As Passed by the Senate 1
123rd General Assembly 4
Regular Session Sub. H. B. No. 292 5
1999-2000 6
REPRESENTATIVES WILLAMOWSKI-BUEHRER-DePIERO-PRINGLE-SCHULER- 8
TAYLOR-TERWILLEGER-VESPER-WOMER BENJAMIN-SALERNO-GRENDELL- 9
SULZER-JONES-SENATORS CUPP-JOHNSON 10
_________________________________________________________________ 12
A B I L L
To amend sections 1309.47 and 1309.49 and to enact 15
section 1301.21 of the Revised Code to provide 16
for the enforceability of commitments to pay 17
attorneys' fees in certain commercial contracts
of indebtedness. 18
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 20
Section 1. That sections 1309.47 and 1309.49 be amended 23
and section 1301.21 of the Revised Code be enacted to read as 24
follows:
Sec. 1301.21. (A) AS USED IN THIS SECTION: 26
(1) "CONTRACT OF INDEBTEDNESS" MEANS A NOTE, BOND, 28
MORTGAGE, CONDITIONAL SALE CONTRACT, RETAIL INSTALLMENT CONTRACT, 29
LEASE, SECURITY AGREEMENT, OR OTHER WRITTEN EVIDENCE OF 30
INDEBTEDNESS, OTHER THAN INDEBTEDNESS INCURRED FOR PURPOSES THAT 31
ARE PRIMARILY PERSONAL, FAMILY, OR HOUSEHOLD.
(2) "COMMITMENT TO PAY ATTORNEYS' FEES" MEANS AN 33
OBLIGATION TO PAY ATTORNEYS' FEES THAT ARISES IN CONNECTION WITH 34
THE ENFORCEMENT OF A CONTRACT OF INDEBTEDNESS. 35
(3) "MATURITY OF THE DEBT" INCLUDES MATURITY UPON DEFAULT 37
OR OTHERWISE.
(B) IF A CONTRACT OF INDEBTEDNESS INCLUDES A COMMITMENT TO 39
PAY ATTORNEYS' FEES, AND IF THE CONTRACT IS ENFORCED THROUGH 40
JUDICIAL PROCEEDINGS OR OTHERWISE AFTER MATURITY OF THE DEBT, A 41
PERSON THAT HAS THE RIGHT TO RECOVER ATTORNEYS' FEES UNDER THE 42
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COMMITMENT, AT THE OPTION OF THAT PERSON, MAY RECOVER ATTORNEYS' 43
FEES IN ACCORDANCE WITH THE COMMITMENT, TO THE EXTENT THAT THE 44
COMMITMENT IS ENFORCEABLE UNDER DIVISIONS (C) AND (D) OF THIS 45
SECTION.
(C) A COMMITMENT TO PAY ATTORNEYS' FEES IS ENFORCEABLE 48
UNDER THIS SECTION ONLY IF THE TOTAL AMOUNT OWED ON THE CONTRACT 49
OF INDEBTEDNESS AT THE TIME THE CONTRACT WAS ENTERED INTO EXCEEDS 50
ONE HUNDRED THOUSAND DOLLARS. 51
(D) A COMMITMENT TO PAY ATTORNEYS' FEES IS ENFORCEABLE 53
ONLY TO THE EXTENT THAT IT OBLIGATES PAYMENT OF A REASONABLE 55
AMOUNT. IN DETERMINING THE AMOUNT OF ATTORNEYS' FEES THAT IS 56
REASONABLE, ALL RELEVANT FACTORS SHALL BE CONSIDERED, INCLUDING 57
BUT NOT LIMITED TO, THE NATURE OF THE SERVICES RENDERED, THE TIME 59
EXPENDED IN RENDERING THE SERVICES, THE AMOUNT OF MONEY AND THE
VALUE OF THE PROPERTY AFFECTED, AND THE PROFESSIONAL SKILL AND 60
EXPERTISE OF THE ATTORNEY OR ATTORNEYS RENDERING THE SERVICES. 61
UNLESS A COURT HAS BEEN REQUESTED TO MAKE A DETERMINATION OF THE 63
AMOUNT OF ATTORNEYS' FEES THAT IS REASONABLE AND FINDS TO THE 64
CONTRARY BY A PREPONDERANCE OF THE EVIDENCE, THE FOLLOWING ARE 65
DEEMED REASONABLE AMOUNTS:
(1) IF THE COMMITMENT TO PAY ATTORNEYS' FEES IS BASED UPON 67
A SPECIFIC PERCENTAGE OF THE TOTAL PRINCIPAL, INTEREST, AND OTHER 68
CHARGES OWED ON THE CONTRACT OF INDEBTEDNESS, THE PERCENTAGE OF 69
THE TOTAL SO OWED AS SPECIFIED IN THE CONTRACT OF INDEBTEDNESS; 70
(2) IF THE COMMITMENT TO PAY ATTORNEYS' FEES IS NOT BASED 72
UPON A SPECIFIC PERCENTAGE OF THE TOTAL PRINCIPAL, INTEREST, AND 73
OTHER CHARGES OWED ON THE CONTRACT OF INDEBTEDNESS, AN AMOUNT 74
EQUAL TO THE ATTORNEYS' FEES CUSTOMARILY CHARGED BY THE ATTORNEY 75
OR ATTORNEYS RENDERING THE SERVICES.
Sec. 1309.47. (A) A secured party after default may sell, 84
lease, or otherwise dispose of any or all of the collateral in 85
its then condition or following any commercially reasonable 86
preparation or processing. Any sale of goods is subject to 87
Chapter 1302. of the Revised Code. The proceeds of disposition 88
