A07500 Summary:

BILL NOA07500
 
SAME ASNo Same As
 
SPONSORDinowitz
 
COSPNSRNiou, DenDekker, Wright, Wallace, Schimminger
 
MLTSPNSR
 
Amd 3218, CPLR
 
Relates to judgment by confession; allows a government agency engaged in the enforcement of a civil or criminal law to file an affidavit in any county.
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A07500 Actions:

BILL NOA07500
 
05/07/2019referred to judiciary
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A07500 Committee Votes:

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A07500 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7500
 
SPONSOR: Dinowitz
  TITLE OF BILL: An act to amend the civil practice law and rules, in relation to judgment by confession This proposal is one in a series of measures being introduced at the request of the Chief Administrative Judge upon the recommendation of his Advisory Committee on Civil Practice. This measure would amend section 3218 of the Civil Practice Law and Rules to remedy abuses in the use of confessions of judgment by credi- tors against out-of-state debtors. This measure is in response to recent press reports regarding creditors that execute confessions of judgment in New York State even though the associated agreement or debtor have no nexus to the State.* Under the current statute, a confession of judgment is a written and signed statement, in the form of an affidavit, in which a debtor admits liability and agrees to pay the sum confessed as owed to the creditor pursuant to an agreement. A confession of judgment is a legitimate tool that may facilitate commercial transactions, resolve or avoid liti- gation, support collection of moneys owed under an equitable distrib- ution plan, or ensure that government agencies can recover funds on behalf of victims. When the debtor does not perform or pay according to the agreement, a confession may be filed as a judgment with the county clerk, even in the absence of a pending court action.** But, in recent years, creditors, often from out-of-state, have entered confessions of judgment in various New York counties against debtors who themselves are out-of-state small business owners with no connection to New York. This practice has resulted in some unscrupulous creditors using New York law and procedure to freeze and then seize debtors' assets based on a judgment entered in a venue far from where the agree- ment was executed and the parties reside, making it difficult for a debtor to contest abusive conduct by a creditor. This measure seeks to correct such abuse without frustrating legitimate use of confessions of judgment within the State. It limits the venue for filing a confession of judgment to in-state debtors, based on where the debtor resided at the time the affidavit was executed or, if the debtor moves, where he or she resides at the time of filing the judgment. This approach is intended to prevent creditors from abusing confessions of judgment by using New York courts as a venue to profit from debtors with no New York connection. Under this measure, a non-natural person, such as a corporation, would be deemed to reside in the county where it has a principal place of business. This measure would provide an exemption for government agencies engaged in enforcing civil or criminal law against a person or non-natural person, including non-residents. Government agencies often use confessions of judgment to ensure that they can recover assets to pay, for example, restitution to victims. Therefore, the proposal would permit government law enforcement agencies to enter such judgments in any county within the State. This measure, which would have no fiscal impact, would take effect imme- diately and apply to judgments by confession filed on or after the effective date.   LEGISLATIVE HISTORY:: None. New Proposal. * Zachary R. Mider and Zeke Faux, 'Sign Here to Lose Everything', Bloom- berg Businessweek (online, November 20, 2018), https://www.bloomberg.com/graphics/2018-confessions-ofjudgment/ ?smd=confessions-of-judgment. ** In the mid-1980s, the Federal Trade Commission (FTC) banned confessions of judgment in consumer transactions and bank transactions: "(I)t is an unfair act or practice within the meaning of Section 5 of (the FTC) Act for a lender or retail installment seller directly or indirectly to take or receive from a consumer an obligation that: 1) Constitutes or contains a cognovit or confession of judgment (for purposes other than executory process in the State of Louisiana), warrant of attorney, or other waiver of the right to notice and the opportunity to be heard in the event of suit or process thereon." (16 CFR 444.2.)
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A07500 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          7500
 
                               2019-2020 Regular Sessions
 
                   IN ASSEMBLY
 
                                       May 7, 2019
                                       ___________
 
        Introduced  by  M. of A. DINOWITZ, NIOU, DenDEKKER -- (at request of the
          Office of Court Administration) --  read  once  and  referred  to  the
          Committee on Judiciary
 
        AN  ACT  to amend the civil practice law and rules, in relation to judg-
          ment by confession
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Paragraph  1  of  subdivision  (a) and subdivision (b) of
     2  section 3218 of the civil practice law and rules, paragraph 1 of  subdi-
     3  vision (a) as amended by chapter 311 of the laws of 1963, are amended to
     4  read as follows:
     5    1.  stating the sum for which judgment may be entered, authorizing the
     6  entry of judgment, and stating the county where  the  defendant  resides
     7  [or if he is a non-resident, the county in which entry is authorized];
     8    (b)  Entry of judgment. At any time within three years after the affi-
     9  davit is executed, it may be filed, but only with the clerk of the coun-
    10  ty where the [defendant] defendant's affidavit stated [in his  affidavit
    11  that  he]  that  the  defendant resided when it was executed or[, if the
    12  defendant was then a non-resident, with the clerk of the  county  desig-
    13  nated  in  the  affidavit]  where  the  defendant resided at the time of
    14  filing. [Thereupon the] The clerk shall then enter  a  judgment  in  the
    15  supreme court for the sum confessed. [He] The clerk shall tax costs [to]
    16  in  the  amount  of fifteen dollars, besides disbursements taxable in an
    17  action.  The judgment may be docketed and enforced in  the  same  manner
    18  and  with  the  same  effect  as  a judgment in an action in the supreme
    19  court. No judgment by confession may be entered  after  the  defendant's
    20  death.    For  purposes of this section, a non-natural person resides in
    21  any county where it has a place of business.
    22    Notwithstanding any other provision of law to the contrary, a  govern-
    23  ment  agency engaged in the enforcement of civil or criminal law against
    24  a person or a non-natural person may file an affidavit in any county.
    25    § 2. This act shall take effect immediately and apply to judgments  by
    26  confession  entered  upon  affidavits  filed  on or after such effective
    27  date.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11359-01-9
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A07500 Chamber Video/Transcript:

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