BILL ANALYSIS
AB 833
Page 1
Date of Hearing: May 12, 2009
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 833 (John A. Perez) - As Amended: May 6, 2009
As Proposed to be Amended
SUBJECT : RENTAL PASSENGER VEHICLES: CONTRACTS
KEY ISSUE : SHOULD THE LEGISLATURE ADJUST THE RIGHTS AND
RESPONSIBILITIES OF CAR RENTAL COMPANIES AND THEIR RENTERS?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This bill is sponsored Enterprise Rent-A-Car Company to change
the statute governing consumer liability when rented vehicles or
their components are stolen, lost or vandalized. Car rental
companies no longer have the evidentiary burden to establish
customer liability when they seek to make the renter responsible
for the theft of the vehicle. The companies would also be
entitled to make customers responsible for the costs incurred
when keys or electronic "key fobs" are lost. Finally, the bill
would double the limit on customer liability from $500 to $1000
when a vehicle is vandalized. The rental companies state that
the bill is a reasonable attempt to clarify some provisions of
the law governing car rental transactions in California and to
conform the law to reflect the economic realities today.
SUMMARY : Revises consumer rights and responsibilities regarding
automobile rental. Specifically, this bill :
1)Allows car rental companies to shift the burden of proof from
the rental company to the renter to establish whether there is
clear and convincing evidence that the renter or authorized
driver failed to exercise ordinary care while in possession of
the vehicle if the vehicle is stolen, making the renter
responsible for the theft up to the fair market vale of the
vehicle.
2)Authorizes a car rental company to make the renter responsible
for the replacement cost of the vehicle ignition key or remote
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keyless entry system if the renter fails to return them, as
well as actual towing, storage, or impound costs incurred by
the car rental company associated with the renter's failure to
return the ignition key or remote keyless entry system.
3)Allows car rental companies to increase the limit on the
renter's responsibility for physical damage to the vehicle
resulting from vandalism (unrelated to theft) from $500 to
$1,000.
EXISTING LAW :
1)Authorizes a rental company and a renter to agree that the
renter will be responsible for, among other things, loss due
to theft of the rented vehicle up to its fair market value,
provided that the rental company establishes by clear and
convincing evidence that the renter or the authorized driver
failed to exercise ordinary care while in the possession of
the vehicle. (Civil Code section 1936(b)(2).)
2)Authorizes the rental company and the renter to agree that the
renter will be responsible for physical damage to the rented
vehicle up to a total of $500 resulting from vandalism
unrelated to theft of the vehicle, and for an administrative
charge, as specified. (Civil Code section 1936 (b)(4).)
COMMENTS : In support of the bill, the sponsor writes: "The
purpose of AB 833 is to clarify some provisions of Section 1936
of the Civil Code which governs passenger vehicle transactions
in California and to modernize other provisions to reflect the
cost of vehicles and the realities of the car rental market
today. The changes contained in AB 833 are largely technical or
minor in nature, involving either updating sections that have
not been amended since passage of the original law in 1988 or
clarifying the protections and applicability of the law. AB 833
is a reasonable attempt to clarify some provisions of the law
governing car rental transactions in California and to conform
the law to reflect the economic realities today."
Changes Evidentiary Burden Regarding Consumer's Responsibility
When Vehicle Is Lost Due to Theft. Currently, car rental
companies have the obligation to "establish by clear and
convincing evidence" that a renter failed to exercise ordinary
care if the company wishes to make the renter responsible for
loss of the vehicle due to theft. This bill would change that
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law by deleting the car rental company's obligation to
"establish" the renter's lack of care. Supporters contend that
"use of the term 'establishes' ? is vague and implies that the
car rental company is before a court when in fact it is making
an internal judgment as to whether there is sufficient 'clear
and convincing evidence' to hold the renter liable for theft."
Supporters state that deleting the requirement that the rental
car company establish the renter's lack of care will "not
substantively change its meaning or a car rental company's
duties and obligations [but] simplify the provision and clarify
the evidentiary burden."
It does seem apparent that the car rental company makes the
initial determination whether to seek to hold the consumer
liable for theft of the vehicle, as supporters state. But it
should be conceded that these issues may be disputed, and may in
fact have to be resolved by a court or a private arbitrator. By
deleting the rental company's obligation to "establish" the
evidence, and replacing the phrase "rental company establishes"
with the phrase "there is," [such evidence] it seems plain that
the effect would be to relieve the company of this evidentiary
duty. If the car rental company no longer has the obligation to
establish the evidence, but the requirement that there be such
evidence remains, the natural inference likely to be drawn by a
court is that the Legislature intended that the renter now have
this evidentiary burden.
Allows Car Rental Companies to Make Renters Responsible for
Costs Associated With Lost Keys And Keyless Systems. In
addition, the bill authorizes a car rental company to make the
renter responsible for the replacement cost of the vehicle
ignition key or remote keyless entry system if the renter fails
to return the ignition key or remote keyless entry system, as
well as actual towing, storage, or impound costs incurred by the
car rental company associated with the renter's failure to
return the ignition key or remote keyless entry system. A
rental company would be required to mitigate these costs.
As supporters note, current law does not specifically provide
that a renter can be held responsible for the cost of key
replacement if he/she loses the ignition key to the rental
vehicle. According to supporters, "[s]ince it is not
specifically stated, renters have argued that they are not
responsible for the costs associated with the loss of a
vehicle's key. There is a growing trend for new vehicles to
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have a 'keyless' ignition system, which includes an electronic
key fob. Key fobs are more difficult and expensive for a car
rental company to replace than standard keys."
Increased Consumer Liability For Vandalism Damage. Finally, the
bill increases the renter's responsibility for vandalism damage
from $500 to $1,000. Supporters state, "The vandalism limit has
not been changed since originally enacted in 1988. Since then,
the inflation rate has been approximately 66%; repair and parts
have risen dramatically more due primarily to fewer body parts
on a car and the complexity of electrical and computer systems."
Author's Proposed Amendment. In order to correct a drafting
error by which prior provisions of the bill were incompletely
eliminated, the author proposes to amend the bill to delete
lines 16-17 on page 6.
REGISTERED SUPPORT / OPPOSITION :
Support
Enterprise Rent-A-Car Co.
Alamo Rent-A-Car, Inc.
National Car Rental, Inc.
Opposition (As Most Recently Amended)
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334