83R6409 ATP/AJA-F
By: Huffman S.B. No. 927
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of and disclosures regarding consumer
lawsuit lending transactions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 30, Civil Practice and Remedies Code, is
amended by adding Section 30.022 to read as follows:
Sec. 30.022. DISCLOSURE OF CONSUMER LAWSUIT LENDING
TRANSACTION. (a) In this section, "consumer lawsuit lender" and
"consumer lawsuit lending transaction" have the meanings assigned
by Section 301.003, Finance Code.
(b) In any civil action with respect to which money has been
or will be provided to or on behalf of a plaintiff by a consumer
lawsuit lender in a consumer lawsuit lending transaction:
(1) the plaintiff must produce to the opposing party,
without awaiting a discovery request, all documents that the
plaintiff or the plaintiff's representative provided to the
consumer lawsuit lender; and
(2) the plaintiff must file with the court and serve on
the opposing party a copy of any agreement between the plaintiff and
a consumer lawsuit lender.
(c) If the consumer lawsuit lending agreement is executed
before the plaintiff's original petition is served, the agreement
shall be:
(1) filed with the court:
(A) promptly on execution of the agreement; or
(B) together with the filing of the plaintiff's
original petition, if the plaintiff's original petition has not
been filed with the court at the time of the agreement's execution;
and
(2) served with the plaintiff's original petition as
provided by the Texas Rules of Civil Procedure.
(d) If the consumer lawsuit lending agreement is executed
after the plaintiff's original petition is served, the agreement
shall be filed with the court and served on the opposing party as
provided by the Texas Rules of Civil Procedure not later than the
10th day after the date the agreement is executed.
SECTION 2. Subchapter D, Chapter 154, Civil Practice and
Remedies Code, is amended by adding Section 154.074 to read as
follows:
Sec. 154.074. DISCLOSURE OF CONSUMER LAWSUIT LENDING
TRANSACTION. (a) In this section, "consumer lawsuit lender" and
"consumer lawsuit lending transaction" have the meanings assigned
by Section 301.003, Finance Code.
(b) In any dispute with respect to which money has been or
will be provided to or on behalf of a complaining party by a
consumer lawsuit lender in a consumer lawsuit lending transaction,
the complaining party must produce to the opposing party, without
awaiting a request in the nature of a discovery request, all
documents that the complaining party or the complaining party's
representative provided to the consumer lawsuit lender.
SECTION 3. Chapter 301, Finance Code, is amended by adding
Section 301.003 to read as follows:
Sec. 301.003. CONSUMER LAWSUIT LENDING TRANSACTION. (a) In
this subtitle, the following definitions apply in the context of a
consumer lawsuit lending transaction:
(1) "Consumer" means an individual who is or may
become a complaining party in a dispute and to whom or on behalf of
whom money is provided in a consumer lawsuit lending transaction.
(2) "Consumer lawsuit lender" means a person who
provides money to or on behalf of a consumer in a consumer lawsuit
lending transaction. The term does not include an attorney who, at
the time money is provided to or on behalf of a consumer in a
consumer lawsuit lending transaction, has an attorney-client
relationship with the consumer concerning the consumer's dispute.
(3) "Consumer lawsuit lending transaction" means a
transaction in which:
(A) money is provided to or on behalf of a
consumer by a consumer lawsuit lender for a purpose other than
prosecuting the consumer's dispute; and
(B) the repayment of the money is conditioned on
and to be received from the consumer's proceeds of the dispute,
whether the proceeds are by judgment, settlement, or otherwise.
(4) "Creditor" includes a consumer lawsuit lender.
(5) "Dispute" includes:
(A) a civil action;
(B) an alternative dispute resolution
proceeding; or
(C) an administrative proceeding before an
agency of this state.
(6) "Interest" includes the amounts payable in a
consumer lawsuit lending transaction to the consumer lawsuit lender
to the extent that those amounts in the aggregate exceed the amounts
provided by the consumer lawsuit lender to or on behalf of the
consumer in the transaction.
