04/28/2003 02:10 PM House JUD
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
April 28, 2003
2:10 p.m.
MEMBERS PRESENT
Representative Lesil McGuire, Chair
Representative Tom Anderson, Vice Chair
Representative Jim Holm
Representative Dan Ogg
Representative Ralph Samuels
Representative Les Gara
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 257
"An Act relating to the disclosure requirements for real estate
licensees, to disciplinary action against real estate licensees,
to private actions against real estate licensees, and to real
estate licensee agency relationships, fiduciary duties, and
other duties; and providing for an effective date."
- HEARD AND HELD
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."
- MOVED CSSSHB 86(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 24
"An Act relating to intergovernmental agreements regarding
management of fish or game."
- HEARD AND HELD
HOUSE BILL NO. 245
"An Act relating to certain suits and claims by members of the
military services or regarding acts or omissions of the
organized militia; relating to liability arising out of certain
search and rescue, civil defense, homeland security, and fire
management and firefighting activities; and providing for an
effective date."
- HEARD AND HELD
HOUSE BILL NO. 145
"An Act relating to public interest litigants and to attorney
fees; and amending Rule 82, Alaska Rules of Civil Procedure."
- HEARD AND HELD
HOUSE BILL NO. 13
"An Act declaring legislative intent to reject the continuity of
enterprise exception to the doctrine of successor liability
adopted in Savage Arms, Inc. v. Western Auto Supply, 18 P.3d 49
(Alaska 2001), as it relates to products liability; providing
that a successor corporation or other business entity that
acquires assets of a predecessor corporation or other business
entity is subject to liability for harm to persons or property
caused by a defective product sold or otherwise distributed
commercially by the predecessor only if the acquisition is
accompanied by an agreement for the successor to assume the
liability, results from a fraudulent conveyance to escape
liability for the debts or liabilities of the predecessor,
constitutes a consolidation or merger with the predecessor, or
results in the successor's becoming a continuation of the
predecessor; defining 'business entity' that acquires assets to
include a sole proprietorship; and applying this Act to the
sale, lease, exchange, or other disposition of assets by a
corporation, a limited liability company, a partnership, a
limited liability partnership, a limited partnership, a sole
proprietorship, or other business entity that occurs on or after
the effective date of this Act."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 257
SHORT TITLE:DISCLOSURES BY REAL ESTATE LICENSEES
SPONSOR(S): REPRESENTATIVE(S)ROKEBERG
Jrn-Date Jrn-Page Action
04/10/03 0912 (H) READ THE FIRST TIME -
REFERRALS
04/10/03 0912 (H) L&C, JUD
04/14/03 (H) L&C AT 3:15 PM CAPITOL 17
04/14/03 (H) Moved Out of Committee
MINUTE(L&C)
04/15/03 0984 (H) L&C RPT 1DP 5NR
04/15/03 0984 (H) DP: ROKEBERG; NR: LYNN,
CRAWFORD,
04/15/03 0984 (H) GUTTENBERG, DAHLSTROM,
ANDERSON
04/15/03 0984 (H) FN1: ZERO(CED)
04/15/03 0984 (H) REFERRED TO JUDICIARY
04/28/03 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 86
SHORT TITLE:INJUNCTIONS AGAINST PERMITTED PROJECTS
SPONSOR(S): REPRESENTATIVE(S)FATE
Jrn-Date Jrn-Page Action
02/10/03 0169 (H) READ THE FIRST TIME -
REFERRALS
02/10/03 0169 (H) RES, JUD
02/21/03 (H) RES AT 1:00 PM CAPITOL 124
02/21/03 (H) Failed To Move Out Of
Committee
02/21/03 (H) MINUTE(RES)
02/24/03 (H) RES AT 1:00 PM CAPITOL 124
02/24/03 (H) <Bill Hearing Postponed>
03/07/03 (H) RES AT 1:00 PM CAPITOL 124
03/07/03 (H) Heard & Held
03/07/03 (H) MINUTE(RES)
04/02/03 0738 (H) SPONSOR SUBSTITUTE INTRODUCED
04/02/03 0738 (H) READ THE FIRST TIME -
REFERRALS
04/02/03 0738 (H) RES, JUD
04/02/03 (H) RES AT 1:00 PM CAPITOL 124
04/02/03 (H) Heard & Held
04/02/03 (H) MINUTE(RES)
04/04/03 0798 (H) COSPONSOR(S): FOSTER,
ROKEBERG, HOLM,
04/04/03 0798 (H) KOTT, LYNN, CHENAULT,
DAHLSTROM, WILSON
04/04/03 (H) RES AT 1:00 PM CAPITOL 124
04/04/03 (H) Moved Out of Committee
04/04/03 (H) MINUTE(RES)
04/08/03 0837 (H) RES RPT 6DP 1DNP
04/08/03 0837 (H) DP: WOLF, MASEK, MORGAN,
GATTO, LYNN,
04/08/03 0837 (H) FATE; DNP: KERTTULA
04/08/03 0837 (H) FN1: ZERO(LAW)
04/09/03 0901 (H) COSPONSOR(S): HEINZE
04/23/03 (H) JUD AT 1:00 PM CAPITOL 120
04/23/03 (H) Heard & Held
MINUTE(JUD)
04/25/03 (H) JUD AT 1:00 PM CAPITOL 120
04/25/03 (H) -- Meeting Postponed to Mon.
April 28 --
04/28/03 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 24
SHORT TITLE:AGREEMENTS ON MANAGEMENT OF FISH AND GAME
SPONSOR(S): REPRESENTATIVE(S)WEYHRAUCH, WHITAKER
Jrn-Date Jrn-Page Action
01/21/03 0037 (H) PREFILE RELEASED (1/10/03)
01/21/03 0037 (H) READ THE FIRST TIME -
REFERRALS
01/21/03 0037 (H) RES, JUD
03/05/03 (H) RES AT 1:00 PM CAPITOL 124
03/05/03 (H) Heard & Held -- Meeting
Postponed to After Session --
03/05/03 (H) MINUTE(RES)
03/07/03 (H) RES AT 1:00 PM CAPITOL 124
03/07/03 (H) Moved CSHB 24(RES) Out of
Committee
03/07/03 (H) MINUTE(RES)
03/10/03 0487 (H) RES RPT CS(RES) NT 4DP 3NR
03/10/03 0487 (H) DP: HEINZE, GATTO, LYNN,
FATE;
03/10/03 0487 (H) NR: KERTTULA, GUTTENBERG,
MASEK
03/10/03 0488 (H) FN1: ZERO (H.RES)
03/10/03 0488 (H) REFERRED TO JUDICIARY
04/09/03 (H) JUD AT 1:00 PM CAPITOL 120
04/09/03 (H) Scheduled But Not Heard
04/11/03 (H) JUD AT 1:00 PM CAPITOL 120
04/11/03 (H) Heard & Held
MINUTE(JUD)
04/25/03 (H) JUD AT 1:00 PM CAPITOL 120
04/25/03 (H) -- Meeting Postponed to Mon.
April 28 --
04/28/03 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 245
SHORT TITLE:SUITS & CLAIMS: MILITARY/FIRE/DEFENSE
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
04/04/03 0777 (H) READ THE FIRST TIME -
REFERRALS
04/04/03 0777 (H) MLV, JUD, FIN
04/04/03 0778 (H) FN1: ZERO(LAW)
04/04/03 0778 (H) FN2: ZERO(DNR)
04/04/03 0778 (H) FN3: INDETERMINATE(ADM)
FORTHCOMING
04/04/03 0778 (H) GOVERNOR'S TRANSMITTAL LETTER
04/08/03 0859 (H) FN3: INDETERMINATE(ADM)
RECEIVED
04/11/03 (H) JUD AT 1:00 PM CAPITOL 120
04/11/03 (H) <Bill Hearing Postponed>
04/15/03 (H) MLV AT 3:00 PM CAPITOL 124
04/15/03 (H) Moved CSHB 245(MLV) Out of
Committee
MINUTE(MLV)
04/16/03 1007 (H) MLV RPT CS(MLV) NT 1DP 2DNP
1NR 2AM
04/16/03 1007 (H) DP: LYNN; DNP: GRUENBERG,
CISSNA;
04/16/03 1007 (H) NR: MASEK; AM: WEYHRAUCH,
FATE
04/16/03 1008 (H) FN1: ZERO(LAW)
04/16/03 1008 (H) FN2: ZERO(DNR)
04/16/03 1008 (H) FN3: INDETERMINATE(ADM)
04/16/03 1008 (H) REFERRED TO JUDICIARY
04/16/03 (H) JUD AT 8:00 AM CAPITOL 120
04/16/03 (H) <Bill Hearing Postponed>
04/28/03 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 145
SHORT TITLE:ATTY FEES: PUBLIC INTEREST LITIGANTS
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
03/03/03 0359 (H) READ THE FIRST TIME -
REFERRALS
03/03/03 0359 (H) JUD, FIN
03/03/03 0359 (H) FN1: ZERO(LAW)
03/03/03 0359 (H) FN2: INDETERMINATE(ADM)
03/03/03 0359 (H) GOVERNOR'S TRANSMITTAL LETTER
03/03/03 0359 (H) REFERRED TO JUDICIARY
04/25/03 (H) JUD AT 1:00 PM CAPITOL 120
04/25/03 (H) -- Meeting Postponed to Mon.
April 28 --
04/28/03 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE NORMAN ROKEBERG
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 257.
CHRIS STEPHENS, Associate Broker
Bond, Stephens & Johnson, Inc.
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of HB
257, urged the bill's passage and responded to questions.
JOE LoMONACO, Associate Broker
Bond, Stephens & Johnson, Inc.
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of HB
257 and urged its passage.
CLAYTON HALVERSON, Associate Broker
Bond, Stephens & Johnson, Inc.
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of HB
257.
ROBERT ARMS, Associate Broker
Bond, Stephens & Johnson, Inc.
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of HB
257.
DAVE FEEKEN, Legislative Chair
Alaska Association of Realtors (AAR)
Kenai, Alaska
POSITION STATEMENT: Provided comments and responded to
questions during discussion of HB 257.
HOWARD S. TRICKEY, Attorney at Law
Jermain, Dunnagan & Owens, PC
Anchorage, Alaska
POSITION STATEMENT: On behalf of Prudential Vista Real Estate
and Prudential Jack White Real Estate, provided comments and
responded to questions during discussion of HB 257.
LINDA S. GARRISON, Broker
AAR #1 Buyer's Agency
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 257.
DAVID A. GARRISON, Associate Broker
AAR #1 Buyer's Agency
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of HB
257.
JIM POUND, Staff
to Representative Hugh Fate
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SSHB 86 on behalf of the sponsor,
Representative Fate.
REPRESENTATIVE BRUCE WEYHRAUCH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 24.
TED POPELY, Majority Legal Counsel
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions about suggested wording
for HB 24.
