Legislature(2003 - 2004)
04/04/2003 01:10 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 86-INJUNCTIONS AGAINST PERMITTED PROJECTS CHAIR FATE announced that the next order of business would be SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 86, "An Act relating to permits issued by the state; and amending Rules 65, 79, and 82, Alaska Rules of Civil Procedure." Number 2185 CHAIR FATE, sponsor, asked that his staff person present the sponsor substitute. REPRESENTATIVE MASEK moved to adopt SSHB 86. [No objection was stated.] Number 2164 JIM POUND, Staff to Representative Hugh Fate, Alaska State Legislature, explained that SSHB 86 was a rewrite of the original bill in order to pass "constitutional muster." It relates to asking for and receiving injunctions that delay work on already permitted projects. Under current law, a plaintiff who files for an injunction against a project and ultimately loses in court is responsible for part of the costs, including court costs and attorney fees of the defendant. This language will give guidance to the judiciary, but will leave determinations to the discretion of the [courts]. Thus SSHB 86 makes those who improperly seek and cause an injunction responsible for full court costs and attorney fees. It also adds statutory language to require that damages or costs incurred as a result of the delay will be paid for by the responsible party. MR. POUND listed included costs: wages and salary for employees working on the project, material costs, and penalties and interest on contracts associated with the project. He said when a project is permitted before a contractor goes to work, hiring employees and purchasing materials are commitments that a contractor makes. Improper delay of a project costs more than just attorney fees and court costs; it disrupts the lives of the contractor, his or her employees, and those other companies that have subcontracted to do the work. Mr. Pound offered the belief that it is unreasonable for someone to have an effect on that many lives without being responsible for the true costs. Number 2064 CHAIR FATE turned attention to page 2, line 12, the language "bad faith litigant". Saying this is the meat of the legislation, he asked Mr. Pound to define it. He also asked whether there are problems in the court system and whether present codes are unclear as to what a bad faith litigant is. MR. POUND, in response, said "bad faith litigant" precedence has already been set by the Alaska Court System on several cases and occasions. Number 2001 REPRESENTATIVE KERTTULA posed a situation in which a party seeks an injunction but won't substantially prevail in a challenge. She asked if it would have to be proved that it was a bad faith challenge. MR. POUND responded that essentially, that's correct. He said if somebody comes in with misinformation, incorrect information, or exaggerated information and succeeds in getting an injunction, and then through the process it is determined those [allegations are based on] incorrect information and [the plaintiff] loses as a result [and it is determined to be] a bad- faith suit, then it becomes a case wherein the judge is to determine damages. Number 1938 REPRESENTATIVE KERTTULA mentioned penalties for bad faith litigation in everything from punishment during a case to severe discipline [by the bar association]. She said it is a bit confusing because it seemingly mixes the bad-faith idea with the [attorney fees under Rule 82 of the Alaska Rules of Civil Procedure] with regard to the one who doesn't substantially prevail. She asked if the idea is to put the two together. MR. POUND conveyed his understanding that this only applies to the court process, not the administrative process, so it certainly covers that part of it. He relayed his belief that [the bill] gives the courts guidance, rather than directing them. He said the intent is that [the courts] look beyond just court costs and attorney fees when [considering] damages for bad faith. REPRESENTATIVE KERTTULA expressed concern about mixing the two standards and adding new things as well. She noted that normally someone has to prove damages as part of a case in order to receive [a monetary award for those damages] and that this isn't done as punishment; she said it is an odd way to do it. Representative Kerttula also expressed concern that there are some really fine lines on what "substantially prevailing" is. She explained, "You could prevail on four out of six causes, but that means you still haven't substantially prevailed, and ... it just seems to open up for some close calls there, too." MR. POUND offered his belief that that's why the bill is written this way, to give guidance, not direction, to the [courts]. Traditionally, he said, in the type of suits being discussed, for the most part there has only been a determination [that a losing plaintiff would] pay part of the attorney fees and court costs; however, this bill provides for full attorney fees, full court costs, and damages. Number 1748 REPRESENTATIVE KERTTULA suggested that the court costs and attorney fees have been the court's decision, and that it would not necessarily change because of this [bill]. She asked, "They could seek it; they might not get it, right?" MR. POUND turned attention to page 2, line 4, paragraph (4), which read in part, "actual litigation cost related to the disruption, including full attorney fees and court costs". He said he thought the aforementioned would be full costs and fees. REPRESENTATIVE KERTTULA told Mr. Pound