BILL ANALYSIS                                                                                                                                                                                                    






                             SENATE JUDICIARY COMMITTEE
                           Senator Ellen M. Corbett, Chair
                              2009-2010 Regular Session


          AB 2394 (Brownley)
          As Amended June 14, 2010
          Hearing Date: June 22, 2010
          Fiscal: Yes
          Urgency: No
          TW:jd
                    

                                        SUBJECT
                                           
                  Civil Process and Notices:  Ministerial Officers

                                      DESCRIPTION  

          This bill would establish the Levying Officer Electronic  
          Transactions Act, whereby a levying officer could use electronic  
          methods to create, generate, send, receive, store, display,  
          retrieve, or process information, electronic records, and  
          documents, as specified.  This bill would authorize an earnings  
          withholding order to be served by first class mail rather than  
          certified mail on an employer.  This provision would require the  
          employer to execute the "employer's return" form within 15 days  
          of receipt of the first class mail service.

          This bill also makes clarifying amendments to various provisions  
          of the Code of Civil Procedure as it pertains to levying  
          officers and execution of writs for the enforcement of money  
          judgments.  This bill also makes technical revisions regarding  
          the provision for the issuance of a warrant for failure to  
          appear pursuant to a subpoena.

                                      BACKGROUND  

          Levying officers are required to serve writs and levies on  
          personal and real property and wage garnishments.  Paper copies  
          of these documents and all communications sent or received are  
          maintained by the levying officers within voluminous files.   
          Levying officers are required under current law to return the  
          original writ documents to the court.

          California has a well-founded interest in utilizing more  
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          electronic resources for the administration of state and local  
          agencies.  In 1999, the Legislature enacted the Uniform  
          Electronic Transactions Act (UETA).  (SB 820 (Sher, Ch. 428,  
          Stats. 1999).)  This Act regulated the electronic transmission  
          of documents and signatures.  In 2004, the Legislature,  
          recognizing a need for an efficient, cost-effective means of  
          maintaining and transmitting records by public agencies, enacted  
          the Electronic Recording Delivery Act of 2004.  (AB 578 (Leno,  
          Ch. 621, Stats. 2004); Gov. Code Sec. 27390.)  This Act  
          regulates the electronic delivery, recording, and return of  
          instruments affecting right, title, or interest in real  
          property.

          This bill, sponsored by the Los Angeles County Sheriff's  
          Department, seeks to establish the Levying Officer Electronic  
          Transactions Act, a comprehensive scheme through which a levying  
          officer and court can electronically administer levies, writs of  
          execution, and wage garnishments.  This bill would authorize the  
          sheriff's department to serve an earnings withholding order by  
          first-class mail.

                                CHANGES TO EXISTING LAW
           
          1.     Existing law  , the California Uniform Electronic  
            Transactions Act (UETA), provides rules and procedures for the  
            sending and receiving of electronic records and signatures,  
            the formation of contracts using electronic records, and  
            procedures governing changes and errors in electronically  
            transmitted records.  The UETA applies to all transactions in  
            which records or signatures are electronically transmitted by  
            parties who have agreed to conduct the transaction  
            electronically. (Civ. Code Sec. 1633.1, et seq.)

             This bill  would establish the Levying Officer Electronic  
            Transactions Act (LOETA) and provide rules and procedures, as  
            specified, for levying officers in the utilization of an  
            information processing system to create, generate, send,  
            receive, store, display, retrieve, or process information,  
            electronic records, and documents to the extent the levying  
            officer has the resources and technological capacity to do so.  


             This bill  provides an "opt-in" provision requiring both the  
            court and the levying officer to have the technological  
            resources with which to administer the information processing  
            system and mutually agree to electronically process the  
                                                                      



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            documents specified in this Act.
             
            This bill  would require levying officers to exclude or redact,  
            as specified, from any record or document made available to  
            the public all social security and financial account numbers.

          2.     Existing law  , the Electronic Recording Delivery Act of  
            2004 (ERDA), provides rules and regulations of electronic  
            recording of documents pertaining to reconveyance,  
            substitution of trustee, or an assignment of deed of trust.   
            (Gov. Code Sec. 27390, et seq.)

             This bill  would authorize levying officers, pursuant to an  
            execution order pertaining to the sale of real property, to  
            electronically record the deeds and conveyances.
                     
           3.    Existing law  provides for requirements for the direction or  
            instructions by the levying party for the execution of process  
            by the levying officer.  (Code Civ. Proc. Secs. 262, 687.010,  
            699.060.)
             This bill  would make technical revisions to these provisions  
            and authorize the levying party to electronically transmit to  
            the levying officer the written instructions for the execution  
            of process.

