BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 2394 (Brownley) Hearing Date: 08/02/2010 Amended: 06/14/2010 Consultant: Jacqueline Wong-HernandezPolicy Vote: Judiciary 4-0 _________________________________________________________________ ____ BILL SUMMARY: AB 2394 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, as specified. This bill also makes clarifying changes to various provisions statute as it pertains to levying officers and execution of writs for the enforcement of money judgments. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Authorizes electronic transmittal Potentially significant savings, if adopted Local Mandates: Levying officers Negligible; unlikely to be reimbursable General Potential net savings Local/General Modifies notice delivery Likely substantial ongoing savings Local _________________________________________________________________ ____ STAFF COMMENTS: AB 2394 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 documents specified in this Act. This provision makes the utilization of electronic processes optional. To the extent that superior courts enter into agreements with levying officers, those courts will likely achieve savings related to reduced paper-base transactions and records storage. This bill makes various minor (often technical and clarifying) changes to various provisions statute as it pertains to levying officers and execution of writs for the enforcement of money judgments. Some of the changes, which are detailed below, may be considered state mandates on local ministerial officers. It does not appear, however, that any of them require significant new duties or a higher level of service in their existing duties; in fact, most will likely result in minor workload decreases. Thus, these changes are unlikely to constitute reimbursable mandates or reach a workload or resource threshold to merit a claim for reimbursement. Page 2 AB 2394 (Brownley) 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 would instead provide 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. Existing law also requires the levying officer to attach the 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. This bill would instead remove the requirements to attach the original garnishee's memorandum to the original writ for return to the court, and would authorize the employer to electronically transmit the garnishee's memorandum to the levying officer. These regulation changes would likely result in increased efficiency in for levying officers (or other county staff) processing the reports. Under current law, the levying officer, upon sale of real property, must execute and deliver a deed of sale to the purchaser and record a duplicate deed of sale with the county recorder. This bill would additionally make the levying officer responsible for collecting the documentary transfer tax with the purchase amount from the purchaser and transmitting the documentary transfer tax to the city and/or county. The degree to which this responsibility already falls on levying officers, by default, is unclear, but placing the responsibility in statute creates a state mandate. That mandate is unlikely to reach the threshold for reimbursement in virtually any county, except Los Angeles, and even in Los Angeles is highly unlikely to be a significant cost. 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. This bill would authorize the levying officer to electronically file the accounting with the court, which would likely result in very minor workload reduction for levying officers and the court. This bill is likely to result in substantial local savings, by changing the requirements for serving an employer with an earnings withholding order. 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. An employer receiving an earnings withholding order must complete under oath and return within 15 days the enclosed Judicial Council "employer's return" form indicating information about the garnishee/employee, as specified. (Code Civ. Proc. Secs. 706.101(b), 706.125, 706.126.) This bill would authorize the levying officer to serve the earnings withholding order on an employer by first class mail, instead of the more expensive certified or registered 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. According to the sponsor, it typically costs $5.88 to serve an earnings withholding order by certified mail, of which $2.20 is charged by the Post Office for return receipt service. By contrast, it typically costs just $0.73 to send the same materials by first class mail.