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AB-1247 Collateral Recovery Act: repossession agencies: limited liability companies. (2017-2018)

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Date Published: 02/17/2017 09:00 PM
AB1247:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1247


Introduced by Assembly Member Chen

February 17, 2017


An act to amend, repeal, and add Sections 7503.1, 7503.4, and 7503.5 of, and to add and repeal Section 7503.15 to, the Business and Professions Code, relating to professions and vocations.


LEGISLATIVE COUNSEL'S DIGEST


AB 1247, as introduced, Chen. Collateral Recovery Act: repossession agencies: limited liability companies.
Existing law, the Collateral Recovery Act, provides for the licensure and regulation of repossession agencies by the Bureau of Security and Investigative Services. A violation of the act is a crime. Existing law prohibits a domestic or foreign limited liability company from being licensed as a repossession agency.
Existing law, the California Revised Uniform Limited Liability Company Act, authorizes a limited liability company to have any lawful purpose, except as specified, and authorizes a domestic or foreign limited liability company to render services that may be lawfully rendered only pursuant to a license, certificate, or registration authorized by the Business and Professions Code if the provisions of that code authorize a limited liability company or foreign limited liability company to hold that license, certificate, or registration.
This bill, until January 1, 2022, would authorize the bureau to issue a repossession agency license to a limited liability company. The bill would require a managing member or manager of a limited liability company and its officers, if any, to submit with the application for licensure a specified personal identification form and fingerprints for a background check by federal law enforcement. The bill would also require a limited liability company applicant to include with the application the true names and complete residence addresses of each managing member or manager and any officer and would authorize the bureau to request a copy of its certified articles of organization. The bill also would require the application to state the name and address of the person to be in charge of the limited liability company. The bill would require the application to be signed under penalty of perjury by a managing member, manager, or officer. By expanding the crime of perjury, the bill would impose a state-mandated local program. The bill would authorize the denial of a license if a managing member or manager of a limited liability company has committed specified acts.
This bill would require a limited liability company, as a condition of licensure, to maintain liability insurance, as specified, for damages arising out of claims based on acts, errors, or omissions arising out of the repossession services it provides. The bill would require a Certificate of Liability Insurance, as specified, to be submitted to the bureau, and would require the insurer issuing the certificate to report specified information to the bureau related to the policy. The bill would authorize suspension, as provided, of the license of a licensee that fails to maintain sufficient insurance, or fails to provide proof of the required insurance upon request by the bureau, and would render each member of the limited liability company personally liable, up to $1,000,000 each, for damages resulting to 3rd parties in connection with the company’s performance during the period of suspension, as specified. Because a violation of these requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 7503.1 of the Business and Professions Code is amended to read:

7503.1.
 (a) Each individual applicant for examination and each manager, partner of a partnership, and officer of a corporation corporation, and each managing member or manager of a limited liability company and its officers if any, shall submit with the application, one personal identification form provided by the chief upon which shall appear a photograph taken within one year immediately preceding the date of the filing of the application together with two legible sets of fingerprints, one set of which shall be forwarded to the Federal Bureau of Investigation for purposes of a background check, and a personal description of each person respectively.
(b) The bureau may impose a fee not to exceed three dollars ($3) for processing classifiable fingerprint cards submitted by applicants, excluding those submitted into an electronic fingerprint system using electronic fingerprint technology.
(c) This section shall remain in effect only until January 1, 2022, and as of that date is repealed.

SEC. 2.

 Section 7503.1 is added to the Business and Professions Code, to read:

7503.1.
 (a) Each individual applicant for examination and each manager, partner of a partnership, and officer of a corporation shall submit with the application, one personal identification form provided by the chief upon which shall appear a photograph taken within one year immediately preceding the date of the filing of the application together with two legible sets of fingerprints, one set of which shall be forwarded to the Federal Bureau of Investigation for purposes of a background check, and a personal description of each person respectively.
(b) The bureau may impose a fee not to exceed three dollars ($3) for processing classifiable fingerprint cards submitted by applicants, excluding those submitted into an electronic fingerprint system using electronic fingerprint technology.
(c) This section shall become operative on January 1, 2022.

SEC. 3.

 Section 7503.4 of the Business and Professions Code is amended to read:

7503.4.
 (a) If the applicant for a license is a corporation, the application shall state the true names and complete residence addresses of all officers. The application shall also state the name and address of the person to be actively in charge of the business corporation for which the license is sought. The application shall be subscribed and verified by a duly authorized officer of the applicant and by the qualified certificate holder thereof. The application shall also state whether any of the officers has ever used an alias.
(b) If the applicant for a license is a limited liability company, the application shall state the true names and complete residence addresses of all owners and the name and address of the owner to be actively in charge of the business for which the license is sought. each managing member or manager and each officer, if any. A certified copy of the articles of organization shall be provided to the bureau upon request. The application shall also state the name and address of the person to be actively in charge of the limited liability company for which the license is sought. If a qualified certificate holder, if other than an owner, a managing member, manager, or officer is to be actively in charge of the business, limited liability company, then the application shall state the name and address of that person. The application shall be subscribed and verified by each owner and, if any other person is to be actively in charge of the business, the application shall also be subscribed and verified by that person. a managing member, manager, or officer and by the qualified certificate holder thereof. The application shall also state whether any of the owners managing members, managers, or officers has ever used an alias.

(c)Nothing in this chapter permits a domestic or foreign limited liability company to be licensed as a repossession agency.

(c) This section shall remain in effect only until January 1, 2022, and as of that date is repealed.