RON SOMERVILLE, Member
Board of Game
Juneau, Alaska
POSITION STATEMENT: Testified on HB 24, noting that he has been
assigned to the House and Senate majority on resource issues.
GAIL VOIGTLANDER, Assistant Attorney General
Special Litigation Section
Civil Division (Anchorage)
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Presented HB 245 on behalf of the
administration.
CRAIG TILLERY, Assistant Attorney General
Environmental Section
Civil Division (Anchorage)
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Presented HB 145 on behalf of the
administration.
ACTION NARRATIVE
TAPE 03-44, SIDE A
Number 0001
CHAIR LESIL McGUIRE called the House Judiciary Standing
Committee meeting to order at 2:10 p.m. Representatives
McGuire, Holm, Ogg, Samuels, Gara, and Gruenberg were present at
the call to order. Representative Anderson arrived as the
meeting was in progress.
HB 257 - DISCLOSURES BY REAL ESTATE LICENSEES
Number 0058
CHAIR McGUIRE announced that the first order of business would
be HOUSE BILL NO. 257, "An Act relating to the disclosure
requirements for real estate licensees, to disciplinary action
against real estate licensees, to private actions against real
estate licensees, and to real estate licensee agency
relationships, fiduciary duties, and other duties; and providing
for an effective date."
Number 0063
REPRESENTATIVE SAMUELS moved to adopt the proposed committee
substitute (CS) for [HB 257], Version 23-LS0893\Q, Bannister,
4/28/03, as the work draft. There being no objection, Version Q
was before the committee.
Number 0093
REPRESENTATIVE NORMAN ROKEBERG, Alaska State Legislature,
sponsor, said that HB 257 was engendered by what he termed "the
disquieting nature of the commerce in the real estate business
in this state," two lawsuits, and a statute which he said he
considered to be broken. He said he calls HB 257 an interim
bill intended to clarify the current situation so that the
commerce of the state can continue. He mentioned that 25
percent of the "state domestic product" is made up of the "chain
of real estate transactions and all activity revolving around
the real estate industry." Thus, he added, "it exceeds
everything but petroleum." The real estate component of
Alaska's economy is paramount in importance, he remarked.
REPRESENTATIVE ROKEBERG said:
I rewrote the entire real estate title ... a few years
back, and I left one section open - this issue that's
about dual agency. I asked at that time that a task
force undertake that; there was a task force working
on it then, but I've been waiting seven years. I
worked this last year with [an] Alaska state board of
realtors' task force on rewriting a bill, and we're
still working on that. But we reached a deadline and
... told folks that unless we could get something - a
comprehensive bill - passed this year, I'd introduce a
stopgap measure to try to make sure that business and
commerce (indisc.) continue. And that's what this
measure is; ... this is a stopgap measure.
It speaks to two issues. One is the exemption of
commercial real estate activity from the problems
revolving around disclosure under dual agency in the
statute, which is [AS] 08.88.396, and the definition
[of] what a commercial real estate transaction is.
Then it goes on to indicate ... in Section 7 of the
bill ... - page 5, ... [subsections] (f) and (g) - ...
what ... needs to be done.
Number 0300
REPRESENTATIVE ROKEBERG turned attention to subsection (g),
which read:
(g) The failure of the licensee to make a written
disclosure as required by this section or to obtain a
written acknowledgment or consent as required by this
section does not give a person a cause of action
against the licensee for the failure. However, this
subsection does not limit a person's ability to take
any other action or pursue any other remedy to which
the person may be entitled under other law.
REPRESENTATIVE ROKEBERG said that basically, if the legislature
adopts this language, it means that the "paperwork ... revolving
around the current statutory requirements of acknowledgement of
disclosure" - whether by seller's agent, buyer's agent, or dual
agent - doesn't, in and of itself, give rise to a cause of
action. Instead, it gives rise to a "license action." So, if
there is an error, there are sanctions that can be applied by
the Real Estate Commission. He relayed that "this" is
consistent with the current [statute pertaining to] conflict of
interest in that if there is an apparent conflict between a
licensee and his/her client and a failure to disclose, any
sanctions or remedies are limited to a license action. In
addition, specific language in subsection (g) permits a person
to take any other action or pursue any other remedy allowed by
law.
REPRESENTATIVE ROKEBERG assured the committee that HB 257 does
not diminish consumers' rights because it only addresses
clerical errors and timing errors regarding [dual-agency]
disclosures pertaining to [commercial] real estate transactions.
He opined that current statute is so unclear about when
disclosure is supposed to occur, that it creates a stultifying
atmosphere. He reiterated that HB 257 is merely an interim
step, and its goal is to ensure that what he termed an
administrative problem does not rise to a major cause of action.
He noted that Section 9 does apply to one of the aforementioned
lawsuits, which is still "at bar" and which speaks to "the very
issue contained in this bill."
Number 0510
REPRESENTATIVE ROKEBERG turned attention to page 4, lines 26-31.
He said:
What we had to do, if we're going to exempt commercial
real estate transactions, we had to define it,
because, formerly, under the title now, a commercial
real estate transaction is defined as a fourplex and
above. So it's not inclusive as to leasing
activities. Let me just say, for the record, on
[lines 24-25], page 4, the [term] "commercial real
estate transaction" is there. So, as relates to
[paragraph] (3), about leasing, it's my intention - I
think the language is clear - that this does not
include residential leasing transactions.
REPRESENTATIVE ROKEBERG then touched on the details of proposed
AS 08.88.396(e), which read:
(e) The provisions of (a) - (c) of this section do
not apply to a commercial real estate transaction that
involves
(1) the sale or lease of real estate that
contains a building having eight or more separate
living units;
(2) the sale of real estate that has a purchase
price of $250,000 or more in value for nonresidential
use; or
(3) the sale or lease of real estate having a
gross lease revenue that exceeds $12,000 a year.
REPRESENTATIVE ROKEBERG, with regard to a potential conflict of
interest, noted that he is a licensed real estate broker and has
had his license for 30 years, though currently he is not active
and has not received a real estate commission for eight years.
He offered that he can speak from experience on the activities
of a commercial broker, and detailed some of his accomplishments
during the time he was active in the industry, which included
dual-agency situations.
REPRESENTATIVE ROKEBERG then turned to the issue of dual agency
and said:
Number 0753
We'll talk ... about the application of the
"principles of agency" to this subject. ... There's
been a court interpretation that those licensees and
brokers that act under their client relationships are
acting under the "common law of agency," whereas the
principal and agent does directly link between the
client and that particular licensee. I submit that
that's a wrongheaded and legally faulty provision. ...
And even the current common language of a real estate
agent related to the agency principal relationship
between the broker, as the principal, and the agent as
the agent of the principal are (indisc). So there's
been a corruption; there's been a corruption in the
case law and everything else.
REPRESENTATIVE ROKEBERG went on to say:
And one of the worst things, [which is] what I think
the committee should take notice of, is that if the
continuation of "common law agency" is to relate to
the licensee and client relationship, then that gives
rise to enormous vicarious liability on the part of
that client. So the average citizen is going to be
exposed. If we continue down this path, legally, and
the fiction of [an] agency principal relationship that
arises between the client and the agent, then the
significant vicarious liability ... could arise and be
directed towards the average citizen. And I think
that's not a good public policy.
REPRESENTATIVE ROKEBERG offered that HB 257 is designed to
clarify this issue. He then mentioned a couple of his past
clients and a leasing situation in which he'd served as dual
agent, to illustrate the problems facing those who serve in that
capacity. He said, "When you're in an agency principal
relationship, fiduciary duties arise, and that's the crux of
this matter: How much can you speak?" Once a dual-agency
situation is established and [a broker] has two masters, under
"agency law" he/she cannot discuss price terms or certain
conditions that would divulge or disadvantage one side of the
transaction or the other. He submitted that it is impossible to
perform one's duties as a dual agent "without being able to do
that," and offered a further personal example pertaining to
leasing to illustrate the difficulties that could arise if one
is prohibited from discussing certain things with one's clients
simply because one is a dual agent.
Number 1210
CHRIS STEPHENS, Associate Broker; Bond, Stephens & Johnson,
Inc., noted that his company is a commercial real estate firm in
Anchorage, that there are others at the location from which he
is testifying that share his sentiments, and that he has
submitted a letter to the committee. He said that there is no
way on earth a commercial broker can do his/her job under dual
agency as defined under current Alaska law. He elaborated:
We absolutely have to have the ability to put these
transactions together and to work with both parties
effectively, and [we] can't do that under the law
because the law says we have to be silent when there's
dual agency. And it's an absolutely ... impossible
position. We have dual agency in roughly half the
transactions that we do. So, it's not for the benefit
of the public or the state or the commerce to have
this restriction, which is an essential part of us
being able to do our job.
The second point is, is on the form of the disclosure.
... The reality is that the disclosure forms that are
required end up being so darned burdensome. In many
cases we're dealing with companies from outside this
state ..., having to run these forms back and forth,
some of the corporations won't even look at them
because they've got to send them to their real estate
law department; it just becomes a nightmare almost.
We're not selling houses, we're not selling people
homes, we're not in business. We're doing business
transactions with people involved in commerce. So
it's a totally different situation.
MR. STEPHENS concluded by saying that he and others at his
location are concerned about [the current situation] and urge
the bill's passage.
Number 1351
JOE LoMONACO, Associate Broker; Bond, Stephens & Johnson, Inc.,
noted that he has been in the real estate industry in Anchorage
for 27 years. He opined that confusion pertaining to the
current statute and its various interpretations has increased.
He said that his fears and concerns surround the risk of being
held civilly or criminally liable because of this confusion. He
noted that some of the more sophisticated clients refuse to sign
the required disclosure forms. He urged passage of HB 257.
Number 1412
CLAYTON HALVERSON, Associate Broker; Bond, Stephens & Johnson,
Inc., remarked that there is a distinct difference between
residential [transactions] and commercial [transactions]. Those
involved in commercial transactions are generally businesspeople
who are very knowledgeable about the pending transaction,
sometimes more so than the transaction brokers. He opined that
under the current law, such transaction brokers are not able to
provide the kind of service that they are obligated to provide
their clients.
Number 1471
ROBERT ARMS, Associate Broker; Bond, Stephens & Johnson, Inc.,
said that the difference between residential and commercial
transactions is dramatic. In many cases, a commercial agent
will represent a customer and find a user for a property, and
the whole transaction will happen without it reaching the
multiple listing service (MLS) system. It's all done privately,
it's all done confidentially, and it's a completely different
situation than what occurs for a residential transaction. He
said that he supported everyone else's comments.
MR. STEPHENS again urged passage of HB 257. In response to a
question, he said that [his firm] has spent over $12,000 having
disclosure forms developed that would meet current law. He
relayed that he's had clients who've simply handed the forms,
without first reading them, to their attorneys, and has had some
clients who've refused to accept or review the forms altogether.
