Senate Bill No. 363

Introduced by Senator Morrell

(Coauthors: Senators Anderson and Gaines)

February 24, 2015

An act to amend Section 1717.5 of the Civil Code, relating to attorney’s fees.

LEGISLATIVE COUNSEL’S DIGEST

SB 363, as introduced, Morrell. Attorney’s fees: book accounts.

Under existing law, in any action on a contract based on a book account, as defined, that does not provide for attorney’s fees and costs, the prevailing party on the contract is entitled to reasonable attorney’s fees and costs, and the court is required to fix the attorney’s fees in an amount that does not exceed the lesser of $800 for book accounts that are maintained for personal, family, or household purposes of a natural person, and $1,000 for book accounts that are maintained for all other purposes, or 25% of the principal obligation owing on the contract, as applicable.

This bill would increase these maximum attorneys fees to an amount not to exceed the lesser of $960 for book accounts that are maintained for personal, family, or household purposes of a natural person, and $1,200 for book accounts that are maintained for all other purposes, or 25% of the principal obligation owing on the contract, as applicable.

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 1717.5 of the Civil Code is amended to
read:

1717.5.  

(a) Except as otherwise provided by law or where
waived by the parties to an agreement, in any action on a contract
based on a book account, as defined in Section 337a of the Code
of Civil Procedure, entered into on or after January 1, 1987, which
does not provide for attorney’s fees and costs, as provided in
Section 1717, the party who is determined to be the party prevailing
on the contract shall be entitled to reasonable attorney’s fees, as
provided below, in addition to other costs. The prevailing party
on the contract shall be the party who recovered a greater relief in
the action on the contract. The court may determine that there is
no party prevailing on the contract for purposes of this section.

Reasonable attorney’s fees awarded pursuant to this section for
the prevailing party bringing the action on the book account shall
be fixed by the court in an amount that shall not exceed the lesser
of: (1) begin delete eight hundred dollars ($800) end delete begin insert nine hundred sixty dollars
($960) end insert for book accounts based upon an obligation owing by a
natural person for goods, moneys, or services which were primarily
for personal, family, or household purposes; and one thousand
begin delete dollars ($1,000) end delete begin insert two hundred dollars ($1,200) end insert for all other book
accounts to which this section applies; or (2) 25 percent of the
principal obligation owing under the contract.

For the party against whom the obligation on the book account
was asserted in the action subject to this section, if that party is
found to have no obligation owing on a book account, the court
shall award that prevailing party reasonable attorney’s fees not to
exceed begin delete eight hundred dollars ($800) end delete begin insert nine hundred sixty dollars
($960) end insert for book accounts based upon an obligation owing by a
natural person for goods, moneys, or services which were primarily
for personal, family, or household purposes, and one thousand
begin delete dollars ($1,000) end delete begin insert two hundred dollars ($1,200) end insert for all other book
accounts to which this section applies. These attorney’s fees shall
be an element of the costs of the suit.

If there is a written agreement between the parties signed by the
person to be charged, the fees provided by this section may not be
imposed unless that agreement contains a statement that the
prevailing party in any action between the parties is entitled to the
fees provided by this section.

(b) The attorney’s fees allowed pursuant to this section shall be
the lesser of either the maximum amount allowed by this section,
the amount provided by any default attorney’s fee schedule adopted
by the court applicable to the suit, or an amount as otherwise
provided by the court. Any claim for attorney’s fees pursuant to
this section in excess of the amounts set forth in the default
attorney’s fee schedule shall be reasonable attorney’s fees, as
proved by the party, as actual and necessary for the claim that is
subject to this section.

(c) This section does not apply to any action in which an
insurance company is a party nor shall an insurance company,
surety, or guarantor be liable under this section, in the absence of
a specific contractual provision, for the attorney’s fees and costs
awarded a prevailing party against its insured.

This section does not apply to any action in which a bank, a
savings association, a federal association, a state or federal credit
union, or a subsidiary, affiliate, or holding company of any of those
entities, or an authorized industrial loan company, a licensed
consumer finance lender, or a licensed commercial finance lender,
is a party.