Introduction
The California legislature unanimously passed Assembly Bill 2067 (“AB 2067”), which is expected to be signed into law on January 1, 2025. This bill proposes significant amendments to the existing law regarding the service of legal process on financial institutions within the state. The primary change introduced by AB 2067 allows financial institutions to designate a third-party agent as a central location for the service of legal process, with specific conditions. Importantly, this amendment applies to the enforcement of money judgments and judgments for possession of personal property in civil actions, among other things. It does not affect legal process requirements for subpoenas or related court orders. This article will explore the implications of this bill for judgment creditors and the broader legal community.
Current Legal Framework
Under existing California law, financial institutions are permitted—and if they have more than nine branches within the state, required—to designate one or more central locations for the service of legal process. (CCP §684.115). This service at a central location is deemed effective against all deposit accounts and property held for safekeeping, collateral, or in safe-deposit boxes, provided certain conditions are met. These conditions include that the deposit accounts or properties must be held at a branch or office of the financial institution within the state and covered by the central process designation.
This framework is designed to streamline the legal process, allowing legal notices and actions to be effectively served on financial institutions without the need for serving process at each individual branch or office. For example, a levy served at a specific branch may affect all deposit accounts regardless of where the account was opened, but it may not attach to a deposit box or other personal property held at another branch. However, when a central location is served, the levy is effective as to most accounts and personal property held by that bank, regardless of its physical location.
Key Provisions of AB 2067
AB 2067 introduces a new option for financial institutions to designate a third-party agent as a central location for the service of legal process. The bill defines a “third-party agent” as a non-financial institution entity, such as a corporation, that specializes in accepting legal service on behalf of financial institutions and other businesses. For those in the industry, think “CT Corp” in Los Angeles or “CSC” in Sacramento. Notably, the bill explicitly excludes licensed attorneys or law firms from being designated as third-party agents for this purpose.
If a financial institution chooses to designate a third-party agent, the bill imposes several requirements:
- Dual Designation Requirement: The financial institution must designate another central location for service of legal process in addition to the third-party agent. This ensures that there is more than one point of contact for legal process service, potentially reducing the risk of service delays or issues.
- Geographical Restrictions: Each central location, including the third-party agent, must be in a different county. This provision is likely intended to prevent the concentration of process service locations within a single geographical area, which could create logistical bottlenecks or limit access for those serving legal process.
Implications for Judgment Creditors
For judgment creditors and those involved in enforcing judgments, the introduction of AB 2067 adds a layer of complexity but also offers more clarity. Under current law, if a financial institution is not on the designated central location list in California, judgment creditors can levy on any branch of that bank. However, once a bank designates a central location, all levies must be served at that location, regardless of where the account was first opened or maintained.
In most California counties, judgment creditors may use a registered process server to serve a centralized service location if the bank has designated one. Alternatively, if a financial institution has nine or more branches and has not designated a central location, it is required to accept levies at any branch. This flexibility benefits judgment creditors, as it simplifies the process of identifying where to serve the levy.
However, it can also create confusion and delays. If a bank has designated a central location and a levy is served on a non-designated branch or agent, the levy is ineffective. This creates substantial risk for judgment creditors, who usually have limited opportunities to seize a debtor’s bank accounts. Accordingly, it is imperative to accurately determine the central location for service (or lack thereof).
Conclusion
AB 2067 represents a noteworthy development in the legal landscape for financial institutions and judgment creditors in California. By allowing the designation of third-party agents as central locations for the service of legal process, the bill offers new opportunities for efficiency and specialization. However, the accompanying requirements for dual designation and geographical distribution will necessitate careful planning and implementation. Judgment creditors should begin preparing now to adapt to new process service strategies in anticipation of the bill’s likely enactment on January 1, 2025.
