BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
AB 1267 (Bloom)
Version: April 27, 2015
Hearing Date: June 16, 2015
Fiscal: No
Urgency: No
TH
SUBJECT
Lawsuits, liens, and other encumbrances
DESCRIPTION
This bill would prohibit a person from filing or recording a
lawsuit, lien, or other encumbrance against any person or
entity, knowing that it is false, with the intent to harass the
person or entity or, in the case of a public officer or
employee, to influence or hinder the person in discharging his
or her official duties. This bill would authorize a court to
issue a civil penalty not to exceed $5,000 for violating the
prohibition, and would allow any person or entity subject to a
lien or other encumbrance filed or recorded in violation of the
prohibition to petition the superior court for an order
directing the claimant to show cause why the lien or other
encumbrance should not be stricken and other relief should not
be granted.
BACKGROUND
According to a report by the Senate Office of Research from
September of 1997, anti-government extremists are engaging in
"paper terrorism" by filing false liens and other encumbrances
on the property of government agencies, public officers, and
public employees. One anti-government ideology in particular -
known as the "sovereign citizen" movement - employs this tactic
frequently as a way to retaliate against perceived injustices.
A recent New York Times article states:
Sovereign citizens believe that in the 1800s, the federal
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government was gradually subverted and replaced by an
illegitimate government. They create their own driver's
licenses and include their thumbprints on documents to
distinguish their flesh and blood person from a "straw man"
persona that they say has been created by the false
government. When writing their names, they often add
punctuation marks like colons or hyphens. Adherents to the
movement have been involved in a host of debt evasion schemes
and mortgage and tax frauds. (Erica Goode, In Paper War,
Flood of Liens Is the Weapon, New York Times (Aug. 23, 2013)
[as of June 10, 2015].)
In 1998, the Legislature passed SB 1759 (Ayala, Ch. 779, Stats.
1998) and SB 2154 (Schiff, Ch. 211, Stats. 1998), which
specifically prohibited the filing of false liens, encumbrances,
or lawsuits against public officials with the intent to harass
them or hinder the discharge of their duties. These bills also
enacted a fast-track process by which public officials could
petition the superior court for an order directing the claimant
to show cause why their lien or other encumbrance should not be
stricken, and to receive a hearing on the court's show cause
order no earlier than 14 days.
This bill would expand and recast the prohibition on filing
false liens, encumbrances, or lawsuits to include all persons or
entities, and would expand the fast-track process to allow any
aggrieved party against whom these false lawsuits, liens, or
other encumbrances have been filed to receive a hearing before a
court no earlier than 14 days of the court issuing a show cause
order.
CHANGES TO EXISTING LAW
Existing federal law provides that whoever files, attempts to
file, or conspires to file, in any public record or in any
private record which is generally available to the public, any
false lien or encumbrance against the real or personal property
of an officer or employee of the United States or of any agency
in any branch of the United States Government, as specified, on
account of the performance of official duties by that
individual, knowing or having reason to know that such lien or
encumbrance is false or contains any materially false,
fictitious, or fraudulent statement or representation, shall be
fined or imprisoned for not more than 10 years, or both. (18
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U.S.C. Sec. 1521.)
Existing law provides that every person who knowingly procures
or offers any false or forged instrument to be filed,
registered, or recorded in any public office within this state,
which instrument, if genuine, might be filed, registered, or
recorded under any law of this state or of the United States, is
guilty of a felony. (Pen. Code. Sec. 115(a).)
Existing law authorizes the awarding of sanctions against a
party who, when filing a pleading, petition, written notice of
motion, or other similar paper with a court, falsely certifies
that, among other things, the filing is not being presented
primarily for an improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of
litigation. (Code Civ. Proc. Sec. 128.7.)
Existing law provides that a county recorder shall not refuse to
record any instrument, paper, or notice that is authorized or
required by statute, court order, or local ordinance that
relates to the recordation of any instrument, paper, or notice
that relates to real property to be recorded on the basis of its
lack of legal sufficiency. (Gov. Code Sec. 27201(a).)
Existing law states that no person shall file or record a
lawsuit, lien, or other encumbrance, including, but not limited
to, a notice of lis pendens, against a public officer or
employee, knowing it is false, with the intent to harass the
officer or employee or to influence or hinder the public officer
or employee in discharging his or her official duties. Existing
law specifies that this prohibition applies only to lawsuits,
liens, or other encumbrances pertaining to actions that arise in
the course and scope of the public officer's or employee's
duties, and that a person who knowingly records or files, or
directs another to record or file, a lawsuit, lien, or
encumbrance in violation of this prohibition shall be liable for
a civil penalty not to exceed five thousand dollars ($5,000).
