House Introduced Bill 5052

HOUSE BILL No. 5052

September 20, 2001, Introduced by Reps. Gieleghem, Bovin, Kolb, Neumann, Dennis and Jacobs and referred to the Committee on Commerce.

A bill to require the use of plain language in consumer con-

tracts; to impose certain requirements relating to consumer con-

tracts; to prescribe the powers and duties of certain state offi-

cers and departments; to provide remedies; to provide for limita-

tion of actions; and to provide for civil fines and prescribe

penalties for violations of this act.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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Sec. 1. This act shall be known and may be cited as the

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"Michigan plain language law".

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Sec. 2. As used in this act:

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(a) "Consumer" means an individual who leases, buys, or

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finances a good, property, or service primarily for noncommercial

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personal, family, or household purposes and not for resale.

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(b) "Consumer contract" means a written agreement between a

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seller, lessor, or creditor and a consumer for the purchase,

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lease, or financing of a good, property, or service primarily for

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noncommercial personal, family, or household purposes. Consumer

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contract does not include either of the following:

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(i) An insurance policy form, annuity contract, rider or

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indorsement form, form of renewal certificate, or group certifi-

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cate form.

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(ii) A contract drafted solely by the consumer entering into

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the contract, if the contract specifies that it was drafted

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solely by that consumer.

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(c) "Plain language" means written in a clear and coherent

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manner using words and phrases with common and everyday meanings,

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appropriately divided and captioned by its various sections.

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Sec. 3. (1) Except as provided in subsection (3):

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(a) A seller, lessor, or creditor shall not offer or execute

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a consumer contract in this state unless the contract is written

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in plain language.

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(b) A commercial preparer of contract forms shall not sell

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or furnish to a person a contract form that may be used as a con-

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sumer contract in this state unless the form is written in plain

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language.

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(2) A violation of subsection (1) is an unfair or deceptive

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method, act, or practice in the conduct of trade or commerce.

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(3) This act does not apply to either of the following:

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(a) Language of a consumer contract that is prescribed by

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state or federal statute or by rules or regulations promulgated

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pursuant to a state or federal statute.

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(b) Words and phrases that are part of a legal description

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of real property.

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Sec. 4. (1) If the attorney general has probable cause to

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believe that a person has violated, is violating, or is about to

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violate this act, and provides notice in accordance with this

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section, the attorney general may bring an action to enjoin the

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person from violating this act. The action may be brought in the

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circuit court for the county in which the person resides or is

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doing business or, if the person is not doing business in this

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state, in the circuit court for Ingham county. The court may

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award costs to the prevailing party. For each persistent and

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knowing violation of section 3, the court may impose a civil fine

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of not more than $10,000.00. For purposes of this subsection, a

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persistent and knowing violation of section 3 occurs if the court

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determines that a person is in violation of this act and that

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either of the following applies:

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(a) A prior final judgment that is not subject to a claim of

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appeal provides that the consumer contract language at issue vio-

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lates this act.

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(b) The person is violating an assurance of discontinuance

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provided under section 5.

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(2) Unless notice is waived by the court on good cause shown

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not less than 10 days before the commencement of an action under

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this section, the attorney general shall notify a person alleged

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to violate this act of the attorney general's intent to seek an

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injunction under this act. The attorney general also shall

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provide the person an opportunity to confer with him or her in

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person, by counsel, or by other representative as to the proposed

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action before the proposed filing date. The notice may be given

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to the person by mail, postage prepaid, to the person's usual

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place of business or, if the person does not have a usual place

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of business, to the person's last known address, or, with respect

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to a corporation only, to a resident agent who is designated to

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receive service of process or to an officer of the corporation.

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(3) A prosecuting attorney or law enforcement officer

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receiving notice of an alleged violation of this act, or of a

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violation of an injunction, order, decree, or judgment issued in

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an action brought pursuant to this section, or of an assurance

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given under this act, immediately shall forward written notice of

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the alleged violation or violation together with any pertinent

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information he or she may have to the department of attorney

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general.

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Sec. 5. (1) The attorney general may accept an assurance of

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discontinuance of an alleged violation of this act from the

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person who is alleged to have violated, be violating, or be about

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to violate this act. An assurance under this section is not an

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admission of guilt and shall not be introduced in a proceeding

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other than a proceeding described in section 4 for a persistent

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and knowing violation of section 3. The assurance may include a

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stipulation for any or all of the following:

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(a) The person's voluntary payment of the costs of

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investigation.