He opined that [the current disclosure requirements] do not
serve any purpose and make an already difficult process more so.
In response to further questions, he acknowledged that some
clients could simply go find brokers that are willing to
participate in a transaction without abiding by the current
disclosure requirements. He also relayed that his firm has
provided the committee with copies of the various disclosure
forms required by current law.
REPRESENTATIVE GARA noted that there is a provision in HB 257
which says that "the law of agency" won't apply, anymore, to
real estate agents "in this context." He asked for examples of
how "the law of agency" has proven to be unfair to real estate
agents. He also noted that there is a retroactive provision in
HB 257 which would allow it to reverse a jury verdict. He asked
for comments on that provision.
MR. STEPHENS offered the following as example of the problem
encountered with dual agency:
If you're an agent, and let's say you have a listing
and you're out soliciting buyers, and let's assume
that you get three offers - one from an agent within
your company, which that (indisc.) now a dual agent,
and two other offers from agents, let's say, [of]
other companies - and you're in your conference room
reviewing these offers to decide which one you're
going to move forward with or perhaps counter and why,
and (indisc.) a very detailed process. So you go
through the offers from one other company; you go
through it in detail. You go through the next offer,
from another company, in detail. Now, you get to the
offer brought in from an agent in your own company.
Currently, you have to tell that seller, "I'm sorry, I
cannot comment on this offer." Now that doesn't do
that seller any good at all, or anyone any good at
all. That's a perfect example of the kinds of things
that we run into all the time.
Number 1750
REPRESENTATIVE GARA said, however, that there is "a law of
agency" that defines the duties between people who are agents
and the people who they represent. And HB 257 seems to exempt
real estate agents from "the law of agency," he remarked. He
said that he understands that sometimes there might be
requirements of "the law of agency" that don't seem to help
people in a particular circumstance, but he is wondering whether
"the law of agency is a burden to Mr. Stephens in some way and,
if so, what that burden is.
MR. STEPHENS acknowledged that he is not that familiar with "the
law of agency." He added, however, that "in trying to do our
job, when we are dealing with people wanting to buy and sell and
lease commercial real estate, we have to be able to talk to
them, and in dual agency, we can't - but we've been hired for
our expertise." That's where the problem is. The types of
transactions at issue require someone with a lot of expertise in
the field of commercial real estate to make them go together.
That's why such brokers are hired; yet current law inhibits them
from providing that expertise, he opined. With regard to the
retroactivity provision of HB 257, he suggested that others
could better testify to that issue.
REPRESENTATIVE ROKEBERG noted that Section 8, found on page 5,
line 15, repeals Section 7 on June 30, 2005. He said that the
reason this sunset provision is included is because Section 7,
the exemption for commercial real estate transactions, is
intended to be a stopgap measure until more comprehensive
legislation can be put in place.
REPRESENTATIVE GARA remarked that of the two changes HB 257
purports to make, he understands one very well, that of
exempting commercial realtors from some rules governing dual
agency in revealing details to the various parties involved in a
transaction. The change he said he seeks clarification on
pertains to the current law that some people have said prohibits
a realtor from representing both a buyer and a seller. He
remarked, however, that the current law does not prohibit this,
as long as the realtor discloses that he/she is representing
both buyer and seller. "So what am I missing there?" he asked.
Number 1952
REPRESENTATIVE ROKEBERG agreed that under current law, an agent
can represent the buyer; the seller; or both, as a dual agent.
The difficulties arise because of interpretations which say that
when two licensees from the same brokerage company represent the
buyer and the seller, it becomes a dual-agency situation and,
therefore, both parties must agree to having both licensees
continue with the transaction. That can work, he remarked, but
the problem then becomes one of what can a licensee do to advise
his/her client. He said that the problem is particularly acute
in the commercial arena, and he called it the "duct tape rule,"
likening it to slapping duct tape over the mouths of the
licensees whose goal is to merely put a deal together.
REPRESENTATIVE GARA said he still doesn't understand why a
realtor, right now, can't give advice to a client, as long as
he/she discloses that there might be a potential conflict. "Am
I right that if they do disclose, then they can say whatever
they want," he asked, adding, "That's the issue I'd like
addressed."
CHAIR McGUIRE surmised that the problem revolves around the fact
that once an agent has signed a person on as his/her client,
under the principles of "agency law," he/she then has fiduciary
responsibilities to that client as the principal. She suggested
that even disclosing to both clients that he/she is acting on
behalf of both of them does not discharge the agent's fiduciary
duties to both clients or make it easier for communication to
occur in a commercial setting.
REPRESENTATIVE ROKEBERG said that the issue becomes how to
determine whether one is breaching one's fiduciary duties with
regard to what information is being discussed. He said that
these same dual-agency problems are true for residential
transactions as well, but HB 257 does not addressed residential
transactions at all. He indicated that the comprehensive
legislation still to be developed will address all the problems
currently faced by clients and agents.
Number 2092
DAVE FEEKEN, Legislative Chair, Alaska Association of Realtors
(AAR), turned attention to page 5, lines 10-14, subsection (g)
of Version Q, and said that this language clarifies that it
pertains only to the written disclosure required by AS
08.88.396, rather than to the whole concept of disclosure. He
said that the AAR is very much in support of this clarifying
language. He mentioned that the board of directors [of the AAR]
has had lengthy debate regarding the definition of
"sophisticated and knowledgeable commercial real estate
transactions," and has provided the sponsor with suggested
language to redefine "the limit." He also mentioned that the
AAR now has a "no opposition as amended" position on HB 257. He
noted that there are a number of states that exempt "commercial,
single agency only, transactions from disclosure." He added,
"The dual-agency situation ... still requires a disclosure in
all states in this country, right along with conflict of
interest."
REPRESENTATIVE GRUENBERG opined that subsection (g) immunizes a
licensee even from a deliberate concealment of a disclosure.
Why is that good public policy? he asked.
MR. FEEKEN said that the AAR does not interpret subsection (g)
as immunizing an agent for concealment. "We're saying that the
rest of the statute still stands," he added; under AS 08.88.396,
the agent still has the duty to disclose. However, if either a
buyer or seller doesn't sign "at the time of specific
assistance," then that is considered a clerical or technical
violation; it does not remove the licensee's obligation to
disclose.
REPRESENTATIVE GRUENBERG said that a right without a remedy is
pretty specious. The only way something can be enforced is to
provide a remedy in the law; one remedy, traditionally, is a
civil remedy, which is often the most effective because it
provides an immediate private remedy without having to go
through a governmental bureaucracy. According to his
interpretation of subsection (g), he said, it's an immunization
of licensee for the failure to make a written disclosure. So
again, why is that good public policy?
Number 2281
MR. FEEKEN pointed out that the second sentence of subsection
(g) says:
However, this subsection does not limit a person's
ability to take any other action or pursue any other
remedy to which the person may be entitled under other
law.
MR. FEEKEN said that proposed AS 08.88.396 says that an agent
shall disclose at the point of specific assistance, which most
people interpret to mean when the agent first starts helping to
locate a property or when he/she first becomes aware of
confidential information. The obligation to disclose has not
been removed, he opined. Instead, he also opined, the language
in subsection (g) means that if one doesn't get that written
disclosure within a particular timeframe, it is just considered
a clerical mistake.
CHAIR McGUIRE remarked that one of the things that has come out
of the aforementioned litigation and some of the resulting
discussions is that people have become aware that there are
alternatives to dual agency. She referenced her own
neighborhood in which the sole real estate agent represented
both the homebuilder and potential buyers, many of whom were
first-time homebuyers and didn't realize that dual agency is
only one alternative. What has begun to happen, she remarked,
is that now a form is being offered, first thing, to potential
buyers regarding dual agency.
TAPE 03-44, SIDE B
Number 2385
CHAIR McGUIRE indicated that she is unsure whether mere
sanctions on an agent's license are going to be enough to
encourage an agent to do all he/she can to inform consumers of
their rights.
MR. FEEKEN said he understood Chair McGuire's concern. He
offered, however, that "the specific assistance issue is
something that's debated in an open-house environment and in [a]
new-construction environment as to when that happens." He
posited that most agents comply with AS 08.88.396, but
acknowledged that perhaps such is not the practice in a hot
market. He remarked that there have been a lot of changes made
in the industry in the last 15 months due to the aforementioned
lawsuit.
CHAIR McGUIRE opined that those changes have been positive for
consumers, particularly that of forcing agents to give consumers
a form explaining their relationship right at the outset.
Subsection (g) is taking away consumers' remedy, she remarked,
and so agents would no longer have the force of law behind them
ensuring that they did the right thing for consumers.
MR. FEEKEN argued that the consumer would still have the right
to bring a cause of action if the agent failed to disclose
verbally. Subsection (g) only pertains to circumstances in
which the agent does not make the disclosure in writing or
obtain written verification of disclosure. He opined that it
would be in the agent's best interest to obtain written
verification of disclosure. He remarked that undisclosed dual
agency constitutes a fraudulent act and as such would still
entitle the consumer to bring a cause of action, adding that
subsection (g) only pertains to the "written technicality of the
disclosure."
REPRESENTATIVE GRUENBERG pointed out, however, that for many
years, the "statute of frauds" has required real estate
transactions - contracts - to be in writing because they are so
important to the people involved in those transactions. In
fact, having things in writing is important to the legal system,
as well, in reducing problems of proof, he said, because if a
consumer bringing a suit claims that he/she never received
verbal disclosure, the defendant - the agent - can then show the
court the written acknowledgement of disclosure. Once the forms
are created, it is easy to provide them to consumers, and they
make it easy to prove in court that proper disclosure did occur.
Number 2146
REPRESENTATIVE ROKEBERG pointed out, however, that one of the
problems revolves around when to make such a disclosure. The
timing of the disclosure has become an issue: Should disclosure
happen when a person attends an open house? After a person asks
an agent a couple of questions? When a person responds to an
add in the paper? He opined that a potential buyer should not
have to sign a form at those points in time, and remarked that
agents in small communities have no choice but to act as dual
agents. He suggested that the aforementioned lawsuit and
current statute have created artificial barriers that are
ludicrous to abide by. He again reiterated that HB 257 is
merely a "Band-Aid bill" that will be replaced by a later, more
comprehensive bill. Current law is badly drafted, he remarked,
in that it doesn't give clear direction regarding when
disclosure should occur.
CHAIR McGUIRE argued, however, that in order for something - a
contract, a transaction, a warranty - to really be meaningful
for a consumer, it should be in writing. Relying on a claim
that disclosure occurred orally is not sufficient, and is likely
to engender more litigation.
REPRESENTATIVE ROKEBERG offered that disclosure would still have
to occur in writing; subsection (g) merely addresses instances
when such does not occur at the exact moment the relationship
started.
REPRESENTATIVE GARA said he agrees that the disclosure forms
should be in writing, but does not agree that proof of verbal
disclosure should be sufficient to preclude a cause of action.
