Legislature(2003 - 2004)

04/06/2004 02:08 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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.                                                                                                            

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