Another attack on the use of warrants of attorney to confess judgment was recently introduced into the 132nd Ohio General Assembly. H.B. 67 was introduced on February 16, 2017 by Representative Ron Young, a Republican of Leroy Township in Lake County. The bill has not yet been assigned to a committee.
The bill seeks to amend R.C. §2323.13(A) to limit a confession of judgment to situations involving “the settlement of a dispute”. The bill does not further define that phrase. Echoing the “dispute settlement” language, H.B. 67 would also amend R.C. §2323.12 to limit confessions of judgment to the “settlement of a dispute” under R.C. §2323.13 and makes a violation of the law a first degree misdemeanor.
The final amendment sought by H.B. 67 is to Ohio’s power of attorney statute, R.C. §1337.53 at subsections (F)(1), to prohibit the use of a general power of attorney with respect to claims and litigation to confess judgment. Echoing the changes to R.C. §§2323.12 and 2323.13, R.C. §1337.53(F)(2) would limit the use of a general power of attorney to confessing judgment “in connection with the settlement of a dispute.”
The absence of any explanation of the meaning of the phrase “in connection with the settlement of a dispute” is very problematic, and could be construed to mean that judgment cannot be confessed against a debtor who simply does not respond to payment demands, but does not “dispute” the debt; it could also be construed to mean that the debtor must consent to the entry of judgment against him after default, thereby “settling a dispute”, which renders redundant obtaining a warrant of attorney to confess judgment in the loan documentation phase of the transaction.
Attacks on warrants of attorney are becoming a biennial event: House Bill 291, which was introduced into the 131st General Assembly, sought to amend R.C. §2323.13 to limit confessions of judgment to instances of nonpayment of principal and interest under a debt instrument and require notice and an opportunity for a hearing to a defendant before entry of judgment pursuant to a confession of judgment. The bill did not get out of the House Judiciary Committee before the 131st General Assembly ended, but we are seeing a fresh attack in H.B. 67.
There is not yet a bill analysis for H.B. 67, but look for this post to be updated once the bill analysis is available.