SF 3049

3rd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to commerce; providing an expedited process for the judicial review
of financing statements; establishing civil and criminal liability for fraudulent
or otherwise improper financing statements; proposing coding for new law in
Minnesota Statutes, chapters 545; 604; 609.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [545.05] EXPEDITED PROCESS TO REVIEW AND DETERMINE
THE EFFECTIVENESS OF FINANCING STATEMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) As used in this section, a financing statement or
other record is fraudulent or otherwise improper if it is filed without the authorization of
the obligor, person named as debtor, or owner of collateral described or indicated in
the financing statement or other record, or by consent of an agent, fiduciary, or other
representative of that person or without the consent of the secured party of record in
the case of an amendment or termination.
new text end

new text begin (b) As used in this section, filing office or filing officer refers to the office or officer
where a financing statement or other record is appropriately filed or recorded as provided
by law, including, but not limited to, the county recorder, the secretary of state, and other
related filing officers.
new text end

new text begin Subd. 2. new text end

new text begin Motion. new text end

new text begin An obligor, person named as a debtor, or owner of collateral
described or indicated in a financing statement or other record filed under sections
336.9-101 to 336.9-709 (Uniform Commercial Code - Secured Transactions), who
has reason to believe that the financing statement or other record is fraudulent or
otherwise improper may complete and file at any time a motion for judicial review of the
effectiveness of the financing statement or other record. A secured party of record who
believes that an amendment or termination of a financing statement or other record is
fraudulent or otherwise improper may also file a motion.
new text end

new text begin Subd. 3. new text end

new text begin Service and filing. new text end

new text begin (a) The motion under subdivision 2 must be mailed
by certified United States mail to the person who is indicated as the secured party on
the allegedly fraudulent or improper record at the address listed on the record or, in the
case of a filing by the secured party of record, to the address of the person who filed
the amendment or termination in question, as listed on the record. The motion must be
accompanied by a copy of the record in question, an affidavit of mailing, the form for
responding to the motion under subdivision 6, and a copy of the text of this section.
new text end

new text begin (b) On the day the motion is mailed, a copy of the materials must be filed with the
district court of the county in which the financing statement or other record has been filed
or in the county of residence of the moving party. The motion must be supported by
the affidavit of the moving party or the moving party's attorney setting forth a concise
statement of the facts upon which the claim for relief is based. There is no filing fee for a
motion or a response filed under this section.
new text end

new text begin Subd. 4. new text end

new text begin Motion form. new text end

new text begin The motion must be in substantially the following form:
new text end

new text begin In Re: A Purported Financing Statement in the district court of ............. County,
Minnesota, Against [Name of person who filed the financing statement]
new text end

new text begin MOTION FOR JUDICIAL REVIEW OF A FINANCING STATEMENT FILED
UNDER THE UNIFORM COMMERCIAL CODE - SECURED TRANSACTIONS
new text end

new text begin .................................... (name of moving party) files this motion requesting a judicial
determination of the effectiveness of a financing statement or other record filed under the
Uniform Commercial Code - Secured Transactions in the office of the ............... (filing
office and location) and in support of the motion provides as follows:
new text end

new text begin I.
new text end

new text begin ................. (name), the moving party, is the [obligor, person named as a debtor, or
owner of collateral described or indicated in] [secured party of record listed in] a financing
statement or other record filed under the Uniform Commercial Code.
new text end

new text begin II.
new text end

new text begin On ............. (date), in the exercise of the filing officer's official duties as ..................
(filing officer's position), the filing officer received and filed or recorded the financing
statement or other record, a copy which is attached, that purports to [perfect a security
interest against the obligor, person named as debtor, or the owner of collateral described or
indicated in the financing statement or other record] or [amend or terminate the financing
statement in which the moving party is listed as the secured party of record].
new text end

new text begin III.
new text end

new text begin The moving party alleges that the financing statement or other record is fraudulent
or otherwise improper and that this court should declare the financing statement or other
record ineffective.
new text end

new text begin IV.
new text end

new text begin The moving party attests that the assertions in this motion are true and correct.
new text end

new text begin V.
new text end

new text begin The moving party does not request the court to make a finding as to any underlying
claim of the parties involved and acknowledges that this motion does not seek review of
an effective financing statement. The moving party further acknowledges that the moving
party may be subject to sanctions if this motion is determined to be frivolous. The moving
party may be contacted by the respondent at:
new text end

