SB426 H JUD AM 4-9 #1
The Committee on the Judiciary moves to amend the bill on page
two following the enacting clause, by striking out the remainder of
the bill, and inserting in lieu thereof, the following language:
" That §46-4A-108 of the Code of West Virginia, 1931, as
amended, be amended and reenacted
, that §46-9-510, §46-9-516,
§46-9-521 and §46-9-525 of said code, be amended and reenacted; and
that said code be amended by adding thereto a new section,
designated §46-9-516a, all to read as follows:
ARTICLE 4A. FUNDS TRANSFERS.
§46-4A-108. Relationship to Electronic Fund Transfer Act.
(a) Except as provided in subsection (b), this This article
does not apply to a funds transfer any part of which is governed by
the Electronic Fund Transfer Act of 1978 (Title XX, Public Law 95-
630, 92 Stat. 3728, 15 U.S.C. §1693 et seq.) as amended from time
to time.
(b) This article applies to a funds transfer that is a
remittance transfer as defined in the Electronic Fund Transfer Act
(15 U.S.C. §1693o-1) as amended from time to time, unless the
remittance transfer is an electronic fund transfer as defined in
the Electronic Fund Transfer Act(15 U.S.C. §1693a) as amended from
time to time.
(c) In a funds transfer to which this Article applies, in the
event of an inconsistency between an applicable provision of this article and an applicable provision of the Electronic Fund Transfer
Act, the provision of the Electronic Fund Transfer Act governs to
the extent of the inconsistency.
ARTICLE 9. SECURED TRANSACTIONS; SALES OF ACCOUNTS AND CHATTEL
PAPER.
§46-9-510. Effectiveness of filed record.
(a) Filed record effective if authorized. - A filed record is
effective only to the extent that it was filed by a person that may
file it under section 9-509. section five hundred nine of this
article.
(b) Authorization by one secured party of record. - A record
authorized by one secured party of record does not affect the
financing statement with respect to another secured party of
record.
(c) Continuation statement not timely filed. - A continuation
statement that is not filed within the six-month period prescribed
by section 9-515(d) subsection (d), section five hundred fifteen of
this article is ineffective.
(d) A filed record ceases to be effective if the filing office
terminates the record pursuant to section five hundred sixteen-a of
this article.
§46-9-516. What constitutes filing; effectiveness of filing.
(a) What constitutes filing. - Except as otherwise provided in subsection (b) of this section, communication of a record to a
filing office and tender of the filing fee or acceptance of the
record by the filing office constitutes filing.
(b) Refusal to accept record; filing does not occur. - Filing
does not occur with respect to a record that a filing office
refuses to accept because:
(1) The record is not communicated by a method or medium of
communication authorized by the filing office;
(2) An amount equal to or greater than the applicable filing
fee is not tendered;
(3) The filing office is unable to index the record because:
(A) In the case of an initial financing statement, the record
does not provide a name for the debtor;
(B) In the case of an amendment or information statement, the
record:
(i) Does not identify the initial financing statement as
required by 9-512 or 9-518, section five hundred twelve or section
five hundred eighteen of this article, as applicable; or
(ii) Identifies an initial financing statement whose
effectiveness has lapsed under section 9-515; five hundred fifteen
of this article; or
__(iii) Identifies an initial financing statement which was
terminated pursuant to section five hundred sixteen-a of this
article;
(C) In the case of an initial financing statement that
provides the name of a debtor identified as an individual or an
amendment that provides a name of a debtor identified as an
individual which was not previously provided in the financing
statement to which the record relates, the record does not identify
the debtor's surname; or
(D) In the case of a record filed or recorded in the filing
office described in section 9-501(a)(1), subdivision (1),
subsection (a), section five hundred one of this article, the
record does not provide a sufficient description of the real
property to which it relates; or
__(E) In the case of a record submitted to the filing office
described in subdivision (1), subsection (a), section five hundred
one of this article, the filing office has reason to believe, from
information contained in the record or from the person that
communicated the record to the office, that:
__(i) If the record indicates that the debtor is a transmitting
utility, the debtor does not meet the definition of a transmitting
