BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 2365 (Lieu)
As Amended April 8, 2010
Hearing Date: June 29, 2010
Fiscal: No
Urgency: No
BCP:jd
SUBJECT
Veterans Affairs: Administration
DESCRIPTION
This bill would permit a service member to recover actual
damages, reasonable attorney's fees, and costs from any person
who violates specified rights and protections of the Military
and Veterans Code.
This bill would also grant service members an expedited review
of a specified petition for relief, and provide that a court
shall not charge a filing fee or court costs for specified
actions.
BACKGROUND
California law provides various financial and consumer-related
protections for service members. Those provisions generally
seek to provide protections against various potential adverse
effects of a deployment, and include provisions enacted by AB
1433 (Horton, Chapter 60, Statutes of 2002), which provided
financial protection with regards to court proceedings, credit
contract obligations, rental agreements, taxes, health
insurance, and eviction protection, and AB 1666 (Frommer,
Chapter 345, Statutes of 2005), which provided additional
protection for members called into active duty with regards to
fees for recording a power of attorney, termination of mobile
telephone contracts, academic tuition, state bar fees, vehicle
leases, and residential utility service.
In order to assist service members in bringing actions to
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protect their rights, the California Military Department,
sponsor, has coordinated with State Military Reserve Judge
Advocate General (JAG) Officers to assist service members who
have incurred financial hardship because of their deployments.
This bill seeks to help additional service members enforce their
rights and protections by permitting the recovery of reasonable
attorney's fees and costs, removing filing fees and court costs
for specified actions, and permitting an expedited review for
certain cases.
This bill was approved by the Senate Veterans Affairs Committee
on June 22, 2010.
CHANGES TO EXISTING LAW
1. Existing law generally provides legal rights and financial
protections for service members, with respect to credit
agreements, court proceedings, interest liabilities, eviction
proceedings, contracts, mortgages and trusts, leases, life
insurance policies, taxes and assessments, and health
insurance policies, as specified. (Mil. & Vet. Code Secs. 401
- 409.4; 800 - 811; 820 - 828.)
Existing law , the California Military Families Financial
Relief Act, permits any member of the United States Military
Reserve or the National Guard who is called to active duty as
part of the Iraq and Afghanistan conflict to defer payments on
specified obligations while serving on active duty. (Mil. &
Vet. Code Sec. 800 et seq.)
Existing law , the California Military Families Financial
Relief Act of 2005, provides financial protection to members
called into active duty regarding fees for recording a power
of attorney, termination of mobile telephone contracts,
academic tuition, state bar fees, vehicle leases, and
residential utility service. (Mil. & Vet. Code Sec. 820 et
seq.)
This bill would provide that any person who violates the above
provisions shall be liable for actual damages, reasonable
attorney's fees, and costs incurred by the injured party.
This bill would provide that a service member or other person
seeking to enforce the above rights shall not be required to
pay a filing fee or court costs.
2. Existing law permits a service member to, at any time
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during his or her period of service or within six months
thereafter, apply to a court for relief from an obligation or
liability incurred by the member prior to his or her period of
military service, or from any tax or assessment falling due
prior to or during the period of service. (Mil. & Vet. Code
Sec. 409.3(a).)
Existing law allows the court to grant specified relief after
appropriate notice and hearing, unless in its opinion the
ability of the service member to comply with the obligation or
pay the tax or assessment has not been materially affected by
reason of the member's military service. (Mil. & Vet. Code
Sec. 409.3(a).)
This bill would, instead, require a court to set a hearing on
the petition within 25 days from the date the petition is
filed, unless the court shows good cause for extending the
date of the hearing. That petition must be served at least 10
days before the hearing, and the respondent must file and
serve a response to the petition at least five days before the
hearing.
This bill would provide that a court shall not charge a filing
fee or court costs for those petitions, and provide that any
person violating the section shall be liable for actual
damages, reasonable attorney's fees, and costs incurred by the
injured party.
COMMENT
1. Stated need for the bill
According to the author:
This bill would authorize service members to recover an
award of reasonable attorney fees. Not only is finding an
attorney to represent a service member claimant difficult
without an attorney's fees provision, but on a typical claim
the service member cannot be made whole when a significant
portion of his or her damages award must go toward
non-recoverable attorney's fees. For example, if a creditor
has refused to defer a mortgage or lower the interest rate
to six percent for pre-service debts, the over-charged
interest may only amount to several hundred dollars.
Another significant example is if an attorney is able to
recover $10,000 for a service member who needs this to pay a
loan he or she is in default on because of the lender's
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violation of the [Military & Veterans Code] and the attorney
takes a 1/3 or 40% contingency, the service member will
still be in default, as the funds needed to clear the
problem are now going to the attorney. The service member
is still not out of the hole. . . . Further, due to being
deployed overseas, many service members do not have the
ability to immediately pay court fees at the time of filing
because of geographical limitations or financial hardship.
This bill would grant a service member a waiver of court
fees so that the service member may proceed to enforce these
important protections.
This bill would also grant service members an expedited
review of their case. Under current law, a service member
may not be able to enforce these protections until the
service member returns from deployment. A delay in
enforcement often puts the service member in irreversible
credit problems, regardless of the eventual outcome of the
case.