Regardless, he observed, subsection (g) is really poorly written
in that it makes it very vague as to whether someone has a cause
of action for a failure to disclose. He stated that if all the
sponsor wants to do is exempt technical violations, then
subsection (g) needs to be rewritten because, as currently
written, it appears to exempt much more than just technical
violations.
REPRESENTATIVE GARA noted that contrary to Mr. Feeken's
statement that the AAR now has no position regarding HB 257,
Carole Winton, president of the AAR, sent a letter via e-mail
that says the AAR does not support HB 257. In particular, the
letter states about the applicability and retrospectivity
provision: "This is a real slap in the face to the law abiding
majority of real estate practitioners in Alaska." He asked Mr.
Feeken to explain why the AAR no longer has a problem with that
provision.
Number 1898
MR. FEEKEN offered his understanding that the applicability and
retrospectivity provision - Section 9 - only applies to
subsection (g), which, he opined, only deals with technical or
clerical disclosure, rather than the actual process of
disclosure. He added:
One of the issues that's came up out of the "Mehner
lawsuit" was, the common practice in the industry was,
in a dual-agency residential transaction, that the
seller of the property, during the process of listing
a property, would allow for dual agency, in other
words, that that agent or someone within that company
to sell that property; "preauthorizing" it was the
terms used. Within that lawsuit, the definition that
came back out said, "No, that practice can't happen
because the principals have to know who each other
is," which was never the intent of the original [AS
08.88.396].
So, it would put the burden upon the agent who has the
listing; if a buyer comes along and says, "I want to
see that property," if you're to go by what the judge
and the attorneys were saying out of that lawsuit,
that agent has to run back out and get that seller to
sign a form saying it's okay for him to show his
house. That is the written technical difficulty we're
trying to put the Band-Aid on ... until this larger
bill can be introduced, which totally revamps this
process of agency disclosure.
REPRESENTATIVE GARA referred again to Ms. Winton's letter, and
read from the third paragraph from the bottom which says in
part: "Fiduciary Duty - This provision is simply embarrassing
to professionals that endorse the National Association of
Realtors code of ethics." He asked: What about the removal of
the "law of agency's" fiduciary duty? Is that no longer the
position of [the AAR]?
MR. FEEKEN replied that the AAR is not dealing with those
issues. He relayed that he'd been involved in the creation of
AS 08.88.396, which had been enacted at a time when "subagency"
was common within the industry. The current language was
intended to let the seller know that the agent working with the
buyer was the buyer's agent, and to disclose the possibility of
dual agency on an in-house [situation] or the same agent working
with both the buyer and seller. The industry has changed a lot,
he added, and subagency is not even available in most states in
the country. "The concept of abrogating the common law by
simply putting a line in like that has been attempted in 13
states and it's failed in 13 states; [you've] got to replace it
with something," he stated. With regard to Ms. Winton's
statement, he said that he did not understand how one could be
honest, be fair, act in good faith, and still not have fiduciary
duty. It's just not practical, he added.
Number 1762
REPRESENTATIVE GARA remarked that Ms. Winton's letter seems to
state that AAR has a problem with abrogating "the common law of
agency," in that it says in part: "The National Association of
Realtors does not recommend abrogation of the common law."
Representative Gara asked: "What is it about this new version
of the bill that resolves that concern?"
MR. FEEKEN replied: "It doesn't address that, and I guess my
point is ... that that line is not enforceable (indisc. -
someone else talking] it hasn't been replaced with anything. If
you abrogate the common law, what law are you going to use?" He
remarked that when Colorado attempted to abrogate common law
with regard to disclosure, "it took 65 pages to replace it, of
the duties of the agent." He surmised that if an issue came
before a judge, even though the proposed legislation might state
that the common law of agency does not apply, without anything
in its place, the judge will "go right back to common law."
REPRESENTATIVE ROKEBERG pointed out that HB 257 only repeals the
"common law principles of agency," not all common law.
REPRESENTATIVE GARA said that's the problem: "we're abrogating
the law that provides the duties." That's not just a little
technical thing that's being abrogated; if the "common law of
agency" imposes the fiduciary duties, and it is abrogated, then
so too are the duties. Why is that a good thing? he asked. Why
are not Ms. Winton's comment right on point?
REPRESENTATIVE ROKEBERG argued that it would only affect
commercial transactions, and then only for two years until more
comprehensive legislation can be introduced and enacted.
REPRESENTATIVE GARA said he understood those points.
REPRESENTATIVE ROKEBERG opined that doing as HB 257 proposes is
acceptable because the parties involved in commercial
transactions are sophisticated and understand the rules of
engagement.
Number 1647
REPRESENTATIVE GARA asked Representative Rokeberg whether he is
claiming that everyone who purchases a commercial piece of
property is so sophisticated that he/she does not need to made
aware of his/her agent's potential conflict of interest.
REPRESENTATIVE ROKEBERG replied that although nothing is
absolute, by and large, people who engage in commercial
transactions should have their own agents, advisors, and
accountants, and should be and are protected under commercial
law.
REPRESENTATIVE GARA said that the concept that one cannot rely
on the agent and should instead arm one's self with a battery of
other agents and an attorney is shocking to him.
REPRESENTATIVE ROKEBERG said that as a matter of course, he'd
advised all of his clients to have their own attorneys and
accountants. He indicated that current law is an insult to him
and his own personal ethics because it implies that an agent
can't act in an ethical manner when serving as a dual agent. He
remarked that every other state in the country is also
struggling with this issue. He said that for a number of years,
he and his staff have been working with people in the industry
to try to find a solution.
REPRESENTATIVE OGG asked why the burden to inform - to disclose
dual agency - in writing is considered onerous.
MR. FEEKEN said that problems arise in instances where the
person to whom the disclosure must be made is not standing right
there where the agent can hand him/her the disclosure notice.
Sometimes portions of the transaction, with regard to
information that must be disclosed, occur over the telephone;
however, according to the specific requirements currently in AS
08.88.396, information must be disclosed in writing. Therefore,
it's not that written disclosure doesn't happen, it's just that
it doesn't happen at the exact same time as the verbal
disclosure; this is the technical issue that subsection (g) is
intended to address. He confirmed that subsection (g) is also
intended to address the issue of the seller approving, via
written acknowledgement, of a dual-agency situation.
REPRESENTATIVE OGG asked whether delivering written disclosure
or acknowledgement could be done via fax, e-mail, or courier.
Number 1390
MR. FEEKEN pointed out that current law says the written
disclosure or acknowledgement must occur at the same time as the
verbal disclosure or acknowledgement. Such is not always
possible, he remarked, adding that sometimes the person to whom
the written disclosure is presented or from whom the written
acknowledgement is asked either does not have the authority or
must get the documents reviewed first.
REPRESENTATIVE OGG remarked that subsection (g) does not mention
the technical violation that the sponsor has indicated he wants
to address. He suggested that perhaps a reference to and a
definition of what constitutes the technical violation should be
included in the bill.
MR. FEEKEN said that is a good suggestion.
REPRESENTATIVE GRUENBERG, on that point, referred to page 4,
line 6, and suggested that the language "at the time of the
initial contact" should be amended by adding something along the
lines of, "or as close as possible thereto". He opined that
currently, subsection (g) is overbroad. He said he agreed with
Representative Gara with regard to the issue of throwing out the
"common law principles of agency." That's a complete body of
law, and it will have a lot of unintended consequences if this
legislation exempts even commercial real estate transactions
from the entire "restatement of agency"; "I couldn't support
that," he added. He then asked Mr. Feeken whether he'd yet read
Judge Christen's decision on the Mehner case.
MR. FEEKEN said he had not.
REPRESENTATIVE GRUENBERG mentioned that one of the decisions
arrived at from the issues surrounding that case was that not
all intentional torts give rise to damages, because even when
the tort is intentional, the conduct must still satisfy either
the "outrageous" or "reckless indifference" requirements of AS
09.17.020(b). Thus, he surmised, one could get punitive damages
only if one is able to prove by clear and convincing evidence
that the action was either outrageous, including acts done with
malice or bad motives, or recklessly indifferent to the interest
of another person. He opined that the judge's finding that she
could not give punitive damages to a particular defendant in
that case - McAlpine - is either a serious misreading of the
statute or there is a problem with the statute.
Number 0958
REPRESENTATIVE GRUENBERG asked Mr. Feeken if he sees a problem
with that interpretation of the punitive damages statute, "where
it's one broker suing another for stealing a commission."
MR. FEEKEN said no.
REPRESENTATIVE HOLM said that giving up the "common law
principles of agency" bothers him because his understanding is
that once he hires someone to do something for him, then that
person will act as his principal agent in his best interest. He
noted that he has never read a law that says someone must treat
another honestly, fairly, and in good faith. Although such is
good sentiment, it doesn't really mean anything because it's all
based on "some level of association" that is not in law. He
questioned whether an agent could really represent both the
buyer and seller and still be "evenhanded."
REPRESENTATIVE HOLM surmised that the only way an agent could
really do so would be if that agent was really just looking out
for his/her own best interest. He asked: "Is that what we're
saying here, [that] this is done for the purpose of the real
estate agent? ... Where do the purchasers and the renters, the
lessors and the lessee, where do they fit into [it]? ... Do they
give up their rights to having ... some kind of agency law at
all?" Because if they do that, then no one acts in their best
interest, necessarily.
REPRESENTATIVE HOLM said:
If you hire someone, usually you're paying them to do
business in your best interest. But the way this is
written, to me, business will be done in the real
estate broker's best interest, regardless of whether
or not it's [in] my best interest ..., whether I'm the
lessor or lessee. ... If I hire a real estate agent, I
would want them to be working for me.
Number 0665
REPRESENTATIVE HOLM said that although he may not understand all
of the principles of agency, he knows how they affect him as a
businessman. If he purchases property, he explained, he wants
to truly feel comfortable that the agent he hires, that he pays,
is working in his best interest. Notwithstanding the claim that
this bill is a "Band-Aid" approach, to write law which
stipulates that the "common law principles of agency" will no
longer apply leaves him wondering what will happen in the
meantime, he remarked.
REPRESENTATIVE ROKEBERG opined that strict interpretation of the
current law hinders commerce, in that transactions cannot be
concluded properly. He remarked that HB 257 has narrow
application, affecting commercial real estate transactions; with
regard to residential transactions, the bill only pertains to
the timeframe in which written documentation is received. He
again reiterated that HB 257 is merely an interim bill, and that
a more permanent solution is being drafted. "All we're trying
to do here is reduce the liability ... for unnecessary
litigation, and to move forward so we can make progress here,"
he added.
CHAIR McGUIRE suggested that they simply wait for that permanent
solution, rather than taking this interim step.
