Legislature(1993 - 1994)
02/09/1993 01:40 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
As prime sponsor, SENATOR KELLY introduced SB 73 (LIABILITY OF DESIGN/CONSTRUCTION PROFESSIONALS) and asked his aide, JOSH FINK, to review the bill for committee. Number 523 MR. FINK explained a similar bill had passed the Senate last year, and he gave a brief history on the Statute of Repose along with the rationale. This presumed that after a building had been utilized safely for 10 years, the facility should be deemed safe, and the design professions should be protected from suit after the passage of a reasonable amount of time. MR. FINK outlined the legal problems, and explained that currently design professionals are subject to an indefinite period of liability. He reviewed the supreme court decision arising from the 1988 consolidated cases, Turner construction v. Robert Scales and Iverson Construction v. DeWayne Carson and referred the committee to two legal opinions in the bill packet. MR. FINK said SB 73 would repeal the 6 year Statute of Repose and reenact a 10 year Statute of Repose in its place, and he explained the legal implications of the bill, and referred the Senators to additional information in the bill packet. In his summation, MR. FINK said the bill would provide reasonable protection for design professionals. He noted two zero fiscal notes. Number 554 SENATOR KELLY asked for additional information on the bill introduced during the last legislature, and MR. FINK gave him the voting history on the bill. SENATOR KELLY invited DOUG GREEN, Chairman of the Alaska Professional Design Council's legislative liaison committee, and a registered architect, to begin the testimony. MR. GREEN commenced with some history on the Alaska Professional Design Council which represented all of the design professionals in the State of Alaska - eleven different associations and 1400 design professionals state- wide. He made several points in favor of the bill and explained the Statute of Limitations in relation to the Statute of Repose, which fixes a time from the date the project is completed until a period in the future. This date, 10 years hence, would cut off the time for litigation against the project and against the design professionals, except in the case of gross negligence. MR. GREEN predicted the bill would encourage construction in Alaska, and he described the number of third party claims for a slip-and-fall type of incidence that makes the design professionals vulnerable to litigation. Number 580 TAPE 93-9, SIDE B Number 001 MR. GREEN deplored the amount of research it took to answer the litigations, and he assured the committee the bill would not limit the access to courts, even after 10 years. SENATOR SALO asked for an example of what would constitute gross negligence v. inadequate design or stress on a building. She said it might be many years before a design flaw comes to light. MR. GREEN gave an example of what might be concealed in the construction of a building which might have a deficiency in the design. He said that would not be standard practice and would constitute gross negligence on the part of a designer, giving recourse through the courts. SENATOR SALO asked about roofs, which she said are problem areas in Alaska. She also asked whether a change in the statute would change the burden of proof. MR. GREEN described the circumstances and remedies for the failure of a roof as a maintenance item, and he said the Statute of Repose could inform the design professional to look to the maintenance record by the owners as part of the defense. Number 066 SENATOR KELLY next called on RICHARD RITTER and COLIN MAYNARD to testify. MR. RITTER said that 45 states currently have a Statute of Repose, and of the 45, 32 have been declared constitutional in actual court cases. He explained Alaska's Statute of Repose had been declared unconstitutional. MR. MAYNARD assured the committee of support from the engineering society for the Statue of Repose, but he didn't think they should be subjected to an indefinite period of liability. He described being dragged into a suit even though his firm had been retired for 10 years. He quoted some statistics to show design problems after 10 years was for other than failure by the design professionals, but from remodeling and neglected maintenance. SENATOR LINCOLN questioned the letter from the legislative counsel, MIKE FORD, as to why the change had been made from 7 to 10 years. MR. FORD explained the correction. SENATOR LINCOLN, in reference to the studies by Shinnerer Management Services, Inc., quoted the "vast majority of claims filed against Design Professionals are brought within six years of substantial completion..." She quoted additional statistics from the legislation as stating 83.6% of the claims were filed the first 5 years, and 45% of the claims were filed during construction. SENATOR LINCOLN wanted to know why the legislature was going to 10 years for such a small percent of claims. MR. GREEN explained the legislation stretches out the number of possible claims to 97% of everyone who would, or could, file a claim. He further explained the design professionals want to provide some end point fair to everyone, but as design professionals wanted to be able to retire and not have to be called to be accountable for a building. Number 145 MR. RITTER added that without a Statue of Repose, design professionals are forced to consider "tail" insurance to retire their business. SENATOR SALO asked if after the 10 year period, would the insurance premiums be less? MR. MAYNARD said they were unable to see any difference immediately, but it would enable the design professionals to throw away their files after 10 years. MR. RITTER discussed insurance problems including deductibles and claims. In answer to questions from SENATOR KELLY, MR. RITTER described expensive court costs, legal fees, and insurance premiums. Number 180 SENATOR RIEGER directed MR. FORD to Sections 2 and 3, and questioned him about an equal protection case on page 3, line 5, where a number of trades and crafts have been included in the exemption rather than just the design professionals. MR. FORD explained why he thought it might help to have a broad base of people. He cited the lack of several liability as a success factor in the bill. SENATOR RIEGER and MR. FORD discussed some other aspects of the bill including joint several liability. SENATOR KELLY called for a motion on the bill. SENATOR RIEGER moved to pass SENATE BILL NO. 73 from committee with individual recommendations. Without objections, so ordered.