Legislature(2015 - 2016)BELTZ 105 (TSBldg)
04/08/2015 01:30 PM Senate JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing: Alaska Public Offices Commission | |
| HB5 | |
| SB76 | |
| SJR15|| SCR4 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 5 | TELECONFERENCED | |
| + | SCR 4 | TELECONFERENCED | |
| SJR 15 | |||
| + | SB 76 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 76-REAL ESTATE BROKERS; LIABILITY
2:32:57 PM
CHAIR MCGUIRE announced the consideration of SB 76."An Act
relating to private actions and remedies against real estate
licensees for licensee relationships, disclosures, and activity
before January 1, 2005; and providing for an effective date."
GENEVIEVE WOJTUSIK, Staff, Senator McGuire introduced SB 76
speaking to the following sponsor statement: [Original
punctuation provided.]
Under AS 08.88.396, a real estate licensee acting
before January 1, 2005 was authorized to act as both a
buyer's and a seller's representative, but only after
the licensee informed both the buyer and the seller of
his or her dual agency and obtained written consent
from both. The statute, as originally enacted, did not
specify remedies if a real estate licensee (or agent)
violated its provisions.
In 2003, the Alaska Legislature acted to correct the
remedies-omission. The Legislature was concerned that
without specifying its intent with respect to
appropriate remedies in the case of a violation, a
court might feel compelled to impose the potentially
business-ending remedy of forfeiture of real-estate
sales commissions. The Legislature was particularly
concerned that this could occur in cases even where
the plaintiffs had suffered no actual damages.
In order to address this concern, the Legislature
enacted House Bill 257, legislation that fixed this
ambiguity by retroactively limiting the remedy for
violations of AS 08.88.396 to actual damages. [House
Bill] 257 passed the Legislature, was signed into law
and has been found constitutional by the Alaska
Supreme Court.
Despite the enactment of House Bill 257, and despite
the Alaska Supreme Court's determination that the law
is constitutional, questions have arisen regarding the
Legislature's intent in amending AS 08.88.396. Senate
Bill 76 is intended to make clear the Legislature's
intent when it amended AS 08.88.396 in 2003 by
specifying and clarifying that the "actual damages"
limitation of the 2003 amendment applies to all claims
that are based upon or arise out of allegations of
violations of AS 08.88.396.
The clarification is necessarily retroactive because
the Legislature enacted House Bill 29 in 2004 which,
among other things, specified that AS 08.88.396 ceased
to apply to real estate transactions as of January 1,
2005; and the Legislature desires to ensure that any
claims pre-dating the 2005 effective date of House
Bill 29 are appropriately subject to the intent of its
2003 enactment of House Bill 257.
The retroactivity of the bill is constitutional, as
provided in both U.S. Supreme Court and Alaska Supreme
Court decisions.1 This bill preserves the right of
purchasers of real estate to seek redress for actual
damages under AS 08.88.396 while ensuring that the
Legislature's intent that only actual damages be
awarded is recognized by courts hearing cases arising
within the relevant time periods.
2:35:00 PM
JEFFRY PICKETT, Staff Counsel to the Senate Judiciary Committee,
Anchorage, Alaska, proved the following sectional analysis:
Section 1 amends the wording of AS 08.88.396(e) which,
for real estate transactions that occurred before
January 1, 2005, limits civil litigation and other
remedies for the failure of a real estate licensee to
comply with certain requirements concerning
relationships with and disclosures to buyers and
sellers.
Section 2 provides that the bill applies to a real
estate transaction that occurred on or before the
bill's effective date, and to a court action related
to such a transaction pending on the effective date of
bill.
Section 3 makes sec. 1 of the bill retroactive to
January 1, 1991.
Section 4 makes the bill effective immediately.
MR. PICKETT deferred to Howard Trickey to provide the historical
context so the committee could understand the need for the bill.
2:36:52 PM
HOWARD TRICKEY, Attorney, Anchorage, Alaska, stated that he is
representing Jack White Vista Real Estate and has for a number
of years with regard to the issues that SB 76 seeks to clarify.
He explained that when [AS 08.88.396] passed initially, it did
not specify a remedy if a real estate licensee or agent violated
the dual agency provisions of the statute. In 2003 the
legislature addressed the remedies omission in House Bill 257,
limiting the remedy for a technical violation to actual damages.
The policy finding and decision was that the lack of a statutory
remedy exposed the real estate industry to potentially ruinous
class action claims. One case pending then, and still today,
sought recovery in excess of $30 million for forfeiture of
commissions for the entire period of the class. The real estate
industry supported the bill then and SB 76 today because of the
potential economic risk to the industry.
MR. TRICKEY said that SB 76 would be retroactive. Two courts
have ruled that forfeiture of commissions is not a remedy that
is provided by contract and there is no vested right to
forfeiture until judgment is entered. Therefore, it is a matter
for the legislature to appropriately address as a matter of
public policy. SB 76 seeks to clarify that the legislature
intended in 2003 that actual damages would be the sole remedy
for any claims arising out of alleged violation of the
disclosure statute.
He added that the disclosure forms and written consents were
written by the multiple listing service. In all transactions the
disclosures were made as required by statute. The problem was a
matter of timing but the disclosures were made in time for
people to withdraw from the transaction if they thought the
disclosure affected the fairness of the transaction in any way.
2:42:12 PM
SENATOR MICCICHE asked if it's common to pass legislation that
is retroactive 24 years.
CHAIR MCGUIRE replied it's not common but it has been done
before, typically when it involves cases with liability. She
said she was comfortable because the bill reaffirms the policy
the legislature put in place initially using a common law
principle.
SENATOR MICCICHE asked about instances of gross negligence and
if the exception allows for costs above actual damages that may
be more ancillary.
2:45:39 PM
MR. TRICKEY explained that this legislation does not affect a
claim someone might bring for gross negligence and the damages
that might be recovered from that cause of action. SB 76 simply
limits the remedies for the statutory violations.
SENATOR COGHILL questioned why the statutory provision has to be
clarified because of the common law principle.
MR. TRICKEY explained that the court recognized that the
legislature intended damages for statutory violations to be
limited to actual damages, and later circumvented the
legislative intent saying that statutory violations could be
presented as evidence of a breach of the common law duty of
loyalty and disclosure. The legal case involves a windfall for
the plaintiffs and their lawyers because nobody suffered any
damages or actual harm.
CHAIR MCGUIRE closed public testimony and solicited a motion.
2:48:48 PM
SENATOR COGHILL motioned to report SB 76 from committee with
individual recommendations and attached zero fiscal note.
CHAIR MCGUIRE announced that without objection, SB 76 is
reported from the Senate Judiciary Standing Committee.