new text begin Mailing Address: (required)
new text end

new text begin Telephone Number:
new text end

new text begin Facsimile Number: (either facsimile or e-mail contact is required)
new text end

new text begin E-Mail Address: (either facsimile or e-mail contact is required)
new text end

new text begin REQUEST FOR RELIEF
new text end

new text begin The moving party requests the court to review the attached documentation and enter
an order finding that the financing statement or other record is ineffective together with
other findings as the court deems appropriate.
new text end

new text begin Respectfully submitted, .......................... (Signature and typed name and address).
new text end

new text begin Subd. 5. new text end

new text begin Motion acknowledgment form. new text end

new text begin The form for the certificate of
acknowledgment must be substantially as follows:
new text end

new text begin AFFIDAVIT
new text end

new text begin THE STATE OF MINNESOTA COUNTY OF .......
new text end

new text begin BEFORE ME, the undersigned authority, personally appeared ........., who, being by
me duly sworn, deposed as follows:
new text end

new text begin "My name is ............... I am over 18 years of age, of sound mind, with personal
knowledge of the following facts, and fully competent to testify.
new text end

new text begin I attest that the assertions contained in the accompanying motion are true and
correct."
new text end

new text begin SUBSCRIBED and SWORN TO before me, this ..... day of ..................
new text end

new text begin NOTARY PUBLIC, State of [state name]
new text end

new text begin Notary's printed name: .........................
new text end

new text begin My commission expires: .........................
new text end

new text begin The motion must be supported by the affidavit of the moving party or the moving
party's attorney setting forth a concise statement of the facts upon which the claim for
relief is based.
new text end

new text begin Subd. 6. new text end

new text begin Motion affidavit of mailing form. new text end

new text begin The moving party shall complete an
affidavit of mailing the motion to the court and to the respondent in substantially the
following form:
new text end

new text begin State of Minnesota
new text end

new text begin County of ..........
new text end

new text begin ............................, the moving party, being duly sworn, on oath, deposes and says
that on the ..... day of .........., ......., the moving party mailed the motion to the court and
the respondent by placing a true and correct copy of the motion in an envelope addressed
to them as shown by certified United States mail at ............................, Minnesota.
new text end

new text begin Subscribed and sworn to before me this ..... day of ...................., .......
new text end

new text begin Subd. 7. new text end

new text begin Response form. new text end

new text begin The person listed as [the secured party in] [filing] the
record for which the moving party has requested review may respond to the motion and
accompanying materials to request an actual hearing within 20 days from the mailing by
certified United States mail by the moving party. The form for use by the person listed as
[the secured party in] [filing] the record in question to respond to the motion for judicial
review must be in substantially the following form:
new text end

new text begin In Re: A Purported Financing Statement in the district court of ............. County,
Minnesota, Against [Name of person who filed the financing statement]
new text end

new text begin RESPONSE TO MOTION FOR JUDICIAL REVIEW OF A FINANCING
STATEMENT FILED UNDER THE UNIFORM COMMERCIAL CODE
- SECURED TRANSACTIONS
new text end

new text begin ............................ (name) files this response to a motion requesting a judicial
determination of the effectiveness of a financing statement or other record filed under the
Uniform Commercial Code - Secured Transactions in the office of the ............... (filing
office and location) and in support of the motion provides as follows:
new text end

new text begin I.
new text end

new text begin ................. (name), the respondent, is the person listed as [the secured party in]
[filing] the record for which review has been requested by the moving party.
new text end

new text begin II.
new text end

new text begin On ............. (date), in the exercise of the filing officer's official duties as ..................
(filing officer's position), the filing officer received and filed or recorded the financing
statement or other record, a copy which is attached, that purports to [perfect a security
interest against] [amend or terminate a record filed by] the moving party.
new text end

new text begin III.
new text end

new text begin Respondent states that the financing statement or other record is not fraudulent
or otherwise improper and that this court should not declare the financing statement or
other record ineffective.
new text end

new text begin IV.
new text end

new text begin Respondent attests that assertions in this response are true and correct.
new text end

new text begin V.
new text end

new text begin Respondent does not request the court to make a finding as to any underlying claim
of the parties involved. Respondent further acknowledges that respondent may be subject
to sanctions if this response is determined to be frivolous.
new text end