utility as described in subdivision (81), subsection (a), section
one hundred two of this article;
__(ii) If the record indicates that the transaction relating to
the record is a manufactured home transaction, the transaction does
not meet the definition of a manufactured home transaction as
described in subdivision (54), subsection (a), section one hundred two of this article; or
__(iii) If the record indicates that the transaction relating to
the record is a public finance transaction, the transaction does
not meet the definition of a public finance transaction as
described in subdivision (70), subsection (a), section one hundred
two of this article;
__(4) In the case of an initial financing statement or an
amendment, if the filing office believes in good faith that the
record was communicated to the filing office in violation of
section five hundred sixteen-a of this article;
__(4) (5) In the case of an initial financing statement or an
amendment that adds a secured party of record, the record does not
provide a name and mailing address for the secured party of record;
(5) (6) In the case of an initial financing statement or an
amendment that provides a name of a debtor which was not previously
provided in the financing statement to which the amendment relates,
the record does not:
(A) Provide a mailing address for the debtor;
(B) Indicate whether the name provided as the name of the
debtor is the name of an individual or an organization;
(6) (7) In the case of an assignment reflected in an initial
financing statement under section 9-514(a) subsection (a), section
five hundred fourteen of this article or an amendment filed under
section 9-514(b), subsection (b), section five hundred fourteen of this article, the record does not provide a name and mailing
address for the assignee; or
(7) (8) In the case of a continuation statement, the record is
not filed within the six-month period prescribed by section
9-515(d). subsection (d), section five hundred fifteen of this
article.
(c) Rules applicable to subsection (b). - For purposes of
subsection (b):
(1) A record does not provide information if the filing office
is unable to read or decipher the information; and
(2) A record that does not indicate that it is an amendment or
identify an initial financing statement to which it relates, as
required by section 9-512, 9-514 or 9-518, sections five hundred
twelve, five hundred fourteen or five hundred eighteen of this
article, is an initial financing statement.
(d) Refusal to accept record; record effective as filed
record. - A record that is communicated to the filing office with
tender of the filing fee, but which the filing office refuses to
accept for a reason other than one set forth in subsection (b) of
this section, is effective as a filed record except as against a
purchaser of the collateral which gives value in reasonable
reliance upon the absence of the record from the files.
(e) Administrative review. -- If the Secretary of State
determines that a financing statement which identities a public official or employee as a debtor is fraudulent or that an
individual debtor and an individual secured party would appear to
be the same individual on the financing statement or that the
individual debtor claims to be a transmitting utility, without
supporting documents, the Secretary may commence administrative
proceedings to remove the statement from its records in accordance
with the provisions of article five, chapter twenty-nine-a of this
code.
(1) Upon the commencement of proceedings pursuant to this
subsection, the Secretary of State shall identify the financing
statement in its records as subject to administrative review and
publish a notice in the West Virginia Register regarding the
proceedings.
(2) A financing statement may be found to be fraudulent only
if, based upon clear and convincing evidence, no good faith basis
exists upon which to conclude that the secured party was authorized
to file the statement and the statement was submitted for the
purpose of harassment or intimidation or fraudulent intent of the
alleged debtor.
(3) If upon the completion of administrative review, it is
determined that the filing of a financing statement was fraudulent,
the filing party shall be assessed all costs incurred by the
Secretary in reaching a final determination, including
reimbursement for all costs of the hearing. The filing party may also be subject to a civil penalty not exceeding $500 per
fraudulent filing. If upon completion of administrative review or
any subsequent appeal of a decision of the Secretary of State, it
is determined that a filing subject to appeal is not fraudulent,
the secretary or court may award the prevailing party reasonable
costs and expenses, including attorney fees.
