Legislature(2015 - 2016)BELTZ 105 (TSBldg)

04/07/2015 01:30 PM LABOR & COMMERCE

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Audio Topic
01:29:56 PM Start
01:30:20 PM Confirmation Hearing
02:21:06 PM SB76
02:37:37 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Public Testimony --
+ Confirmation Hearing: TELECONFERENCED
Commissioner Heidi Drygas, Department of Labor &
Workforce Development
<Pending Introduction & Referral>
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved SB 76 Out of Committee
             SB  76-REAL ESTATE BROKERS; LIABILITY                                                                          
2:21:06 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration of  SB 76. "An Act relating to private  actions and                                                             
remedies   against    real   estate   licensees    for   licensee                                                               
relationships, disclosures, and activity  before January 1, 2005;                                                               
and providing  for an  effective date." She  noted that  this was                                                               
the second hearing.                                                                                                             
2:21:42 PM                                                                                                                    
GENEVIEVE WOJTUSIK,  Staff, Senator  McGuire, summarized  that SB
76   addresses   notification   requirements  for   real   estate                                                               
transactions before January 1, 2005  when the licensee represents                                                               
both the buyer  and seller. The original statute  did not specify                                                               
remedies if  a real estate  licensee violated its  provisions and                                                               
had no  timeline. In 2002 a  lawsuit was brought and  it became a                                                               
class action  suit in 2010.  SB 76  broadens the language  in [AS                                                               
08.88.396(e)] to help with that suit.                                                                                           
During the previous  hearing, Senator Giessel asked  what the law                                                               
said  in 1998  regarding dual  representation. At  that time,  AS                                                               
08.88.396(c) said: "A person licensed  under this chapter may act                                                               
as an  agent for  both the prospective  seller and  a prospective                                                               
buyer of  real estate, only  after the licensee informs  both the                                                               
seller  and the  buyer of  the dual  agency and  receives written                                                               
consent to  the dual  agency from  both principals."  The statute                                                               
did not include  a timeline for obtaining the  written consent to                                                               
the dual representation.                                                                                                        
2:24:04 PM                                                                                                                    
CHAIR  COSTELLO  recalled  previous  testimony  that  prospective                                                               
homeowners  were making  on  the spot  offers  after viewing  the                                                               
properties. As a  result, a situation came up where  a buyer felt                                                               
he/she  made an  offer without  receiving communication  from the                                                               
agent about their dual representation.                                                                                          
MS. WOJTUSIK  confirmed that two  people felt that they  were not                                                               
informed  that  the real  estate  licensee  represented both  the                                                               
buyer and seller. They brought legal action in 2002.                                                                            
CHAIR COSTELLO  asked why  the new  language on  page 1,  line 6,                                                               
striking  the term  "for" and  inserting  "arising out  of" is  a                                                               
MS. WOJTUSIK deferred to Mr. Pickett.                                                                                           
2:25:34 PM                                                                                                                    
JEFFREY  PICKETT,  retained  counsel  for  the  Senate  Judiciary                                                               
Committee, explained  that the  term "arising out  of" is  a more                                                               
broadly interpreted  term by Alaska  courts and would  cover both                                                               
common  law  and  statutory  actions.   This  would  clarify  the                                                               
legislature's intent  in 2003 when  it limited damages  to actual                                                               
damages for violations of the dual agency notice requirement.                                                                   
CHAIR  COSTELLO  asked  if  this   change  might  bring  consumer                                                               
protection concerns.                                                                                                            
MR.  PICKETT  replied  he  has  heard  nothing  on  the  consumer                                                               
advocate side  that would indicate  concern with this  change. He                                                               
explained that  the change is  focused on the damages  a consumer                                                               
is  entitled  to if  the  dual  representation was  not  properly                                                               
disclosed. Should forfeiture  be allowed as a  remedy for failure                                                               
to  properly disclose,  some 3,500  transactions that  took place                                                               
during  this  timeframe would  be  at  risk. That  would  gravely                                                               
damage the entire industry.                                                                                                     
2:28:55 PM                                                                                                                    
