion

First, we explain that we decide only the legal issue presented by petitioner with respect to the admissibility of hearsay evidence. In the petition, Houghtaling makes unsupported assertions and innuendo concerning both Rossi’s motive for “arranging” to have the matter heard before Judge Joseph Johnston, and that judge’s alleged bias in favor of Rossi. Such matters are entirely outside the record and we do not consider them.³

As noted above, the nature of small claims proceedings results in a paucity of published authority on any issues relating to such proceedings. The texts and bench aids tend to list customary practices and variations without setting forth a great deal of substantive authority for such practices. For example, in the California Judges’ Benchbook for Small Claims Court and Consumer Law (2d ed. 1989), the writers could provide nothing more helpful with respect to our issue than to say that some courts allow all hearsay, and some allow some of it, while citing no authority for either approach.⁴ However, we do not write on a clean slate; the Courts of Appeal and our Supreme Court have on several occasions addressed themselves to specific issues of small claims proceedings. As most recently confirmed in Crouchman v. Superior Court (1988) 45 Cal.3d 1167 [248 Cal.Rptr. 626, 755 P.2d 1075]), the current trend of the law is to defer to the intent of the Legislature, as grounded in historical perspective, to create an informal and flexible forum in which disputes over modest sums of money may be resolved without the necessity for incurring disproportionate expenses or consuming undue amounts of time. (See also City and County of San Francisco v. Small Claims Court (1983) 141 Cal.App.3d 470, 474 [190 Cal.Rptr. 340].) The small claims system is a response to that quandary described by Dean Pound: “For ordinary causes, our contentious system has great merit as a means of getting at the truth. But it is a denial of justice in small causes to drive litigants to employ lawyers, and it is a shame to drive them to legal aid societies to get as a charity what the state should give as a right.” (Pound, The Administration of Justice in the Modem City (1913) 26 Harv. L.Rev. 302, 318.) We approach the question from this starting point.

Recognizing the goal of providing justice in small matters at a reasonable cost, the courts of this state have upheld provisions in the statutes governing small claims actions which restrict what are recognized otherwise as substantial, even constitutional, rights. Thus, the denial of any right to appeal for a plaintiff has been sustained (Superior Wheeler C. Corp. v. Superior Court (1928) 203 Cal. 384, 387 [264 P. 488]), as has the prohibition against representation by counsel. (Prudential Ins. Co. v. Small Claims Court (1946) 76 Cal.App.2d 379, 383-384 [173 P.2d 38, 167 A.L.R. 820].) And while these cases sometimes stressed that the restrictions were justified either by the plaintiff’s election to submit to the small claims procedures, or the availability of expanded rights in a trial de novo, in Crouchman v. Superior Court, supra, the court relied on history and the purpose of the small claims court in its holding that the Legislature could validly provide that no jury trial should be had even at the de novo level.

In the context of hearsay, it cannot be gainsaid that the right to require the witnesses against one to appear in court, and that they be subject to cross-examination, is of major importance in our system of jurisprudence. (See Englebretson v. Industrial etc. Com. (1915) 170 Cal. 793, 798 [151 P. 421].) The opportunity for cross-examination has been called “ ‘the greatest legal engine ever invented for the discovery of truth.’ ” (People v. Reynolds (1984) 152 Cal.App.3d 42, 46 [199 Cal.Rptr. 379], quoting 5 Wigmore, Evidence (3d ed. 1940) The Hearsay Rule Satisfied: By Cross-Examination, § 1367, p. 29.) However, the prohibition of hearsay evidence is far from all-encompassing even in litigation pursuant to the usual rules of evidence (see exceptions, e.g., Evid. Code, § 1220 et seq.), and the nature of small claims proceedings makes an even looser rule appropriate. It is to be noted that although Evidence Code section 1200 bars hearsay evidence “except as provided by law,” “law,” in this context, includes decisional law. Consequently, we are empowered to create, or recognize, an exception not specifically set forth in the statutes.⁵ (In re George G. (1977) 68 Cal.App.3d 146, 155 [137 Cal.Rptr. 201].)

To begin with, section 116.510 provides that “[t]he hearing and disposition of the small claims action shall be informal, the object being to dispense justice promptly, fairly, and inexpensively.” (The stressed language quoted goes back at least to 1933 and the enactment of former § 117h; see Stats. 1933, ch. 743.) While the term “informal” is not defined, in Sanderson v. Niemann (1941) 17 Cal.2d 563, 573 [110 P.2d 1025], the court noted as one of the “chief characteristics” of this informality the fact that “there are . . . no legal rules of evidence.” Although no authority for this proposition was cited (and although it was dicta), we must, of course, give due consideration to it—especially as Sanderson was quoted on the point in Crouchman v. Superior Court, supra, 45 Cal.3d at p. 1171.

