BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 363|
|Office of Senate Floor Analyses | |
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CONSENT
Bill No: SB 363
Author: Morrell (R), et al.
Introduced:2/24/15
Vote: 21
SENATE JUDICIARY COMMITTEE: 7-0, 5/12/15
AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning,
Wieckowski
SUBJECT: Attorneys fees: book accounts
SOURCE: California Association of Collectors
DIGEST: This bill increases the maximum attorney's fees, in any
action on a contract based on a book account, as defined, that
does not provide for attorney's fees and costs, to an amount not
to exceed (1) $960 for book accounts that are maintained for
personal, family, or household purposes of a natural person; and
(2) $1,200 for book accounts that are maintained for all other
purposes.
ANALYSIS:
Existing law:
1)Defines the term "book account" as a detailed statement which
constitutes the principal record of one or more transactions
between a debtor and a creditor arising out of a contract or
some fiduciary relation, and shows the debits and credits in
connection therewith, and against whom and in favor of whom
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entries are made, is entered in the regular course of business
as conducted by such creditor or fiduciary, and is kept in a
reasonably permanent form and manner and is (a) in a bound
book, or (b) on a sheet or sheets fastened in a book or to
backing but detachable therefrom, or (c) on a card or cards of
a permanent character, or is kept in any other reasonably
permanent form and manner.
2)Provides that in any action on a contract based on a book
account which does not provide for attorney's fees and costs,
the prevailing party is entitled to reasonable attorney's
fees, in addition to other costs. The prevailing party on the
contract is the party who recovered a greater relief in the
action on the contract.
3)Provides that reasonable attorney's fees awarded to the
prevailing party, as specified, shall be fixed by the court in
an amount that shall not exceed the lesser of: (a) $800 for
book accounts based on an obligation owed by a natural person
for goods, moneys, or services which were primarily for
personal, family, or household purposes; and $1,000 for all
other book accounts; or (b) 25 percent of the principal
obligation owing under the contract.
4)States that if there is a written agreement between the
parties signed by the person to be charged, the above fees may
not be imposed unless that agreement contains a statement that
the prevailing party in any action between the parties is
entitled to the above fees.
This bill increases the amounts of the above reasonable
attorney's fees for a prevailing party from $800 to $960 (for
book accounts based on an obligation owed by a natural person
for goods, moneys, or services which were primarily for
personal, family, or household purposes), and, from $1,000 to
$1,200 (for all other book accounts).
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Background
Originally enacted in 1986 by SB 1934 (Deddeh, Chapter 884,
Statutes of 1986), Civil Code Section 1717.5 provides for an
award of attorney's fees in contract actions based on a "book
account" in which the underlying contract did not provide for an
award of attorney's fees. Typically, "book accounts" include
such consumer billings as doctors' fees, lawyers' fees, and
grocery or restaurant charges that are not handled under formal
credit terms. Book accounts do not include retail installment
or credit card sales.
SB 1934 was sponsored by the California Association of
Collectors (CAC). CAC argued that the bill was needed because
the cost of collection actions to recover a delinquent debt was
prohibitive, particularly in small cases, in the absence of an
attorney's fee provision. SB 1934 provided a statutory
attorney's fee award of up to $500 or 25 percent of the
delinquent debt, whichever is less, to the prevailing creditor.
The law applied equally to allow a prevailing debtor to recover
up to $500 in attorney's fees.
In 1991, the $500 cap was increased to $660 by SB 182 (Lockyer,
Chapter 406, Statutes of 1991) primarily to reflect inflation.
The increase also served to allow collection agencies to recover
more of their collection costs. Similarly, in 2004, AB 2347
(Maddox, Chapter 328, Statutes of 2004) increased the maximum
awardable fee to a prevailing creditor or debtor in a collection
action to $800 for open book accounts that are maintained by a
natural person for personal, family, or household purposes, and
to a maximum of $1,000 for all other open book accounts. This
bill seeks to similarly increase the cap to reflect inflation,
thus, increasing the amounts to $960, and, $1,200, respectively.
Comments
The author writes, "[t]here have been substantial increases in
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the cost of filing civil cases in California, including
attorney's fees and filing fees. This bill simply provides a
modest increase in statutorily set attorney's fees."
Prior Legislation
AB 2347 (Maddox, Chapter 328, Statutes of 2004) increased the
maximum awardable attorney fee to a prevailing creditor or
debtor in a collection action.
SB 182 (Lockyer, Chapter 406, Statutes of 1991) increased the
cap on attorney's fees.
SB 1934 (Deddeh, Chapter 884, Statutes of 1986) enacted the
section allowing for an award of attorney's fees in contract
actions based on a "book account."
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified5/14/15)
California Association of Collectors (source)
USCB, America, Inc.
OPPOSITION: (Verified5/14/15)
None received
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Page 5
Prepared by:Benjamin Palmer / JUD. / (916) 651-4113
5/15/15 15:24:33
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