new text begin REQUEST FOR RELIEF
new text end

new text begin Respondent requests the court to review the attached documentation, to set a hearing
for no later than five days after the date of this response or as soon after that as the court
shall order and to enter an order finding that the financing statement or other record is
not ineffective together with other findings as the court deems appropriate. Respondent
may be contacted at:
new text end

new text begin Mailing Address: (required)
new text end

new text begin Telephone Number:
new text end

new text begin Facsimile Number: (either facsimile or e-mail contact is required)
new text end

new text begin E-Mail Address: (either facsimile or e-mail contact is required)
new text end

new text begin Respectfully submitted, .........................
new text end

new text begin (Signature and typed name and address).
new text end

new text begin Subd. 8. new text end

new text begin Response acknowledgment form. new text end

new text begin The form for the certificate of
acknowledgment must be substantially as follows:
new text end

new text begin AFFIDAVIT
new text end

new text begin THE STATE OF MINNESOTA COUNTY OF .......
new text end

new text begin BEFORE ME, the undersigned authority, personally appeared ........., who, being by
me duly sworn, deposed as follows:
new text end

new text begin "My name is ............... I am over 18 years of age, of sound mind, with personal
knowledge of the following facts, and fully competent to testify.
new text end

new text begin I attest that the assertions contained in the accompanying motion are true and
correct."
new text end

new text begin SUBSCRIBED and SWORN TO before me, this ..... day of ..................
new text end

new text begin NOTARY PUBLIC, State of [state name]
new text end

new text begin Notary's printed name: .........................
new text end

new text begin My commission expires: .........................
new text end

new text begin Subd. 9. new text end

new text begin Response affidavit of mailing form. new text end

new text begin Respondent shall submit the
response by United States mail to both the court and the moving party, and also by either
e-mail or facsimile as provided by the moving party. The respondent shall complete an
affidavit of mailing the response to the court and to the moving party in substantially
the following form:
new text end

new text begin State of Minnesota
new text end

new text begin County of ..........
new text end

new text begin ............................, being the responding party, being duly sworn, on oath, deposes
and says that on the ..... day of .........., ......., respondent mailed the response to court
and the moving party by placing a true and correct copy of the response in an envelope
addressed to them as shown depositing the same with postage prepaid, in the U.S. Mail
at ............................, Minnesota.
new text end

new text begin Subscribed and sworn to before me this ..... day of ...................., .......
new text end

new text begin Subd. 10. new text end

new text begin Hearing. new text end

new text begin (a) If a hearing is timely requested, the court shall hold that
hearing within five days after the mailing of the response by the respondent or as soon
after that as ordered by the court. After the hearing, the court shall enter appropriate
findings of fact and conclusions of law regarding the financing statement or other record
filed under the Uniform Commercial Code.
new text end

new text begin (b) If a hearing request under subdivision 7 is not received by the court by the
20th day following the mailing of the original motion, the court's finding may be made
solely on a review of the documentation attached to the motion and without hearing any
testimonial evidence. After that review, which must be conducted no later than five days
after the 20-day period has expired, the court shall enter appropriate findings of fact and
conclusions of law as provided in subdivision 11 regarding the financing statement or
other record filed under the Uniform Commercial Code.
new text end

new text begin (c) A copy of the findings of fact and conclusions of law must be sent to the moving
party, the respondent, and the person who filed the financing statement or other record at
the address listed in the motion or response of each person within seven days of the date
that the findings of fact and conclusions of law are issued by the court.
new text end

new text begin (d) In all cases, the moving party shall file or record an attested copy of the findings
of fact and conclusions of law in the filing office in the appropriate class of records in
which the original financing statement or other record was filed or recorded. The filing
officer shall not collect a filing fee for filing a court's finding of fact and conclusion of
law as provided in this section except as specifically directed by the court in its findings
and conclusions.
new text end

new text begin Subd. 11. new text end

new text begin Order form; no hearing. new text end

new text begin The findings of fact and conclusion of law
for an expedited review where no hearing has been requested must be in substantially
the following form:
new text end

new text begin MISCELLANEOUS DOCKET No. ...........
new text end

new text begin In Re: A purported Financing Statement in the district court of ........... ................
County, Minnesota, Against [Name of person who filed financing statement]
new text end

new text begin Judicial Finding of Fact and Conclusion of Law Regarding a Financing Statement or
Other Record Filed Under the Uniform Commercial Code - Secured Transactions
new text end