(4) The Secretary of State shall annually submit a report to
the Legislature regarding actions taken against fraudulent filings
pursuant to this section which identifies the number and
characteristics of such proceedings, identifies any creditors found
to have made fraudulent filings, describes proceedings initiated by
the secretary in which it is ultimately determined that fraudulent
filings did not occur, describes the number and type of complaints
received by the secretary in which it is alleged that fraudulent
filings have occurred, and describes the actions taken by the
secretary to investigate complaints concerning allegedly fraudulent
filings and the results of the investigations.
(5) A decision by the secretary to remove a financing
statement determined to have been fraudulently filed subject to
appeal de novo to the circuit court of Kanawha County. Pending the
outcome of an appeal, the financing statement may not be removed
from the records of the Secretary, but shall be identified in the
records as having been adjudicated to be fraudulent, subject to a
pending appeal by the putative creditor.
(6) A financing statement filed by a regulated financial
institution is not subject to the provisions of this section. For
the purposes of this section, a regulated financial institution is
a bank, bank and trust company, trust company, savings bank,
savings association, building and loan association, credit union,
consumer finance company, insurance company, investment company,
mortgage lender or broker, securities broker, dealer or
underwriter, or other institution chartered, licensed, registered
or otherwise authorized under federal law, the law of this state or
any other state, to engage in secured lending.
§46-9-516a. Filing fraudulent records; civil and criminal
penalties; administrative proceedings; immunity from
liability.
__(a) No person may cause to be communicated to the filing
office for filing a false record the person knows or reasonably
should know:
__(1) Is not authorized or permitted under sections five hundred
nine, seven hundred eight or eight hundred eight of this article;
and
__(2) Is filed with the intent to harass or defraud the person
identified as debtor in the record or any other person.
__(b) Any person who violates subsection (a) of this section
shall, for a first offense, be guilty of a misdemeanor and, upon
conviction thereof, shall be fined not less than $100 nor more than $1000 or, in the discretion of the court, be confined in jail not
more than twelve months, or both fined and confined. Any person
who violates subsection (a) of this section shall, for a second or
subsequent offense, be guilty of a felony and, upon conviction
thereof, shall be imprisoned in a state correctional facility not
less than one nor more than five years.
__(c) Any person who violates subsection (a) of this section is
liable in a civil action to each injured person for:
__(1) The greater of the actual damages caused by the violation
or up to $10,000 in lieu of actual damages;
__(2) Reasonable attorney fees;
__(3) Court costs and other related expenses of bringing an
action including reasonable investigative expenses; and
__(4) In the discretion of the court, punitive damages in an
amount determined by the court or jury.
__(d) A person identified as a debtor in a filed record the
person believes was caused to be communicated to the filing office
in violation of subsection (a) of this section may, under penalty
of perjury, file with the Secretary of State an affidavit to that
effect. The Secretary of State shall adopt and make available a
form affidavit for use under this section.
__(e) Upon receipt of an affidavit filed under this section, or
upon administrative action by the Secretary of State, the Secretary
of State shall communicate to the secured party of record on the record to which the affidavit or administrative action relates and
to the person who communicated the record to the filing office, if
different and known to the office, a request for additional
documentation supporting the effectiveness of the record. The
Secretary of State shall review all such documentation received
within thirty days after the first request for additional
documentation is sent if the Secretary of State has a reasonable
basis for concluding that the record was communicated to the filing
office in violation of subsection (a) of this section.
__The Secretary of State may initiate an administrative action
under this subsection with regard to a filed record if the
Secretary of State has reason to believe, from information
contained in the record or obtained from the person who
communicated the record to the filing office, that the record was
communicated to the filing office in violation of subsection (a) of
this section. The Secretary of State may give heightened scrutiny
to a record that indicates the debtor is a transmitting utility or
that indicates the transaction to which the record relates is a
manufactured home transaction or a public finance transaction.
__(f) The Secretary of State may not charge a fee to file an
affidavit under this section and may not return a fee paid for
filing a record terminated under this section.