Section 116.520 explicitly governs the introduction of evidence at the hearing, and acknowledges the parties’ basic right to present evidence “by witnesses at the hearing.” However, it also permits the court to allow for the taking of evidence at other times; more significantly, it allows the court to “consult witnesses informally and otherwise investigate the controversy with or without notice to the parties.” (§ 116.520, subd. (c).) While there are obviously some limits beyond which the court should not go, the statutes are clearly designed to afford both the parties and the court considerable flexibility in presenting their cases and ascertaining the truth.⁶

The typical hearsay statement is routinely excluded by the operation of Evidence Code section 1200 simply because its trustworthiness cannot be tested. This is certainly true of the affidavit submitted here; defendants had no means of challenging the declarants’ expertise or honesty. The mechanic may have been incompetent, or bribed by petitioner.⁷ In another case, there may be reason to suspect that the declarant is biased against the other party.

On the other hand, as mentioned above, the law permits the introduction of hearsay evidence in a large number of situations, despite the fact that cross-examination is, by definition, not available.

It is true that in most cases the exceptions are justified, expressly or impliedly, by the underlying theory that the nature of the hearsay statement carries some indicia of reliability. Thus, Evidence Code section 1230 defines a “declaration against interest” as a statement which, due to the likely deleterious personal consequences, “a reasonable man . . . would not have made . . . unless he believed it to be true.” (See Estate of Huntington (1976) 58 Cal.App.3d 197, 210 [129 Cal.Rptr. 787].) A dying declaration is admitted (Evid. Code, § 1242) on the theory that a declarant is likely to tell the truth when faced with the immediate prospect of eternity. (People v. Adams (1990) 216 Cal.App.3d 1431, 1440 [265 Cal.Rptr. 568]; see also Mattox v. United States (1895) 156 U.S. 237, 244 [39 L.Ed. 409, 411, 15 S.Ct. 337].) However, some hearsay is made admissible simply as a matter of convenience or practical necessity, where no other means of proof is available; an example is the “family history” exceptions of Evidence Code section 1310 et seq. (Estate of Hartman (1910) 157 Cal. 206, 213 [107 P. 105].) These examples strengthen the position that hearsay is not always to be considered the pariah of the world of evidence, and this is further recognized by the rule that hearsay evidence is competent to support a judgment, if admitted in the absence of any objection. (Flood v. Simpson (1975) 45 Cal.App.3d 644, 649 [119 Cal.Rptr. 675].)

None of the above objections to hearsay requires that it be excluded from small claims actions, while the exceptions support a rule recognizing its propriety in such proceedings. A respected commentator has observed that the hearsay rule, like other technical rules of evidence, is generally “not vigorously enforced” in bench trials. (1 Wigmore, Evidence (Tillers rev. ed. 1983) § 4d.l, pp. 213-214.) Indeed, the occasional resistance to this policy of relaxed rules is described by the author as “surprising persistence” or even “stubborn persistence.” After all, there is no need for concern over the danger that the jury will overestimate the value of such evidence; the trial judge is routinely called upon to evaluate proffered evidence by balancing its probative worth against the danger that it will mislead the jury. (Ibid.) Thus, there is significant precedent for permitting the judge, in a small claims matter, to receive all relevant evidence and then determine its probative value.

A second point is more practical. It is repeatedly stated that small claims courts are designed for the unsophisticated petty litigant. (See e.g., Brooks v. Small Claims Court (1973) 8 Cal.3d 661, 669 [105 Cal.Rptr. 785, 504 P.2d 1249]—“inexperienced individual.”) Volumes have been written on the hearsay rule, and the shelves are filled with judicial constructions and explanations. It is simply unrealistic to expect lay litigants to understand and abide by the formal rules of evidence. How is a lay plaintiff to be made to understand that the bill for services which he presents to show the repair costs for his damaged property must be authenticated as a business record? Or that the police report of an accident proves nothing in the eyes of the law? Nor would a strict enforcement of the hearsay rule serve the policies of speed and economy, if the result were to compel the parties to bring in numerous additional witnesses to testify in person. The parties might incur subpena and witness fees; on the other hand, in neighborhood matters, a party might be unwilling to antagonize a reluctant witness by compelling his appearance. In a case such as the one at bar, of course, the practical difficulties facing a party with out-of-state witnesses would often make an effective case or defense impossible, if hearsay testimony could not be presented. If the small claims court is to be the “People’s Court,” it must not be encumbered with rules and restrictions which can only frustrate and hinder the litigant who resorts to that court in response to its promise of speedy and economical justice. In the case of inexperienced pro se litigants, it is better to err on the side of admitting an ore-heap of evidence in the belief that nuggets of truth may be found amidst the dross, rather than to confine the parties to presenting assayed and refined matter which qualifies as pure gold under the rules of evidence.