REPRESENTATIVE ROKEBERG pointed out, however, that the firm of
Bond, Stephens & Johnson, Inc., alone does between $300 million
and $400 million in business a year, approximately half of which
is under dual agency. Waiting for the more comprehensive
legislation, he opined, will shut down such firms and have a
negative impact on business. Agents are fearful of the
potential liability resulting from the aforementioned case and
are in need of legislation that will keep the balance until a
more permanent solution is in place, he added.
Number 0392
HOWARD S. TRICKEY, Attorney at Law; Jermain, Dunnagan & Owens,
PC, indicated that he would be speaking to proposed AS
08.88.396(g) and its retrospective application [on behalf of
Prudential Vista Real Estate and Prudential Jack White Real
Estate]. He said that the purpose of the legislation, as
drafted, is to address the following problem. Currently, there
is a perception that every dual-agency transaction done in
Alaska in recent years was not properly documented. This
contention is based upon the requirement that there be a signed
acknowledgement, from both buyer and seller, every time a
prospective buyer wants to see a house listed with the same
broker. For example, if the broker has a house and a "house
showing," which is common in many areas, each time a new buyer
even walks into that house, the current statutory requirement is
that the broker obtain a written consent from both seller and
buyer in order to show the house.
MR. TRICKEY offered that current law is ambiguous in that it
requires the disclosure when there's a specific assistance. He
opined that subsection (g) is intended to merely and solely
protect agents and brokers from liability for a technical
statutory violation involving the timing of when they document
the written disclosure. It really is to protect them from a
recordkeeping requirement, he added. Subsection (g) does not
abrogate the responsibility to make a written disclosure; it
does not abrogate agents' liability in the event that there is
actual harm or loss because someone was engaged in fraud,
intentional misconduct, negligence, or negligent
misrepresentation. He said that the second sentence of
subsection (g) was drafted to preserve any cause of action or
claim that a buyer, who has suffered injury or harm or damage,
may have under the common law of either tort principles or
contract principles.
MR. TRICKEY attempted to assure members that subsection (g) is
not intended to protect agents or brokers when someone has
actually suffered harm or loss. Under the second [sentence of
subsection (g)], any buyer would still have the right to bring a
claim based on a tort or contract theory. The intent of the
legislation is very narrow and limited, he opined, in that it is
intended to protect from liability a failure to timely document
the written disclosure still required of a residential agent
when acting in a dual-agency capacity.
MR. TRICKEY said of the retroactivity provision that it is not
intended to set aside a jury verdict. He said he is unaware of
any jury verdict involving any action that has resulted in a
trial and a verdict that's been rendered. He attempted to
assure members that HB 257 will not change and would not have
changed the result of the Mehner case, wherein, he offered, the
judge found that the defendant committed intentional misconduct
and made misrepresentations in a transaction. He opined that
the retroactivity provision is necessary to protect those in the
industry when there is a technical violation of the statute
involving the documenting of the written-disclosure requirement,
which, he also opined, causes no harm to a buyer and seeks only
the forfeiture of the commission that the agent earned in the
transaction.
TAPE 03-45, SIDE A
Number 0001
MR. TRICKEY, in response to a question, mentioned that he is
speaking on behalf of Prudential Vista Real Estate and
Prudential Jack White Real Estate, and is involved with co-
counsel in defending those firms in a class-action lawsuit,
which, he proffered, seeks to disgorge all commissions earned by
those firms over the past six years.
REPRESENTATIVE GARA surmised that what is intended via
subsection (g) is that if agents fail to disclose, to a client,
dual agency or a conflict, then they would be liable, but if the
agents do disclose but just don't do a written disclosure in
time, that fact doesn't make the agents liable. He asked if
that was a fair summary, if he had 90 percent of it right.
MR. TRICKEY told Representative Gara that he did have 90 percent
of it right, because statute requires disclosure of dual agency
and defines conflict of interest. Therefore, if there is a
conflict as defined by that statute, there is a different remedy
for an undisclosed conflict. In other words, "conflict" is a
technical term under the statute.
REPRESENTATIVE GARA opined that if the aforementioned is the
intent of subsection (g), then it needs to be rewritten because,
currently, it seems to imply, though unintentionally, that if an
agent fails to disclose, then there is no [cause of] action.
MR. TRICKEY noted that failure to make a written disclosure, at
all, would result in a licensure action. He reiterated that the
purpose of subsection (g) is to prevent someone from being
liable for the technical failure to document the disclosure.
REPRESENTATIVE GARA said that the language, as written, does not
make him feel comfortable that that is all they are doing.
[Following was some discussion about Mr. Trickey's
aforementioned class-action lawsuit and whether the court will
hold that actual harm must occur before damages are awarded.]
Number 0401
CHAIR McGUIRE opined that subsection (g) is written so vaguely
that it gives the impression that failure to make any disclosure
at all does not give a person a cause of action. At a minimum,
she suggested, it should be rewritten to clarify that the duty
itself still exists and it is only the [timing of] the written
disclosure that is addressed in subsection (g). She also
pondered whether the committee should consider the issue of
actual harm. For example, perhaps the language should stipulate
that the failure to provide written disclosure within a certain
timeframe must cause actual harm.
MR. TRICKEY confirmed that he'd assisted in the drafting of the
current language in subsection (g), and said he thought that the
language is clear in its intent when read in the context of the
entire statute, because proposed AS 08.88.396(a) and (b) require
the disclosure to be in writing. "Subsection (g) does not
abrogate that requirement; it simply, we thought, made it clear
that it just does not give rise to a cause of action against the
licensee for failure to do that," he added, mentioning that the
second sentence in subsection (g) was written as it was because
they did not want it to interfere with any legal claim by a
person who suffers actual harm.
REPRESENTATIVE ROKEBERG, making reference to the aforementioned
class-action lawsuit, said, "The focus of the legislation is to
cut off a fishing expedition by counsel, and the scope of the
commissions he's asking for disgorgement and the discovery alone
could run into hundreds of thousands of dollars." That's why
the issue warrants interim legislation, he opined, because the
scope of the aforementioned class-action lawsuit is quite
substantial.
CHAIR McGUIRE indicated that regardless of whether HB 257 is
warranted, the language in subsection (g) does not seem to
address the specific problem, as purported.
REPRESENTATIVE GRUENBERG turned attention to Section 9,
subsection (b), and asked whether its effect will be to dismiss
the aforementioned class-action lawsuit.
MR. TRICKEY replied, "That's correct ...; it would be correct as
to the claim in the suit for the violation of the statute."
[Following was some discussion on the issue of legislation
specifically designed to influence pending court cases, and on
the issue of prior legislatures' intentions.]
Number 1029
LINDA S. GARRISON, Broker, AAR #1 Buyer's Agency, said that [HB
257] is a bad law, adding that its creation was very rushed.
Why the hurry, she asked, why the sunset? She noted that Mr.
Trickey has said that HB 257 is necessary to protect the
industry so that commissions are not disgorged. She spoke
against abrogating common law, and remarked that she has heard
no one explain how these proposed changes will help the public -
the consumer. She noted that her firm has chosen to be a
single-agency office: it exclusively represents buyers.
MS. GARRISON opined that state law is not difficult to
understand. It's very simple: an agent can represent the
seller, or the buyer, or, in certain case, can [undertake] dual
agency. She explained that the term "specific assistance" is
defined by some people in the industry as the writing of the
contract, but countered that that is way too late. Instead, an
agent should explain to the consumer right up front what his/her
agency relationship is and what types of situations could arise
because of that relationship.
MS. GARRISON said that HB 257 could be called a "real estate
protection Act." It is the flexibility to comply with statutory
requirements without driving away the client; in other words,
she opined, it is like saying, "We don't want to tell buyers ...
[and] sellers the whole story because, if we do, they won't let
us be a dual agent." [House Bill 257] is designed to preserve
dual agency, it is designed to take liability away from the
professional in the field, and it is an attempt to weaken
Alaskan statutes. She suggested that it is as if proponents of
HB 257 are saying, "Rather than comply with the law, we're going
to work to dilute the law until it serves our purpose."
MS. GARRISON stated that written disclosure should be
immediately upon first contact, and listed ways in which a
record of that disclosure could be made and kept, that that
disclosure was indeed made on first contact. On the issue of
what constitutes a commercial real estate transaction, she said
that the definition in the bill is not accurate: $250,000 is
about the average price of a home, and an annual gross lease
revenue of $12,000 is [easily achieved in many residential
leases]. She remarked that any time she hears that something is
going to block the public - block the consumer - from legal
recourse, it gives her concern. She opined that the reason HB
257 is before the committee is because the industry got caught
doing something it wasn't supposed to do and is now seeking
legislative relief. Current statute works just fine - it's not
broken - she said in conclusion, adding that she does not
support HB 257 at all and strongly urges the committee to table
it.
Number 1265
DAVID A. GARRISON, Associate Broker, AAR #1 Buyer's Agency,
referred to page 3, line 16, in which "agency" is changed to
"real estate licensee relationships". He said, "We need to
discuss agency, not the relationship of a real estate licensee.
Referring then to page 3, line 23, in which "an agent" is being
changed to "a real estate licensee", he opined that the purpose
of that change is to allow agents to say that their relationship
is with brokers rather than buyers or sellers, and thus they
could be governed more by regulation rather than statute. He
remarked that this should be stopped, and that an agent should
stay an agent - for either the buyer or the seller.
MR. GARRISON stated that the judge was very clear in the Mehner
case regarding dual agency. It is very difficult to be a dual
agent and, thus, there should be a higher standard of awareness
for the person entering into such deal, that both the buyer and
the seller - or the lessee and lessor - have a really strong
understanding of what it means to be entering into that type of
a relationship. Turning to the bill's definition of what would
constitutes a commercial real estate transaction, he noted that
a duplex would fall outside of that definition but probably
couldn't rent for under $12,000 a year.
MR. GARRISON said that nothing in current law prevents an agent
from representing the seller, and opined that there are very few
people who broker commercial transactions for the very wealthy -
who some consider to be "sophisticated" in the matter of such
transactions - and are perhaps encumbered by the current law
regarding dual-agency disclosure. There are many people, he
noted, that for one reason or another are entering into
commercial real estate transactions for the first time, and
these folks are not knowledgeable about the real estate market
and everything there is to know about such transactions. Such
people aren't sophisticated buyers or sellers; they need to be
protected, and the agents need to disclose whom they're working
for.
MR. GARRISON stated that HB 257 goes totally against the general
public. He relayed that recently he'd taken a client of his - a
buyer - to an open house, and the agent holding the open house
insisted that she was there to represent the buyer. Members of
the general public just walking into such a situation without
any prior knowledge would have relied upon her to assist them
and deal with them fairly, and might never realize that she was
actually representing the seller. Mr. Garrison remarked that
the current law needs to be enforced and that agents need to be
educated on that law; if it takes lawsuits to get agents to
realize that they need to abide by the law, then that remedy
should remain intact.
