BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   AB 621|
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                                 THIRD READING


          Bill No:  AB 621
          Author:   Charles Calderon (D)
          Amended:  9/8/11 in Senate
          Vote:     21

           
           SENATE JUDICIARY COMMITTEE  :  5-0, 7/5/11
          AYES:  Evans, Harman, Blakeslee, Corbett, Leno
           
          ASSEMBLY FLOOR  :  47-25, 4/7/11 (Substantially amended in 
            Senate) - See last page for vote


           SUBJECT  :    Vehicle rental agreements

           SOURCE  :     Consumer Attorneys of California


           DIGEST  :    This bill requires a rental car company that 
          enters into a vehicle rental agreement with a renter who is 
          not a resident of this country to do the following when 
          that renter purchases liability insurance as part of the 
          agreement:  (1) accept service of process of any summons 
          and complaint against the renter for any accident resulting 
          from the operation of the rental car within California; and 
          (2) mail a copy of the summons and complaint and any other 
          to the renter.  This bill specifies how process must be 
          served on the rental car company and would require that the 
          plaintiff agree to limit his/her recovery to the limits of 
          protection provided by the insurance.  This bill sunsets on 
          January 1, 2015.

           Senate Floor Amendments  of 9/8/11 correct a drafting error 
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          by ensuring that Section 2 of this bill reflects existing 
          law.

          NOTE:  This bill passed the Senate (37-0) on August 30, 
          2011 and was withdrawn from engrossing and enrolling to add 
          this technical amendment.

           ANALYSIS  :    Existing law specifies restrictions on rental 
          vehicle agreements and regulates a renter's liability for 
          loss due to theft, a rental company's loss of use, damage, 
          or loss to the car, damage waivers and damage waiver fees.  
          (Civil Code Section 1936)

          Existing law provides that a rental car company may act as 
          a rental car agent for an authorized insurer in connection 
          with liability insurance, which may include uninsured 
          motorist coverage, that provides coverage to the renter and 
          is not duplicative of any standard liability coverage, for 
          liability arising from the negligent operation of the 
          rental vehicle.  (Insurance Code Section 1758.85(b))

          Existing law provides that a nonresident driver impliedly 
          consents to the appointment of the director of the 
          Department of Motor Vehicles (DMV) as his/her agent for 
          service of process in any action against the nonresident 
          driver for injuries caused by an accident or collision.  
          Existing law provides that service of process shall be made 
          by delivering a copy of the summons and complaint to the 
          director.  The plaintiff must also send a copy of the 
          summons and complaint by registered mail to the nonresident 
          driver, return-receipt requested.  (Vehicle Code Sections 
          17451, 17454, 17455, 17456) 

          This bill, as described in more detail below, authorizes a 
          rental car company that enters into a vehicle rental 
          agreement with a renter who is not a resident of this 
          country to accept service of a summons and complaint and 
          any other required documents against that renter when the 
          renter purchases liability insurance as defined in 
          Insurance Code Section 1758.85.

          This bill requires the rental car company, if served as set 
          forth in this bill, to accept service of a summons and 
          complaint and any other required documents against the 

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          foreign renter for any accident or collision resulting from 
          the operation of the rental vehicle within California 
          during the rental period.

          This bill requires the rental car company, within 30 days 
          of acceptance of service of process, to provide a copy of 
          the summons and complaint and any other required documents 
          to the foreign renter by first class mail, return receipt 
          requested. 

          This bill specifies that, if the rental car company has a 
          registered agent for service of process on file with the 
          Secretary of State, process shall be served on the rental 
          company's registered agent, either by first class mail, 
          return receipt requested, or by personal service. 

          This bill provides that a plaintiff who elects to serve a 
          foreign renter by delivering a copy of the summons and 
          complaint and any other required documents to the rental 
          car company as provided by this bill shall agree to limit 
          his/her recovery against the foreign renter and the rental 
          car company to the limits of the protection extended by the 
          liability insurance.

          This bill sunsets on January 1, 2015.

           Background
           
          Existing law provides that in certain instances an 
          individual is deemed to have consented to the appointment 
          of another entity to serve as his/her agent for service of 
          process.  For example, under the Vehicle Code, out-of-state 
          drivers impliedly consent to the appointment of the DMV's 
          director as their agent for service of process in any 
          action against that nonresident driver for injuries caused 
          by an accident or collision.  Similarly, this bill, 
          sponsored by the Consumer Attorneys of California, requires 
          a rental car company to accept service of process for 
          out-of-country renters when those renters purchase 
          liability insurance as a part of the vehicle rental 
          agreement.  This bill is nearly identical to last year's AB 
          2059 (Calderon), 2009-10 Session, which was vetoed by 
          Governor Schwarzenegger.


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           Prior Legislation
           
          AB 2059 (Calderon), 2009-10 Session, passed the Senate 
          (24-12) on August 31, 2010.  As noted in the Background, 
          this bill is nearly identical to AB 2059.  The bill was 
          vetoed by Governor Schwarzenegger who stated:

            "This bill provides a mechanism for service of legal 
            process on non-residents who cause injuries involving 
            rental cars in California, by allowing process to be 
            served to the rental company.  While I appreciate the 
            challenging nature of serving process on people who live 
            out of the country, it does not seem reasonable or 
            justified to simply shift that burden from the plaintiff 
            to the rental car company."

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   
          Local:  No

           SUPPORT  :   (Verified  9/8/11)

          Consumer Attorneys of California (source)
          Consumer Federation of California


           ARGUMENTS IN SUPPORT  :    The author's office and this 
          bill's sponsors assert that this bill is necessary because 
          "Ýs]ervice of process on out of country defendants is 
          complicated, expensive, and difficult as (1) the onerous 
          provisions of the Hague Convention of 1965 On the Service 
          Abroad of Judicial and Extrajudicial Documents in Civil or 
          Commercial Matters must be met; (2) not all countries have 
          agreed to the Hague Convention; (3) the paperwork must be 
          translated into the language of the defendant; and (4) a 
          service processor must be located."  Legal commentators 
          have also noted the complexity of serving international 
          defendants.  


           ASSEMBLY FLOOR  :  47-25, 4/7/11
          AYES:  Alejo, Allen, Ammiano, Atkins, Beall, Block, 
            Blumenfield, Bonilla, Bradford, Brownley, Buchanan, 
            Butler, Charles Calderon, Campos, Carter, Cedillo, 
            Chesbro, Davis, Dickinson, Eng, Feuer, Fong, Fuentes, 

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            Gatto, Gordon, Hall, Hayashi, Roger Hernández, Hill, 
            Huber, Hueso, Huffman, Lara, Ma, Mendoza, Monning, Pan, 
            Perea, V. Manuel Pérez, Skinner, Solorio, Swanson, 
            Torres, Wieckowski, Williams, Yamada, John A. Pérez
          NOES:  Achadjian, Bill Berryhill, Conway, Cook, Donnelly, 
            Fletcher, Garrick, Grove, Hagman, Halderman, Harkey, 
            Jeffries, Jones, Knight, Logue, Mansoor, Miller, 
            Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao, 
            Wagner
          NO VOTE RECORDED:  Furutani, Galgiani, Gorell, Bonnie 
            Lowenthal, Mitchell, Morrell, Portantino, Vacancy


          RJG:kc  9/8/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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