          4.    Existing law  provides a list of information that must be  
            included on a writ of execution or writ of possession or sale.  
             (Code Civ. Proc. Secs. 699.510, 699.520, 712.020.)

             This bill  would add to this list: 1) if the judgment debtor is  
            not a natural person, the type of legal entity must be stated  
            on the writ of execution; and 2) a statement indicating  
            whether the case from which the writ of execution stems is  
            limited or unlimited.
           
           5.    Existing law  requires the levying officer to return the  
            original writ of execution to the court along with a report  
            detailing the actions taken by the levying officer, the  
            amounts collected pursuant to the writ, and the costs  
            incurred.

             This bill  provides that the levying officer can either return  
            the original writ to the court or store the writ as specified  
            under the LOETA and file the report separately with the court.

          6.  Existing law  requires the levying officer to attach the  
                                                                      



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            original garnishee's memorandum to the original writ of  
            execution for return to the court and deliver a copy to the  
            judgment creditor, unless no memorandum was received which  
            information shall be conveyed to the court.  (Code Civ. Proc.  
            Sec. 701.030(c).)

             This bill  would remove the requirements to attach the original  
            garnishee's memorandum to the original writ for return to the  
            court or advise the court of the absence of the garnishee's  
            memorandum.

             This bill  would authorize the employer to electronically  
            transmit the garnishee's memorandum to the levying officer.

          7.  Existing law  requires the levying officer, upon sale of real  
            property, to execute and deliver a deed of sale to the  
            purchaser and record a duplicate deed of sale with the county  
            recorder.  (Code Civ. Proc. Sec. 701.660.)

             This bill  would add the requirement that the levying officer  
            collect the documentary transfer tax with the purchase amount  
            from the purchaser and transmit the documentary transfer tax  
            to the county or city and  county.

          8.  Existing law  requires a levying officer at least once every  
            two years to account to the court all amounts collected under  
            an earnings withholding order.  (Code Civ. Proc. Sec.  
            706.026.)

             This bill  would authorize the levying officer to  
            electronically file the accounting with the court, as  
            specified. 

          9.  Existing law  requires the service of an earnings withholding  
            order on an employer to be delivered by personal delivery, as  
            specified, or by registered or certified mail with return  
            receipt requested.  Service would be deemed completed at the  
            time the return receipt is executed by or on behalf of the  
            recipient.  (Code Civ. Proc. Sec. 706.101(b).)

            Existing law requires an employer receiving an earnings  
            withholding order to complete under oath and return within 15  
            days a Judicial Council form indicating information about the  
            garnishee/employee, as specified.  This form is referred to as  
            the "employer's return."  (Code Civ. Proc. Secs. 706.125,  
            706.126.)
                                                                      



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             This bill  would authorize the levying officer to serve the  
            earnings withholding order on an employer by first class mail.  
             Service would be complete at the time of the receipt of the  
            withholding order as indicated by the employer on the  
            employer's return.  If the employer's return is not returned  
            by the employer within 15 days, the levying officer must  
            personally serve the earnings withholding order on the  
            employer.

                                        COMMENT
           
          1. Stated need for the bill  
          
          The author writes:
          
            [Existing law] [g]enerally requires that certain documents and  
            records relating to service of process and notices be in  
            writing, and, when required to be served on a party, must be  
            served by personal delivery or by certified mail in some  
            cases.

            This bill seeks to make more efficient Sheriff's Departments  
            in regards to their Civil Law Enforcement operations.  This  
            bill seeks to allow the Sheriff and Courts to work together to  
            streamline civil process operations and bring [these  
            operations] more into line with technology available.  [T]his  
            bill would provide a cost saving by allowing the sheriff to  
            serve Earnings Withholdings Orders (EWO) by first class mail  
            rather than by certified mail.  It typically costs $5.88 to  
            serve [an] EWO by certified mail, of which $2.20 is charged by  
            the post office for a return receipt.  By contrast [it] costs  
            just $0.73 to send the same EWO by first class mail.  This  
            alone would save an estimated $500,000 to the LA County  
            Sheriff alone.
          
          2.  First class mail service of earnings withholding orders  

          This bill seeks to change the method of service of earnings  
          withholding orders upon employers by levying officers by first  
          authorizing the levying officer to mail the earnings withholding  
          order by first class mail.  This is a change from existing law  
          which requires the levying officer to attempt service on the  
          employer by personal service or by registered or certified mail  
          with return receipt requested.  Existing law requires that if  
          service is first attempted by registered or certified mail and  
                                                                      



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          no return receipt is received by the levying officer within 15  
          days of mailing, the levying officer must personally serve on  
          the employer the earnings withholding order.  

