Amended in Senate July 1, 2014

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 BillNo. 1858


Introduced by Assembly Member Perea

February 19, 2014


An act to amend Section 9503 of, and to add Chapter 9 (commencing with Section 9901) to Division 9 of, 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. The bill would also implement transitional rules for carrying out these provisions.

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:

P2    1

SECTION 1.  

Section 9503 of the Commercial Code, as
2amended by Section 16 of Chapter 531 of the Statutes of 2013, is
3amended to read:

4

9503.  

(a) A financing statement sufficiently provides the name
5of the debtor only if it does so in accordance with the following
6rules:

7(1) Except as otherwise provided in paragraph (3), if the debtor
8is a registered organization or the collateral is held in a trust that
9is a registered organization, only if the financing statement provides
10the name that is stated to be the registered organization’s name on
11the public organic record most recently filed with or issued or
12enacted by the registered organization’s jurisdiction of organization
13which purports to state, amend, or restate the registered
14organization’s name.

P3    1(2) Subject to subdivision (f), if the collateral is being
2administered by the personal representative of a decedent, only if
3the financing statement provides, as the name of the debtor, the
4name of the decedent and, in a separate part of the financing
5statement, indicates that the collateral is being administered by a
6personal representative.

7(3) If the collateral is held in a trust that is not a registered
8organization, only if the financing statement satisfies both of the
9following conditions:

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

11(i) If the organic record of the trust specifies a name for the
12trust, the name specified.

13(ii) If the organic record of the trust does not specify a name
14for the trust, the name of the settlor or testator.

15(B) In a separate part of the financing statement, the following
16information is provided, as applicable:

17(i) If the name is provided in accordance with clause (i) of
18subparagraph (A), the financing statement indicates that the
19collateral is held in a trust.

20(ii) If the name is provided in accordance with clause (ii) of
21subparagraph (A), the financing statement provides additional
22information sufficient to distinguish the trust from other trusts
23having one or more of the same settlors or the same testator and
24indicates that the collateral is held in a trust, unless the additional
25information so indicates.

26(4) Subject to subdivision (g), if the debtor is an individual to
27whom the Department of Motor Vehicles has issued a driver’s
28license that has not expired or an identification card that has not
29expired, only if the financing statement provides the name of the
30individual indicated on that driver’s license or identification card.

31(5) If debtor is an individual to whom paragraph (4) does not
32apply, only if the financing statement provides the individual name
33of the debtor or the surname and first personal name of the debtor.

34(6) In other cases, according to the following rules:

35(A) If the debtor has a name, only if the financing statement
36provides the organizational name of the debtor.

37(B) If the debtor does not have a name, only if the financing
38statement provides the names of the partners, members, associates,
39or other persons comprising the debtor, in a manner that each name
40provided would be sufficient if the person named were the debtor.

P4    1(7) Subject to thebegin delete lastend deletebegin insert following end insert sentence of this paragraph, it
2is a violation of Section 51 of the Civil Code for a secured party
3or proposed secured party to decline to provide credit to a debtor
4or proposed debtor, or offer to make the terms and conditions of
5the credit less favorable to the debtor or proposed debtor if (A)
6that decision was based on the fact that the debtor’s name to be
7included on the financing statement is or would be that provided
8under paragraph (5) rather than under paragraph (4), and (B) all
9elements that would be required to establish a claim for violation
10of Section 51begin delete (including any elements relating to motivation or
11state of mind)end delete
begin insert of the Civil Codeend insert are established. Any affirmative
12defenses that would be available to a claim under Section 51begin insert of
13the Civil Codeend insert
would be affirmative defenses to a claim under this
14paragraph.begin insert Nothing in this paragraph shall be construed to alter,
15 expand, limit, or negate any other rights, defenses, or remedies
16under Section 51 of the Civil Code.end insert

17(b) A financing statement that provides the name of the debtor
18in accordance with subdivision (a) is not rendered ineffective by
19the absence of either of the following:

20(1) A trade name or other name of the debtor.

21(2) Unless required under subparagraph (B) of paragraph (6) of
22subdivision (a), names of partners, members, associates, or other
23persons comprising the debtor.

24(c) A financing statement that provides only the debtor’s trade
25name does not sufficiently provide the name of the debtor.

26(d) Failure to indicate the representative capacity of a secured
27party or representative of a secured party does not affect the
28sufficiency of a financing statement.

29(e) A financing statement may provide the name of more than
30one debtor and the name of more than one secured party.

31(f) The name of the decedent indicated on the order appointing
32the personal representative of the decedent issued by the court
33having jurisdiction over the collateral is sufficient as the “name
34of the decedent” under paragraph (2) of subdivision (a).

