BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 238|
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THIRD READING
Bill No: AB 238
Author: Huber (D), et al.
Amended: 9/2/11 in Senate
Vote: 27 - Urgency
SENATE JUDICIARY COMMITTEE : 4-0, 9/7/11
AYES: Evans, Harman, Blakeslee, Corbett
NO VOTE RECORDED: Leno
ASSEMBLY FLOOR : Not relevant
SUBJECT : Motor vehicle conditional sale contracts
SOURCE : California New Car Dealers Association
DIGEST : This bill provides that a motor vehicle
conditional sales contract shall not be made unenforceable
solely because of a violation of requirements to disclose
specified government fees and the total of those and other
fees. This bill applies only to contracts executed or
entered into on or after January 1, 2012, and provide that,
in addition to other remedies that may be available, the
buyer is entitled to actual damages sustained as a result
of a violation of the disclosure requirements.
ANALYSIS : Existing law, the Automobile Sales Finance Act
(ASFA) (also known as the Rees-Levering Motor Vehicle Sales
and Finance Act), sets forth numerous requirements with
regard to disclosures required in an automobile conditional
sale contract, including, among other things, amounts paid
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to public officials for vehicle license, registration,
transfer, titling fees, and California tire fees. Those
disclosures also include the subtotal of those fees and
other items. (Civil Code ÝCIV] Section 2982(a)(2), (a)(5))
Existing law provides that if the seller, except as the
result of an accidental or bona fide error in computation,
violates the above disclosure provisions, the conditional
sale contract shall not be enforceable except by a bona
fide purchaser or until the violation is corrected, as
specified, and, if the violation is not corrected, the
buyer may recover from the seller the total amount paid
pursuant to the terms of the contract. (CIV Section 2983)
Existing law further provides that if a holder acquires a
conditional sales contract without actual knowledge of
specified violations, the contract shall be valid and
enforceable by the holder except the buyer is excused from
payment of the unpaid finance charge, unless the violation
is corrected. (CIV Section 2983.1.) If the holder
acquired the conditional sales contract with knowledge of
specified violations, the contract shall not be enforceable
except by a bona fine purchaser unless the violation is
corrected, as specified, and if the violation is not
corrected, the buyer may recover specified amounts. (CIV
Section 2983.1)
Existing law provides that when a contract is not
enforceable under the above sections, the buyer may elect
to retain the motor vehicle and continue the contract in
force, or may, with reasonable diligence, elect to rescind
the contract and return the motor vehicle. The value of
the returned vehicle shall be credited as restitution by
the buyer without any decrease that results from the
passage of time in the cash price of the motor vehicle, as
specified. (CIV Section 2983.1)
Existing law provides that reasonable attorney's fees and
costs shall be awarded to the prevailing party in any
action on a contract or purchase order. (CIV Section
2983.4)
This bill provides that a conditional sales contract shall
not be made unenforceable solely because of a violation by
the seller regarding the disclosure of amounts paid to
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public officials regarding various fees and the subtotal of
those fees with other amounts.
This bill additionally provides that a buyer shall not be
excused from payment of any finance charge solely due to
the above violation with respect to a holder of a
conditional sales contract that was acquired without actual
knowledge of the violation.
This bill provides that, in addition to any other remedies
that may be available, the buyer is entitled to any actual
damages sustained as a result of a violation of the above
provisions.
This bill states that nothing shall affect any legal
rights, claims, or remedies otherwise available under law,
and would apply only to conditional sales contracts
executed or entered into on or after January 1, 2012.
This bill takes effect immediately as an urgency measure.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 9/7/11)
California New Car Dealers Association (source)
ARGUMENTS IN SUPPORT : According to the author:
"AB 238 narrowly refines the ASFA's disproportionate
remedy provisions by providing that a contract shall not
be rendered unenforceable solely because of a discrepancy
in the disclosure of specified government fees. This
bill does ensure that consumers retain the right to sue
dealers that violate these disclosure requirements in
Superior Court in an effort to obtain monetary damages
and attorney's fees.
"This proposal is the result of a careful collaboration
between interested parties to ensure that consumers are
adequately protected from unscrupulous dealers, and that
dealers who make technical disclosure violations are held
accountable without the prospect of a
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business-threatening catastrophic lawsuit."
The California New Car Dealers Association, the sponsor of
this bill, further notes that "the bill ensures that
consumers retain the right to sue dealers that violated
government fee disclosure requirements in Superior Court -
in class or individual action- and to obtain monetary
damages and attorney's fees when successful."
RJG:kc 9/7/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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