(7) "Loan" includes the provision of money to or on
behalf of the consumer in a consumer lawsuit lending transaction,
without regard to whether there is a circumstance under which the
consumer does not have an obligation to repay to the consumer
lawsuit lender the principal amount provided.
(8) "Obligor" includes the consumer in a consumer
lawsuit lending transaction.
(b) A consumer lawsuit lending transaction and the parties
to the transaction are subject to this subtitle, including Section
303.201, in the same manner as a loan for personal, family, or
household use and the parties to such a loan.
SECTION 4. Subchapter A, Chapter 342, Finance Code, is
amended by adding Section 342.0015 to read as follows:
Sec. 342.0015. DEFINITION OF CONSUMER LAWSUIT LENDING
TRANSACTION AND RELATED TERMS. In this chapter, in the context of a
consumer lawsuit lending transaction, "consumer," "consumer
lawsuit lender," "consumer lawsuit lending transaction,"
"creditor," "dispute," "interest," "loan," and "obligor" have the
meanings assigned by Section 301.003.
SECTION 5. Section 342.005, Finance Code, is amended to
read as follows:
Sec. 342.005. APPLICABILITY OF CHAPTER. (a) Except as
provided by Sections 302.001(d) and 342.004(c), a loan is subject
to this chapter if the loan:
(1) provides for interest in excess of 10 percent a
year;
(2) is extended primarily for personal, family, or
household use;
(3) is made by a person engaged in the business of
making, arranging, or negotiating those types of loans; and
(4) either:
(A) is not secured by a lien on real property; or
(B) is described by Section 342.001(4), 342.301,
or 342.456 and is predominantly payable in monthly installments.
(b) The amounts provided by the consumer lawsuit lender to
or on behalf of the consumer in a consumer lawsuit lending
transaction are considered to be amounts extended primarily for
personal, family, or household use. A consumer lawsuit lending
transaction is subject to this chapter if the amounts payable under
the transaction to the consumer lawsuit lender in the aggregate
exceed the amounts provided by the consumer lawsuit lender to or on
behalf of the consumer by an amount that, when aggregated and
amortized using the actuarial method during the term of the loan,
provides for interest in excess of 10 percent a year.
SECTION 6. Section 342.051(a), Finance Code, is amended to
read as follows:
(a) A person must hold a license issued under this chapter
to:
(1) engage in the business of making, transacting, or
negotiating loans subject to this chapter; [or]
(2) contract for, charge, or receive, directly or
indirectly, in connection with a loan subject to this chapter, a
charge, including interest, compensation, consideration, or
another expense, authorized under this chapter that in the
aggregate exceeds the charges authorized under other law; or
(3) engage in a consumer lawsuit lending transaction
subject to this chapter or Subtitle A.
SECTION 7. (a) Except as otherwise provided by this
section, the changes in law made by this Act apply to and in
connection with a consumer lawsuit lending transaction entered into
on or after the effective date of this Act. A consumer lawsuit
lending transaction entered into before the effective date of this
Act is governed by the law in effect when the transaction was
entered into, and the former law is continued in effect for that
purpose.
(b) Section 30.022, Civil Practice and Remedies Code, as
added by this Act, applies only to an action commenced on or after
the effective date of this Act.
(c) Section 154.074, Civil Practice and Remedies Code, as
added by this Act, applies only to a dispute resolution proceeding
commenced on or after the effective date of this Act.
(d) The licensing requirement of Section 342.051(a),
Finance Code, as amended by this Act, applies only in relation to a
consumer lawsuit lending transaction entered into on or after
January 1, 2014. A consumer lawsuit lending transaction entered
into before January 1, 2014, is governed by the law in effect when
the transaction was entered into, and the former law is continued in
effect for that purpose.
SECTION 8. This Act takes effect September 1, 2013.