__(g) The Secretary of State shall promptly communicate to the
secured party of record a notice of the termination of a record under subsection (e) of this section. A secured party of record
who believes in good faith that the record was not communicated to
the filing office in violation of subsection (a) of this section
may file an action to require that the record be reinstated by the
filing office. A person who communicated a record to the filing
office that the filing office rejected in reliance on subdivision
(4), subsection (b), section five hundred sixteen of this article,
who believes in good faith that the record was not communicated to
the filing office in violation of subdivision (4), subsection (b),
section five hundred sixteen of this article, may file an action to
require that the record be accepted by the filing office. The
jurisdiction for the action is the circuit court of Kanawha County.
__(h) If the court determines that a record terminated under
this section or rejected in reliance on subdivision (4), subsection
(b), section five hundred sixteen of this article should be
reinstated or accepted, the court shall provide a copy of an order
to that effect to the Secretary of State. On receipt of an order
reinstating a terminated record, the Secretary of State shall
refile the record along with a notice indicating that the record
was refiled pursuant to this section and its initial filing date.
On receipt of an order requiring that a rejected record be
accepted, the Secretary of State shall promptly file the record
along with a notice indicating that the record was filed pursuant
to this section and the date on which it was communicated for filing. A rejected record that is filed pursuant to an order of a
court shall have the effect described in subsection (d), section
five hundred sixteen of this article for a record the filing office
refuses to accept for a reason other than one set forth in
subsection (b), section five hundred sixteen of this article.
__(i) A terminated record that is refiled under subsection (h)
of this section is effective as a filed record from the initial
filing date. If the period of effectiveness of a refiled record
would have lapsed during the period of termination, the secured
party may file a continuation statement within thirty days after
the record is refiled and the continuation statement has the same
effect as if it had been filed during the six-month period
described in subsection (d), section five hundred fifteen of this
article. A refiled record is considered never to have been
ineffective against all persons and for all purposes except that it
is not effective as against a purchaser of the collateral that gave
value in reasonable reliance on the absence of the record from the
files.
__(j) Neither the filing office nor any of its employees incur
liability for the termination or failure to accept a record for
filing in the lawful performance of the duties of the office or
employee.
__(k) This section does not apply to a record communicated to
the filing office by a regulated financial institution or by a representative of a regulated financial institution, except that
the Secretary of State may request from the secured party of record
on the record or from the person that communicated the record to
the filing office, if different and known to the office, additional
documentation supporting that the record was communicated to the
filing office by a regulated financial institution or by a
representative of a regulated financial institution. For the
purposes of this section the term "regulated financial institution"
means a financial institution subject to regulatory oversight or
examination by a state or federal agency and includes banks,
savings banks, savings associations, building and loan
associations, credit unions, consumer finance companies, industrial
banks, industrial loan companies, investment funds, installment
sellers, mortgage servicers, sales finance companies and leasing
companies.
__(l) If a record was communicated to the filing office for
filing before the effective date of this section, and its
communication would have constituted a violation of subsection (a)
of this section if it had occurred on or after the effective date
of this section:
__(i) Subsections (b) and (c) are not applicable; and
__(ii) The remaining subsections of this section are applicable.
§46-9-521. Written financing statement and amendment thereto.
(a) Initial financing statement. - A filing office that accepts written records may not refuse to accept a written initial
financing statement in the following form and format except for a
reason set forth in section 9-516(b): subsection (b), section five
hundred sixteen of this article: Provided, That the written record
must be on the most recent revision of the appropriate form as
approved by the International Association of Commercial
Administrators."
(b) Amended financing statement. - A filing office that
accepts written records may not refuse to accept an amended written
record in the following form and format except for a reason set
forth in section 9-516(b): subsection (b), section five hundred
sixteen of this article: Provided, That the written record must be
on the most recent revision of the appropriate form as approved by
the International Association of Commercial Administrators.
§46-9-525. Fees.
(a) Initial financing statement or other record: general
rule. -- Except as otherwise provided in subsection (e) of this
section, the fee for filing and indexing a record under this part,
other than an initial financing statement of the kind described in
subsection (b) of this section, is the amount specified in
subsection (c) of this section, if applicable, plus:
(1) Ten $20 dollars if the record is communicated in writing
and consists of one or two pages; and
(2) Ten $20 dollars if the record is communicated in writing
and consists of more than two pages; and
(3) Ten $20 dollars if the record is communicated by another
medium authorized by filing-office rule.
