In electronics, a short circuit is “[a] low-resistance connection between two points in an electrical circuit, causing the current to bypass the rest of the circuit.” Clever defendants in some states have found a way to achieve a similar effect in the civil justice system, bypassing litigation of their cases on the merits. By obtaining a judgment against a plaintiff then executing on and purchasing the plaintiff’s claim, a defendant can “short circuit” the justice system and extinguish a lawsuit against itself, regardless of the merits.
To illustrate the problem, suppose a plaintiff is injured when he is negligently struck by a delivery truck driver. Plaintiff sues both the driver and the driver’s employer, alleging damages of $500,000, and has evidence of the driver’s negligence that makes success on the merits extremely likely. However, plaintiff is a judgment debtor—he owes $50,000 to a third party from an unsatisfied judgment in a prior action. Defendants purchase the prior judgment from the third party for a small sum, buying the right to enforce that judgment against plaintiff and becoming the plaintiff’s judgment creditors. To enforce the judgment they have just purchased, defendants obtain a writ of execution against plaintiff’s claims in the pending negligence lawsuit against defendants. Plaintiff’s claims—a form of property called a “chose in action”—are seized and sold at a sheriff’s auction. Defendants are the only bidders at the sale and purchase plaintiff’s claims for $10,000. Defendants now own plaintiff’s right to pursue—or not pursue—the lawsuit. They are, in effect, both plaintiffs and defendants, while the original plaintiff has been stripped of standing. In their new capacity as plaintiffs, defendants move to dismiss the claims against themselves. Thus, defendants have extinguished the plaintiff’s $500,000 claim for the comparatively small sum of $10,000, without trying the case on the merits or negotiating a voluntary settlement. They have “bypass[ed] the rest of the circuit,” and plaintiff is forever barred from recovery on those claims.