Legislature(2003 - 2004)
04/06/2004 02:08 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE BILL NO. 227 An Act increasing the jurisdictional limit for small claims and for magistrates from $7,500 to $10,000; increasing the jurisdictional limit of district courts in certain civil cases from $50,000 to $75,000; and amending Rule 11(a)(4), Alaska District Court Rules of Civil Procedure, relating to service of process for small claims. VANESSA TONDINI, STAFF, REPRESENTATIVE LESIL MCGUIRE, advised that the jurisdictional limit for district courts was last raised in 1990 when the Legislature raised the limit from $35,000 to $50,000 dollars. By raising the jurisdictional limit from $50,000 to $100,000, HB 227 will allow for increases in inflation and provide increased flexibility for litigants regarding whether to file in district court or superior court. Ms. Tondini added that the jurisdictional limit on small claims court and magistrate court was last raised in 1997 when the Legislature raised the limit from $5,000 to $7,500 dollars. Small claims court offers many advantages over district court to private litigants, including less formal discovery requirements, reduced filing fees, and relaxed evidentiary rules. The bill would increase the limit to $10,000 dollars. She added that the bill would also remove prohibitions against the district court hearing claims for false imprisonment, libel, slander, and malicious prosecution. The restrictions were adopted shortly after statehood. District court judges are well qualified and there is no reason to prohibit them from hearing these types of cases. Ms. Tondini concluded that the bill would expand small claims jurisdiction over out-of-state defendants. Under current law, small claims actions against out-of-state defendants may only be brought under the landlord-tenant act or under AS 09.05.020, which authorizes service of process against owners or operators of motor vehicles involved in an accident in the State. The bill would authorize small claims jurisdiction over out-of-state defendants under traditional long-arm principles. The expanded long-arm jurisdiction is limited to district court judges. Magistrates would continue to be limited by the standards set forth in current law. REPRESENTATIVE MAX GRUENBERG offered to answer questions of the Committee. Co-Chair Harris asked what the benefits of the legislation would be. Representative Gruenberg replied that it would become more simple and faster than district court. · Section 1 increases the jurisdictional limit of district courts from $50,000 to $100,000 dollars. · Sections 2 increases the jurisdictional limits of the small claims court from $7,500 to $10,000 dollars. · Section 3 extends the jurisdiction of the district court to include claims for false imprisonment, libel, slander and malicious prosecution. · Section 4 increases the jurisdictional amount for claims heard by magistrates from $7,500 to $10,000 dollars. · Section 5 precludes magistrates from hearing cases brought under the expanded small claims jurisdiction over out-of-state defendants provided for in Section 6 of the bill. Magistrates would continue to be able to hear claims against out-of- state defendants only under the landlord-tenant act or in accordance with the AS 09.05.20 relating to service of process on nonresident owner or operator of motor vehicle. · Section 6 amends District Court Rule 11(a) to allow suits in small claims court against out-of- state defendants under traditional long-arm jurisdictional authority. · Section 7 provides that Sections 5 and 6 of the bill only take effect if the court rule changes in Section 6 of the bill receive the two-thirds majority vote of each house required by art. IV, sec. 15 of the Alaska Constitution. Representative Hawker asked if to date, there had been a compelling argument against the legislation. TAPE HFC 04 - 78, Side A DOUG WOOLIVER, ADMINISTRATIVE ATTORNEY, ALASKA COURT SYSTEM, stated that the Court is neutral on the bill. There are potential down sides in making the proposed changes. The bill is consistent with the Courts overall philosophy. Section 1 raises the juristical limit of district court to $100,000 dollars, which the court does not object to. Sections 2 & 4 raise from $7,500 dollars to $10,000 dollars, the jurisdictional limit for small claims courts. Judges are split if that is a good idea or not. The concerns are if that change is necessary, it is a lot of money to have at stake and that most people cannot avail themselves of that amount. Mr. Wooliver continued, another category of complaint of a more serious nature is claims up to $10,000 dollars are consistent with the purpose of small claims court. The purpose in general is to move many small claims more quickly through. He pointed out that the higher the claim amount, the more tenaciously the cases are fought, which could be a potential downside. Also, related to that, the same things that make it easier to sooth somebody in the small claims court, can make it easier to loose in that arena. It would be a trade off between speed, efficiency and due process. Several judges are concerned that with the higher jurisdictional limit, the more likely it is that the unsophisticated defendants are going to loose. It is true that they have the option for more formal district court action. Many people do not understand the distinctions or the benefits between the two types of courts. Regarding the limit of $10,000 dollars, he advised that most judges and magistrates are comfortable moving to that level, however, it needs to be understood that defendants can loose out in the process. The other significant change deals with more out-of-state defendants in the small claims court. That does not create new problems but it would be moving into a more informal process. Out-of-state defendants are frequently more time consuming. Mr. Wooliver reiterated that the Alaska Court System is neutral on the bill. He pointed out that more and more people are coming to court without attorneys. Co-Chair Harris referenced the interminent fiscal note from the Alaska Court System. Mr. Wooliver clarified that the Alaska Court System does not know the impact. Small claims courts are easier, faster and cheaper for litigants but not necessarily for the Court System. There could be more court effort involved. Co-Chair Harris did not think the fiscal impact would be much. Representative Stoltze thought that increasing the amount to $10,000 dollars would increase caseloads and that there would be more court action. Mr. Wooliver pointed out that the last two times that the jurisdiction rate was raised for small claims, the courts did not see a spike in those files. Representative Fate commented on damage recovery and problems associated with that in the lower jurisdiction courts. Mr. Wooliver was not aware of the connection between those two factors. He acknowledged it would be interesting to see if there was a correlation between the amount in small court and recovery percentages. Representative Fate believed that recovery could become problematic and thought it could be predicated on the amount at stake. In response to Representative Fate, Representative Gruenberg advised that all the bill does is to clarify that the decision can be brought to either small claims court, district and/or superior court. The judgment will remain the same. Representative Croft pointed out that small claims court are generally handled without lawyers and the situation is more relaxed. Lawyer fees can get high quickly. If the amount discussed was under $7,500 dollars, the person previously, could stay in the small claim court venue. Small claims court is the simplified place for people to go without having to hire an attorney. Representative Foster MOVED to report CS HB 227 (JUD) out of Committee with individual recommendations and with the accompanying fiscal note. CS HB 227 (JUD) was reported out of Committee with a "do pass" recommendation and with indeterminate note #1 by the Alaska Court System.