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shall be applied in the order following to: 89
(1) The reasonable expenses of retaking, holding, 91
preparing for sale or lease, selling, leasing, and the like, AND, 92
TO THE EXTENT PROVIDED FOR IN AN AGREEMENT WITH THE SECURED PARTY 93
AND NOT PROHIBITED BY SECTION 1301.21 OF THE REVISED CODE, THE 94
REASONABLE ATTORNEYS' FEES AND LEGAL EXPENSES INCURRED BY THE 95
SECURED PARTY; 96
(2) The satisfaction of indebtedness secured by the 98
security interest under which the disposition is made; 99
(3) The satisfaction of indebtedness secured by any 101
subordinate security interest in the collateral if written 102
notification of demand therefor is received before distribution 103
of the proceeds is completed. If requested by the secured party, 104
the holder of a subordinate security interest must SHALL 105
seasonably furnish reasonable proof of his THE HOLDER'S interest, 107
and unless he THE HOLDER does so, the secured party need not 109
comply with his THE HOLDER'S demand.
(B)(1) If the underlying transaction was a sale of 111
accounts or chattel paper, the debtor is entitled to any surplus 112
or is liable for any deficiency only if the security agreement so 113
provides. 114
(2)(a) If the security interest secures an indebtedness, 116
the secured party must SHALL account to the debtor for any 117
surplus, and, unless otherwise agreed, the debtor is liable for 119
any deficiency. 120
(b) If the secured party in disposing of collateral 122
pursuant to this section has complied with the requirements of 123
division (C) of this section, the amount of the deficiency, if 124
any, to which the secured party is entitled shall be based on the 125
actual proceeds of the disposition. 126
(c) If the secured party in disposing of collateral 128
pursuant to this section has failed to comply with the 129
requirements of division (C) of this section, the amount of the 130
deficiency, if any, to which the secured party is entitled shall 131
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be based on the appropriate value of the collateral as provided 132
in division (B)(2)(d) or (e) of this section. 133
(d) The appropriate value of the collateral under division 135
(B)(2)(c) of this section shall be presumed to equal the secured 136
indebtedness. The secured party may rebut this presumption by 137
introducing some credible evidence of a lower appropriate value 138
of the collateral. Evidence of the amount of the actual proceeds 139
of the disposition is not, of itself, sufficient to rebut the 140
presumption. 141
(e) If the secured party rebuts the presumption described 143
in division (B)(2)(d) of this section, the appropriate value of 144
the collateral shall be deemed to equal the actual proceeds of 145
the disposition, unless the debtor establishes that a greater 146
amount would have been realized had the secured party complied 147
with the requirements of division (C) of this section, in which 148
case, the greater amount established by the debtor shall be 149
deemed the appropriate value of the collateral. The debtor bears 150
the burden of establishing the amount that would have been 151
realized had the secured party complied with the requirements of 152
division (C) of this section. 153
(C) Disposition of the collateral may be by public or 155
private proceedings and may be made by way of one or more 156
contracts. Sale or other disposition may be as a unit or in 157
parcels, and at any time and place, and on any terms, but every 159
aspect of the disposition, including the method, manner, time, 160
place, and terms must, SHALL be commercially reasonable. Unless 162
collateral is perishable or threatens to decline speedily in 163
value or is of a type customarily sold on a recognized market, 164