Number 1532
REPRESENTATIVE ROKEBERG explained that the changes from "agent"
to "real estate licensee" and from "agency" to "real estate
licensee relationships" are simply conforming amendments, ones
that he'd anticipated would have been done some time ago, but
since those changes had yet to occur, he'd included them in HB
257.
CHAIR McGUIRE surmised, then, that those changes simply reflect
current terms of art, and indicated that the substantive changes
in the bill pertain to dual agency and disclosure.
CHAIR McGUIRE, after determining that there was no one further
to testify, closed public testimony and indicated that HB 257
would be held over.
The committee took an at-ease from 4:18 p.m. to 4:29 p.m.
HB 86 - INJUNCTIONS AGAINST PERMITTED PROJECTS
Number 1655
CHAIR McGUIRE 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 1685
REPRESENTATIVE SAMUELS moved to adopt the proposed committee
substitute (CS) for SSHB 86, Version 23-LS0349\V, Kurtz,
4/25/03, as the work draft. There being no objection, Version V
was before the committee.
REPRESENTATIVE GARA asked for a brief at-ease for the purpose of
working with the sponsor's representative on a possible
amendment to Version V.
The committee took an at-ease from 4:31 p.m. to 4:35 p.m.
Number 1731
JIM POUND, Staff to Representative Hugh Fate, Alaska State
Legislature, remarked on behalf of Representative Fate, sponsor,
that Version V maintains the sponsor's intent to "provide a
private remedy to the permittee or owner of a state-permitted
project who is the victim of frivolous, obstructionist
litigation." The private remedy is in addition to any other
penalty or sanction otherwise provided by law. Under Version V,
a person who initiates or maintains a malicious claim against a
state-permitted project will be liable for damages caused by
such a lawsuit should he/she lose the case. Version V specifies
the elements that would have to be established in order for the
person to be held liable, and it specifies the type of damages
the aggrieved person would be able to seek. The elements for
such a cause of action are based on concepts established in law
for stating a claim for unlawful civil proceedings and abuse of
process.
MR. POUND remarked that [Version V] has two key benefits. One,
it avoids use of the unfamiliar, potentially ambiguous terms
currently found in SSHB 86. Two, the courts would be able to
draw on existing case law from Alaska to assist them in
interpreting and applying the proposed law. He assured the
committee that the civil remedy provided for in Version V is
narrow and focused, adding that "it would apply only to
egregious cases of abusive civil litigation." If adopted, he
remarked, Version V would not have a chilling or deterrent
effect on litigants who would bring legitimate, meritorious
cases to court.
Number 1834
REPRESENTATIVE GARA made a motion to adopt Conceptual Amendment
1: on page 2, lines 16-17, delete "(A) without probable cause;
or (B)", and insert "in bad faith"; on page 2, delete subsection
(d) located on lines 23-25. There being no objection,
Conceptual Amendment 1 was adopted.
REPRESENTATIVE SAMUELS suggested that page 1, line 10, should
have the phrase, ", but not limited to" inserted after
"including".
REPRESENTATIVE GRUENBERG explained that language in Title 1
defines "including" to mean "including, but not limited to".
REPRESENTATIVE SAMUELS withdrew his suggestion, which Chair
McGuire referred to as Amendment 2.
Number 1940
REPRESENTATIVE SAMUELS moved to report the proposed committee
substitute (CS) for SSHB 86, Version 23-LS0349\V, Kurtz,
4/25/03, as amended, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSSSHB 86(JUD) was reported from the House
Judiciary Standing Committee.
HB 24 - AGREEMENTS ON MANAGEMENT OF FISH AND GAME
Number 2013
CHAIR McGUIRE announced that the next order of business would be
HOUSE BILL NO. 24, "An Act relating to intergovernmental
agreements regarding management of fish or game." [Before the
committee was CSHB 24(RES).]
Number 2018
REPRESENTATIVE BRUCE WEYHRAUCH, Alaska State Legislature, joint
sponsor of HB 24, summarized his understanding from the previous
hearing. He drew attention to language proposed by [Stephen
White of the Department of Law] to address some concerns he had;
it read [original punctuation provided but some formatting
changed]:
SUGGESTED LANGUAGE FOR CS FOR HOUSE BILL NO. 24(RES)
(This will remove the separation of powers issue and
will strengthen the bill against attack under the
impairment of contracts clauses.)
Section 1. AS 16.20.010 is amended by adding a new
subsection to read:
(c) The department or a board may not enter into
an agreement with the National Park Service that cedes
to the federal government the state's traditional
authority to manage fish or game in the navigable
waters within or adjoining Glacier Bay National Park
and Preserve. In this subsection, "authority to
manage" means authority to regulate the method,
manner, means, time, or place of taking of fish or
game or to regulate the amount of fish or game that
may be taken.
Section 2. The uncodified law of the State of Alaska
is amended by adding a new section to read:
STATUS OF EXISTING AGREEMENTS REGARDING MANAGEMENT OF
FISH AND GAME IN THE NAVIGABLE WATERS WITHIN OR
ADJOINING GLACIER BAY NATIONAL PARK AND PRESERVE. An
agreement, or a severable portion of an agreement,
between the Department of Fish and Game, the Board of
Fisheries, or the Board of Game and the National Park
Service that was entered into before the effective
date of this Act and that cedes to the federal
government the state's traditional authority to manage
fish or game in the navigable waters within or
adjoining Glacier Bay National Park and Preserve is
void on and after July 1, 2004.
REPRESENTATIVE WEYHRAUCH informed members that he'd asked George
Utermohle, legislative drafter, and Ted Popely to talk to the
committee.
The committee took an at-ease from 4:44 p.m. to 4:45 p.m.
Number 2090
REPRESENTATIVE WEYHRAUCH told members that one concern he's had
is that the state's authority, referenced in Section 1,
subsection (c), of Mr. White's proposed language, is a
constitutionally recognized one, not [just] a traditional one.
He said that the central premise of the bill is to ensure that
the state doesn't cede, by contract, the management rights it
holds by authority under the constitution. He suggested that if
the word "traditional" is stricken, the language will basically
mirror the bill.
CHAIR McGUIRE agreed.
Number 2149
REPRESENTATIVE OGG noted that although what's before the
committee focuses on Glacier Bay National Park and Preserve, the
same issues apply in his district, which has a national park
"across the way from us." He suggested perhaps extending the
legislation to apply to national monuments and other federal
lands as well, so that it could correct potential problems in
his district.
REPRESENTATIVE WEYHRAUCH explained that S. 501 was introduced in
Congress by then-U.S. Senator Frank Murkowski to require that
agreements be entered into by the State of Alaska and the
Department of the Interior for co-management of fisheries in the
outside waters of Glacier Bay. While there may be concerns over
a potential co-management agreement between the National Park
Service and the State of Alaska in the Kodiak area, there is no
specific requirement as now exists for Glacier Bay National Park
and Preserve. He suggested, however, that it is in the state's
best interest to prevent, statewide, the kind of co-management
agreements wherein the state cedes, by contract, its authority.
He said he wouldn't object to putting [language that applies
statewide] in the bill.
CHAIR McGUIRE offered her understanding that the intent behind
the original version of HB 24 was to include all navigable
waters.
Number 2229
REPRESENTATIVE WEYHRAUCH specified that the original intent was
to include all co-management agreements over "all waters and,
basically, resources in the entire state of Alaska." He'd
supported [CSHB 24(RES)], however, because sometimes the state
and a sovereign entity have an agreement over a fish weir to
count fish, for example, or have an agreement to hire a tribal
entity or federal [agency] with regard to some resource. In
those instances, the state and the resource users benefit, and
there is no ceding of jurisdiction. He suggested that that
isn't the kind of agreement the legislature wants to review on a
case-by-case basis. It's only the central, critical kinds of
issues where there potentially is a ceding of jurisdiction, with
respect to the right and ability to manage resources, that the
legislature should be concerned about, he concluded.
CHAIR McGUIRE posited that the committee supports the sponsor's
goal, and that the only debate she's heard from members is the
question, "Why not make it broader?" She suggested speaking
clearly and concisely [in the statute]. She asked how a court
will interpret the existence of a House bill that originally
spoke on a broader level about navigable waters and the state's
rights, followed by committee discussion and a subsequent
narrowing of that.
REPRESENTATIVE WEYHRAUCH acknowledged the difficulty of
predicting how a court would interpret something, but suggested
that a reasonable interpretation would be that the legislature
considered it and decided to make it more restrictive.
Therefore, he opined, a court wouldn't read [the proposed
statute] expansively to include any other area outside the
Glacier Bay National Park and Preserve, because the legislature
specifically knew about a broad intent and then amended the bill
to make it narrower.
Number 2332
REPRESENTATIVE SAMUELS asked about replacing "Glacier Bay" with
the word "any" so that it would read "any national park or
preserve". He also suggested the word "a".
REPRESENTATIVE WEYHRAUCH said it had begun broad and that he'd
had no problem with it. He emphasized his concern: that Alaska
not cede to the federal government its jurisdiction over
management of fish and game.
CHAIR McGUIRE asked Mr. Popely whether he had any suggested
language, and whether saying "any national park and preserve"
would accomplish the intent.
Number 2371
TED POPELY, Majority Legal Counsel, Alaska State Legislature,
answered that either that or similar language would be
effective, to his belief. With regard to broadening the
language, he said it may actually be required, since there is a
constitutional mandate that [legislative Acts] conform to the
local and special Acts provision; this could raise an issue
about whether this is a special or local provision, as opposed
to one that's generally applicable to all federal preserves.
TAPE 03-45, SIDE B
Number 2380
MR. POPELY added that he believes broadening it probably should
have been done originally, in fact.
REPRESENTATIVE WEYHRAUCH emphasized that it is fundamental
management issues and disputes that are at issue here, rather
than examples like the one he'd given of a fish weir.
CHAIR McGUIRE suggested it could be made clear through testimony
both in this committee and on the House floor that it isn't the
intent to be unnecessarily burdensome for small, technical
agreements worked out over things like fish wheels.
Number 2355
REPRESENTATIVE WEYHRAUCH noted that Mr. Popely had suggestions
about the word "traditional" in the proposed language.
MR. POPELY suggested that removing the phrase "the state's
traditional" [in subsection (c)] would cause the language
proposed by Mr. White to more accurately reflect the sponsors'
intention. He explained that the state's traditional authority
to manage fish or game seems to be a fluid concept in Alaska,
one that is continually litigated and that probably shouldn't be
in the statute as written; it would be open to a wide spectrum
of interpretations as to whether the department was conforming
to the statute with regard to when it is ceding the state's
traditional authority to manage fish and game.
MR. POPELY offered his understanding that Representative
Weyhrauch's point in proposing this bill is specifically to
preclude the state's ceding any of its constitutional authority,
"as opposed to some interpreted or manufactured authority that's
always subject to some legal interpretation"; he said removing
those three words - "the state's traditional" - would reflect
that intention well in both Sections 1 and 2 [of Mr. White's
proposed language].
