Amended in Senate June 15, 2014

Amended in Assembly May 19, 2014

Amended in Assembly May 13, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1858

Introduced by Assembly Member Perea

February 19, 2014

An act to amend Section 9503 of begin insert , and to add Chapter 9 (commencing with Section 9901) to Division 9 of, end insert the Commercial Code, relating to secured transactions.

LEGISLATIVE COUNSEL’S DIGEST

AB 1858, as amended, Perea. Commercial law: secured transactions.

The Uniform Commercial Code - Secured Transactions governs security interests in collateral, including personal property and fixtures, as well as certain sales of accounts, contract rights, and chattel paper. That code, among other things, specifies requirements and procedures regarding perfecting a security interest, including the filing of a financing statement with the Secretary of State. Existing law specifies that a financing statement sufficiently provides the name of a debtor, where the debtor is an individual, if it provides the individual name of the debtor or the surname and first personal name of the debtor.

This bill would revise the manner in which a financing statement sufficiently provides the name of the debtor, where that debtor is an individual, to provide that, where the Department of Motor Vehicles has issued a driver’s license that has not expired or identification card that has not expired to the individual, the statement sufficiently provides the name of the debtor only if the statement provides the name of the individual indicated on the license or card and, if the individual has not been issued a driver’s license or identification card, the statement sufficiently provides the name of the debtor if it provides the individual name of the debtor or the surname and first personal name of the debtor. begin insert The bill would also implement transitional rules for carrying out these provisions. end insert

Existing provisions of the Unruh Civil Rights Act, with certain exceptions, prohibit various forms of arbitrary discrimination by business establishments.

This bill would make it a violation of the Unruh Civil Rights Act for a secured party or proposed secured party to decline to provide credit to a debtor or proposed debtor, or offer to make the terms and conditions of such credit less favorable to the debtor or proposed debtor, if that decision was based on the fact that the debtor’s name to be included on the financing statement is or would be that provided by a debtor to whom the Department of Motor Vehicles has not issued a driver’s license that has not expired or an identification card that has not expired and all elements that would be required to establish a claim for violation of the Unruh Civil Rights Act are established.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 9503 of the Commercial Code, as
amended by Section 16 of Chapter 531 of the Statutes of 2013, is
amended to read:

9503.  

(a) A financing statement sufficiently provides the name
of the debtor only if it does so in accordance with the following
rules:

(1) Except as otherwise provided in paragraph (3), if the debtor
is a registered organization or the collateral is held in a trust that
is a registered organization, only if the financing statement provides
the name that is stated to be the registered organization’s name on
the public organic record most recently filed with or issued or
enacted by the registered organization’s jurisdiction of organization
which purports to state, amend, or restate the registered
organization’s name.

(2) Subject to subdivision (f), if the collateral is being
administered by the personal representative of a decedent, only if
the financing statement provides, as the name of the debtor, the
name of the decedent and, in a separate part of the financing
statement, indicates that the collateral is being administered by a
personal representative.

(3) If the collateral is held in a trust that is not a registered
organization, only if the financing statement satisfies both of the
following conditions:

(A) Provides, as the name of the debtor, either of the following:

(i) If the organic record of the trust specifies a name for the
trust, the name specified.

(ii) If the organic record of the trust does not specify a name
for the trust, the name of the settlor or testator.

(B) In a separate part of the financing statement, the following
information is provided, as applicable:

(i) If the name is provided in accordance with clause (i) of
subparagraph (A), the financing statement indicates that the
collateral is held in a trust.

(ii) If the name is provided in accordance with clause (ii) of
subparagraph (A), the financing statement provides additional
information sufficient to distinguish the trust from other trusts
having one or more of the same settlors or the same testator and
indicates that the collateral is held in a trust, unless the additional
information so indicates.

(4) Subject to subdivision (g), if the debtor is an individual to
whom the Department of Motor Vehicles has issued a driver’s
license that has not expired or an identification card that has not
expired, only if the financing statement provides the name of the
individual indicated on that driver’s license or identification card.

(5) If debtor is an individual to whom paragraph (4) does not
apply, only if the financing statement provides the individual name
of the debtor or the surname and first personal name of the debtor.

(6) In other cases, according to the following rules:

(A) If the debtor has a name, only if the financing statement
provides the organizational name of the debtor.

(B) If the debtor does not have a name, only if the financing
statement provides the names of the partners, members, associates,
or other persons comprising the debtor, in a manner that each name
provided would be sufficient if the person named were the debtor.

(7) Subject to the last sentence of this paragraph, it is a violation
of Section 51 of the Civil Code for a secured party or proposed
secured party to decline to provide credit to a debtor or proposed
debtor, or offer to make the terms and conditions of the credit less
favorable to the debtor or proposed debtor if (A) that decision was
based on the fact that the debtor’s name to be included on the
financing statement is or would be that provided under paragraph
(5) rather than under paragraph (4), and (B) all elements that would
be required to establish a claim for violation of Section 51
(including any elements relating to motivation or state of mind)
are established. Any affirmative defenses that would be available
to a claim under Section 51 would be affirmative defenses to a
claim under this paragraph.

(b) A financing statement that provides the name of the debtor
in accordance with subdivision (a) is not rendered ineffective by
the absence of either of the following:

(1) A trade name or other name of the debtor.

