SECTIONS 9650-9663 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 9650-9663

9650. (a) Each cemetery authority shall file with the bureau
annually, on or before June 1, or within five months after close of
their fiscal year provided approval has been granted by the bureau as
provided for in Section 9650.1, a written report in a form
prescribed by the bureau setting forth the following:
(1) The number of square feet of grave space and the number of
crypts and niches sold or disposed of under endowment care by
specific periods as set forth in the form prescribed.
(2) The amount collected and deposited in both the general and
special endowment care funds segregated as to the amounts for crypts,
niches and grave space by specific periods as set forth either on
the accrual or cash basis at the option of the cemetery authority.
(3) A statement showing separately the total amount of the general
and special endowment care funds invested in each of the investments
authorized by law and the amount of cash on hand not invested, which
statement shall actually show the financial condition of the funds.
(4) A statement showing separately the location, description, and
character of the investments in which the special endowment care
funds are invested. The statement shall show the valuations of any
securities held in the endowment care fund as valued pursuant to
Section 9659.
(5) A statement showing the transactions entered into between the
corporation or any officer, employee or stockholder thereof and the
trustees of the endowment care funds with respect to those endowment
care funds. The statement shall show the dates, amounts of the
transactions, and shall contain a statement of the reasons for those
transactions.
(b) The report shall be verified by the president or vice
president and one other officer of the cemetery corporation. The
information submitted pursuant to paragraphs (2), (3), (4), and (5)
shall be accompanied by an annual audit report of the endowment care
fund and special care fund signed by a certified public accountant or
public accountant. The scope of the audit shall include the
inspection, review, and audit of the general purpose financial
statements of the endowment care fund and special care fund, which
shall include the balance sheet, the statement of revenues,
expenditures, and changes in fund balance.
(c) If a cemetery authority files a written request prior to the
date the report is due, the bureau may, in its discretion, grant an
additional 30 days within which to file the report.

9650.1. Each cemetery authority requesting a change of filing date
of the endowment care fund report from a calendar year to a fiscal
year or a change in fiscal year shall file a petition with the bureau
prior to the close of the year of request. The bureau may approve
such petition provided that no report shall be for a period of more
than 12 months.

9650.2. The report shall state the name of the trustee or trustees
of the endowment care fund. Any change of trustee shall be reported
to the bureau within a period of 30 days after the change is made.

9650.3. A copy of each annual audit report shall be transmitted to
the bureau and shall be a public record. It shall also be open for
public inspection at the offices of the cemetery authority during
normal business hours. If the cemetery authority does not maintain
offices in the county in which its cemetery is located, it shall file
a copy of the annual audit report with the county clerk of the
county, which shall be subject to public inspection.

9650.4. (a) Any cemetery authority that does not file its report
within the time prescribed by Section 9650 may be assessed a fine by
the bureau in an amount not to exceed four hundred dollars ($400) per
month for a maximum of five months. The amount of the fine shall be
established by regulation in accordance with the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code). Failure to pay the
fine within 15 days after receipt of written notification of the
assessment or, where a timely request for waiver or reduction of the
fine has been filed, within 15 days after receipt of written
notification of the bureau's decision in the matter, shall be cause
for disciplinary action.
(b) A cemetery authority may request waiver or reduction of a fine
by making a written request therefor. The request shall be
postmarked within the time specified above for payment of the fine
and shall be accompanied by a statement showing good cause for the
request.
(c) The bureau may waive or reduce the fine where a timely request
is made and where it determines, in its discretion, that the
cemetery authority has made a sufficient showing of good cause for
the waiver or reduction.

9651. The bureau shall examine the reports filed with it as to
their compliance with the requirements of the Health and Safety Code
as to the amount of endowment care funds collected and as to the
manner of investment of such funds.

9652. The bureau shall examine the endowment care funds of a
cemetery authority:
(a) Whenever it deems necessary and at least once every five
years;
(b) Whenever the cemetery authority in charge of endowment care
funds fails to file the report required by this article; or
(c) Whenever the accountant or auditor qualifies his or her
certification of the report that is prepared and signed by a
certified public accountant licensed in the state and prepared in
accordance with Section 9650.
(d) The reasonable and necessary cost of the examination performed
under subdivision (b) or (c) shall be paid by the cemetery
authority.
A certified copy of the actual costs, or a good faith estimate of
the costs where actual costs are not available, signed by the
director or his or her designee, shall be prima facie evidence of the
reasonable and necessary costs of the examination.
The actual and necessary expense of the examination under
subdivision (a) shall, in the discretion of the bureau, be paid by
the cemetery authority whenever the examination requires more than
one day and the need for continuing the examination is directly
related to identified omissions and errors in the management of
endowment care funds.

