Bill Text: CA SB904 | 2017-2018 | Regular Session | Introduced

California Senate Bill 904 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Alarm companies: business conditions: limited liability companies.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2018-09-14 - Chaptered by Secretary of State. Chapter 406, Statutes of 2018. [SB904 Detail]

Download: California-2017-SB904-Introduced.html

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill

No. 904

Introduced by Senator Wieckowski

January 17, 2018

An act to amend Section 7599.34 of the Business and Professions Code, relating to professions and vocations.

LEGISLATIVE COUNSEL'S DIGEST

SB 904, as introduced, Wieckowski. Alarm companies: business conditions: limited liability companies.

The Alarm Company Act provides for the licensure, registration, and regulation of alarm company operators and alarm agents by the Bureau of Security and Investigative Services within the Department of Consumer Affairs and makes a violation of the act a crime. The act authorizes the bureau, until January 1, 2019, to issue an alarm company operator license to a limited liability company (LLC).

The Alarm Company Act, until January 1, 2019, also requires an LLC, as a condition of the issuance, reinstatement, reactivation, or continued valid use of an alarm company license, to maintain an insurance policy or policies against liability for damages from claims arising from its services. Existing law also establishes the total aggregate limit of liability for those required insurance policies, based on aggregate limits. Existing law further requires an LLC applicant or licensee, prior to issuance, reinstatement, or reactivation of an LLC license, to submit to the bureau certain information and documentation demonstrating compliance. Under existing law, if a licensee fails to maintain sufficient insurance or proof thereof, the licensee’s license is subject to suspension, in accordance with specified procedures. Existing law also subjects each member of the LLC to personal liability under certain circumstances.

This bill would extend the operative date of these provisions until January 1, 2025. By expanding the scope of existing crimes, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES

The people of the State of California do enact as follows:

SECTION 1.

Section 7599.34 of the Business and Professions Code, as amended by Section 62 of Chapter 800 of the Statutes of 2016, is amended to read:

7599.34.

(a) A licensee shall not conduct a business as an individual, partnership, limited liability company, or corporation unless the licensee holds a valid license issued to that exact same individual, partnership, limited liability company, or corporation. A violation of this section may result in a fine of five hundred dollars ($500) for each violation.

(b) As a condition of the issuance, reinstatement, reactivation, or continued valid use of a license under this chapter, a limited liability company shall, in accordance with the provisions of this section, maintain a policy or policies of insurance against liability imposed on or against it by law for damages arising out of claims based upon acts, errors, or omissions arising out of the alarm company services it provides.

(c) The total aggregate limit of liability under the policy or policies of insurance required under this section shall be as follows:

(1) For a limited liability company licensee with five or fewer persons named as managing members pursuant to Section 7593.5 or 7599.32, the aggregate limit shall not be less than one million dollars ($1,000,000).

(2) For a limited liability company licensee with more than five persons named as managing members pursuant to Section 7593.5 or 7599.32, an additional one hundred thousand dollars ($100,000) of insurance shall be obtained for each person named as managing members of the licensee except that the maximum amount of insurance is not required to exceed five million dollars ($5,000,000) in any one designated period, less amounts paid in defending, settling, or discharging claims as set forth under this section.

(d) Prior to the issuance, reinstatement, or reactivation of a limited liability company license as provided under this chapter, the applicant or licensee shall, in the manner prescribed by the bureau, submit the information and documentation required by this section and requested by the bureau, demonstrating compliance with the financial security requirements specified by this section.

(e) For any insurance policy secured by a licensee in satisfaction of this section, a Certificate of Liability Insurance, signed by an authorized agent or employee of the insurer, shall be submitted electronically or otherwise to the bureau. The insurer issuing the certificate shall report to the bureau the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, the date and amount of any payment of claims, and cancellation date if applicable. The insurer shall list the bureau as the certificate holder for the purposes of receiving notifications related to the policy’s status.

(f) (1) If a licensee fails to maintain sufficient insurance as required by this section, or fails to provide proof of the required insurance upon request by the bureau, the license is subject to suspension and is automatically suspended pursuant to this subdivision until the date that the licensee provides proof to the bureau of compliance with the insurance coverage requirement.

(2) Prior to an automatic suspension, the bureau shall notify the licensee, in writing, that the licensee has 30 days to provide proof to the bureau of having the required insurance or the license shall be automatically suspended.

(3) If the licensee fails to provide proof of insurance coverage within the period described in paragraph (2), the bureau may automatically suspend the license.

(g) Where the license of a limited liability company is suspended pursuant to subdivision (f), each member of the limited liability company shall be personally liable up to one million dollars ($1,000,000) each for damages resulting to third parties in connection with the company’s performance, during the period of suspension, of any act or contract where a license is required by this chapter.

(h) This section shall remain in effect only until January 1, ~~2019,~~ 2025, and as of that date is repealed.

SEC. 2.

Section 7599.34 of the Business and Professions Code, as amended by Section 63 of Chapter 800 of the Statutes of 2016, is amended to read:

7599.34.

(a) A licensee shall not conduct a business as an individual, partnership, or corporation unless the licensee holds a valid license issued to that exact same individual, partnership, or corporation. A violation of this section may result in a fine of five hundred dollars ($500) for each violation.

(b) This section shall become operative on January 1, ~~2019.~~ 2025.

SEC. 3.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.