he may be right, but that it could be a problem. She posed a situation in which someone win fours out of six causes of action; she questioned having that person [be responsible] for full court [costs] and attorney fees, as well as tying the court's hands that way. Number 1690 CHAIR FATE specified that the intent is to allow discretion of the court to make that determination. He told Representative Kerttula [the situation she posed] brings up an interesting point. Chair Fate remarked: If the four points ... that the defendant lost out of the six were of minor consequence, and the other two are a major consequence to the disruption of a project, I think the court would be obliged to take that under consideration; that would be that court's determination. And so, as we thought this over, in trying to make it the kind of legislation ... that allows the system, without any obstacles to ... recourse to an injunctive process, which this doesn't stop - to any type of litigation, [which] this doesn't stop, which was a complaint [about] the former version of this HB 86 - we have, in the attempt to make this absolutely fair [in] the legal procedure as it is today, ... given some discretion to the courts to determine these things. But we've also given notice legally that there is a liability attached to ... an injunction that was filed and granted in bad faith. So, that liability is what people have to take note of; it's still up to the court to determine what that liability is. So, we're not stopping any type ... of a civil process at all. Number 1558 REPRESENTATIVE GATTO posed an example in which he sues someone who has done such a bad job working on his car that he sues the mechanic for $10,000 and wins; under Rule 82 currently, he can recover a portion of his attorney fees. He asked if Rule 82 would go away [under the bill]. He noted that it talks about changing Rule 82. MR. POUND offered his belief that it wouldn't eliminate [Rule 82], but could possibly be interpreted to mean that someone would have to pay full attorney fees and court costs. REPRESENTATIVE GATTO asked if Mr. Pound was saying it enhances Rule 82, then, rather than diminishing it. MR. POUND offered his belief that it would, but said he didn't think this bill was particularly aimed at that type of civil case. He added that he wasn't sure how the courts would interpret that language to cover a case such as Representative Gatto had mentioned. Number 1464 REPRESENTATIVE KERTTULA referred to page 2, paragraph (4), lines 4-5, and to Rule 82. She surmised that this applies on the counts on which the person doesn't prevail. CHAIR FATE said the intent was not to modify it, but to make it a higher standard and "bump it up." REPRESENTATIVE KERTTULA asked if it was even less under Rule 82. AN UNIDENTIFIED SPEAKER answered, "Yes." REPRESENTATIVE KERTTULA offered her understanding that the bill bumps up Rule 82 because there is a fixed fee. She said right now awards of fees are limited because attorney fees can get pretty high. Representative Kerttula suggested this bill might encourage some high attorney fees. MR. POUND said he wouldn't know anything about that. Number 1277 REPRESENTATIVE WOLF posed a situation in which a permitted high- risk tree-cleaning project is stopped [and a fire results that destroys a public school]. He asked if SSHB 86 would allow for a bad faith public litigant to be held accountable for public property loss. CHAIR FATE offered his understanding that the determination would be made by the court, and that other mitigating circumstances would have to be taken into consideration before a [determination could be made]. REPRESENTATIVE WOLF remarked: When they ... look at high-risk management, it's one of those things that's been ... determined that it's a high risk to public property or public safety. And ... a project needs to be moved forward; it goes through the public process; permits are issued. And because there's a bad faith litigant, they go to court to try to stop it anyway. CHAIR FATE offered his assumption that the public would get a chance to voice an opinion before any high-risk projects were permitted. MR. POUND said that this bill is primarily aimed at the private sector and that the term "person" normally references a private individual and not a government [entity]. He said in reference to the school's burning down that he would think that wouldn't be the case. CHAIR FATE said regardless of whether it's public or private, certain procedures have to be [followed] in any high-risk project. Number 1084 REPRESENTATIVE KERTTULA suggested the other standard, or perhaps the main standard, is that it's a bad faith challenge. She asked for clarification of the definition or what the court [would use to make a determination]. MR. POUND said he was unsure what the court's specific language was for bad faith. He said he knows it has been used in precedent before. He indicated he would research those cases, but hadn't done so yet. Number 1039 CHAIR FATE indicated [the courts] have dealt with bad faith cases previously and would have a better understanding of what constitutes bad faith. REPRESENTATIVE MASEK suggested that many of the aforementioned concerns could be addressed in the next committee of referral, the House Judiciary Standing Committee. Number 0973 REPRESENTATIVE MASEK moved to report SSHB 86 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, SSHB 86 was reported from the House Resources Standing Committee.
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