          This bill essentially would work in the same way.  The levying  
          officer first could attempt first class mail service.  If the  
          employer fails to return the required employer's return form  
          within 15 days of mailing the service of the earnings  
          withholding order, then the levying officer must personally  
          serve on the employer the earnings withholding order.  The  
          difference between first class mail service and  
          registered/certified/return receipt mail service is the cost;  
          otherwise, both methods require a return signature by the  
          recipient verifying receipt of the wage withholding order.  If  
          no such signature is received, personal service is required. 

          The reasoning behind personal service of documents is to make  
          sure the individual or entity actually receives the document  
          that may be affecting their personal and financial rights and to  
          render personal jurisdiction over the person or entity.  Since  
          an earnings withholding order, served upon the employer, comes  
          after the court has asserted personal jurisdiction over the  
          employee and after final judgment, the importance of the method  
          of service decreases to a level of making sure the employer  
          actually received the document.  Proof of receipt of the  
          document is important to allow the judgment creditor asserting  
          their rights under the court's judgment to obtain the monies  
          owed under the judgment.  For this reason, the court currently  
          allows levying officers to serve the earnings withholding order  
          by registered or certified mail with return receipt requested.   
          This return receipt is the proof that the employer actually  
          received the document.  This bill substitutes the return receipt  
          signed by the employer with the employer's return, a document  
          that must be executed and returned by the employer in any event.

          Under the bill, in the event the employer's return is not  
          received by the levying officer, the levying officer would be  
          required to personally serve the earnings withholding order on  
          the employer.  This change in method of service of an earnings  
          withholding order proposed by the bill does not diminish the  
          service and acknowledgment of receipt requirement under the law.  
           As the sponsor notes, the benefit to the levying officer is a  
          significant decrease in cost for first class mail service while  
          still ensuring a return signature by the recipient as proof of  
          receipt of service.

                                                                      



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          3.  Electronic maintenance and service of writs and levies  

          This bill proposes to establish regulations and procedures for  
          an electronic technology system to create, generate, send,  
          receive, store, display, retrieve, or process information,  
          electronic records, and documents to be used by levying officers  
          and courts regarding writs, levies, and wage garnishments.  The  
          author argues that levying officers should have the option of  
          utilizing electronic technology systems for the administration  
          of writ, levy, and wage garnishment documents in order to reduce  
          operating costs and streamline communication and documentation  
          between levying officers and courts.  

          The Judicial Council raised concerns with the bill as introduced  
          because it allowed for a situation in which a levying officer  
          may have the capability to electronically transmit the required  
          writs and levies to the court, but the court may not have the  
          electronic resources to receive and maintain this information.   
          The Judicial Council worked with the author, sponsor, and other  
          stakeholders, and the bill was amended to provide for an opt-in  
          provision which would require both the court and levying officer  
          to determine the resources and technological capacity to  
          maintain an electronic technology system for writs, levies, and  
          wage garnishments, and also agree to process these documents, as  
          specified.  If either party did not have the resources or  
          technological capacity to maintain the electronic system, then  
          the levying officer must continue to utilize the current paper  
          method of administering the writ, levy, and earnings  
          withholdings orders with the issuing court. 

          4.    Privacy concerns over electronic transmission of documents  
            containing confidential information  

          This bill would authorize a levying officer to send and receive  
          information by electronic transfer by and between banks,  
          employers, and other entities holding a judgment debtor's  
          property.  In order to protect confidential information such as  
          Social Security numbers and financial account information from  
          being released to the public, the sponsor drafted the bill to  
          comply with the standards required by the California Public  
          Records Act.  (See Gov. Code Sec. 6250 et seq.)  The bill  
          requires the levying officer to exclude or redact Social  
          Security and financial account numbers from documents provided  
          to the court or to the public. 


                                                                      



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           Support  :  California Law Enforcement Association of Records  
          Supervisors; California State Sheriffs' Association

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  Los Angeles County Sheriff's Department

           Related Pending Legislation  :  None Known

           Prior Legislation  :  See Background.



           Prior Vote  :

          Assembly Judiciary Committee (Ayes 10, Noes 0)
          Assembly Appropriations Committee (Ayes 16, Noes 0)
          Assembly Floor (Ayes 72, Noes 0) 

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