new text begin On the (number) day of (month), (year), in the above entitled and numbered cause,
this court reviewed a motion, verified by affidavit, of (name) and the documentation
attached. The respondent did not respond within the required 20-day period. No testimony
was taken from any party, nor was there any notice of the court's review, the court
having made the determination that a decision could be made solely on review of the
documentation as provided in Minnesota Statutes, section 545.05.
new text end

new text begin The court finds as follows (only an item or subitem checked and initialed is a valid
court ruling):
new text end

new text begin [..] The documentation attached to the motion IS filed or recorded with the
authorization of the obligor, person named as debtor, or owner of collateral described or
indicated in the financing statement or other record, or by consent of an agent, fiduciary, or
other representative of that person, or with the authorization of the secured party of record
in the case of an amendment or termination.
new text end

new text begin [..] The documentation attached to the motion IS NOT filed or recorded with the
authorization of the obligor, person named as debtor, or owner of collateral described or
indicated in the documentation, or by consent of an agent, fiduciary, or other representative
of that person, or with the authorization of the secured party of record in the case of an
amendment or termination and, IS NOT an effective financing statement or other record
under the Uniform Commercial Code - Secured Transactions law of this state.
new text end

new text begin [..] This court makes no finding as to any underlying claims of the parties involved
and expressly limits its findings of fact and conclusions of law to the review of a
ministerial act. The filing officer shall remove the subject financing statement or other
record so that the record is not reflected in or obtained as a result of any search, standard
or otherwise, conducted of those records, but shall retain them and these findings of fact
and conclusions of law in the filing office for the duration of the period for which they
would have otherwise been filed.
new text end

new text begin SIGNED ON THIS THE ...... DAY of .......
new text end

new text begin ............. District Judge
new text end

new text begin ............. District
new text end

new text begin ............. County, Minnesota
new text end

new text begin new text end

new text begin Subd. 12. new text end

new text begin Hearing determination. new text end

new text begin If a determination is made after a hearing, the
court may award the prevailing party all costs related to the entire review, including, but
not limited to, filing fees, attorney fees, administrative costs, and other costs.
new text end

new text begin Subd. 13. new text end

new text begin Subsequent motion. new text end

new text begin If the moving party files a subsequent motion under
this section against a person filing a financing statement or other record that is reviewed
under this section and found to be filed or recorded with the authorization of the obligor,
person named as debtor, or owner of collateral described or indicated in the financing
statement or other record, or by consent of an agent, fiduciary, or other representative of
that person, or with the authorization of the secured party of record in the case of an
amendment or termination, the court may, in addition to assessing costs, order other
equitable relief against the moving party or enter other sanctions against the moving party.
new text end

new text begin Subd. 14. new text end

new text begin Judicial officers. new text end

new text begin The chief judge of a district court may order that any
or all proceedings under this section be conducted and heard by other judicial officers of
that district court.
new text end

Sec. 2.

new text begin [604.18] CIVIL LIABILITY FOR FRAUDULENT OR OTHERWISE
IMPROPER FINANCING STATEMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section:
new text end

new text begin (1) "financing statement" has the meaning given in section 336.9-102(a) of the
Uniform Commercial Code; and
new text end

new text begin (2) "filing officer" is defined as Uniform Commercial Code filing officer in each
jurisdiction.
new text end

new text begin Subd. 2. new text end

new text begin Liability. new text end

new text begin (a) A person shall not knowingly cause to be presented for filing
or promote the filing of a financing statement that the person knows:
new text end

new text begin (1) is forged;
new text end

new text begin (2) is not:
new text end

new text begin (i) related to a valid lien or security agreement; or
new text end

new text begin (ii) filed pursuant to section 336.9-502(d); and
new text end

new text begin (3) is for an improper purpose or purposes, such as to harass, hinder, defraud, or
otherwise interfere with any person.
new text end

new text begin (b) A person who violates paragraph (a) is liable to each injured person for:
new text end

new text begin (1) the greater of:
new text end

new text begin (i) nominal damages up to $10,000; or
new text end

new text begin (ii) the actual damages caused by the violation;
new text end

new text begin (2) court costs;
new text end

new text begin (3) reasonable attorney fees;
new text end

new text begin (4) related expenses of bringing the action, including investigative expenses; and
new text end

new text begin (5) exemplary damages in the amount determined by the court.
new text end

new text begin Subd. 3. new text end

new text begin Cause of action. new text end

new text begin (a) The following persons may bring an action to enjoin
violation of this section or to recover damages under this section:
new text end

