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AB-2677 Sureties: liability.(2023-2024)

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Date Published: 09/04/2024 09:00 PM
AB2677:v97#DOCUMENT

Enrolled  September 04, 2024
Passed  IN  Senate  August 30, 2024
Passed  IN  Assembly  April 25, 2024
Amended  IN  Assembly  April 17, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 2677

Introduced by Assembly Member Chen

February 14, 2024

An act to amend Section 996.470 of the Code of Civil Procedure, relating to sureties.


LEGISLATIVE COUNSEL'S DIGEST


AB 2677, Chen. Sureties: liability.
Existing law authorizes a beneficiary to enforce the liability on a bond against both the principal and sureties by civil action. Under existing law, a judgment of liability on a bond, except as specified, is in favor of the beneficiary and against the principal and sureties, and obligates each of them jointly and severally. Existing law provides that except as specified, the aggregate liability of a surety to all persons for all breaches of the condition of a bond is limited to the amount of the bond, and that the liability of the principal is not limited to the amount of the bond.
This bill would define “aggregate liability,” for purposes of the provisions above, to include all liability for damages, costs, and attorney’s fees, including any attorney’s fees that may be assessed as costs, if recoverable. The bill would define “surety” for these purposes as a corporate insurer or interinsurance exchange to which the Insurance Commissioner has issued a certificate of authority to transact surety insurance in the state.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

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


SECTION 1.

 Section 996.470 of the Code of Civil Procedure is amended to read:

996.470.
 (a) Notwithstanding any statute other than Section 996.480, the aggregate liability of a surety to all persons for all breaches of the condition of a bond, including any attorney’s fees that may be assessed as costs pursuant to paragraph (10) of subdivision (a) of Section 1033.5 or similar statute, is limited to the amount of the bond. Except as otherwise provided by statute, the liability of the principal is not limited to the amount of the bond.
(b) If a bond is given in an amount greater than the amount required by statute or by order of the court or officer pursuant to statute, the liability of the surety on the bond is limited to the amount required by statute or by order of the court or officer, unless the amount of the bond has been increased voluntarily or by agreement of the parties to satisfy an objection to the bond made in an action or proceeding.
(c) The liability of a surety is limited to the amount stipulated in any of the following circumstances:
(1) The bond contains a stipulation pursuant to Section 995.520 that the liability of a personal surety is limited to the worth of the surety.
(2) The bond contains a stipulation that the liability of a surety is an amount less than the amount of the bond pursuant to a statute that provides that the liability of sureties in the aggregate need not exceed the amount of the bond.
(d) For purposes of this section, the following terms have the following meanings:
(1) “Aggregate liability” includes all liability for damages, costs, or attorney’s fees, if recoverable.
(2) “Surety” means an admitted surety insurer as defined in Section 995.120.