Number 2250
CHAIR McGUIRE moved to adopt as a work draft the document titled
"Suggested Language for CS for House Bill No. 24(RES)" [text
provided previously], with the following amendments: In
Section 1 after "federal government", delete "the state's
traditional"; delete "Glacier Bay"; insert after the word "Park"
the letter "s"; and insert after the word "Preserve" the letter
"s". In Section 2, delete "Glacier Bay"; insert after the word
"Park" the letter "s"; and insert after the word "Preserve" the
letter "s".
CHAIR McGUIRE continued with the motion, specifying that the
title, though not part of the written document, would be
[included in the work draft after being] amended as follows:
delete "Glacier Bay"; insert after the word "Park" the letter
"s"; and insert after the word "Preserve" the letter "s".
REPRESENTATIVE HOLM suggested inserting "any" after "within or
adjoining".
CHAIR McGUIRE accepted that as a friendly amendment, specifying
that it would read "any national parks or preserves".
REPRESENTATIVE WEYHRAUCH stated his preference for "and" instead
of "or" so that it is broader.
CHAIR McGUIRE concurred, specifying that the title portion would
read "or adjoining any national parks and preserves".
Number 2198
REPRESENTATIVE GRUENBERG proposed a friendly amendment, to
retain the word "the" so that [both Sections 1 and 2] would read
"cedes to the federal government the authority". He
acknowledged that this was in contrast to Mr. Popely's
suggestion to delete "the state's traditional".
CHAIR McGUIRE, calling it a good, friendly amendment, specified
that deleted would be "state's traditional" [in both sections].
CHAIR McGUIRE asked whether there was any objection [to the
proposed work draft, as amended, including the title change].
Number 2165
REPRESENTATIVE OGG [objected for discussion purposes],
suggesting that there were additional amendments to discuss.
For example, national wildlife refuges sometimes receive
wilderness status for some sections on shores or bays. There
are also national monuments and national forests. He inquired
about the [ability of the Alaska Department of Fish and Game] to
make agreements with "those folks."
REPRESENTATIVE WEYHRAUCH said that that is the problem - where
to cut it off - and that it potentially is a significant problem
which the legislature should deal with.
REPRESENTATIVE OGG suggested adding those entities he'd
mentioned.
REPRESENTATIVE WEYHRAUCH said he wasn't sure how to amend the
bill to do that. He said he'd thought about it a long time, and
just needed "something small I could chew." He suggested
perhaps Representative Ogg could provide an amendment to insert
later after discussion. He added that it is a huge problem that
he doesn't know how to deal with.
Number 2094
REPRESENTATIVE HOLM indicated his staff had just suggested
defining "preserve" to include all the entities that the
committee wants to include.
REPRESENTATIVE WEYHRAUCH proposed just saying "with the federal
government"; that would include parks, preserves, forests, and
everything else. He also suggested it could say "any federal
lands or waters".
Number 2065
CHAIR McGUIRE said she liked it. She announced that a friendly
amendment to the conceptual amendment was before the committee,
and reworded it slightly to be "any federal lands and waters".
Number 2049
REPRESENTATIVE GARA objected for discussion purposes, expressing
concern about broadening it to where the legislature will have
to confirm a large number of agreements about which it knows
very little at this point. When the bill was limited to Glacier
Bay National Park and Preserve, he said, "I think we all sort of
had our arms wrapped around the problem." Remarking that the
sponsor had solved one problem, he recalled an earlier hearing
and noted that the bill would have prevented [the state] from
contracting with and accepting authority from the federal
government at times. He explained:
The sponsor has now said no, we just want to keep the
state from giving away authority. We'll accept
authority, but we don't want to give away any
authority; so that's the "ceding" language in here.
So that solves a good bit of the problem, and I
appreciate that.
But now let's focus on some areas where the state
accepts authority from the federal government. ...
Let's think through how many agreements there might be
out there that we're going to have to confirm if we
broaden the language. And ... there are places on
federal land, I suppose, [where] we conduct fish and
game law enforcement activities, and I'm wondering
whether, if we wrote the bill as broadly as this, we
might now need legislative approval to do that. ...
I'm just worried that now that we're going to affect
... all sorts of federal lands within Alaska ..., with
this provision, that there might be a whole bunch of
agreements out there that the legislature's going to
have to confirm that we really didn't mean to confirm.
Number 1966
REPRESENTATIVE WEYHRAUCH asked Ron Somerville to talk about this
issue.
MR. POPELY first offered his belief that the definition provided
by Mr. White's language specifically defines the authority to
manage to include regulating methods, manner, means, time, or
place of taking. Those are the traditional aspects of
management activities for which he thinks the sponsor is trying
to preclude contracting with the federal government, Mr. Popely
indicated, as opposed to law enforcement, counting activities,
or other ministerial activities for which the state continues to
want to contract with various federal or other organizations.
Number 1935
REPRESENTATIVE WEYHRAUCH pointed out that there are co-
management agreements on waterfowl and bowhead whale hunting,
for example, between the state and the federal government. He
said he'd hate to think management of fish and game couldn't be
facilitated for citizens' interests through legislative review
of all those smaller kinds of agreements.
Number 1904
RON SOMERVILLE, Member, Board of Game, noting that he has been
assigned to work with the House and Senate majority on resource
issues, said most of the agreements with federal agencies
involve cooperative programs, but don't involve authority.
These are agreements for enforcement work or cooperative
counting programs, for instance, but rarely include anything
related to the basic authority of various agencies, he
indicated. With regard to authority being ceded to one agency
or another, he said he doesn't see that very often - only where
there may be disagreement with the Office of the Attorney
General over what traditional authorities there might be. He
added his belief that the legislature already would be required
to deal with any authority that was going to be given to other
agencies.
MR. SOMERVILLE suggested the purpose here, when Congress has
mandated that a cooperative program be established, for example,
is to make it clear to the [administration], as a matter of
policy, that it cannot cede any management authority or
authority to regulate. He said the key point he'd seen [in the
proposed language] is defining "authority to manage", which is
regulating "the following activities". He said he doesn't think
it will be often that the legislature will be called upon to do
that.
Number 1841
CHAIR McGUIRE interpreted the foregoing to mean that Mr.
Somerville doesn't see a problem with using the broader term
"federal lands and waters".
MR. SOMERVILLE affirmed that he doesn't see that as a problem,
although he said it might broaden the debate to say any federal
withdrawals, because there are a lot of federal withdrawals. He
mentioned the BLM [Bureau of Land Management] and said the U.S.
Fish and Wildlife Service "is just as difficult to deal with, in
many cases, as is the National Park Service."
Number 1801
CHAIR McGUIRE asked whether there was further debate on the
"second-degree amendment" to broaden the language beyond
national parks and preserves to include "federal lands and
waters".
REPRESENTATIVE OGG noted that the second line [of the proposed
work draft] references an agreement with the National Park
Service; he suggested it should say "with the federal
government" for consistency.
CHAIR McGUIRE indicated agreement, noting that it would be
required in the title as well.
Number 1779
REPRESENTATIVE SAMUELS asked about saying "federal lands and
waters" in the title, as opposed to just "federal lands".
AN UNIDENTIFIED SPEAKER said, "Just federal lands."
CHAIR McGUIRE concurred. She said within the title it would
read "navigable waters within or adjoining federal lands".
REPRESENTATIVE WEYHRAUCH disagreed with saying "lands" to the
exclusion of waters, because there are areas of dispute between
the federal government and the State of Alaska regarding which
has management jurisdiction over waters, not just lands. He
referred to a U.S. Supreme Court case he'd mentioned in the
first bill hearing that relates to Glacier Bay waters, "donut
hole" waters in the Alexander Archipelago, and "the national
forest waters." He said the state recently won that point
because the federal government, in its brief, acknowledged that
the state has jurisdiction over those waters adjacent to the
Tongass National Forest.
Number 1706
CHAIR McGUIRE agreed. She announced her intention of
withdrawing her amendment and reoffering it incorporating "all
of the discussion that we've had here on the record."
Number 1693
REPRESENTATIVE GRUENBERG said it sounds as though the
committee's intent is to make it broad. He said he was
wondering, if the intention is to assert sovereignty, whether
sovereignty perhaps should be asserted "in things that would not
be within the, quote, 'authority to manage'." He offered deep-
sea mining as a possible example and mentioned authority over
other types of natural resources. He suggested keeping it as
broad as possible to comply with Representative Weyhrauch's
desire not to cede any state authority. Then if it needs to be
narrowed, that can be done. "If we want to make a statement,
let's make a statement," he concluded.
Number 1594
REPRESENTATIVE WEYHRAUCH said he thinks that is a great idea as
a [policy] statement. He offered to have the drafters create a
clean committee substitute (CS), which he'd bring back to the
committee.
CHAIR McGUIRE agreed, noting that the committee's intent is to
broaden it, but no further than the sponsor is comfortable with.
REPRESENTATIVE WEYHRAUCH reiterated that the bill had begun
broad, and told members that both he and the other prime sponsor
[Representative Whitaker] want it broad.
CHAIR McGUIRE announced that HB 24 would be held over.
HB 245 - SUITS & CLAIMS: MILITARY/FIRE/DEFENSE
Number 1424
CHAIR McGUIRE announced that the next order of business would be
HOUSE BILL NO. 245, "An Act relating to certain suits and claims
by members of the military services or regarding acts or
omissions of the organized militia; relating to liability
arising out of certain search and rescue, civil defense,
homeland security, and fire management and firefighting
activities; and providing for an effective date." [Before the
committee was CSHB 245(MLV).]
Number 1401
GAIL VOIGTLANDER, Assistant Attorney General, Special Litigation
Section, Civil Division (Anchorage), Department of Law (DOL),
relayed that HB 245 provides tort liability protection for
emergency workers in a variety of areas. She referred to a
handout in members' packets, a "bullet sheet" that reviews HB
245.
MS. VOIGTLANDER turned attention to [Section 2 of the bill], and
said that the first area in which HB 245 provides immunity from
tort lawsuits is that of search and rescue; this immunity would
be for state and local government and their employees.
Annually, there are approximately 400 "search and rescues"
conducted in Alaska in a variety of circumstances, many of which
are severe and life threatening, both to the people who are
being searched for and for those doing the searching. The
Division of Alaska State Troopers (AST) calls for those searches
and then relies upon a number of state and local resources to
help conduct the "search and rescues." The immunity granted in
Section 2 would allow state and local agencies to make decisions
based upon both the information at the time and the safety-
related circumstances that searchers might be subject to.
