Memorandum of Law
To: Al Smith & Jones, Senior Partner
From: Research Associate
RE: State and Federal Court System for California: Bob vs. Al, Kathy, Dan
Date: July 6th, 2013
Statement of Facts
California Statutes of Limitation
A promissory note is a legal document with a written undertaking with an obligation pay a debt at a stated period(s) or on demand under agreed terms and conditions.
Federal securities Act define a security to include any note. The California courts have adopted the words any note under the family of resemblance test to mean a security.
There are four factor balancing tests that have been used by the court to determine if a note qualifies to be a security. They include;
- If the motivation is to raise money for business use or to finance a substantial investment then it qualifies to be a security.
- If the lender dictates the terms of the loan then it makes it less likely to qualify as a security.
- Whether the investing public expects that note to be a security i.e. if the purchasers view the notes as a type of investment, they are more likely to be securities.
- Whether there are regulatory scheme that protects the investor other than the securities laws.
There are two statutes that govern promissory notes regulation.
- Written agreements are limited to four years from the date of breach.
- Oral agreements are limited to two years from the date of breach.
1. An overview of the state and federal courts in California
California has both the federal and state courts.
The federal courts located in California include the United States Court of Appeals for the Ninth Circuit and the United States District Court for the Central, Eastern, Northern and Southern Districts of California. Federal court jurisdiction is limited to the types of cases in the constitution
State courts in California are the Supreme Courts of California, California courts of appeal (with 6 appellate districts and the Superior Courts of California (with 58 courts, each for the 58 counties). State courts have broad jurisdiction so most individual cases are involved in here.
The vast majority of the cases in California start at one of the 58 superior courts and can hear both civil and criminal cases. The next level of judicial authority rests with the Courts of Appeal. The Supreme Court serves as the highest court in the state and has discretion over decisions of the court of appeal.
2) Which court or courts has/have jurisdiction for the amount in controversy in the three lawsuits that Bob wants to file.
Bob has to file three different cases for Al ($500), Cathy ($7,000) and Dan ($55,000) in the state of California because Al, Cathy and Dan all reside in Los Angeles, California.
Monetary issues of less than $ 10,000 for a person living within the state can file a complaint in the small claims court. And all fillings above $ 10,000 will have to be filled in superior courts division. This implies that Al and Cathy claims can be filed at the small claims court while for Dan is to be filed in the superior courts division.
When a debtor defaults to pay the amount loaned, Bob can obtain a judgement against the person for the total amount owned. Where to file the suit depends on the amount defaulted as explained above.
To file a suit in the superior courts division one will require hiring an attorney since the rules in the superior court are much more complex than for small claims.
For small claims obtain a complaint from the local small claims court where the debtor resides, fill it and then file it.
For secured notes the court can guarantee seizure of security till the note is fully settled
3) Why Bob should file his lawsuits in a particular court or courts
Bob has to file his cases in different courts because of different jurisdiction depending on the case or amount of money involved in each case. However, because all the three respondents live in the state of California, Bob needs to file his complaints at the State Courts and not at the Federal Courts.
In the state courts, different courts have different jurisdiction depending on the amount of money/claims involved.
4) In which courts Bob must represent himself and in which courts he may be represented by an attorney
For the small claims, Bob does not need a lawyer to represent him.
For any claim of more than $25,000 (that is for Dan’s case which involves $55,000), Bob needs a lawyer to represent him in court because the amount exceeds $25,000.
All the above cases refer to the California Code of Civil Procedure sections 85–86.
As at the California State law, Bob has to institute legal claims against his promissory notes to Al, Cathy and Dan. Legislation requires that monetary issues of less than $ 10,000 for a person living within the state filed within the small claims court while monetary issues involving more than $25,000 be filed with superior courts division. Bob can represent himself in the first two cases while he needs a lawyer to represent him in the superior courts division.