(2) Unless required under subparagraph (B) of paragraph (6) of
subdivision (a), names of partners, members, associates, or other
persons comprising the debtor.

(c) A financing statement that provides only the debtor’s trade
name does not sufficiently provide the name of the debtor.

(d) Failure to indicate the representative capacity of a secured
party or representative of a secured party does not affect the
sufficiency of a financing statement.

(e) A financing statement may provide the name of more than
one debtor and the name of more than one secured party.

(f) The name of the decedent indicated on the order appointing
the personal representative of the decedent issued by the court
having jurisdiction over the collateral is sufficient as the “name
of the decedent” under paragraph (2) of subdivision (a).

(g) If the Department of Motor Vehicles has issued to an
individual more than one driver’s licenses or identification cards
of a kind described in paragraph (4) of subdivision (a), paragraph
(4) of subdivision (a) refers to the most recently issued license or
card.

(h) For purposes of this section:

(1) “Driver’s license” includes a driver’s license issued pursuant
to subdivision (a) of Section 12801.9 of the Vehicle Code.

(2) “Name of the settlor or testator” means either of the
following:

(A) If the settlor is a registered organization, the name that is
stated to be the settlor’s name on the public organic record most
recently filed with or issued or enacted by the settlor’s jurisdiction
of organization which purports to state, amend, or restate the
settlor’s name.

(B) In other cases, the name of the settlor or testator indicated
in the trust’s organic record.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Chapter 9 (commencing with Section 9901) is added
to Division 9 of the end insert begin insert Commercial Code end insert begin insert , to read: end insert

begin insert

 

Chapter   begin insert 9. end insert Transition Provisions for 2014 Amendments

 

begin insert 9901. end insert   

(a) The changes to this division made by the act adding
this chapter become operative on January 1, 2015.

(b) This chapter applies to a security interest only to the extent
that, with respect to such security interest, both of the following
apply:

(1) A debtor is an individual.

(2) A financing statement filed before January 1, 2015, provides
the name of an individual as a debtor.

(c) If a security interest is within the scope of Chapter 8
(commencing with Section 9801), that chapter continues to apply.
To the extent there is a conflict between Chapter 8 (commencing
with Section 9801) and this chapter, this chapter governs.

begin insert 9902. end insert   

(a) Except as otherwise provided in this chapter, the
changes to this division made by the act adding this chapter apply
to a transaction or lien within its scope, even if the transaction or
lien was entered into or created before January 1, 2015.

(b) The changes to this division made by the act adding this
chapter do not affect an action, case, or proceeding commenced
before January 1, 2015.

(c) Paragraph (7) of subdivision (a) of Section 9503, as added
by the act adding this chapter, applies only with respect to events
occurring on or after January 1, 2015.

begin insert 9903. end insert   

A security interest that is a perfected security interest
immediately before January 1, 2015, is a perfected security interest
under this division as amended by this act if, as of January 1, 2015,
the applicable requirements for attachment and perfection under
this division as of that date are satisfied without further action.

begin insert 9904. end insert   

A security interest that is an unperfected security interest
immediately before January 1, 2015, becomes a perfected security
interest as follows:

(a) Without further action, on January 1, 2015, if the applicable
requirements for perfection under this division as amended by this
act are satisfied before or at that time.

(b) When the applicable requirements for perfection are satisfied
if the requirements are satisfied after that time.

begin insert 9905. end insert   

(a) The filing of a financing statement before January
1, 2015, is effective to perfect a security interest to the extent the
filing would satisfy the applicable requirements for perfection
under this division as amended by this act.

(b) The changes to this division made by the act adding this
chapter do not render ineffective an effective financing statement
that, before January 1, 2015, is filed and satisfies the applicable
requirements for perfection under this division (including giving
effect to Chapter 8 (commencing with Section 9801)) as it existed
before giving effect to the changes to this division made by the act
adding this chapter. However, except as otherwise provided in
subdivision (c), the financing statement ceases to be effective at
the time the financing statement would have ceased to be effective
had the changes to this division made by the act adding this chapter
not become effective and operative.

(c) The timely filing of a continuation statement on or after
January 1, 2015, continues the effectiveness of a financing
statement filed before January 1, 2015, if the financing statement
(including any amendments) contains the name of the debtor in
accordance with the requirements of Chapter 5 (commencing with
Section 9501) as amended by the act adding this chapter for an
initial financing statement.

(d) A financing statement (including any amendments) that
includes a financing statement filed before January 1, 2015, and
a continuation statement filed after January 1, 2015, is effective
only to the extent that they satisfy the requirements of Chapter 5
(commencing with Section 9501) as amended by the act adding
this chapter for an initial financing statement.

begin insert 9906. end insert   

A person may file an initial financing statement or a
continuation statement under this chapter if the following
conditions are satisfied:

(a) The secured party of record authorizes the filing.

(b) The filing is necessary under this division to accomplish
either of the following:

(1) To continue the effectiveness of a financing statement filed
before January 1, 2015.

(2) To perfect or continue the perfection of a security interest.

begin insert 9907. end insert   

The changes to this division made by the act adding this
chapter determine the priority of conflicting claims to the
collateral. However, if the relative priorities of the claims were
established before those changes become effective and operative
on January 1, 2015, this division as it existed before those changes
become effective and operative determines priority.

end insert