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Senate Engrossed |
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State of Arizona Senate Fifty-second Legislature First Regular Session 2015
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SENATE BILL 1403 |
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AN ACT
amending title 44, chapter 9, Arizona Revised Statutes, by adding article 26; relating to consumer lawsuit loans.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 44, chapter 9, Arizona Revised Statutes, is amended by adding article 26, to read:
ARTICLE 26. CONSUMER LAWSUIT LOANS
44-1382. Definitions
In this article, unless the context otherwise requires:
1. "Consumer" means a natural person who either resides or is domiciled in this state or who is a party to a legal action pending before a state or federal court located in this state.
2. "Consumer lawsuit loan" means the monies that a consumer lawsuit loan company in a consumer lawsuit loan transaction provides directly or indirectly to a consumer.
3. "Consumer lawsuit loan company":
(a) Means a person that enters into a consumer lawsuit loan transaction with a consumer.
(b) Includes:
(i) An affiliate or subsidiary of a consumer lawsuit loan company.
(ii) A person who buys a whole or partial interest in a consumer lawsuit loan.
(iii) A person who acts as an agent to provide a consumer lawsuit loan from a third party for a fee.
(iv) A person who acts as an agent for a third party in providing a consumer lawsuit loan for a fee, regardless of whether approval or acceptance by the third party is necessary to create a legal obligation for the third party.
(v) Any other person that is determined by the attorney general to be engaged in a transaction that is substantively either a disguised consumer lawsuit loan or a subterfuge for the purpose of avoiding this article.
(c) Does not include an attorney who provides professional services to the consumer on a contingency basis in relation to the consumer's legal claim.
4. "Consumer lawsuit loan contract" means a written or oral agreement between a consumer and a consumer lawsuit loan company providing for a consumer lawsuit loan transaction.
5. "Consumer lawsuit loan transaction" includes a transaction in which both of the following apply:
(a) A consumer lawsuit loan company provides a consumer lawsuit loan to a consumer.
(b) The consumer assigns, conveys or otherwise confers to the consumer lawsuit loan company the right to receive the proceeds or part of the proceeds of the settlement, insurance payment or award of damages obtained in the consumer's legal action.
6. "Legal action":
(a) Means A bona fide civil action, a statutory or regulatory claim for which damages may be awarded to the claiming party or a cause of action or legal claim on which a civil action or a statutory or regulatory claim may be based.
(b) Includes:
(i) Any settlement or negotiations toward settlement of a civil action or regulatory proceeding described in subdivision (a) of this paragraph.
(ii) Any agreement or negotiations toward an agreement under which a civil action or regulatory proceeding based on a cause of action described in subdivision (a) of this paragraph would not be initiated.
7. "Proceeds" means the monies from a settlement, insurance payment or award of damages obtained in the consumer's legal action.
44-1382.01. Consumer lawsuit loan contract; maximum interest rate
A. A consumer lawsuit loan company may not enter into a consumer lawsuit loan transaction with a consumer with respect to a legal action in which the consumer is a party if the consumer lawsuit loan company imposes an annual rate of interest that exceeds thirty‑six percent.
B. A consumer lawsuit loan contract entered into in violation of this section is void.
44-1382.02. Unlawful practice; attorney general
An act or practice in violation of this article is an unlawful practice under section 44-1522 and is subject to enforcement through private action and prosecution by the attorney general. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.
Sec. 2. Severability
If a provision of this act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the act that can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.