NY State Senate Bill 2009-S880

Archive: Last Bill Status - Stricken

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Feb 03, 2009	recommit, enacting clause stricken
Jan 21, 2009	referred to judiciary

2009-S880 (ACTIVE) - Details

Law Section:: Judiciary Law
Laws Affected:: Add Art 15-A §499-a, Judy L

2009-S880 (ACTIVE) - Summary

Prohibits the financing of a lawsuit for investment purposes, where the repayment of the financing is contingent upon success of the lawsuit; establishes that such financing shall be considered a loan and subject to the state usury laws.

2009-S880 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S880

 TITLE OF BILL :
An act to amend the judiciary law, in relation to the financing of
lawsuits


 PURPOSE :
This bill relates to the financing of lawsuits.

 SUMMARY OF PROVISIONS :
Section 1 amends the judiciary law by adding a new article 15-A,
entitled "Financing of a Lawsuit by a Third Party." The financing of a
lawsuit by a third party for investment, with the expectation of a
return which exceeds the state usury laws, shall be considered
champertous and illegal.

It further stipulates that any financing of a lawsuit by a third party
shall be considered a loan and therefore subject to the provisions of
section 5-501 of the general obligations law and to penalties, where
applicable, under article 190 of the penal law relating to criminal
usury.

This bill does not apply to contingency fees. Violations will be
considered a misdemeanor, carrying a fine of $2,500 per incident.

Section 2 enacts this bill immediately.

 JUSTIFICATION :
The practice of champerty is a proceeding by which a person, not a
party in a lawsuit, bargains to aid in its prosecution or defense for
consideration of a share of the settlement. Litigation finance
companies have been sprouting up across New York State and have become
a burgeoning business nationwide.

Litigation financing companies issue short-term, high interest cash
advances to plaintiffs to fund their expenses before a decision has
been reached. Contract terms generally stipulate that the financing
company will get all or a portion of its loan. Loan amounts may range
from $500 to $100,000 at interest rates of 2 to 4% per month.

New York has criminal laws barring the practice of usury, generally
considered to be loans with interest rates higher than 16% annually.
with interest rates Sky-rocketing over 50%, these financing schemes
should be considered usurious loans and not "investments" in the
outcome of a case.

 LEGISLATIVE HISTORY :
New bill.

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
This act shall take effect immediately.

2009-S880 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   880

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            January 21, 2009
                               ___________

Introduced  by  Sen.  KRUGER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Judiciary

AN ACT to amend the judiciary law,  in  relation  to  the  financing  of
  lawsuits

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The judiciary law is amended by adding a new  article  15-A
to read as follows:

                              ARTICLE 15-A
                   FINANCING OF LAWSUIT BY THIRD PARTY

SECTION 499-A. FINANCING OF LAWSUIT BY THIRD PARTY.
  S  499-A.  FINANCING  OF LAWSUIT BY THIRD PARTY. 1. THE FINANCING OF A
LAWSUIT, BEFORE OR AFTER SUCH LAWSUIT HAS BEEN FILED, BY A PERSON, PART-
NERSHIP, CORPORATION, FIRM OR OTHER THIRD PARTY FOR INVESTMENT WITH  THE
EXPECTATION  OF  A  RETURN WHICH EXCEEDS THE USURY LAWS OF THIS STATE IN
THE EVENT THE FINANCED PARTY PREVAILS AND WITHOUT THE EXPECTATION  OF  A
RETURN IN THE EVENT THE FINANCED PARTY DOES NOT PREVAIL SHALL BE CONSID-
ERED CHAMPERTOUS AND ILLEGAL UNDER THE LAWS OF THIS STATE.
  2.  ANY  FINANCING OF A LAWSUIT BY A THIRD PARTY SHALL BE CONSIDERED A
LOAN AND SUBJECT TO SECTION 5-501 OF THE  GENERAL  OBLIGATIONS  LAW  AND
WHERE  APPLICABLE,  THE  PROVISIONS OF ARTICLE ONE HUNDRED NINETY OF THE
PENAL LAW RELATING TO CRIMINAL USURY.
  3. THIS SECTION SHALL IN NO WAY APPLY TO CONTINGENCY FEES THAT ARE  IN
CONFORMANCE  WITH  THE  LAWS OF THIS STATE, INCLUDING BUT NOT LIMITED TO
SECTION FOUR HUNDRED EIGHTY-EIGHT OF THIS CHAPTER.
  4. ANY VIOLATION OF THIS SECTION SHALL BE A MISDEMEANOR AND SUBJECT TO
A FINE OF TWO THOUSAND FIVE HUNDRED DOLLARS PER VIOLATION.
  S 2. This act shall take effect immediately.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06557-01-9

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Senate Bill S880

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Archive: Last Bill Status - Stricken

Actions

2009-S880 (ACTIVE) - Details

2009-S880 (ACTIVE) - Summary

2009-S880 (ACTIVE) - Sponsor Memo

2009-S880 (ACTIVE) - Bill Text download pdf

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Sponsored By

Carl Kruger

Archive: Last Bill Status - Stricken

Actions

2009-S880 (ACTIVE) - Details

2009-S880 (ACTIVE) - Summary

2009-S880 (ACTIVE) - Sponsor Memo

2009-S880 (ACTIVE) - Bill Text download pdf

Comments