reasonable notification of the time and place of any public sale 165
or reasonable notification of the time after which any private 166
sale or other intended disposition is to be made shall be sent by 167
the secured party to the debtor if he THE DEBTOR has not signed 168
after default a statement renouncing or modifying his THE 170
DEBTOR'S right to notification of sale. In the case of consumer 172
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goods, no other notification need be sent. In other cases, 173
notification shall be sent to any other secured party from whom 174
the secured party has received, before sending his notification 175
to the debtor or before the debtor's renunciation of his THE 176
DEBTOR'S rights, written notice of a claim of an interest in the 178
collateral. The secured party may buy at any public sale, and, 179
if the collateral is of a type customarily sold in a recognized 180
market or is of a type which is the subject of widely distributed 181
standard price quotations he, THE SECURED PARTY may buy at A 183
private sale.
(D) When collateral is disposed of by a secured party 185
after default, the disposition transfers to a purchaser for value 186
all of the debtor's rights therein IN THE COLLATERAL, AND 187
discharges the security interest under which it is made and any 190
security interest or lien subordinate thereto TO IT. The 191
purchaser takes free of all such rights and interests even though 193
the secured party fails to comply with the requirements of 194
sections 1309.44 to 1309.50 of the Revised Code or of any 195
judicial proceedings:
(1) In the case of a public sale, if the purchaser has no 197
knowledge of any defects in the sale and if he THE PURCHASER does 199
not buy in collusion with the secured party, other bidders, or 200
the person conducting the sale; or 201
(2) In any other case, if the purchaser acts in good 203
faith. 204
(E) A person who is liable to a secured party under a 206
guaranty, indorsement, repurchase agreement, or the like and who 207
receives a transfer of collateral from the secured party or is 208
subrogated to his THE SECURED PARTY'S rights has thereafter the 209
rights and duties of the secured party. Such a transfer of 211
collateral is not a sale or disposition of the collateral under 212
this chapter.
(F) This section is subject to the limitations of section 214
1317.16 of the Revised Code. 215
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Sec. 1309.49. At any time before the secured party has 224
disposed of collateral or entered into a contract for its 225
disposition under section 1309.47 of the Revised Code or before 226
the obligation has been discharged under division (B) of section 227
1309.48 of the Revised Code, the debtor or any other secured
party may, unless otherwise agreed in writing after default, 228
redeem the collateral by tendering fulfillment of all obligations 230
secured by the collateral as well as, the expenses reasonably 232
incurred by the secured party in retaking, holding, and preparing 233
the collateral for disposition, in arranging for the sale, AND, 234
TO THE EXTENT PROVIDED FOR IN AN AGREEMENT WITH THE SECURED PARTY 235
AND NOT PROHIBITED BY SECTION 1301.21 OF THE REVISED CODE, THE 236
REASONABLE ATTORNEYS' FEES AND LEGAL EXPENSES INCURRED BY THE 237
SECURED PARTY.
Section 2. That existing sections 1309.47 and 1309.49 of 240
the Revised Code are hereby repealed. 241
Section 3. Section 1301.21 of the Revised Code applies 243
only to commitments to pay attorneys' fees that are included in 244
contracts of indebtedness that are enforced, through judicial 245
proceedings or otherwise, on and after the effective date of this 246
act.