2. Awarding reasonable attorney's fees and costs
To assist service members in bringing actions for violations of
their rights and protections that have previously been granted
by the Legislature, this bill would provide that any person
violating various sections of the Military and Veterans Code
shall be liable for actual damages, reasonable attorney's fees,
and costs incurred by the injured parties. The result of that
provision would be to shift the cost of the service member's
attorney (and any other costs incurred) to a defendant who is
found to have violated those sections.
The general rule governing attorney's fees in the United States
is that each party must bear the costs of his or her own
attorney's fees, regardless of who prevails in litigation. Fee
shifting statutes are enacted only when society considers a
statutory or constitutional right important enough to justify
fee shifting. (See Choate v. County of Orange (2000) 86
Cal.App.4th 312, 322-23; Code Civ. Proc. Sec. 1021.)
Regarding the importance of shifting attorney's fees onto those
individuals who violate specified provisions of the Military and
Veterans Code, the author asserts:
Many of the rights sought to be enforced have either no
damages or minimal damages. The service member is primarily
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seeking an order from the court compelling the lender to
stop violating the [Military & Veterans Code (MVC)] and
honor his or her requests. An example is a case to defer a
service member's mortgage after the institution has
wrongfully denied the service member the deferral
protections. There would be no damages in a case where the
service member is only seeking a deferment. There are no
damages to pay an attorney in an injunction action.
Finding an attorney to take such a case is nearly impossible
unless that attorney knows that reasonable compensation will
be allowed by the court for undertaking such an action to
protect the rights of a service member. Voluntary
compliance will be much more likely if creditors know that
litigation over violations of the MVC may result in an award
against them of the service member's reasonable fees and
costs.
Considering that the Legislature has already enacted numerous
important protections for service members, and that those
protections may be unlikely to be enforced absent the provision
of attorney's fees, the proposed fee shift appears appropriate
and consistent with the original intent of those statutes. The
protections at issue - including those regarding charging high
interest rates, and protecting the service member from
foreclosure for a period of time - represent important statutory
rights that have previously been recognized by the Legislature.
The following clarifying amendment is suggested to clarify the
addition of the attorney fee language to two sections pertaining
mostly to court actions.
Clarifying amendments:
1) On page 3, strike out lines 37 through 39, inclusive.
2) On page 4, line 5, after the period insert:
That person shall also be liable for actual damages,
reasonable attorney's fees, and costs incurred by the injured
party.
3) On page 11, line 34, after the period insert:
Any person violating this subdivision shall be liable for
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actual damages, reasonable attorney's fees, and costs incurred
by the injured party.
4) On page 12, strike out lines 5 through 7, inclusive.
3. No filing fees or court costs
The Judicial Council's Self-Help Center provides the following
three ways that an individual may qualify for a fee waiver: (1)
if the person is receiving public benefits; (2) if the person's
household income, before taxes, is less than a specified amount;
or (3) if the court finds that the person does not have enough
income to pay for their household's basic needs and the court
fees.
This bill would also provide that a service member or other
person seeking to enforce specific rights shall not be required
to pay a filing fee or court costs. The author asserts that
this waiver is necessary because "due to being deployed
overseas, many service members do not have the ability to
immediately pay court fees at the time of filing because of
geographical limitations or financial hardship." As a result,
the waiver would remove this barrier in the filing of an action
to enforce their rights.
Committee staff notes that while fee waivers are currently
available in the above circumstances, this bill would
essentially guarantee that service members qualify for those
waivers when enforcing the rights at issue. As of the writing
of this analysis, the Committee has received no opposition from
the Judicial Council to the proposed fee waiver.
4. Expedited review
This bill would also permit a service member to receive an
expedited hearing regarding: (1) any obligation or liability
incurred prior to their service; or (2) a tax or assessment that
fell due prior to, or during, their period of service. That
hearing must be within 25 days from the date the petition is
filed, unless the court shows good cause for extending the date.
That petition must be served at least 10 days before the
hearing, and the respondent must file and serve a response to
the petition at least five days before the hearing.
The author notes that: "[u]nder current law, a service member
may not be able to enforce these protections until the service
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member returns from deployment. A delay in enforcement often
puts the service member in irreversible credit problems,
regardless of the eventual outcome of the case." Although court
calendars are currently highly impacted in certain areas of the
state, with some cases being delayed for months, the Committee
has received no opposition to this provision that would
prioritize these cases. Similar to the above provisions, this
provision reflects the policy choice of the Legislature to
provide enhanced protections for service members when they are
called to active military duty. The California Military
Department, sponsor, further asserts that this bill is "crucial,
as Servicemembers and their Families continue to experience the
hardships of ongoing deployments."
5. California Bankers Association in a neutral if amended
position
The California Bankers Association (CBA) states that they
"believe that government enforcement is more effective than an
enforcement mechanism that encourages civil litigation. If the
bill was amended to require government enforcement, CBA would
adopt a neutral position on the bill."
Support : California Association of County Veterans Service
Officers; National Guard Association of California; Vietnam
Veterans of America, California State Council; one individual
Opposition : California Bankers Association
HISTORY
Source : California Military Department
Related Pending Legislation : None Known
Prior Legislation : None Known
Prior Vote :
Assembly Veterans Affairs Committee (Ayes 8, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
Assembly Floor (Ayes 71, Noes 0)
Senate Veterans Affairs Committee (Ayes 4, Noes 0)
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