MS. VOIGTLANDER indicated that the next area in which HB 245
provides immunity relates to intra-military tort claims. Those
provisions of the bill would bar tort action for damages against
the state and its employees by service members. She said that
there was a recent Alaska Supreme Court decision that basically
went a different direction from all but two of the "reported
states and the federal government," which do provide such intra-
military tort immunity. She predicted that [these provisions of
the bill] would not affect any service member's entitlement to,
or rights to, benefits under either state worker's compensation,
if they are on state-duty orders, or federal compensation, if
they are on federal-duty orders.
MS. VOIGTLANDER said that these provisions would make Alaska
consistent with the majority of states that follow both the
Feres doctrine and the "federal doctrine." The policy behind
the federal doctrine, she explained, is to avoid civilian courts
going in and "Monday-morning quarterbacking" the decisions that
were made in military operations. In Alaska, a variety of
military operations occur; most involve federal orders and the
Alaska National Guard responding to federal orders, but
occasionally there are also times when the governor calls them
out in active state service under Title 26.
Number 1195
MS. VOIGTLANDER offered that [these provisions] of HB 245 would
also immunize the state from lawsuits that arise out of such
military maneuvers unless there was, in fact, a "state call out"
by the governor. [These provisions] of HB 245 recognize that
the federal government, and not the State of Alaska, is
responsible for injuries and claims while service members are
under federal command and control. She reiterated that a
person's entitlement to worker's compensation benefits are not
affected.
MS. VOIGTLANDER said that the next area of immunity addressed by
HB 245 relates to civil defense and homeland security. Since
[the terrorist attacks of September 11, 2001 ("9/11")], the need
for homeland security and civil defense have shifted somewhat.
The existing statutes in Title 26 reflect the concept of civil
defense which existed prior to 9/11. [Sections 7-11] of HB 245
would bar tort claims against the government, employees, and
authorized volunteers for damages that are sustained by a
homeland security worker. However, a homeland security worker's
or an authorized volunteer's rights to worker's compensation
benefits remain. These sections simply create a bar to tort
claims. She noted that those receiving worker's compensation
are already barred from filing a tort lawsuit arising out of the
same injury.
MS. VOIGTLANDER pointed out that Sections 7-11 also bar third-
party tort claims against the government, employees, and
authorized volunteers for damages sustained within the scope of
civil defense or homeland security, unless the person who was
injured can demonstrate, by clear and convincing evidence, that
the actions were taken with reckless indifference or were
malicious in nature. She added: "The ... limited exemption
that is available in the civil defense and homeland security
[provisions] attempt to track an exemption in existing law under
that same title; that does provide some liability exposure, but
under very limited circumstances."
MS. VOIGTLANDER said that the final area of immunity addressed
by HB 245 involves fire management and firefighting activities.
Section 12 and 13 would bar tort claims by third parties against
the state, local governments, or other firefighting groups and
their employees. Every year, the Division of Forestry
[Department of Natural Resources] is called upon to respond to
600-700 fires throughout Alaska. In the past, she remarked,
lawsuits were not brought against the Division of Forestry in
terms of how fires were fought. However, in two rulings by the
Alaska Supreme Court, it has been held that the state may be
sued for firefighting activity. This departs from many
jurisdictions in the West, as well as from federal jurisdictions
which find that firefighting activities are immune activities
for which the government should not be sued for damages in tort.
Number 0967
MS. VOIGTLANDER said that the litigation the Division of
Forestry anticipates as a result of the Alaska Supreme Court
decision will disrupt its activities, and cause it to call
firefighters in off the line in order that they be available for
civil litigation, hearings, testimony, and trials. In addition
to being a disruption, [being available for such activities]
will be quite expensive for the agency, she predicted.
MS. VOIGTLANDER noted that these provisions of HB 245 are
consistent with both federal [law] and common law in many other
jurisdictions that immunize [firefighting] activities, either
through case law or through statute. She offered that Sections
12 and 13 would not affect a person's existing entitlement to
worker's compensation benefits, or to federal or state disaster-
relief benefits. She noted that because the Division of
Forestry's firefighting and fire management activities are
addressed in two chapters in statute, both Section 12 and
Section 13 are necessary to effect the desired change.
MS. VOIGTLANDER said in conclusion that although HB 245 deals
with four different topics, what they have in common are
"methods in order to allow the state, it's employees, and those
other governmental employees and volunteers who conduct various
types of emergency relief to be immune from tort claims." She
indicated that she would be available for questions whenever HB
245 is next heard.
CHAIR McGUIRE announced that HB 245 would be held over.
HB 145 - ATTY FEES: PUBLIC INTEREST LITIGANTS
[Contains mention that a proposed clarifying amendment to HB 145
resulted from Senate committee hearings on SB 97, companion bill
to HB 145.]
Number 0776
CHAIR McGUIRE announced that the final order of business would
be HOUSE BILL NO. 145, "An Act relating to public interest
litigants and to attorney fees; and amending Rule 82, Alaska
Rules of Civil Procedure."
Number 0732
CRAIG TILLERY, Assistant Attorney General, Environmental
Section, Civil Division (Anchorage), Department of Law (DOL),
said that HB 145 is a bill related to public interest litigant
[attorney] fees. He offered that currently, public interest
litigants are entitled to full attorney fees if they win a case;
are entitled to "no fees against them" if they lose a case;
receive full fees if they win one issue out of many that they
may allege; and may be entitled to fees in some cases, even if
they don't win at all but it is viewed that the government later
changed its actions partially in response to the lawsuit. This
law is not in a rule of the court, he noted, but rather was
developed by the Alaska Supreme Court through case law. It
applies to civil actions and to administrative appeals.
MR. TILLERY relayed that during the last legislative session, SB
183 was proposed, and it applied to [Civil Rule 82 of the Alaska
Rules of Civil Procedure], and would have eliminated the public
interest litigant rule in all cases; SB 183 passed the Senate
but not the House. HB 145 is different in that it is far more
limited. It applies only to decisions by the Department of
Environmental Conservation (DEC), the Department of Natural
Resources (DNR), and the Alaska Department of Fish and Game
(ADF&G) that are coastal consistency determinations, that adopt
regulation, or that have had an opportunity for public comment
and administrative review.
MR. TILLERY said that under HB 145, in the aforementioned
circumstances, public interest litigants would be treated the
same as any other litigant. He reasoned that each of the
aforementioned situations represents "something where public
participation has already been paid for and where there's
already been extensive public participation on the decision."
He mentioned that members should have a proposed amendment
before them that reflects some clarifications that came out of
hearings in the Senate on the companion bill to HB 145 - SB 97;
this proposed amendment read [original punctuation provided]:
Page 1, line 1, following "fees", through line 2:
Delete "; and amending Rule 82, Alaska Rules of
Civil Procedure"
Page 1, line 11, following "action":
Insert "or an appeal from an administrative
agency,"
Page 1, line 13, following "Resources", through line
14:
Delete "making a coastal consistency
determination, adopting"
Insert "through which one or more of those
agencies makes a coastal consistency determination or
adopts"
Page 2, line 3, following "litigant" through line 5:
Delete "as provided in Rule 82(g), Alaska Rules
of Civil Procedure, on the effective date of this Act"
Insert "in the same manner as attorney's fees may
be awarded to or against a non-public interest
litigant"
Page 2, line 6, through page 3, line 2:
Delete all material and insert new bill section
to read:
"* Sec. 2. AS 09.60.010 is amended by adding a new
subsection to read:
(b) In this section, "public interest
litigant" means a party bringing a civil action or
appeal that
(1) is designed to effectuate strong
public policies;
(2) will benefit numerous people;
(3) could only be expected to be
brought by a private party; and
(4) the party bringing the civil action
or appeal would lack sufficient economic incentive to
bring if it did not involve issues of general
importance.
* Sec. 3. The uncodified law of the State of Alaska
is amended by adding a new section to read:
APPLICABILITY. This Act applies to all civil
actions and appeals filed on or after the effective
date of this Act."
MR. TILLERY explained that this proposed amendment is intended
to do three things. First, it clarifies that the bill applies
to both civil actions and to administrative appeals. The reason
for this is because many instances in which public interest
litigant [attorney] fees are awarded are administrative appeals.
Second, it clarifies that HB 145 only applies to the three
aforementioned types of decisions by the DEC, the DNR, and the
ADF&G. Third, the proposed amendment would delete a proposed
change to Civil Rule 82(b), thus allowing the legislation to
proceed simply as a change in statute rather as a court rule
change.
Number 0512
MR. TILLERY offered that the purpose of HB 145 is to balance the
incentives in litigation between those who attack a state
resource agency decision and those who would defend it.
Changing the law would force all potential public interest
litigants to make the essential cost/benefit analysis that all
other potential litigants do prior to filing a lawsuit, that is,
does the benefit gained by going to court outweigh the risk of
loss and the transaction costs of going to court. Since most
public interest litigants and public interest organizations
involved in natural resource issues are fairly well financed, he
opined, they can engage effectively in this "calculus" without
any disadvantage.
MR. TILLERY noted that there are firms, both in Alaska and in
other states, that deal with public interest issues, and that
most public interest lawsuits end up being against the state and
are costly to defend. The state's fiscal situation, he
remarked, could lead the specter of potential fees playing a
role in decisions made by the state. "Public interest fees are
also available against private individuals, which may or may not
be affected by the potential for such fees, depending upon the
size of the project and the size of the entity that wishes to
engage in a project," he stated.
MR. TILLERY also offered that HB 145 is intended to reduce the
incentive to assert excessive, unjustified claims, that is, to
reduce the potential incentive for parties to file claims with
multiple - even a hundred - various causes of action in the
hopes that some of them will later be proven justified and then,
under the "doctrine of non-apportionment," the parties can
recover attorney fees. "It also should make it easier to
compromise cases, as frequently these public interest litigant
cases will become 'mooted out,' will somehow become no longer
relevant, but we still end up in fights in the supreme court ...
[relating to attorney] fees only," he added.
Number 0368
MR. TILLERY said that philosophically, the approach of the
administration is that HB 145 is very narrowly drawn. In the
last 11 years, only 23 of the 43 fee orders that the state has
had to pay were from natural resource cases, representing about
$760,000 in awards. The bill and [the proposed amendment] would
not penalize litigation or restrict lawsuits, he assured the
committee; instead, all it does is reduce the positive incentive
that the [Alaska] Supreme Court has introduced into [the issue
of] attorney fees.
MR. TILLERY opined that the bill provides a level playing field
for all parties, and only includes situations where there is
already extensive state-funded public involvement, those being
coastal consistency determinations; regulations, where there is
public notice, public comment, and - often but not always -
hearings; and decisions which have had an opportunity for public
comment and administrative review. He assured the committee
that the courts would remain free, under the rules, to vary fee
awards for reasons such as the complexity of the litigation, but
not simply for the reason that the party is a public interest
litigant.
CHAIR McGUIRE announced that HB 145 would be held over.
TAPE 03-46, SIDE A
Number 0001
CHAIR McGUIRE discussed the committee's schedule for the
upcoming week.
ADJOURNMENT
Number 0191
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 5:45 p.m.
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