SEC. 4.

 Section 7503.4 is added to the Business and Professions Code, to read:

7503.4.
 (a) If the applicant for a license is a corporation, the application shall state the true names and complete residence addresses of all officers. The application shall also state the name and address of the person to be actively in charge of the business for which the license is sought. The application shall be subscribed and verified by a duly authorized officer of the applicant and by the qualified certificate holder thereof. The application shall also state whether any of the officers has ever used an alias.
(b) Nothing in this chapter permits a domestic or foreign limited liability company to be licensed as a repossession agency.
(c) This section shall become operative on January 1, 2022.

SEC. 5.

 Section 7503.5 of the Business and Professions Code is amended to read:

7503.5.
 If the director determines that the applicant, if an individual, or if the applicant is a person other than an individual, that its manager and any of its officers and partners partners, or managing member or manager or officer of a limited liability company have committed any of the following acts, the director may deny the license:
(a) Committed any act, which, if committed by a licensee, would be a ground for the suspension or revocation of a license under this chapter.
(b) Committed any act constituting dishonesty or fraud.
(c) Been refused a license under this chapter or had a license revoked.
(d) Been an officer, partner, or manager of any person person, or managing member or manager or officer of a limited liability company who has been refused a license under this chapter or whose license has been revoked.
(e) Committed, or aided and abetted the commission of, any act for which a license is required by this chapter while unlicensed.
(f) Knowingly made any false statement in his or her application.
(g) Committed any act or crime constituting grounds for denial of licensure under Section 480.
The denial shall be in writing and shall describe the basis for the denial. The denial shall inform the applicant that if he or she desires a hearing to contest the denial, the hearing shall be requested of the director, in writing, within 30 days of the issuance of the denial.
When a hearing is held under this section, it shall be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.
(h) This section shall remain in effect only until January 1, 2022, and as of that date is repealed.

SEC. 6.

 Section 7503.5 is added to the Business and Professions Code, to read:

7503.5.
 If the director determines that the applicant, if an individual, or if the applicant is a person other than an individual, that its manager and any of its officers and partners have committed any of the following acts, the director may deny the license:
(a) Committed any act, which, if committed by a licensee, would be a ground for the suspension or revocation of a license under this chapter.
(b) Committed any act constituting dishonesty or fraud.
(c) Been refused a license under this chapter or had a license revoked.
(d) Been an officer, partner, or manager of any person who has been refused a license under this chapter or whose license has been revoked.
(e) Committed, or aided and abetted the commission of, any act for which a license is required by this chapter while unlicensed.
(f) Knowingly made any false statement in his or her application.
(g) Committed any act or crime constituting grounds for denial of licensure under Section 480.
The denial shall be in writing and shall describe the basis for the denial. The denial shall inform the applicant that if he or she desires a hearing to contest the denial, the hearing shall be requested of the director, in writing, within 30 days of the issuance of the denial.
When a hearing is held under this section, it shall be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.
(h) This section shall become operative on January 1, 2022.

SEC. 7.

 Section 7503.15 is added to the Business and Professions Code, to read:

7503.15.
 (a) As a condition of the issuance, reinstatement, reactivation, or continued valid use of a license under this chapter, a limited liability company shall, in accordance with this section, maintain a policy or policies of insurance against liability imposed on or against it by law for damages arising out of claims based upon acts, errors, or omissions arising out of the repossession services it provides.
(b) The total aggregate limit of liability under the policy or policies of insurance required under this section shall be as follows:
(1) For a limited liability company licensee with five or fewer persons named as managing members or managers, the aggregate limit shall not be less than one million dollars ($1,000,000).
(2) For a limited liability company licensee with more than five persons named as managing members or managers, an additional one hundred thousand dollars ($100,000) of insurance shall be obtained for each person named as a managing member or manager of the licensee except that the maximum amount of insurance is not required to exceed five million dollars ($5,000,000) in any one designated period, less amounts paid in defending, settling, or discharging claims as set forth under this section.
(c) Prior to the issuance, reinstatement, or reactivation of a limited liability company license as provided under this chapter, the applicant or licensee shall, in the manner prescribed by the bureau, submit the information and documentation required by this section and requested by the bureau, demonstrating compliance with the financial security requirements specified by this section.
(d) For any insurance policy secured by a licensee in satisfaction of this section, a Certificate of Liability Insurance, signed by an authorized agent or employee of the insurer, shall be submitted electronically or otherwise to the bureau. The insurer issuing the certificate shall report to the bureau the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable. The insurer shall list the bureau as the certificate holder for the purposes of receiving notifications related to the policy’s status.
(e) (1) If a licensee fails to maintain sufficient insurance as required by this section, or fails to provide proof of the required insurance upon request by the bureau, the license is subject to suspension and shall be automatically suspended pursuant to this subdivision until the date that the licensee provides proof to the bureau of compliance with the insurance coverage requirement.
(2) Prior to an automatic suspension, the bureau shall notify the licensee, in writing, that it has 30 days to provide proof to the bureau of having the required insurance or the license shall be automatically suspended.
(3) If the licensee fails to provide proof of insurance coverage within this period, the bureau may automatically suspend the license.
(f) If the license of a limited liability company is suspended pursuant to subdivision (e), each member of the limited liability company shall be personally liable up to one million dollars ($1,000,000) each for damages resulting to third parties in connection with the company’s performance, during the period of suspension, of any act or contract when a license is required by this chapter.
(g) This section shall remain in effect only until January 1, 2022, and as of that date is repealed.

SEC. 8.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.