new text begin (1) the obligor, the person named as the debtor, any person who owns an interest
in the collateral described or indicated in the financing statement, or any person harmed
by the filing of the financing statement;
new text end

new text begin (2) the attorney general;
new text end

new text begin (3) a county attorney;
new text end

new text begin (4) a city attorney; and
new text end

new text begin (5) a person who has been damaged as a result of an action taken in reliance on the
filed financing statement.
new text end

new text begin (b) A filing officer may refer a matter to the attorney general or other appropriate
person for filing the legal actions under this section.
new text end

new text begin Subd. 4. new text end

new text begin Venue. new text end

new text begin An action under this section may be brought in any district court in
the county in which the financing statement is presented for filing or in a county where
any of the persons named in subdivision 3, paragraph (a), clause (1), resides.
new text end

new text begin Subd. 5. new text end

new text begin Filing fee. new text end

new text begin (a) The fee for filing an action under this chapter is $....... The
plaintiff must pay the fee to the clerk of the court in which the action is filed. Except as
provided by paragraph (b), the plaintiff may not be assessed any other fee, cost, charge, or
expense by the clerk of the court or other public official in connection with the action.
new text end

new text begin (b) The fee for service of notice of an action under this section charged to the
plaintiff may not exceed:
new text end

new text begin (1) $....... if the notice is delivered in person; or
new text end

new text begin (2) the cost of postage if the service is by registered or certified mail.
new text end

new text begin (c) A plaintiff who is unable to pay the filing fee and fee for service of notice may file
with the court an affidavit of inability to pay under the Minnesota Rules of Civil Procedure.
new text end

new text begin (d) If the fee imposed under paragraph (a) is less than the filing fee the court imposes
for filing other similar actions and the plaintiff prevails in the action, the court may order a
defendant to pay to the court the differences between the fee paid under paragraph (a) and
the filing fee the court imposes for filing other similar actions.
new text end

new text begin Subd. 6. new text end

new text begin Other remedies. new text end

new text begin (a) An obligor, person named as a debtor, owner of
collateral, or any other person harmed by the filing of a financing statement in violation of
subdivision 2, paragraph (a), also may request specific relief, including, but not limited
to, terminating the financing statement and removing the debtor named in the financing
statement from the index under the provisions of section 545.05, paragraph (c), such that it
will not appear in a search under that debtor name.
new text end

new text begin (b) This law is cumulative of other law under which a person may obtain judicial
relief with respect to any filed or recorded document.
new text end

Sec. 3.

new text begin [609.7475] FRAUDULENT OR OTHERWISE IMPROPER FINANCING
STATEMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin As used in this section, "record" has the meaning given
in section 336.9-102.
new text end

new text begin Subd. 2. new text end

new text begin Crime described. new text end

new text begin A person who:
new text end

new text begin (1) knowingly causes to be presented for filing or promotes the filing of a record that:
new text end

new text begin (i) is not:
new text end

new text begin (A) related to a valid lien or security agreement; or
new text end

new text begin (B) filed pursuant to section 336.9-502(d); or
new text end

new text begin (ii) contains a forged signature or is based upon a document containing a forged
signature; or
new text end

new text begin (2) presents for filing or causes to be presented for filing a record with the intent that
it be used to harass or defraud any other person;
new text end

new text begin is guilty of a crime and may be sentenced as provided in subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Penalties. new text end

new text begin (a) Except as provided in paragraph (b), a person who violates
subdivision 2 is guilty of a gross misdemeanor.
new text end

new text begin (b) A person who violates subdivision 2 is guilty of a felony and may be sentenced
to imprisonment for not more than five years or to payment of a fine of not more than
$10,000, or both, if the person:
new text end

new text begin (1) commits the offense with intent to influence or otherwise tamper with a juror or a
judicial proceeding or with intent to retaliate against a judicial officer, as defined in section
609.415, or a prosecutor, defense attorney, or officer of the court, because of that person's
performance of official duties in connection with a judicial proceeding; or
new text end

new text begin (2) commits the offense after having been previously convicted of a violation
of this section.
new text end

new text begin new text end

new text begin Subd. 4. new text end

new text begin Venue. new text end

new text begin A violation of this section may be prosecuted in either the county
of residence of the individual listed as debtor or the county in which the filing is made.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2006, and applies to crimes
committed on or after that date.
new text end

Sec. 4. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 and 2 are effective the day following final enactment.
new text end