BILL ANALYSIS �
AB 2364
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Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2364 (Wagner) - As Amended: April 30, 2012
Policy Committee: JudiciaryVote:9-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill establishes procedures for service of process and
execution of levies at a central location designated by a bank
and its other branches. Specifically, this bill:
1) Requires a bank or financial institution that has more
than nine branch offices in this state, and authorizes
those with less than nine, to designate one or more central
locations for service of legal process within the state.
Further provides that if the institution fails to make the
designation, then each branch shall be deemed to be a
central location at which service may be made.
2) Requires the bank to file a notice of its designation
with the Department of Financial Institutions (DFI), and
requires DFI to update its online records to reflect
current designations within 10 days of filing. DFI is to
provide this information to any person requesting it, and
may satisfy this requirement by making the information
available for free to the public on its web site.
3) Clarifies that the effects of service of legal process
and execution of levies served within California is limited
to accounts and safety deposit boxes maintained at a bank's
branches and offices within this state, and not other
states or countries.
FISCAL EFFECT
Minor absorbable ongoing costs to DFI for filing banks'
designations and making this information available on its
AB 2364
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website. �Financial Institutions Fund]
COMMENTS
1)Background . Attachment is an order by a court, while a civil
action is pending, directing that money or property of the
defendant be held as security for the eventual satisfaction of
a judgment, if one is obtained. Attachment is thus a
provisional remedy to aid the plaintiff in the collection of a
money judgment by seizure of the defendant's money or property
in advance of a trial or judgment. It is ordered when a court,
after a hearing on an application for a writ of attachment,
finds that the plaintiff has established the probable validity
of the claim. In contrast, writs of execution are issued only
after judgment is entered by the court. They permit the
judgment creditor to collect against the property of the
judgment debtor, including deposit accounts held by a
financial institution. In short, attachment can be seen as a
pre-judgment security device, while execution of levy is a
post-judgment collection device.
2)Purpose . This bill-sponsored by the Consumer Financial
Services Committee, Business Law Section of the State
Bar-amends service of process rules for both attachment to and
execution of levies upon accounts, safe deposit boxes, and
other property held by the debtor or defendant's bank.
According to the author, this bill seeks to address two
problems that arise from these current procedures for service
of levies. First, conducting discovery or a debtor's
examination to identify the proper branch to serve can add
hundreds or even thousands of dollars of unnecessary expenses
to the cost of judgment collection, a cost that may be added
to the amount owed by the judgment debtor. Second, the current
requirement that the judgment creditor serve the proper branch
can also facilitate the concealment of assets by a dishonest
judgment debtor, because an examination of the debtor to
identify the branch can prompt the debtor to move the funds
and game the system.
By facilitating service of process at a central location
instead of at individual branches, the author contends this
bill will reduce unnecessary expenses on collection, and will
prevent unscrupulous debtors from manipulating the rules to
avoid their obligations. For example, given the relatively
concentrated nature of the banking industry today, the sponsor
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estimates that a creditor serving levies on the central
locations designated by just a handful of the largest banks
would probably capture a sizable majority of all of the
deposit accounts and safe deposit boxes in California.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081