BILL ANALYSIS
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THIRD READING
Bill No: AB 2059
Author: Charles Calderon (D), et al
Amended: 8/20/10 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 4-0, 6/22/10
AYES: Corbett, Harman, Hancock, Leno
NO VOTE RECORDED: Walters
SENATE JUDICIARY COMMITTEE : 4-0, 8/26/10
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
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specified. This bill sunsets on January 1, 2016.
Senate Floor Amendments of 8/20/10 change the sunset date
from
December 31, 2013, to January 1, 2016, and revise the rate
limitation on damage waivers.
ANALYSIS : Existing law specifies restrictions on rental
vehicle agreements and regulates a renter's liability for
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
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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
to the limits of the protection extended by the
supplemental liability insurance.
This bill sunsets on January 1, 2016.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/26/10)
Consumer Attorneys of California (source)
OPPOSITION : (Verified 8/26/10)
Avis Budget Group
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."
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ARGUMENTS IN OPPOSITION : Opponents argue that "[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 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 8/27/10 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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