BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1549|
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CONSENT
Bill No: AB 1549
Author: Assembly Banking and Finance Committee
Amended: 4/13/09 in Assembly
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 6/16/09
AYES: Corbett, Harman, Florez, Leno, Walters
ASSEMBLY FLOOR : 78-0, 5/11/09 - See last page for vote
SUBJECT : Judgment liens: priority
SOURCE : Insolvency Committee, Business Law Section,
State Bar
of California
DIGEST : This bill restores the ability of judgment
creditors to obtain judgment liens against the assets of a
judgment debtor organization that is incorporated or
registered in another state but has assets located in
California. This bill eliminates the condition that a
judgment lien on personal property of the judgment debtor
can be obtained only if a security interest in the property
could be perfected under the Commercial Code by filing a
financing statement with the Secretary of State at the time
the lien is created; and requires instead that the personal
property against which a judgment lien is to be created be
located in California, or the judgment debtor is located in
the state. This bill establishes a new priority rule,
whereby a security interest in personal property perfected
CONTINUED
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by the filing of a financial statement or other action
under the laws of another state would have priority over a
California judgment lien in the same personal property.
ANALYSIS : Existing law provides that a judgment lien on
personal property is a lien on all interests in specified
personal property that are subject to enforcement of a
money judgment against the judgment debtor at the time the
lien is created, if a security interest in the property
could be perfected under the Commercial Code by filing a
financing statement at that time with the Secretary of
State. (Code Civ. Proc. Sec. 697.530(a).)
This bill removes the condition that a judgment lien on
personal property can only be created if a security
interest in the property could be perfected under the
Commercial Code by filing a financing statement with the
Secretary of State at the time when the lien is created.
This bill instead requires that, to create a judgment lien
against the following tangible personal property, the
judgment debtor be located in this state or the property be
located in this state:
1.For accounts receivable, the judgment debtor is located
in the state;
2.For tangible chattel paper (as defined in Commercial Code
Section 9102, i.e., chattel paper consisting of record or
records consisting of information inscribed on a tangible
medium), the judgment debtor is located in the state; and
3.For personal property consisting of equipment, products,
inventory, and negotiable documents of title, the
personal property is located within this state.
This bill provides that whether a person is located in this
state is determined in accordance with Section 9307 of the
Commercial Code, except that a registered organization (a
corporation, LLC, limited partnership or similar business
organization) organized under the law of a sister state,
normally located in that state under Section 9307(e), would
be located in this state if it has a place of business or
its chief executive office in this state.
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Existing law identifies certain personal property of a
judgment debtor, to which a judgment lien does not attach.
(Code Civ. Proc. Sec. 697.530(d).)
This bill adds the following to the list of property to
which a judgment lien would not attach:
1.As-extracted collateral, as defined in Commercial Code
Section 9102(a)(6) (oil, gas, and other minerals that are
subject to a security interest created by the debtor
before extraction and that attaches to the minerals as
they are extracted, and accounts arising from the sale of
said minerals at the wellhead or the minehead of the oil,
gas or other minerals in which the debtor had an interest
before extraction); and
2.Timber to be cut.
Existing law provides that priority between a judgment lien
on personal property and a conflicting security interest in
the same personal property shall be determined according to
priority in time of filing or perfection, as provided.
(Code Civ. Proc. Sec. 697.590.)
This bill establishes a new priority rule, providing that a
security interest in personal property perfected by the
filing of a financial statement or other action under the
law of a jurisdiction other than this state has priority
over a California judgment lien in the same personal
property.
This bill adds agricultural lien to various provisions
relating to judgment liens on personal property that
omitted agricultural liens, making them subject to the
rules relating to priority of judgment liens.
Existing law provides that the officer levying an execution
lien or attachment lien upon a deposit account shall
personally serve a copy of the writ and notice of levy
either on: (a) the financial institution that maintains the
deposit account; or (b) a centralized location within the
county as designated by the financial institution. (Code
Civ. Proc. Sec. 700.140(a).)
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This bill instead provides that the officer levying an
execution lien or attachment lien upon a deposit account
shall personally serve the writ and notice of levy to a
centralized location within the state as designated by the
financial institution that maintains the deposit account.
Background
When the Commercial Code was revised in 2001, certain
rights of judgment creditors under the Code of Civil
Procedure were inadvertently affected. In particular, the
right of a judgment creditor to obtain a judgment lien
against the assets of a foreign registered organization
(corporation, limited liability company, limited
partnership, limited liability partnership, or similar
business organization that was organized in another state
or a foreign country) was eliminated because a condition
for the creation of the judgment lien became impossible to
meet.
This bill corrects that inadvertent error as well as makes
a few other changes to the Code of Civil Procedure sections
relating to judgment liens against personal property.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/17/09)
Insolvency Committee, Business Law Section, State Bar of
California
(source)
ARGUMENTS IN SUPPORT : According to the author's office,
"the purpose of the bill is to reinstate the ability of
judgment creditors to obtain judgment liens against the
assets of foreign registered organizations. Before July 1,
2001, the author explains, judgment creditors had that
ability, but lost it on that date as a result of major
changes in Division 9 of the Commercial Code that affected
the rights of judgment creditors under the Code of Civil
Procedure."
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ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu,
Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning,
Nava, Nestande, Niello, Nielsen, John A. Perez, V. Manuel
Perez, Portantino, Price, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Bass
NO VOTE RECORDED: Duvall, Yamada
RJG:nl 6/17/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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