9652.1. If any cemetery authority refuses to pay such expenses, the
bureau shall refuse it a certificate of authority and shall revoke
any existing certificate of authority. All examination expense moneys
collected by the bureau shall be paid into the State Treasury to the
credit of the Cemetery Fund.

9653. (a) In making the examination the bureau:
(1) Shall have free access to the books and records relating to
the trust funds, their collection and investment, and the number of
graves, crypts, and niches under endowment care.
(2) Shall inspect and examine the trust funds to determine their
condition and the existence of the investments.
(3) Shall ascertain if the cemetery corporation has complied with
all the laws applicable to trust funds.
(b) Upon request by the bureau, a cemetery authority shall provide
records to substantiate the expenditures of the income of the trust
funds. If a cemetery authority fails to reasonably comply with this
request, the bureau may have access to books, records, and accounts
of a cemetery authority for purposes of ascertaining compliance with
applicable laws.

9653.5. (a) Subject to subdivision (b), a limited liability company
certificated as a cemetery authority pursuant to Section 7018 of the
Health and Safety Code may provide services of licensed cemetery
brokers, cemetery salespersons, cemetery managers, funeral directors,
embalmers, crematorium licensees, and any other person licensed
under this code to provide services relating to cemeteries and
funerals by employing one or more of these licensed persons.
(b) At the time of certification, and at all times during which a
limited liability company transacts intrastate business as a cemetery
authority, the company shall be required to provide security for
claims against it based upon acts, errors, or omissions of its
licensed employees as described in subdivision (a) by complying with
one, or a combination, of the following:
(1) (A) Maintaining a policy or policies of insurance against
liability imposed on or against it by law for damages arising out of
claims. However, the total aggregate limit of liability under the
policy or policies of insurance for a limited liability company that
employs five or fewer licensed persons shall not be less than one
million dollars ($1,000,000), and for a limited liability company
that employs more than five licensees, an additional one hundred
thousand dollars ($100,000) of insurance shall be obtained for each
additional 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 in this paragraph. The policy or
policies may be issued on a claims-made or occurrence basis, and
shall cover:
(i) In the case of a claims-made policy, claims initially asserted
in the designated period.
(ii) In the case of an occurrence policy, occurrences during the
designated period.
(B) For purposes of this paragraph, "designated period" means a
policy year or any other designated period in the policy that is not
greater than 12 months.
(C) The impairment or exhaustion of the aggregate limit of
liability by amounts paid under the policy in connection with the
settlement, discharge, or defense of claims applicable to a
designated period shall not require the limited liability company to
acquire additional insurance coverage for that designated period. The
policy or policies of insurance may be in a form reasonably
available in the commercial insurance market and may be subject to
those terms, conditions, exclusions, and endorsements that are
typically contained in those policies. A policy or policies of
insurance maintained pursuant to this paragraph may be subject to a
deductible or self-insured retention.
(D) Upon the dissolution and winding up of the limited liability
company, the company shall, with respect to any insurance policy or
policies then maintained pursuant to this paragraph, maintain or
obtain an extended reporting period endorsement or equivalent
provision in the maximum aggregate limit of liability required to
comply with this paragraph for a minimum of three years if reasonably
available from the insurer.
(2) Maintaining in trust or bank escrow, cash, bank certificates
of deposit, United States Treasury obligations, bank letters of
credit, or bonds of insurance or surety companies as security for
payment of liabilities imposed by law for damages arising out of all
claims. However, the maximum amount of security for a limited
liability company that employs five or fewer licensed persons shall
not be less than one million dollars ($1,000,000), and for a limited
liability company that employs more than five licensees rendering
professional services on behalf of the company, an additional one
hundred thousand dollars ($100,000) of security shall be obtained for
each additional licensee except that the maximum amount of security
is not required to exceed five million dollars ($5,000,000). The
limited liability company remains in compliance with this section
during a calendar year notwithstanding amounts paid during that
calendar year from the accounts, funds, Treasury obligations, letters
of credit, or bonds in defending, settling, or discharging claims of
the type described in this paragraph, provided that the amount of
those accounts, funds, Treasury obligations, letters of credit, or
bonds was at least the amount specified in the preceding sentence as
of the first business day of that calendar year. Notwithstanding the
pendency of other claims against the limited liability company, it
shall be deemed to be in compliance with this paragraph as to a claim
if within 30 days after the time that a claim is initially asserted
through service of a summons, complaint, or comparable pleading in a
judicial or administrative proceeding, the limited liability company
has provided the required amount of security by designating and
segregating funds in compliance with the requirements of this
paragraph.
(3) Unless the limited liability company has satisfied paragraph
(4), each member of a limited liability company certificated as a
cemetery authority that provides professional services rendered by
employees who are licensed professionals described in subdivision
(a), by virtue of that person's status as a member, thereby
automatically guarantees payment of the difference between the
maximum amount of security required for the limited liability company
by this subdivision and the security otherwise provided in
accordance with paragraphs (1) and (2), provided that the aggregate
amount paid by all members under these guarantees shall not exceed
the difference. Neither withdrawal by a member nor the dissolution
and winding up of the limited liability company shall affect the
rights or obligations of a member arising prior to withdrawal or
dissolution and winding up, and the guarantee provided for in this
paragraph shall apply only to conduct that occurred prior to the
withdrawal or dissolution and winding up. Nothing contained in this
subdivision shall affect or impair the rights or obligations of the
members among themselves, or the limited liability company,
including, but not limited to, rights of contribution, subrogation,
or indemnification.
(4) Confirming, pursuant to the procedure in subdivision (c) of
Section 16956 of the Corporations Code, that, as of the most recently
completed fiscal year of the limited liability company, it had a net
worth equal to or exceeding ten million dollars ($10,000,000). The
limited liability company shall transmit evidence of this paragraph
to the Cemetery and Funeral Board in a form similar to the form
submitted by a limited liability partnership providing alternative
security provisions pursuant to subdivision (c) of Section 16956 of
the Corporations Code.
(c) (1) A limited liability company may aggregate the security
required pursuant to paragraphs (1) to (4), inclusive, of subdivision
(b).
(2) For purposes of compliance with this section, the provisions
of subdivision (d) of Section 16956 of the Corporations Code shall
apply to a limited liability company certificated as a cemetery
authority.