The approach suggested by the dissent would require the trial court to apply technical rules of evidence continuously through the hearing, and would probably mire down proceedings with a constant stream of explanations from the court—explanations which would rarely be understood and virtually never, we suspect, appreciated. Many losing litigants would focus on the exclusion of their proffered evidence as the cause of their defeat, and nurse the belief that they had not been fully heard and not received a fair trial. Unless evidence is inadmissible under one of the supervening policies we discuss below, it is better for the trial court to listen patiently, even if it is mentally classifying the evidence as improbable, incredible, or preposterous.

We also think it unlikely that, as suggested by the dissent, crafty small claims litigants will choose to present weak hearsay evidence rather than to provide witnesses available for cross-examination. If stronger evidence is clearly available, the trial court may draw the inference offered by Evidence Code section 412, and view the proffered evidence with distrust. A litigant clever enough to think of using flexible rules of evidence to his advantage will presumably also be wise enough to recognize the folly of not presenting as strong a case as possible.

We have considered whether to limit the court’s duty and power to admit hearsay evidence along the lines suggested by Government Code section 11513, which governs administrative proceedings. That statute generally permits the introduction of “[a]ny relevant evidence . . . if it is the sort of evidence on which responsible persons are accustomed to rely in the conduct of serious affairs . . . .” (See e.g. Aengst v. Board of Medical Quality Assurance (1980) 110 Cal.App.3d 275, 282 [167 Cal.Rptr. 796].) It also provides that hearsay alone will not support a decision. We have concluded that such a formal restriction is both unenforceable and, we trust, unnecessary, although we do hold that some of the limiting provisions of the statute are applicable to small claims proceedings.

Government Code section 11513 requires the tribunal to recognize the “rules of privilege,” and we believe that this restriction is appropriately applied to small claims cases. The privileges established by the Evidence Code section 930 et seq., reflect important concerns of public policy, rather than concerns over reliability. (See, e.g., Nowell v. Superior Court (1963) 223 Cal.App.2d 652, 657 [36 Cal.Rptr. 21, 2 A.L.R.3d 853] [attorney-client]; People v. Johnson (1991) 233 Cal.App.3d 425, 437 [284 Cal.Rptr. 579] [confidential marital communications]; In re Lifschutz (1970) 2 Cal.3d 415, 436-437 [85 Cal.Rptr. 829, 467 P.2d 557, 44 A.L.R.3d 1] [psychotherapist-patient].) Thus, in a small claims proceeding, no party may be compelled to provide, over objection and a proper claim of the privilege, information covered by a statutory privilege, and no party may introduce such evidence absent an appropriate waiver.⁸

We also hold that the trial court retains the discretion under Evidence Code section 352 to exclude evidence which is cumulative, overly time-consuming, confusing or prejudicial and also to exclude evidence not relevant pursuant to Evidence Code section 350. Such a power may be particularly desirable in a forum in which the parties generally (even at trial de novo) appear in propria persona.⁹

It must be candidly admitted that the administration of rules governing small claims procedure are almost wholly dependent upon the good faith and conscientiousness of the trial courts, because, as we explained above, there is no provision for routine plenary review. An appeal results in a trial de novo, not a decision in which the lower court’s procedures or conduct may be usefully and productively criticized. As proceedings are rarely, if ever, reported, there is little point in establishing detailed rules where errors would generally escape discovery and correction. It may well be for this reason that the Legislature has not seen fit to prescribe the actual conduct of the hearing in specific detail.

On the other hand, and more importantly, the system is designed to depend upon the commonsense ability of the judges to sort out relatively minor disputes. As mentioned above, the rules of evidence are commonly relaxed in court trials, a practice which reflects a recognition that judges are—and must be—trusted to treat questionable evidence in a fair and rational manner. We need not admonish judges not to rely on evidence to which no reasonable person could give any credence; this duty, and the ability to perform it, is inherent in the job.¹⁰ Our holding places no restrictions upon the type or amount of relevant hearsay evidence which shall be received, subject to the court’s power under Evidence Code section 352 and its duty to respect and enforce the law of privileges.

Finally, we reject the position of the trial court that different rules apply on a trial de novo.¹¹ Section 116.770, subdivision (b) provides that hearings on the trial de novo “shall be conducted informally” and the statute expressly incorporates the statutes governing the original proceeding. In Crouchman v. Superior Court, supra, 45 Cal.3d 1167, 1172, the court, citing the predecessor statute to section 116.770, subdivision (b), recognized that the Legislature did not intend to provide for jury trials at either level. Although in other situations additional rights have been held required in the trial de novo (e.g. Prudential Ins. Co. v. Small Claims Court, supra, 76 Cal.App.2d 379, concerning the right to counsel), rules of evidence do not rise to this level of significance. The parties must be afforded the same latitude in the introduction of evidence at the hearing de novo as was applied in the original proceeding.