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(b) The person's payment of an amount to be held in escrow

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pending the outcome of an action.

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(c) The person's payment of an amount for restitution to an

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aggrieved person.

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(2) An assurance of discontinuance shall be in writing and

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may be filed with the circuit court for Ingham county. The clerk

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of the court shall maintain a record of the filing. Unless

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rescinded by the parties or voided by a court for good cause, the

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assurance may be enforced in the circuit court by the parties to

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the assurance. The assurance may be modified by the parties or

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by a court for good cause.

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Sec. 6. (1) A consumer may bring an action to enjoin a

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person who is violating this act, and also may seek money damages

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as provided in this section.

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(2) Except as provided in subsections (3) and (4), a con-

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sumer who suffers loss as a result of a violation of this act may

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bring an action against a creditor, seller, or lessor who vio-

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lated this act to recover actual damages and exemplary damages of

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$50.00, together with reasonable attorney fees.

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(3) A consumer who suffers loss arising from a person's vio-

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lation of this act may bring a class action against the person on

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behalf of consumers injured for the lesser of either of the

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following:

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(a) Actual damages.

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(b) $10,000.00.

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(4) A defendant who attempts in good faith to comply with

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this act is not liable for more than actual damages.

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(5) An action under this section shall not be brought more

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than 3 years after the later of either of the following:

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(a) The offering of the consumer contract to a consumer for

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his or her signature or signing of the consumer contract that is

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the subject of the action.

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(b) The full performance of the contract.

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(6) If a consumer commences an action against another

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person, the defendant may assert, as a defense, counterclaim, or

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offset, any claim under this act arising out of the transaction

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on which the action is brought and may join as a party defendant

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any person who prepared, sold, or furnished the principal

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defendant the contract form if the form was prepared, sold, or

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furnished after the effective date of this act.

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(7) In an action brought by a consumer under this section,

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the court shall construe the consumer contract that is the

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subject of the action to conform to the reasonable expectations

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of the consumer if the court finds that the consumer contract is

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not written in plain language as required in section 3.

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(8) Except as provided in subsection (7), a violation of

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this act does not affect the enforceability of a contract.

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Sec. 7. Upon commencement of an action brought pursuant to

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section 6 or 10, the clerk of the court shall mail a copy of the

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complaint to the attorney general, and upon entry of a judgment

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or decree in the action, the clerk of the court shall mail a copy

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of the judgment, decree, or order to the attorney general.

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Sec. 8. The attorney general or a prosecuting attorney is

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not required to pay a filing fee for the commencement of an

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action or motions made during an action under this act.

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Sec. 9. A law enforcement officer in the state, if

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requested by the attorney general or a prosecuting attorney,

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shall aid and assist in an investigation of an alleged or actual

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violation of this act.

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Sec. 10. A prosecuting attorney may conduct an investiga-

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tion pursuant to this act and may institute and prosecute an

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action under this act in the same manner as the attorney

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general.

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Sec. 11. (1) A seller, creditor, or lessor may submit a

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consumer contract to the attorney general for review as to

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whether the contract complies with the requirements of

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section 3. Within 60 days after receiving the contract, the

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attorney general shall do 1 of the following:

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(a) Certify that the contract complies with section 3.

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(b) Decline to certify that the contract complies with

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section 3 and note his or her objections to the contractual

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language.

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(c) Decline to review the contract and refer the party sub-

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mitting the contract to other previously certified contracts of

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the same type.

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(d) Decline to review the contract because the contract's

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compliance with section 3 is the subject of pending litigation.

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(e) Decline to review the contract because the contract is

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not subject to section 3.

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(2) An action of the attorney general pursuant to this sec-

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tion may be appealed pursuant to the administrative procedures

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act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

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(3) Certification of a consumer contract pursuant to

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subsection (1) is not an approval of the contract's legality or

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legal effect beyond complying with section 3.

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(4) Failure to submit a contract to the attorney general for

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review pursuant to subsection (1) does not show a lack of good

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faith and does not raise a presumption that the contract violates

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section 3. Failure to use a contract referred to the seller,

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lessor, or creditor as a previously certified contract pursuant

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to subsection (1)(c) does not show a lack of good faith and does

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not raise a presumption that a contract used by that seller,

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lessor, or creditor violated section 3.

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(5) The attorney general may assess a fee of not more than

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$50.00 for the costs of reviewing a consumer contract pursuant to

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subsection (1).

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Sec. 12. This act takes effect 1 year after its enactment

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and does not affect any contracts executed before its effective

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date.

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