9653.6. (a) No person licensed under this code as a cemetery
broker, cemetery salesperson, cemetery manager, funeral director,
embalmer, crematorium licensee, or other person licensed to provide
services related to cemeteries and funerals shall have any ownership
interest as a member in a limited liability company certificated as a
cemetery authority pursuant to Section 7018 of the Health and Safety
Code.
(b) If a limited liability company admits, as a member with
ownership interest, a licensed person described in subdivision (a),
the limited liability company, by operation of law, shall be deemed
in violation of Section 17375 of the Corporations Code, and the
members shall be treated as partners with joint and several liability
for claims made upon acts, errors, or omissions arising out of
services provided by any licensed person described in subdivision
(a).
(c) If the bureau determines that a licensed cemetery broker,
cemetery salesperson, cemetery manager, funeral director, embalmer,
crematorium licensee, or other person licensed to provide services
related to cemeteries and funerals has an ownership interest as a
member in the limited liability company, the bureau shall suspend the
limited liability company's certificate of authority. The bureau
shall reinstate the certificate of authority only upon finding that
the licensed cemetery broker, cemetery salesperson, cemetery manager,
funeral director, embalmer, crematorium licensee, or other person
licensed to provide services related to cemeteries and funerals has
been divested of his or her ownership interest in the limited
liability company or has voluntarily surrendered his or her license.

9654. The bureau may administer oaths and examine under oath any
person relative to the endowment care fund. Such examination shall be
conducted in the principal office of the person or body in charge of
the endowment care fund and shall be private.

9655. If any examination made by the bureau, or any report filed
with it, shows that there has not been collected and deposited in the
endowment care funds the minimum amounts required by the Health and
Safety Code since September 19, 1939, the bureau shall require such
cemetery corporation to comply with Sections 8743 and 8744 of the
Health and Safety Code.