In summary, we hold that the trial court here erred in refusing to consider the affidavit by the Nebraska witnesses presented by petitioner; at least with respect to relevant hearsay evidence, we conclude that the court in Sanderson v. Niemann, supra, 17 Cal.2d 563 meant just what it said in observing that the rules of evidence do not apply in small claims proceedings. We have thoroughly reviewed the petition, the record, and the opposition filed by defendants, and have notified the parties of our intention to issue a peremptory writ in the first instance. (Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 176 [203 Cal.Rptr. 626, 681 P.2d 893].) We therefore now issue the writ as prayed, and remand the matter to the superior court for the conduct of a new hearing in conformity with this opinion.

McKinster, J., concurred.

1 Unless otherwise noted, all subsequent statutory references are to the Code of Civil Procedure.

2 The hearing was not reported. However, Rossi does not contest that the statement was in fact excluded, despite the indication on the minute order that some sort of exhibits were received into evidence.

3 On remand, if the matter is reassigned to Judge Johnston, petitioner will have the opportunity to file an affidavit pursuant to section 170.6 or 170.3, subdivision (c).

4 As the primary objection to hearsay is that such evidence is not subject to cross-examination, it is worth noting that courts have routinely restricted or forbidden cross-examination in small claims matters. (See Comment, The California Small Claims Court (1964) 52 Cal.L.Rev. 876, 881, fn. 58.)

5 Section 116.540, subdivisions (d)-(g), makes provision for the representation of a party by a third person, and the presentation of declarations or other hearsay, in specified situations where the party’s personal appearance would be burdensome or impossible—for example, in the case of a nonresident landlord plaintiff, or a plaintiff on active duty outside this state with fhe armed forces.

It can be argued that these provisions represent the only circumstances in which the Legislature deems hearsay to be appropriately admitted. We do not think such a limited interpretation of the section is consistent with the requirement in section 116.510 that hearings be conducted informally and inexpensively, as we discuss more expansively below. We also believe that the focus of section 116.540 is not on evidence, but on the appearance of a party, and the situations in which such an appearance may be excused.

We are particularly concerned by the dissent’s willingness to countenance a bar on affidavits other than as specified in section 116.540. It would be anomalous to reject an affidavit offered in a minor fence dispute, while permitting matters of great moment to be decided upon such evidence. (See, e.g., § 437c, subd. (b), permitting several categories of hearsay evidence in summary judgment proceedings.)

6 In Thompson v. Municipal Court (1958) 162 Cal.App.2d 676, 678 [328 P.2d 514], the court refused to read these provisions to authorize the court to “take evidence” by a proxy, i.e., the court clerk. As a matter of due process and fundamental fairness, courts should tread carefully in obtaining evidence ex parte and then ruling without giving the adverse party the opportunity to respond to apparently damaging evidence so obtained. On the other hand, the Legislature has evidently recognized that small claims litigants sometimes present their cases so inexpertly that the trial court can best serve justice by using its own experience and resources to investigate the matter and evaluate the facts.

7 In this case, the fact that the declarants submitted a sworn statement—thus subjecting themselves to penal liability if they lied—provided some indication of reliability, although admittedly the likelihood of prosecution was slim. As we will explain, we do not rest our decision on the level of reliability exhibited by the statement proffered in this case.

8 The court must also be vigilant to prevent disclosure of possibly privileged material through inadvertence, and to ensure that the parties and witnesses are aware of their rights in this respect. We do not believe that silence, on the part of a layman, should be deemed a waiver of any privilege, and the court should elicit an informed, express waiver before such evidence is admitted.

9 Evidence Code section 352 on its face applies only to trial by jury. However, its principles have been recognized as applicable as well to court trials, at least with respect to cumulative evidence. (See Sparks v. Board of Dental Examiners (1942) 54 Cal.App.2d 491, 495 [129 P.2d 405]; Litt v. Litt (1946) 75 Cal.App.2d 242, 244 [170 P.2d 684].)

10 We certainly do not mean to imply that administrative law judges are more in need of a formal limitation on their ability to admit unreliable evidence. The point of Government Code section 11513 is obviously to broaden the category of admissible evidence; we think the limitation was an unnecessary statement of the obvious.

11 From the record, it appears that the trial court excluded the declaration on its own motion. Especially where, as here, the other party was represented by counsel, it was unnecessary for the trial court to make its own objection to proffered evidence.