(Gov. Code Sec. 6223.)
Existing law provides that a public officer or employee whose
property is subject to a lien or other encumbrance in violation
of the above provision may petition the superior court of the
county in which the person resides or in which the property is
located for an order, which may be granted ex parte, directing
the lien or other encumbrance claimant to appear at a hearing
before the court and show cause why the lien or other
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encumbrance should not be stricken and other relief should not
be granted, as specified. Existing law states that the court
shall schedule the hearing no earlier than 14 days after the
date of the order. (Code Civ. Proc. Sec. 765.010.)
Existing law provides that if the court determines that the lien
or other encumbrance is in violation of the above prohibition,
the court shall issue an order striking and releasing the lien
or other encumbrance and may award costs and reasonable attorney
fees to the petitioner to be paid by the lien or other
encumbrance claimant. Existing law states that if the court
determines that the lien or other encumbrance is valid, the
court shall issue an order so stating and may award costs and
reasonable attorney fees to the encumbrance claimant to be paid
by the petitioner. (Code Civ. Proc. Sec. 765.030.)
Existing law provides that any lien or encumbrance claimant who
records or files, or directs another to record or file, a lien
or other encumbrance in violation of the above prohibition shall
be liable to the owner of the property bound by the lien or
other encumbrance for a civil penalty of up to five thousand
dollars ($5,000). (Code Civ. Proc. Sec. 765.040.)
Existing law states that if a lien or other encumbrance is
recorded or filed in violation of the above prohibition, the
state or local agency that employs the public officer or
employee may provide counsel for the public officer or employee
in an action brought under these procedures. (Code Civ. Proc.
Sec. 765.060.)
This bill would recast and expand the above provisions to state
that a person shall not file or record, or direct another to
file or record, a lawsuit, lien, or other encumbrance, including
a notice of lis pendens, against another person or entity
knowing it is false, with the intent to harass the person or
entity or to influence or hinder the person in discharging his
or her official duties if the person is a public officer or
employee.
This bill would provide that a person or entity whose property
is subject to a lien or encumbrance in violation of the above
provision may petition the superior court of the county in which
the person or entity resides or in which the property is located
for an order, which may be granted ex parte, directing the lien
or other encumbrance claimant to appear at a hearing before the
court and show cause why the lien or other encumbrance should
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not be stricken and other specified relief should not be
granted.
This bill would specify that the court shall schedule the
hearing no earlier than 14 days after the date of the order, and
that the scheduled date of the hearing shall allow adequate time
for notice of the hearing.
This bill would define "harass" to mean engaging in knowing and
willful conduct that serves no legitimate purpose, and "entity"
to mean both government and private entities.
This bill would make other technical and conforming changes.
COMMENT
1.Stated need for the bill
The author writes:
The sovereign citizen movement is an extreme anti-government
movement whose members believe our government has no authority
or jurisdiction over them and that they do not need to obey
its laws and regulations. The movement dates back to 1970 but
has had a surge of popularity since 2009, accompanied by a
wide range of criminal activity that includes violence, scams
and frauds.
One of the most popular sovereign citizen tactics is known as
paper terrorism, which refers to the use of bogus legal
documents and filings, or the misuse of legitimate ones, in
order to intimidate, harass, threaten, or retaliate against
public officials, law enforcement officers, or private
individuals. Acts of paper terrorism can range from simple
and straightforward filings, such as frivolous lawsuits, to
more complex strategies, such as filing IRS forms that
fraudulently allege victims have been paid large sums of money
on which they declared no taxes. The most popular paper
terrorism tactic is the use of bogus liens or other documents
to cloud title to property owned by victims. Whatever the
ploy, the result creates serious legal and financial problems
for those targeted.
The goal of AB 1267 is to further protect Californians from
paper terrorism by strengthening already existing laws . . .
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California law already protects public officers and employees
who are targeted by these false encumbrances by allowing them
to utilize a fast track removal process. AB 1267 extends such
protection to individuals and businesses so they may all use
this expedient process. When public officers and employees
are targeted by a false encumbrance, they are entitled to seek
civil remedies (up to $5000). AB 1267 permits individuals and
businesses to also pursue these remedies.