9656. Whenever the bureau finds, after notice and hearing, that any
endowment care funds have been invested in violation of the Health
and Safety Code, it shall by written order mailed to the person or
body in charge of the fund require the reinvestment of the funds in
conformity to that code within a period which shall be not less than
two years if the investment was made prior to October 1, 1949, not
less than six months if the investment was made on or after October
1, 1949, and before the effective date of the amendment of this
section by the 1969 Regular Session of the Legislature, and not less
than 30 days if the investment is made on or after the effective date
of the amendment. The period may be extended by the bureau in its
discretion.

9656.1. The superior court of the county in which the principal
office of the cemetery authority in charge of endowment care funds is
located shall, upon the filing by the bureau of a verified
application showing any of the following conditions hereinafter
enumerated to exist, issue its order vesting title to any endowment
care funds of a cemetery authority in the bureau, and directing the
bureau forthwith to take possession of all necessary books, records,
property, real and personal, and assets, and to conduct as
conservator, the management of such endowment care funds, or so much
thereof as to the bureau may seem appropriate:
(a) That the cemetery authority has refused to submit its books,
papers, accounts, or affairs to the reasonable examination of the
bureau.
(b) That the cemetery authority has neglected to observe an order
of the bureau to make good within the time prescribed by law any
deficiency in its investments of endowment care funds.
(c) That the cemetery authority is found, after an examination, to
be in such condition that its further management of its endowment
care funds will be hazardous to its members, plotholders, or to the
public.
(d) That the cemetery authority has violated its articles of
incorporation or any law of the state.
(e) That any officer, director, agent, servant or employee of the
cemetery authority person refuses to be examined under oath relative
to the endowment care funds thereof.
(f) That any person has embezzled or otherwise wrongfully diverted
any of the endowment care funds of the cemetery authority.
The order shall continue in force and effect until, on the
application either of the bureau or of the cemetery authority, it
shall, after a full hearing, appear to the court that the ground for
the order does not exist or has been removed and that the cemetery
authority can properly resume title and possession of its property
and the management of its endowment care funds.

9656.2. When it has been alleged by verified petition pursuant to
Section 9652 or when the bureau on its own investigation determines
that there is probable cause to believe that any of the conditions
set forth in Section 9656.1 exist or that irreparable loss and injury
to the endowment care funds of a cemetery authority has occurred or
may occur unless the bureau so acts immediately, the bureau, without
notice and before applying to the court for any order, may take
possession of the endowment care funds and the books, records, and
accounts relating thereto of the cemetery authority, and retain
possession subject to the order of the court. Any person having
possession of and refusing to deliver any assets, books or records of
a cemetery authority against which a seizure order has been issued
by the bureau shall be guilty of a misdemeanor and punishable by a
fine not exceeding one thousand dollars ($1,000) or imprisonment not
exceeding one year, or by both that fine and imprisonment.

9656.25. If any city, county, or city and county exercises its
authority to address public health, safety, or welfare issues in
connection with a cemetery within its jurisdiction and if the
certificate of authority of the cemetery has been revoked or
suspended or has not been renewed, and the bureau holds the endowment
care fund of the certificate of authority under applicable
provisions of this code, the costs of any action that constitutes
care, maintenance, or embellishment of the cemetery within the
meaning of Section 8726 of the Health and Safety Code shall be
eligible for reimbursement from available income from any endowment
care fund in existence for the cemetery. For purposes of this
section, local jurisdiction action may be based on charter,
ordinance, or inherent police powers. Any claim for money or damages
for an act or omission by the local jurisdiction acting in accord
with this section shall be subject to all otherwise applicable
immunities contained in Division 3.6 (commencing with Section 810) of
Title 1 of the Government Code.

9656.3. Whenever the bureau makes any seizure as provided in
Section 9656.2, it shall, on demand of the bureau, be the duty of the
sheriff of any county of this state, and of the police department of
any municipal corporation therein, to furnish the bureau with
deputies, patrolmen or officers as may be necessary to assist the
bureau in making and enforcing that seizure.

9656.4. Immediately after effecting a seizure pursuant to Section
9656.2, the bureau shall institute a proceeding as provided for in
Section 9656.1.

