04/25/2005 01:00 PM House JUDICIARY

SB 129 - WRONGFUL FILING OF LIS PENDENS                                                                                       
                                                                                                                                
1:49:19 PM                                                                                                                    
                                                                                                                                
CHAIR McGUIRE announced that the  next order of business would be                                                               
CS  FOR  SENATE  BILL  NO.  129(JUD), "An  Act  relating  to  the                                                               
wrongful recording of a notice  of pendency of an action relating                                                               
to title to or right to possession of real property."                                                                           
                                                                                                                                
SENATOR  CHARLIE HUGGINS,  Alaska State  Legislature, sponsor  of                                                               
SB 129, thanked  Representative Gruenberg  for his  assistance in                                                               
reviewing the bill, and characterized the bill as non-                                                                          
contentious,  essentially  correcting  faults  currently  in  the                                                               
system.   In  the situation  that  engendered the  bill, a  state                                                               
employee  had  "fragrantly"  filed  [a  notice  of  lis  pendens]                                                               
against some people that he had  no legitimate claim against.  He                                                               
explained  that a  lis pendens  notice is  essentially a  lien of                                                               
sorts, and  in the aforementioned  situation, the  pendens action                                                               
was filed  against an assistant  attorney general, a  real estate                                                               
developer, and some  members of the Board of Game;  it cost those                                                               
people  thousands  of  dollars  to  "remove  that  action."    In                                                               
conclusion,  he  offered his  belief  that  adopting SB  129  and                                                               
instituting the correction it proposes is the right thing to do.                                                                
                                                                                                                                
DEBORAH  GRUNDMANN,  Staff  to Senator  Charlie  Huggins,  Senate                                                               
Transportation  Standing  Committee,  Alaska  State  Legislature,                                                               
added on  behalf of Senator  Huggins, sponsor, that SB  129 seeks                                                               
to  discourage abusive  filings  of illegal  lis pendens  notices                                                               
and,  in  fact, makes  filing  such  illegal  notices a  class  A                                                               
misdemeanor.   While the filing  itself does not create  a formal                                                               
lien, such a  notice can have a similar impact  on the ability of                                                               
the  targeted  person  to  do business  with  the  affected  real                                                               
estate.  She, too, referred  to the situation that engendered the                                                               
legislation, and mentioned that  that case took months, thousands                                                               
of dollars,  and attorney time  to solve.   She then  pointed out                                                               
that Section  2 of CSSB 129  now proposes to also  add the words,                                                               
"in writing" to AS 11.46.560(b).                                                                                                
                                                                                                                                
1:53:26 PM                                                                                                                    
                                                                                                                                
RUTH  HAMILTON HEESE,  Assistant Attorney  General, Environmental                                                               
Section,  Civil  Division  (Juneau),  Department  of  Law  (DOL),                                                               
offered that  a lis pendens is  basically a filing that  one puts                                                               
in the recorder's [office] of a  notice of a pending suit, and is                                                               
defined in part  in Black's Law Dictionary as a  notice filed, on                                                               
public records, for  the purpose of warning all  persons that the                                                               
title of certain  [property] is in litigation and  that that they                                                               
are  in  danger of  being  bound  by  an  adverse judgment.    It                                                               
essentially creates a  cloud on the title of one's  property.  In                                                               
creating SB  129, the DOL  considered existing law  regarding the                                                               
crime of filing  wrongful liens on property,  and the legislation                                                               
merely amends  that existing  law to  include wrongful  filing of                                                               
lis pendens.   It essentially  closes the loophole that  some are                                                               
using to harass people for  certain decisions they may have made.                                                               
The  bill is  narrowly focused,  she concluded,  adding that  the                                                               
criminal  intent  for this  crime  is  reckless disregard,  which                                                               
involves  an individual  consciously  going forward  with an  act                                                               
even though  he/she knows that  there is a substantial  risk that                                                               
the act will be found wrongful.                                                                                                 
                                                                                                                                
