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<ns0:ActionText>INTRODUCED</ns0:ActionText>
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<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
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<ns0:ActionDate>2026-01-05</ns0:ActionDate>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Papan</ns0:AuthorText>
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<ns0:Name>Papan</ns0:Name>
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<ns0:Title>An act to amend Section 765.040 of the Code of Civil Procedure, and to amend Section 9625 of, and to add Section 9529 to, the Commercial Code, relating to civil proceedings. </ns0:Title>
<ns0:RelatingClause>civil proceedings</ns0:RelatingClause>
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<ns0:Subject>Lawsuits, liens, and other encumbrances.</ns0:Subject>
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<html:p>Existing law prohibits a person from filing or recording, or directing another to file or record, a lawsuit, lien, or other encumbrance against any person or entity, knowing that it is false, with the intent to harass the person or entity or to influence or hinder the person in discharging their official duties if the person is a public officer or employee. Existing law also provides that a person who files a lawsuit, lien, or other encumbrance against any person or entity in violation of this prohibition is liable for a civil penalty not to exceed $5,000.</html:p>
<html:p>This bill would instead provide that a person who files a lawsuit, lien, or other encumbrance against a person or entity in violation of the above-described prohibition is liable for a civil penalty not to
exceed $15,000.</html:p>
<html:p>The Uniform Commercial Code-Secured Transactions governs security interests in collateral, including personal property and fixtures, as well as certain sales of accounts, contract rights, and chattel paper. That code, among other things, specifies requirements and procedures regarding perfecting a security interest, including the filing of a financing statement with the Secretary of State. Existing law specifies that a financing statement is sufficient if it provides, among other things, the name of the debtor. If it is established that a secured party is not proceeding in accordance with the code, existing law authorizes a court to restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.</html:p>
<html:p>This bill would require the Secretary of State to notify the debtor named in the financing statement within 21 days after the financing statement is filed. The bill would
additionally require any court fees incurred by a debtor to be paid at the end of the judicial proceeding, as specified. The bill would also make any party deemed to have violated above-described provision regarding lawsuits, liens, or other encumbrances liable to the debtor for three times all of the court fees paid.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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Section 765.040 of the
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is amended to read:
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<ns0:Num>765.040.</ns0:Num>
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<html:p>Any lien or encumbrance claimant who records or files, or directs another to record or file, a lawsuit, lien, or other encumbrance in violation of Section 765.010 shall be liable to the person subject to the lawsuit or the owner of the property bound by the lien or other encumbrance for a civil penalty of up to fifteen thousand dollars ($15,000).</html:p>
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 9529 is added to the
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, to read:
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<ns0:Num>9529.</ns0:Num>
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<html:p>The Secretary of State shall notify the debtor named in the financing statement within 21 days after the financing statement is filed.</html:p>
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 9625 of the
<ns0:DocName>Commercial Code</ns0:DocName>
is amended to read:
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<ns0:Num>9625.</ns0:Num>
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(a)
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(1)
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If it is established that a secured party is not proceeding in accordance with this division, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.
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<html:p>
(2)
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Any court fees incurred by a debtor shall be paid at the end of the judicial proceeding brought pursuant to this section. Any party deemed to have violated Section 765.010 of the Code of Civil Procedure shall be liable to the debtor for three times all of the court fees paid.
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<html:p>
(b)
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Subject to subdivisions (c), (d), and (f), a person is liable for damages in the amount of any loss caused by a failure to comply with this division. Loss caused by a failure to comply may include loss resulting from the debtor’s inability to obtain, or increased costs of, alternative financing.
</html:p>
<html:p>
(c)
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Except as otherwise provided in Section 9628, a person that, at the time of the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under subdivision (b) for its loss.
</html:p>
<html:p>
(d)
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A debtor whose deficiency is eliminated under Section 9626 may recover damages for the loss of any surplus. However, in a transaction other than a consumer transaction, a debtor or secondary obligor whose deficiency is eliminated or reduced under Section 9626 may not otherwise recover
under subdivision (b) for noncompliance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance.
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<html:p>
(e)
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In addition to any damages recoverable under subdivision (b), the debtor, consumer obligor, or person named as a debtor in a filed record, as applicable, may recover five hundred dollars ($500) in each case from any of the following persons:
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<html:p>
(1)
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A person that fails to comply with Section 9208.
</html:p>
<html:p>
(2)
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A person that fails to comply with Section 9209.
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<html:p>
(3)
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A person that files a record that the person is not entitled to file under subdivision (a) of Section 9509.
</html:p>
<html:p>
(4)
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A person that fails to cause the secured party of record to file or send a termination
statement as required by subdivision (a) or (c) of Section 9513.
</html:p>
<html:p>
(5)
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A person that fails to comply with paragraph (1) of subdivision (b) of Section 9616 and whose failure is part of a pattern, or consistent with a practice, of noncompliance.
</html:p>
<html:p>
(6)
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A person that fails to comply with paragraph (2) of subdivision (b) of Section 9616.
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<html:p>
(f)
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A debtor or consumer obligor may recover damages under subdivision (b) and, in addition, five hundred dollars ($500) in each case from a person that, without reasonable cause, fails to comply with a request under Section 9210. A recipient of a request under Section 9210 which never claimed an interest in the collateral or obligations that are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this
subdivision.
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(g)
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If a secured party fails to comply with a request regarding a list of collateral or a statement of account under Section 9210, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure.
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