9656.45. Notwithstanding any other provision of law, the bureau
shall be the custodian of all moneys collected or surrendered
pursuant to Sections 9656.1 and 9656.2. As custodian, the bureau may
deposit those moneys, or any part thereof, without court approval, in
any of the following: a bank or trust company legally authorized and
empowered by the state to act as a trustee in the handling of trust
funds; in a centralized State Treasury system bank account; or in
funds administered by the State Treasurer.

9656.5. The bureau shall maintain, regulate, operate, and control
the property situated in Amador County, referred to as the Elkin
Property in Judicial Council Coordination Proceedings Nos. 1814 and
1817, Order Re Proposed Neptune Memorial, Disposition of the Elkin
Property, and Order Re Final Disposition of Ashes of the Sacramento
Superior Court, and legally described as "Parcel 16-B as shown on the
certain Record or Survey for Eugene S. Lowrance, et ux, filed for
record May 17, 1971, in Book 17 of Maps and Plats at page 87, Amador
County Records." The bureau shall administer and supervise endowment
funds established by the court for the property. The bureau shall
exercise the authority granted by this section for the sole purpose
of protecting the human remains resting on the property and
preserving the property in its natural state.

9657. The bureau is authorized to bring action to enforce the
provisions of the law subject to its jurisdiction, in which actions
it shall be represented by the Attorney General.

9658. The bureau shall enforce and administer Part 1 (commencing
with Section 8100), Part 3 (commencing with Section 8250), and Part 5
(commencing with Section 9501) of Division 8 of the Health and
Safety Code.

9659. In any report to the bureau all bonds, debentures or other
evidences of debt held by a cemetery corporation if amply secured and
if not in default as to principal or interest may be valued as
follows:
(a) If purchased at par at the par value.
(b) If purchased above or below par on the basis of the purchase
price adjusted so as to bring the value to par at maturity and so as
to yield the effective rate of interest on the basis at which the
purchase was made.
(c) In such valuation the purchase price shall in no case be taken
at a higher figure than the actual market value at the time of
purchase.

9660. Any security or other evidence of debt if in default as to
principal or interest or if not amply secured shall not be valued as
an asset of the endowment care fund above its market value.

9661. Notwithstanding any other provision of law, every cemetery
authority shall present to the survivor of the deceased who is
handling the burial or cremation arrangements or the responsible
party a copy of any preneed agreement that has been signed and paid
in full, or in part, by or on behalf of the deceased and is in the
possession of the cemetery authority. The copy may be presented in
person, by certified mail, or by facsimile transmission, as agreed
upon by the survivor of the deceased or the responsible party. A
cemetery authority who knowingly fails to present the preneed
agreement to the survivor of the deceased or the responsible party
shall be liable for a civil fine equal to three times the cost of the
preneed agreement, or one thousand dollars ($1,000), whichever is
greater.

9662. The current address, telephone number, and name of the bureau
shall appear on the first page of any contract for goods and
services offered by a cemetery authority or crematory. At a minimum,
the information shall be in 8-point boldface type and make the
following statement:

"FOR MORE INFORMATION ON FUNERAL, CEMETERY, AND CREMATION MATTERS,
CONTACT: DEPARTMENT OF CONSUMER AFFAIRS, CEMETERY AND FUNERAL
BUREAU, (ADDRESS), (TELEPHONE NUMBER)."

A cemetery authority or crematory operator shall supply the above
information in writing when presenting a sales contract to any
individual.

9663. (a) The bureau shall make available to funeral establishments
and cemetery authorities a copy of a consumer guide for funeral and
cemetery purchases for purposes of reproduction and distribution. The
funeral and cemetery guide that is approved by the bureau, in
consultation with the funeral and cemetery industries and any other
interested parties, shall be made available in printed form and
electronically through the Internet.
(b) A cemetery authority shall prominently display and make
available to any individual who, in person, inquires about funeral or
cemetery purchases, a copy of the consumer guide for funeral and
cemetery purchases, reproduced as specified in subdivision (a).
(c) Prior to drafting a contract for cemetery goods or services,
the cemetery authority or cemetery licensee shall provide to the
consumer, for retention, a copy of the consumer guide for funeral and
cemetery purchases specified.