BILL ANALYSIS
AB 2059
Page 1
(Without Reference to File)
CONCURRENCE IN SENATE AMENDMENTS
AB 2059 (Charles Calderon)
As Amended August 30, 2010
Majority vote
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|ASSEMBLY: |48-28|(May 13, 2010) |SENATE: |24-12|(August 31, |
| | | | | |2010) |
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Original Committee Reference: JUD.
SUMMARY : Temporarily provides a mechanism for service of legal
process on non-residents who cause injuries involving rental
cars in California, up to a maximum contractual limit.
Specifically, this bill :
1)Provides that, where a car rental company enters into a rental
contract with a renter who resides out of the United States,
and the rental car company provides third-party supplemental
liability insurance to the renter, as defined, the car rental
company shall accept service of process on behalf of the
renter related to any harm, loss, or damage related to the use
or operation of the rental vehicle.
2)Provides that process may be served by first-class mail,
return receipt requested, registered mail, or by personal
service by a registered agent of service of process on file
with the Secretary of State and Consumer Services.
3)Requires that the rental car company shall provide a copy of
any summons and complaint so served to the renter by
first-class mail, return receipt requested.
4)Requires any plaintiff who elects to deliver process to the
rental company pursuant to these provisions agree to limit his
or her recovery against the renter, authorized driver, or
rental company to the limits of the protection provided by the
insurance coverage.
5)Specifies that acceptance of service of process by the rental
company does not create any duty or agency relationship other
than as provided above.
AB 2059
Page 2
6)Provides a three-year sunset by which the bill will cease to
be operative on December 31, 2014.
The Senate amendments restrict the application of the bill to
renters (excluding other authorized drivers), limit the bill to
renters residing outside the United States, delete the
disclosure obligation on rental car companies, clarify the
covered insurance, and limit the bill to a three-year period.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version approved by the Senate, except as noted above.
FISCAL EFFECT : None
COMMENTS : The author states that this bill will assist drivers
and the State of California by making sure that the insurance
that car renters buy can actually be relied upon as intended by
requiring the car rental company to be the agent for service of
process for claims against insured drivers who reside outside of
California.
The author explains the reason for the bill as follows:
Under current law, service of process on out of
country defendants is complicated, expensive and
difficult as (1) the onerous provisions of the Hague
Convention of 1965 On the Service Abroad of Judicial
and Extrajudicial Documents in Civil or Commercial
Matters must be met; (2) not all countries have agreed
to the Hague Convention; (3) the paperwork must be
translated into the language of the defendant; and (4)
a service processor must be located. The losers in
the current situation are Californians who are injured
or killed by an out-of-state renter because the case
cannot proceed unless the defendant is properly
served. The State of CA suffers as well because if
the defendant cannot be served and the case not
processed, the medical bills may often end up being
paid by California taxpayers.
The sponsor of this bill, Consumer Attorneys of California
(CAOC), argues that AB 2059 will make sure drivers receive the
benefits of car rental insurance when injured by an out-of-state
or out-of-country driver.
AB 2059
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CAOC also argues that the bill will help save the State of
California money, noting that when service of process cannot be
accomplished, California often 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.
The bill is opposed by some car rental companies and other
business interests who argue in the main that the bill will
increase exposure to liability, which the rental companies
presumably avoid under existing arrangements when renters cannot
be sued, and will therefore increase costs.
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
FN: 0006873