The sponsor, Anti-Defamation League (ADL), states:
Although the ADL is encouraged by the positive steps the State
of California has already taken to fortify existing paper
terrorism protections, there is more to do. For instance,
California currently provides a fast track removal process and
civil remedies for false filings. These code sections,
however, only apply to public officers and employees, while
sovereign citizens also target others. AB 1267 expands these
protections to individuals - including the spouses and
relatives of public officers, as well as private citizens and
businesses. This bill will bring California in line with the
ten states that currently provide a fast track removal process
to individuals and businesses, and the twenty-five states that
provide civil remedies for false filings.
2.Expansion to Private Individuals and Entities
This bill would expand California's existing protections for
public officers and employees against the filing of false liens,
encumbrances, and lawsuits to all individuals and entities.
While the tactic of harassing individuals through these false
filings seems primarily directed toward public officials, some
reports indicate that retaliatory harassment of this kind is
occasionally directed against private individuals and entities.
For example, the Anti-Defamation League reports that false liens
have been used in the past by a disgruntled employee to harass
General Electric, and by disgruntled customers to harass banks
and lending institutions, title companies, and attorneys. (See
Mark Pitcavage, Paper Terrorism's Forgotten Victims: The Use of
Bogus Liens Against Private Individuals and Businesses (Jun. 29,
1998) [as of June
10, 2015].) By explicitly prohibiting the filing of false liens
and encumbrances with intent to harass any individual or entity,
and allowing a court to award a $5,000 civil penalty per
violation against infringers, this bill's provision could
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further deter individuals who may consider engaging in this form
of harassment. Additionally, expanding the fast track removal
process currently reserved for public officers and employees to
all victims of this form of harassment will likely help victims
quickly clear up questionable liens that harm the marketability
of their property.
3.Impact to Judicial Resources
It is unclear whether expanding the fast track removal process
to all parties would impose a significant additional burden on
judicial resources. Pursuant to this bill, the court must
schedule a hearing no earlier than 14 days from an order
requiring the claimant (person filing the lien on the property)
to appear before the court and show cause why the lien should
not be stricken. Although the net effect of this bill would be
to require courts to order additional hearings - it is unclear
how many hearings would actually be ordered. Based on media
reports regarding the filing of false liens and encumbrances, it
appears that the majority of these filings are directed at
public officials, not private individuals and entities. As
such, the expansion of the fast track process proposed in this
bill may not have a significant impact on the courts. However,
if such fraudulent filings are underreported or if the tactics
of individuals engaged in such campaigns of harassment change,
the impact to judicial resources could be more substantial.
Support : California District Attorneys Association; California
Police Chiefs Association; CSAC Excess Insurance Authority
Opposition : None Known
HISTORY
Source : Anti-Defamation League
Related Pending Legislation : None Known
Prior Legislation :
SB 346 (Dutton, 2007) would have prohibited a person from filing
a lien or other encumbrance without providing evidence to a
recording clerk of the pendency of an action or the issuance of
a judgment upon which the lien is based, and would have required
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the Secretary of State to revise the Uniform Commercial Code
Financing Statement (UCC-1) to require a lien claimant to attach
documentation sufficient to provide evidence of the pendency of
an action or the issuance of a judgment upon which the lien is
based, as specified. This bill died in the Senate Judiciary
Committee.
SB 1759 (Ayala, Ch. 779, Stats. 1998) modified the prohibitions
enacted in SB 2154 (Schiff, Ch. 211, Stats. 1998) to specify
that an encumbrance includes, but is not limited to, a notice of
lis pendens, and created an expedited action, filed pursuant to
a complaint form established by the Judicial Council, requesting
the striking or release of a lien or other encumbrance recorded
in violation of those prohibitions. This bill also prohibited
consumer credit reporting agencies from reporting a document
which acts as a lien or other encumbrance but which has together
with it a court order striking or releasing the lien or other
encumbrance, as specified.
SB 2154 (Schiff, Ch. 211, Stats. 1998) prohibited a person from
filing a lawsuit or recording or filing a lien or other
encumbrance, against a public officer or employee, knowing it is
false, with the intent to harass the officer or employee or
influence or hinder the public officer or employee in
discharging his or her official duties. This bill specified
that the above provision would apply only to lawsuits, liens, or
other encumbrances pertaining to actions that arise in the
course and scope of the public officer's or employee's duties,
and provided that a person who violates these provisions would
be liable for a civil penalty not to exceed $5,000.
Prior Vote :
Assembly Floor (Ayes 76, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
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