(b) Initial financing statement: Public-finance and
manufactured housing transactions. -- Except as otherwise provided
in subsection (e) of this section, the fee for filing and indexing
an initial financing statement of the following kind is the amount
specified in subsection (c) of this section, if applicable, plus:
(1) Ten dollars $20 if the financing statement indicates that
it is filed in connection with a public-finance transaction;
(2) Ten dollars $20 if the financing statement indicates that
it is filed in connection with a manufactured-home transaction.
(c) Number of names. -- The number of names required to be
indexed does not affect the amount of the fee in subsections (a)
and (b) of this section.
(d) Response to information request. -- The fee for responding
to a request for information from the filing office, including for
issuing a certificate showing whether there is on file any
financing statement naming a particular debtor, is:
(1) Five dollars $10 if the request is communicated in
writing;
(2) Five dollars $10 if the request is communicated by another
medium authorized by filing-office rule; and
(3) Fifty cents $1 per page for each active lien.
(e) Record of mortgage. -- This section does not require a fee
with respect to a record of a mortgage which is effective as a
financing statement filed as a fixture filing or as a financing
statement covering as-extracted collateral or timber to be cut
under section 9-502(c) of this article. However, the recording and
satisfaction fees that otherwise would be applicable to the record
of the mortgage apply.
(f) Deposit of funds. -- All fees and moneys collected by the
Secretary of State pursuant to the provisions of this article shall
be deposited by the Secretary of State as follows: One-half shall
be deposited in the special revenue account created by paragraph
(B), subdivision (4), subsection (c), section ten, article one,
chapter fifty-nine of this code to provide civil legal services for
low income persons, one-fourth shall be deposited in the state
fund, general revenue, and one-half one-fourth shall be deposited
in the service fees and collections account established by section
two, article one, chapter fifty-nine of this code for the operation
of the office of the Secretary of State. Any balance remaining on
June 30, 2001, in the existing special revenue account entitled
"uniform commercial code" as established by chapter two hundred
four, acts of the Legislature, 1989 regular session, shall be
transferred to the service fees and collections account established
by section two, article one, chapter fifty-nine of this code for the operation of the office of the Secretary of State. The
Secretary of State shall dedicate sufficient resources from that
fund or other funds to provide the services required in this
article, unless otherwise provided by appropriation or other action
by the Legislature.
"
The Committee on the Judiciary moves to amend the title of the
committee substitute, as follows:
"A BILL to amend and reenact §46-4A-108 of the Code of West
Virginia, 1931, as amended,
to amend and reenact §46-9-510,
§46-9-516, §46-9-521 and §46-9-525 of said code; and to amend
said code by adding thereto a new section, designated
§46-9-516a, all relating to amending the Uniform Commercial
Code; clarifying the relationship between article 4A of the
West Virginia code and the federal Electronic Fund Transfer
Act; resolving conflicts between federal and state law;
providing for the effectiveness of filed records; creating
additional authority to refuse to accept a record for filing;
creating circumstances under which a record filing is false;
providing criminal penalties for filing or attempting to file
a false record; providing civil penalties for filing or
attempting to file a false record; setting forth an
administrative procedure initiated by the Secretary of State
or a person identified as a debtor on a record; requiring
party to an adverse administrative decision by the Secretary
of State to file action in Kanawha County Circuit Court if the
party wishes to have the Secretary of State's decision
reversed; exempting the filing office and its employees from
liability; exempting filings by a regulated financial
institution or its representatives from certain provisions;
clarifying the applicability of provisions to records filed
prior to the effective date of this article; increasing fees
for filing financing statements or other records in secured
transactions; increasing fees for responding for requests for
information related to secured transactions; and requiring
that the increase in fees be deposited in the existing Fund
for Civil Legal Services for Low Income Persons.