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As Passed by the Senate
123rd General Assembly
Regular Session
1999-2000 | Sub. H. B. No. 292 |
REPRESENTATIVES WILLAMOWSKI-BUEHRER-DePIERO-PRINGLE-SCHULER-
TAYLOR-TERWILLEGER-VESPER-WOMERBENJAMIN-SALERNO-GRENDELL-
SULZER-JONES-
SENATOR SCUPP-JOHNSON
A BILL
To amend sections 1309.47 and 1309.49
and to enact section 1301.21 of
the Revised Code to provide for the enforceability of commitments
to pay attorneys' fees in certain commercial contracts of
indebtedness.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 1309.47 and 1309.49
be amended and section 1301.21 of
the Revised Code be enacted to read as follows:
Sec. 1301.21. (A) AS USED IN THIS SECTION:
(1) "CONTRACT OF INDEBTEDNESS" MEANS A NOTE, BOND, MORTGAGE, CONDITIONAL
SALE CONTRACT, RETAIL INSTALLMENT CONTRACT, LEASE, SECURITY AGREEMENT, OR
OTHER WRITTEN EVIDENCE OF INDEBTEDNESS, OTHER THAN INDEBTEDNESS INCURRED FOR
PURPOSES THAT ARE PRIMARILY PERSONAL, FAMILY, OR HOUSEHOLD.
(2) "COMMITMENT TO PAY ATTORNEYS' FEES" MEANS AN OBLIGATION TO PAY
ATTORNEYS' FEES THAT ARISES IN CONNECTION WITH THE ENFORCEMENT OF A CONTRACT
OF INDEBTEDNESS.
(3) "MATURITY OF THE DEBT" INCLUDES MATURITY UPON DEFAULT OR OTHERWISE.
(B) IF A CONTRACT OF INDEBTEDNESS INCLUDES A COMMITMENT TO PAY
ATTORNEYS' FEES, AND IF THE CONTRACT IS ENFORCED THROUGH JUDICIAL PROCEEDINGS
OR OTHERWISE AFTER MATURITY OF THE DEBT, A PERSON THAT HAS THE RIGHT TO
RECOVER ATTORNEYS' FEES UNDER THE COMMITMENT, AT THE OPTION OF THAT PERSON,
MAY RECOVER ATTORNEYS' FEES IN ACCORDANCE
WITH THE COMMITMENT, TO THE EXTENT THAT THE COMMITMENT IS ENFORCEABLE UNDER
DIVISIONS (C) AND (D) OF THIS SECTION.
(C) A COMMITMENT TO PAY ATTORNEYS'
FEES IS ENFORCEABLE UNDER THIS SECTION ONLY IF THE TOTAL AMOUNT OWED ON THE
CONTRACT OF INDEBTEDNESS
AT THE TIME THE CONTRACT WAS ENTERED INTO EXCEEDS ONE HUNDRED
THOUSAND DOLLARS.
(D) A COMMITMENT TO PAY ATTORNEYS' FEES IS ENFORCEABLE ONLY TO
THE EXTENT THAT
IT OBLIGATES PAYMENT OF A REASONABLE AMOUNT. IN DETERMINING THE AMOUNT OF
ATTORNEYS' FEES THAT IS REASONABLE, ALL RELEVANT
FACTORS SHALL BE CONSIDERED, INCLUDING BUT NOT LIMITED TO, THE NATURE OF THE
SERVICES RENDERED,
THE TIME EXPENDED IN RENDERING THE SERVICES, THE AMOUNT OF MONEY AND THE VALUE
OF THE PROPERTY AFFECTED, AND THE PROFESSIONAL SKILL AND EXPERTISE OF THE
ATTORNEY OR ATTORNEYS RENDERING THE SERVICES. UNLESS A COURT HAS BEEN
REQUESTED TO MAKE A
DETERMINATION OF THE AMOUNT
OF ATTORNEYS' FEES THAT IS REASONABLE AND FINDS TO THE CONTRARY BY
A PREPONDERANCE OF THE EVIDENCE, THE FOLLOWING ARE DEEMED REASONABLE AMOUNTS:
(1) IF THE COMMITMENT TO PAY ATTORNEYS' FEES IS BASED UPON A SPECIFIC
PERCENTAGE OF THE TOTAL PRINCIPAL, INTEREST, AND OTHER CHARGES OWED ON THE
CONTRACT OF INDEBTEDNESS, THE PERCENTAGE OF THE TOTAL SO OWED AS SPECIFIED IN
THE CONTRACT OF INDEBTEDNESS;
(2) IF THE COMMITMENT TO PAY ATTORNEYS' FEES IS NOT BASED UPON A SPECIFIC
PERCENTAGE OF THE TOTAL PRINCIPAL, INTEREST, AND OTHER CHARGES OWED ON THE
CONTRACT OF INDEBTEDNESS, AN AMOUNT EQUAL TO THE ATTORNEYS' FEES CUSTOMARILY
CHARGED BY THE ATTORNEY OR ATTORNEYS RENDERING THE SERVICES.
