BILL ANALYSIS
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THIRD READING
Bill No: AB 2059
Author: Charles Calderon (D), et al
Amended: 6/29/10 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 4-0, 6/22/10
AYES: Corbett, Harman, Hancock, Leno
NO VOTE RECORDED: Walters
ASSEMBLY FLOOR : 48-28, 5/13/10 - See last page for vote
SUBJECT : Vehicle rental agreements
SOURCE : Consumer Attorneys of California
DIGEST : This bill requires a rental car company that
enters into a vehicle rental agreement with a renter who is
not a resident of this country to do the following when
that renter purchases supplemental liability insurance as
part of the agreement: (1) accept service of process of any
complaint against the renter regarding harm, loss, or
damage related to the use or operation of the rental car,
and (2) provide a copy of the summons and complaint to the
renter, as specified. This bill, which provides this
mechanism for service of process only where the plaintiff
agrees to limit his/her recovery against the renter, as
specified. This bill sunsets on December 31, 2013.
ANALYSIS : Existing law specifies restrictions on rental
vehicle agreements and regulates a renter's liability for
CONTINUED
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loss due to theft, a rental company's loss of use, damage,
or loss to the car, damage waivers and damage waiver fees.
(Section 1936 of the Civil Code)
Existing law provides that a rental car company may act as
a rental car agent for an authorized insurer in connection
with liability insurance, which may include uninsured
motorist coverage, that provides coverage to the renter and
is not duplicative of any standard liability coverage, for
liability arising from the negligent operation of the
rental vehicle. (Section 1758.85(b) of the Insurance Code)
Existing law provides that a nonresident driver impliedly
consents to the appointment of the director of the
Department of Motor Vehicles (DMV) as his/her agent for
service of process in any action against the nonresident
driver for injuries caused by an accident or collision.
Existing law provides that service of process shall be made
by delivering a copy of the summons and complaint to the
director. The plaintiff must also send a copy of the
summons and complaint by registered mail to the nonresident
driver, return-receipt requested. (Sections 17451, 17454,
17455, and 17456 of the Vehicle Code)
This bill requires a rental car company that enters into a
vehicle rental agreement with a renter who is not a
resident of this country to do both of the following when
that renter purchases supplemental liability insurance, as
defined in Section 1758.85(b) of the Insurance Code, as
part of the agreement:
1.Accept service of process of any complaint against the
renter regarding harm, loss, or damage related to the use
or operation of the rental car. Process may be served by
first-class mail, return receipt requested, or by
personal service by a registered process server.
2.Provide a copy of the summons and complaint to the renter
by first-class mail, return receipt requested, or
registered mail.
This bill provides the above-described mechanism for
service of process only where the plaintiff agrees to limit
his/her recovery against the renter, or the rental company
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to the limits of the protection extended by the
supplemental liability insurance.
This bill sunsets on December 31, 2013.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/29/10)
Consumer Attorneys of California (source)
OPPOSITION : (Verified 6/29/10)
Avis Budget Group
California Chamber of Commerce
Civil Justice Association of California
Hertz Corporation
ARGUMENTS IN SUPPORT : The bill's sponsor, Consumer
Attorneys of California (CAOC), writes that the bill will
help Californians because the service of process
requirements under the Hague Convention are "onerous
obstacles [which] can be avoided if the rental company
simply accepts service of process on behalf of its renter."
CAOC also points out that "[w]hen service of process
cannot be accomplished, often California suffers
financially as well. If the defendant cannot be served and
the case not processed, the medical bills may often end up
being paid by California taxpayers. Under the normal
course of a lawsuit, the medical bills would be repaid out
of the lawsuit recovery to the state in instances where it
provides medical care. However, under the current
situation, if a defendant cannot be served, he or she (and
the insurer) avoid responsibility and the victim and the
state end up paying."
ARGUMENTS IN OPPOSITION : The California Chamber of
Commerce writes: "[This bill] would shift the
responsibility and cost of notifying the renter ? from the
plaintiff to the car rental company, regardless of the
burden posed to the plaintiff in notifying the particular
driver ? So long as plaintiffs expect that their recovery
will be within the limits of the insurance coverage, they
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will happily pass on the burden and expense of locating and
notifying renters ? regardless of whether the plaintiff is
actually in a better position to locate the driver, and
regardless of whether notification would pose a significant
burden for the plaintiff at all. This is an unreasonable
burden that goes significantly beyond what is necessary to
address the scenarios offered by the sponsor as
justification for the bill. ? Neither the bill sponsor nor
the author cite any evidence to support the assertion that
insurance sales are 'very profitable' for car rental
companies. To the extent that car rental companies price
their policies reasonably to address their risks, while
keeping them affordable so that renters take advantage of
the coverage, they will need to raise rates to compensate
for increased exposure and the costs associated with having
to identify and notify drivers far and wide."
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Bass, Beall, Block, Blumenfield,
Bradford, Brownley, Buchanan, Charles Calderon, Carter,
Chesbro, Coto, Davis, De La Torre, De Leon, Eng, Evans,
Feuer, Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, V. Manuel Perez,
Portantino, Ruskin, Salas, Saldana, Solorio, Swanson,
Torlakson, Torres, Torrico, Yamada, John A. Perez
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Blakeslee, Conway, Cook, DeVore, Emmerson, Fletcher,
Fuller, Gaines, Garrick, Gilmore, Hagman, Harkey,
Jeffries, Knight, Logue, Miller, Nestande, Niello,
Nielsen, Silva, Smyth, Audra Strickland, Tran, Villines
NO VOTE RECORDED: Caballero, Norby, Skinner, Vacancy
RJG:mw 6/29/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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