35(g) If the Department of Motor Vehicles has issued to an
36individual more than one driver’s licenses or identification cards
37of a kind described in paragraph (4) of subdivision (a), paragraph
38(4) of subdivision (a) refers to the most recently issued license or
39card.

40(h) For purposes of this section:

P5    1(1) “Driver’s license” includes a driver’s license issued pursuant
2to subdivision (a) of Section 12801.9 of the Vehicle Code.

3(2) “Name of the settlor or testator” means either of the
4following:

5(A) If the settlor is a registered organization, the name that is
6stated to be the settlor’s name on the public organic record most
7recently filed with or issued or enacted by the settlor’s jurisdiction
8of organization which purports to state, amend, or restate the
9settlor’s name.

10(B) In other cases, the name of the settlor or testator indicated
11in the trust’s organic record.

12

SEC. 2.  

Chapter 9 (commencing with Section 9901) is added
13to Division 9 of the Commercial Code, to read:

14 

15Chapter  9. Transition Provisions for 2014 Amendments
16

 

17

9901.  

(a) The changes to this division made by the act adding
18this chapter become operative on January 1, 2015.

19(b) This chapter applies to a security interest only to the extent
20that, with respect to such security interest, both of the following
21apply:

22(1) A debtor is an individual.

23(2) A financing statement filed before January 1, 2015, provides
24the name of an individual as a debtor.

25(c) If a security interest is within the scope of Chapter 8
26(commencing with Section 9801), that chapter continues to apply.
27To the extent there is a conflict between Chapter 8 (commencing
28with Section 9801) and this chapter, this chapter governs.

29

9902.  

(a) Except as otherwise provided in this chapter, the
30changes to this division made by the act adding this chapter apply
31to a transaction or lien within its scope, even if the transaction or
32lien was entered into or created before January 1, 2015.

33(b) The changes to this division made by the act adding this
34chapter do not affect an action, case, or proceeding commenced
35before January 1, 2015.

begin delete

36(c) Paragraph (7) of subdivision (a) of Section 9503, as added
37by the act adding this chapter, applies only with respect to events
38occurring on or after January 1, 2015.

end delete
39

9903.  

A security interest that is a perfected security interest
40immediately before January 1, 2015, is a perfected security interest
P6    1under this division as amended by this act if, as of January 1, 2015,
2the applicable requirements for attachment and perfection under
3this division as of that date are satisfied without further action.

4

9904.  

A security interest that is an unperfected security interest
5immediately before January 1, 2015, becomes a perfected security
6interest as follows:

7(a) Without further action, on January 1, 2015, if the applicable
8requirements for perfection under this division as amended by this
9act are satisfied before or at that time.

10(b) When the applicable requirements for perfection are satisfied
11if the requirements are satisfied after that time.

12

9905.  

(a) The filing of a financing statement before January
131, 2015, is effective to perfect a security interest to the extent the
14filing would satisfy the applicable requirements for perfection
15under this division as amended by this act.

16(b) The changes to this division made by the act adding this
17chapter do not render ineffective an effective financing statement
18that, before January 1, 2015, is filed and satisfies the applicable
19requirements for perfection under this division (including giving
20effect to Chapter 8 (commencing with Section 9801)) as it existed
21before giving effect to the changes to this division made by the
22act adding this chapter. However, except as otherwise provided in
23subdivision (c), the financing statement ceases to be effective at
24the time the financing statement would have ceased to be effective
25had the changes to this division made by the act adding this chapter
26not become effective and operative.

27(c) The timely filing of a continuation statement on or after
28January 1, 2015, continues the effectiveness of a financing
29statement filed before January 1, 2015, if the financing statement
30(including any amendments) contains the name of the debtor in
31accordance with the requirements of Chapter 5 (commencing with
32Section 9501) as amended by the act adding this chapter for an
33initial financing statement.

34(d) A financing statement (including any amendments) that
35includes a financing statement filed before January 1, 2015, and
36a continuation statement filed after January 1, 2015, is effective
37only to the extent that they satisfy the requirements of Chapter 5
38(commencing with Section 9501) as amended by the act adding
39this chapter for an initial financing statement.

P7    1

9906.  

A person may file an initial financing statement or a
2continuation statement under this chapter if the following
3conditions are satisfied:

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

5(b) The filing is necessary under this division to accomplish
6either of the following:

7(1) To continue the effectiveness of a financing statement filed
8before January 1, 2015.

9(2) To perfect or continue the perfection of a security interest.

10

9907.  

The changes to this division made by the act adding this
11chapter determine the priority of conflicting claims to the collateral.
12However, if the relative priorities of the claims were established
13before those changes become effective and operative on January
141, 2015, this division as it existed before those changes become
15effective and operative determines priority.



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