Sec. 1309.47. (A) A secured party after default may sell,
lease, or otherwise dispose of any or all of the collateral in
its then condition or following any commercially reasonable
preparation or processing. Any sale of goods is subject to
Chapter 1302. of the Revised Code. The proceeds of disposition
shall be applied in the order following to:
(1) The reasonable expenses of retaking, holding,
preparing for sale or lease, selling, leasing, and the like, AND, TO
THE EXTENT PROVIDED FOR IN AN AGREEMENT WITH THE SECURED PARTY AND NOT
PROHIBITED BY SECTION 1301.21 OF THE REVISED CODE, THE
REASONABLE ATTORNEYS' FEES AND LEGAL EXPENSES INCURRED BY THE SECURED
PARTY;
(2) The satisfaction of indebtedness secured by the
security interest under which the disposition is made;
(3) The satisfaction of indebtedness secured by any
subordinate security interest in the collateral if written
notification of demand therefor is received before distribution
of the proceeds is completed. If requested by the secured party,
the holder of a subordinate security interest must SHALL
seasonably
furnish reasonable proof of his THE HOLDER'S interest, and
unless he THE HOLDER does so,
the secured party need not comply with his THE HOLDER'S demand.
(B)(1) If the underlying transaction was a sale of
accounts or chattel paper, the debtor is entitled to any surplus
or is liable for any deficiency only if the security agreement so
provides.
(2)(a) If the security interest secures an indebtedness,
the secured party must SHALL account to the debtor for any
surplus,
and, unless otherwise agreed, the debtor is liable for any
deficiency.
(b) If the secured party in disposing of collateral
pursuant to this section has complied with the requirements of
division (C) of this section, the amount of the deficiency, if
any, to which the secured party is entitled shall be based on the
actual proceeds of the disposition.
(c) If the secured party in disposing of collateral
pursuant to this section has failed to comply with the
requirements of division (C) of this section, the amount of the
deficiency, if any, to which the secured party is entitled shall
be based on the appropriate value of the collateral as provided
in division (B)(2)(d) or (e) of this section.
(d) The appropriate value of the collateral under division
(B)(2)(c) of this section shall be presumed to equal the secured
indebtedness. The secured party may rebut this presumption by
introducing some credible evidence of a lower appropriate value
of the collateral. Evidence of the amount of the actual proceeds
of the disposition is not, of itself, sufficient to rebut the
presumption.
(e) If the secured party rebuts the presumption described
in division (B)(2)(d) of this section, the appropriate value of
the collateral shall be deemed to equal the actual proceeds of
the disposition, unless the debtor establishes that a greater
amount would have been realized had the secured party complied
with the requirements of division (C) of this section, in which
case, the greater amount established by the debtor shall be
deemed the appropriate value of the collateral. The debtor bears
the burden of establishing the amount that would have been
realized had the secured party complied with the requirements of
division (C) of this section.
(C) Disposition of the collateral may be by public or
private proceedings and may be made by way of one or more
contracts. Sale or other disposition may be as a unit or in
parcels, and at any time and place, and on any terms, but
every
aspect of the disposition, including the method, manner, time,
place, and terms must, SHALL be commercially reasonable.
Unless
collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market,
reasonable notification of the time and place of any public sale
or reasonable notification of the time after which any private
sale or other intended disposition is to be made shall be sent by
the secured party to the debtor if he THE DEBTOR has not signed
after
default a statement renouncing or modifying his THE DEBTOR'S
right to
notification of sale. In the case of consumer goods, no other
notification need be sent. In other cases, notification shall be
sent to any other secured party from whom the secured party has
received, before sending his notification to the debtor or before
the debtor's renunciation of his THE DEBTOR'S rights, written
notice of a
claim of an interest in the collateral. The secured party may
buy at any public sale, and, if the collateral is of a type
customarily sold in a recognized market or is of a type which is
the subject of widely distributed standard price quotations he,
THE SECURED PARTY
may buy at A private sale.
(D) When collateral is disposed of by a secured party
after default, the disposition transfers to a purchaser for value
all of the debtor's rights therein IN THE COLLATERAL, AND
discharges
the security
interest under which it is made and any security interest or lien
subordinate thereto TO IT. The purchaser takes free of all such
rights
and interests even though the secured party fails to comply with
the requirements of sections 1309.44 to 1309.50 of the Revised
Code or of any judicial proceedings:
(1) In the case of a public sale, if the purchaser has no
knowledge of any defects in the sale and if he THE PURCHASER
does not buy in
collusion with the secured party, other bidders, or the person
conducting the sale; or
(2) In any other case, if the purchaser acts in good
faith.
(E) A person who is liable to a secured party under a
guaranty, indorsement, repurchase agreement, or the like and who
receives a transfer of collateral from the secured party or is
subrogated to his THE SECURED PARTY'S rights has thereafter the
rights and duties of
the secured party. Such a transfer of collateral is not a sale
or disposition of the collateral under this chapter.
(F) This section is subject to the limitations of section
1317.16 of the Revised Code.
Sec. 1309.49. At any time before the secured party has disposed of collateral
or entered into a contract for its disposition under section 1309.47 of the
Revised Code or before the obligation has been discharged under division (B)
of section 1309.48 of the Revised Code, the debtor or any other secured party
may, unless otherwise agreed in writing after default, redeem the
collateral by
tendering fulfillment of all obligations secured by the collateral as well
as,
the expenses reasonably incurred by the secured party in retaking, holding,
and preparing the collateral for disposition, in arranging for the
sale, AND, TO THE EXTENT PROVIDED FOR IN AN AGREEMENT WITH THE
SECURED PARTY AND NOT PROHIBITED BY SECTION 1301.21 OF THE REVISED
CODE, THE REASONABLE ATTORNEYS' FEES AND LEGAL EXPENSES INCURRED BY
THE SECURED PARTY.
Section 2. That existing sections 1309.47 and 1309.49
of the Revised Code are
hereby repealed.
Section 3. Section 1301.21 of the Revised Code applies only to commitments to
pay attorneys' fees that are included in contracts of indebtedness that are
enforced, through judicial proceedings or otherwise, on and after the
effective date of this act.
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