BILL ANALYSIS AB 2365 Page 1 Date of Hearing: April 27, 2010 ASSEMBLY COMMITTEE ON VETERANS AFFAIRS Paul J. Cook, Chair AB 2365 (Lieu) - As Amended: April 8, 2010 SUBJECT : Veterans affairs: administration. SUMMARY : This bill makes a person who has violate the rights of a service member under existing law liable for attorney's fees, court cost and damages. Specifically, this bill : 1. Holds a person who violates these specified rights of service members liable for actual damages, reasonable attorney's fees, and costs incurred by a person seeking to enforce the rights. 2. Waives waive the filing fee and court costs for a person seeking to enforce the specified rights. 3. Requires the court to set a hearing date within 25 days after a petition is filed, unless good cause is shown to delay the date of the hearing. 4. Prohibits the court from charging a filing fee or court costs for filing a petition for relief. EXISTING LAW : 1.Provides legal rights, as specified, for service members in regards to credit agreements, court proceedings, interest liabilities, eviction proceedings, contracts, mortgages and trusts, leases, life insurance policies, taxes and assessments, and health insurance policies. 2.Authorizes a service member to apply to the court for relief of an obligation, liability, tax, or assessment, as specified. Existing law requires a party to provide notice before the court grants relief. Existing law requires the court to provide a hearing before granting or denying relief. 3.Establishes the California Military Families Financial Relief Act and the California Military Families Financial Relief Act of 2005, which provides financial relief for a service member AB 2365 Page 2 who is called to active duty. FISCAL EFFECT : Unknown COMMENTS : Recently, the California Military Department has coordinated with State Military Reserve Judge Advocate General (JAG) Officers to assist deployed and deploying service members who incur financial hardship because of their deployments and are afforded protections under the California Military and Veterans Code. These experienced lawyers have either counseled or represented 22 service members over the past year. During their representation of these service members, the JAG Officers have experienced the need for this legislation for the reasons expressed above. However, the resources that the California Military Department can expend on these issues are very limited. The author states that service members must have this legislation so they can enforce their rights and protections on their own accord. Generally, these cases arise when the service members attempts to find relief under the provisions of the California Military and Veterans Code. Relief sought includes, but is not limited to, a deferment of a financial obligation or reduction of an interest rate to the statutory requirement of 6%. The service members will send a letter and often times follow up with a telephone call to their creditor/s. The financial institution will then deny the service members the protections of the Military and Veterans Code. The service member is at a standstill. Judge Advocates in-country are limited by regulation and geography from doing anything more than sending a letter on behalf of the service members. The service member is limited by geography or sophistication in enforcing his or her rights in court. This bill enables service members to recover an award of reasonable attorney fees. Not only is finding an attorney to represent a service members claimant difficult without an attorney's fees provision, but on a typical claim the service member cannot be made whole when a significant portion of his or her damages award must go toward non-recoverable attorney's fees. Finding an attorney to take such a case is nearly impossible unless that attorney knows that reasonable compensation will be allowed by the court for undertaking such an action to protect the rights of a service member. AB 2365 Page 3 Many of the rights sought to be enforced have either no damages or minimal damages. The service member is primarily seeking an order from the court compelling the lender to stop violating the Military and Veterans Code and honor his or her requests. An example is a case to clear up the service members' credit after the institution has wrongfully denied the service members the protections of the Military and Veterans Code. There would be no damages in a case where the service members is only seeking a court order to accurately reflect his or her credit if no attorney's fees are available. There is no money to pay an attorney in an injunction action. The author believes voluntary compliance will be much more likely if creditors know that litigation over violations of the Military and Veterans Code may result in an award against them of the service members' reasonable fees and costs. Due to being deployed overseas, many service members do not have the ability to immediately pay court fees at the time of filing because of geographical limitations or financial hardship. This bill would grant service members a waiver of court fees so that service members may proceed to enforce these important protections. This bill would also grant service members an expedited review of their case. Under current law, a service member may not be able to enforce these protections until the service member returns from deployment. A delay in enforcement often puts the service members in irreversible credit problems, regardless of the eventual outcome of the case. The author believes this legislation is critical because more Citizen Soldiers and Airmen of California are being called to active duty in Iraq and Afghanistan. As a result, the service members and their families are suffering the hardships of these ongoing deployments. It is necessary to provide an enforcement mechanism to ensure the Legislature's stated intent to enable service members to devote their entire energy to the defense needs of the nation or state. REGISTERED SUPPORT / OPPOSITION : Support California Military Department (sponsor) National Guard Association of California AB 2365 Page 4 Opposition None on file. Analysis Prepared by : Eric Worthen / V. A. / (916) 319-3550