1:55:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ANDERSON characterized  SB  129  as an  important                                                               
piece of  legislation, and noted  that abuses of the  lis pendens                                                               
procedure can even be seen in "family law" cases.                                                                               
                                                                                                                                
CHAIR  McGUIRE, after  ascertaining that  no one  else wished  to                                                               
testify, closed public testimony on SB 129.                                                                                     
                                                                                                                                
SENATOR  HUGGINS,   in  response   to  a  comment,   offered  his                                                               
understanding  that by  using the  term, "reckless  disregard" in                                                               
the bill,  it ensures  that the behavior  is not  merely careless                                                               
behavior.  In response to a  further comment, he pointed out that                                                               
there  is no  evidence  of  abuse of  the  current law  regarding                                                               
offering a  false instrument for  recording even though  that law                                                               
uses the same standard of reckless disregard.                                                                                   
                                                                                                                                
MS. HEESE also pointed out  that the "in writing" provision would                                                               
allow someone to submit to having  a lis pendens filed on him/her                                                               
and thus  the person that filed  the notice would be  fairly safe                                                               
from prosecution under this proposed  statute.  She, too, pointed                                                               
out that  the current law  regarding offering a  false instrument                                                               
for recording  has not been  abused, and suggested that  the same                                                               
standard of  criminal intent  should apply to  the filing  of all                                                               
such false  instruments.   It would be  foolhardy for  someone to                                                               
file such an instrument knowing that it is false, she concluded.                                                                
                                                                                                                                
CHAIR McGUIRE offered her belief  that reckless disregard means a                                                               
conscious disregard, not just a mistaken disregard.                                                                             
                                                                                                                                
REPRESENTATIVE  GARA disagreed,  offering his  understanding that                                                               
with  reckless  disregard, one  could  know  that a  behavior  is                                                               
wrongful  and  still  "accidentally"  do  it.    He  opined  that                                                               
providing a criminal penalty for  behavior that is reckless would                                                               
be doing a disservice.                                                                                                          
                                                                                                                                
MS.   HEESE  offered   to  read   the  definition   of  "reckless                                                               
disregard."                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE said  that doing  so wouldn't  be necessary.   She                                                               
added  that   she  didn't  see  how   someone  could  consciously                                                               
disregard a risk and then claim that doing so was an accident.                                                                  
                                                                                                                                
2:01:12 PM                                                                                                                    
                                                                                                                                
SENATOR  HUGGINS relayed  that after  discussing this  issue with                                                               
others,  he  feels  100 percent  comfortable  that  the  language                                                               
currently in the bill will not be abused.                                                                                       
                                                                                                                                
REPRESENTATIVE GARA made a motion  to adopt Amendment 1, to "make                                                               
it a crime of intent rather than a crime of recklessness."                                                                      
                                                                                                                                
REPRESENTATIVE ANDERSON objected.                                                                                               
                                                                                                                                
CHAIR McGUIRE surmised that Amendment  1 would replace "reckless"                                                               
on page 1, line 8, with "intentional".                                                                                          
                                                                                                                                
2:02:32 PM                                                                                                                    
                                                                                                                                
A roll call  vote was taken.  Representative Gara  voted in favor                                                               
of  Amendment 1.    Representatives  McGuire, Anderson,  Coghill,                                                               
Kott,  Dahlstrom,  voted  against  it.   Therefore,  Amendment  1                                                               
failed by a vote of 1-5.                                                                                                        
                                                                                                                                
2:03:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ANDERSON moved  to  report CSSB  129(JUD) out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GARA   objected.    He  then   provided  comments                                                               
regarding  the term  reckless  in  the civil  context  and as  it                                                               
related to physicians.                                                                                                          
                                                                                                                                
CHAIR McGUIRE ruled those comments out of order.                                                                                
                                                                                                                                
REPRESENTATIVE  GARA  removed  his  objection to  the  motion  to                                                               
report the bill from committee.                                                                                                 
                                                                                                                                
CHAIR McGUIRE  stated that  CSSB 129(JUD)  was reported  from the                                                               
House Judiciary Standing Committee.