CHAIR  COSTELLO asked  how the  bill  clarifies the  will of  the                                                               
legislature in 2003.                                                                                                            
MR. PICKETT replied the will  of the legislature is determined by                                                               
courts after a  review of the legislative  history. This includes                                                               
testimony, written comments  and anything put on  the record. His                                                               
understanding  is that  the  legislature in  2003  was trying  to                                                               
clarify the same thing that SB  76 seeks to clarify. That is that                                                               
permitting  forfeiture as  a remedy  for violations  of the  dual                                                               
agency  provisions would  have a  very disruptive  impact on  the                                                               
real estate industry.                                                                                                           
CHAIR  COSTELLO  asked  Senator  Ellis  if  he  had  supplemental                                                               
SENATOR ELLIS replied the previous comments reflect his memory.                                                                 
2:30:53 PM                                                                                                                    
SENATOR STEVENS asked why the  bill is retroactive [to January 1,                                                               
1991], if  anyone would  be harmed by  the retroactivity  and how                                                               
they would be harmed.                                                                                                           
MR. PICKETT  explained that the  bill is  necessarily retroactive                                                               
so  it  applies  to  cases  and claims  brought  since  the  1998                                                               
amendment made disclosure of dual  agency a requirement. The bill                                                               
makes it clear  to the courts that the intent  of the legislature                                                               
in  2003 was  that  only actual  damages would  be  awarded to  a                                                               
consumer  if  provisions  of the  dual  agency  requirement  were                                                               
SENATOR STEVENS asked  if there are ongoing court  cases to which                                                               
this would apply and if it  would provide a definitive answer for                                                               
any court decisions.                                                                                                            
MR. PICKETT  confirmed that  a case has  been ongoing  since 2010                                                               
could  be  affected,  and  others   could  be  brought  based  on                                                               
transactions between 1998 and 2003.  He said the ambiguity in the                                                               
law  is  related to  whether  the  limitation to  actual  damages                                                               
applies to  common law actions.  It clearly applies  to statutory                                                               
actions.  The pending  case could  be affected  because the  bill                                                               
would  require  the courts  to  apply  the limitation  to  actual                                                               
damages in any  case arising out of the failure  to disclose dual                                                               
agency representation.                                                                                                          
2:34:23 PM                                                                                                                    
CHAIR COSTELLO  asked how to rationalize  a retroactive effective                                                               
date  when   one  legislature  is   not  able  to   bind  another                                                               
MR. PICKETT explained that retroactivity  is a permitted power of                                                               
a  sitting legislature.  One legislature  may not  bind a  future                                                               
legislature, but  it is permissible  for a legislature  to change                                                               
what an earlier legislature has done.                                                                                           
SENATOR STEVENS  asked for  an explanation  of actual  damages as                                                               
opposed to other types.                                                                                                         
MR.  PICKETT  explained  that actual  damages  are  out-of-pocket                                                               
losses a buyer  or seller might have suffered as  a result of not                                                               
understanding that  the agent was representing  both parties. The                                                               
claimants in the pending case  are seeking the punitive damage of                                                               
forfeiture.  Those claimants  would like  the real  estate agents                                                               
that didn't  technically comply  with the  disclosure requirement                                                               
to disgorge the commissions and fees that they earned.                                                                          
2:37:05 PM                                                                                                                    
CHAIR  COSTELLO  found  no further  questions  or  testimony  and                                                               
closed public testimony.                                                                                                        
2:37:24 PM                                                                                                                    
SENATOR STEVENS motioned to report SB 76 from committee with                                                                    
individual recommendations and attached fiscal note(s).                                                                         
CHAIR COSTELLO announced that without objection, SB 76 is                                                                       
reported from the Senate Labor and Commerce Standing Committee.                                                                 

Document Name Date/Time Subjects
Commissioner DOLWF - Drygas #3.pdf SL&C 4/7/2015 1:30:00 PM
Appointment Confirmations