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F I S C A L I M P A C T R E P O R T

SPONSOR SJC

ORIGINAL DATE

LAST UPDATED

1/19/2007

3/13/2007 HB

SHORT TITLE Judicial Forum for Rental Contracts

SB 69/SJCS/a HJC

ANALYST Schuss/Wilson

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

Unknown Unknown Unknown Recurring General

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Administrative Office of the Courts (AOC)

SUMMARY

Synopsis of Amendment

The House Judiciary Committee amendment to the Senate Judiciary Committee substitute for

Senate Bill 69 adds a new Subsection to Section 2 that reads:

A lease or rental contract for equipment that does not contain a provision covered by this

section shall be presumed to conform to Subsections A and B of this section.

Synopsis of Original Bill

The Senate Judiciary Committee substitute for Senate Bill 69 amends NMSA Section 55-2A-

106. The bill states if the forum for an arbitration or mediation hearing chosen by the parties to a

consumer lease is in a state or in a similar political subdivision in a foreign country other than the

state or the similar subdivision in the foreign country in which the lessee resides at the time the

Senate Bill 69/SJCS/a HJC– Page

2

lease agreement becomes enforceable or within thirty days thereafter or in which the goods are to

be used, the choice is not enforceable.

The bill also prohibits indemnification clauses where one party agrees to hold harmless,

indemnify, etc. the other party for bodily injury claims caused by the negligence or wrongful acts

of the other party. This prevents one party from having to assume risk even when the injury is

caused by the other party.

The bill defines “indemnify" or “hold harmless" as any requirement to name the indemnified

party as an additional insured on the indemnitor’s insurance for the purpose of providing

indemnification for liability otherwise allowed in this section.

The following are exempt from the provisions of this bill:

•

A lease or rental contract for a motor vehicle, as "motor vehicle" is defined in Section 66-

1-4.11 NMSA 1978 and that is designed and used primarily to transport persons or

property on a public highway.

•

A security agreement as defined in Section 55-9-102 NMSA 1978 or to a finance lease as

defined in Section 55-2A-103 NMSA 1978 or to a lease by a repossessing lessor for

equipment repossessed upon default under such a finance lease.

•

A lease or rental contract for equipment for use in the production of motion pictures or

television.

FISCAL IMPLICATIONS

The Administrative Office of the Courts states that any fiscal impact on the judiciary is unknown

and would be proportional to increase in lease disputes heard in New Mexico’s courts. There

may be an increase in the amount of work that needs to be done by the courts, thus requiring

additional resources to handle increase.

SIGNIFICANT ISSUES

This bill attempts to correct the situation when a renter of equipment is forced to indemnify a

rental company for the company’s negligence and wrongful acts and still not deviate from the

Model Uniform Commercial Code, as they have not been adopted by the National Conference of

Commissioners on Uniform State Laws.

ADMINISTRATIVE IMPLICATIONS

The Administrative Office of the Courts states that

there may be an administrative impact on the

courts as the result of an increase in caseload and/or in the amount of time necessary to dispose

of cases.

BS/DW:mt