04/27/2007 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HB22 | |
| HB163 | |
| HB194 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 22 | TELECONFERENCED | |
| += | HB 225 | TELECONFERENCED | |
| + | HB 163 | TELECONFERENCED | |
| + | HB 195 | TELECONFERENCED | |
| += | HB 194 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
April 27, 2007
1:05 p.m.
MEMBERS PRESENT
Representative Jay Ramras, Chair
Representative Nancy Dahlstrom, Vice Chair
Representative John Coghill
Representative Bob Lynn
Representative Ralph Samuels
Representative Max Gruenberg
Representative Lindsey Holmes
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 22
"An Act extending the termination date for the Board of
Governors of the Alaska Bar Association; and providing for an
effective date."
- MOVED HB 22 OUT OF COMMITTEE
HOUSE BILL NO. 163
"An Act relating to real property foreclosures, executions, and
deeds of trust."
- HEARD AND HELD
HOUSE BILL NO. 194
"An Act relating to fines for certain offenses involving
aeronautics, alcoholic beverages, boats, fish and game, health
care records and public health, medical review organizations,
public restroom facilities, smoking, shelter cabins,
refrigerators and similar equipment, radiation sources, high
voltage lines, child labor, employment in underground mines,
marriage licenses, motor vehicles and driver's licenses,
ignition interlock devices, pipelines, use of the state seal,
and emissions requirements; relating to the maximum fine
provided for violations and infractions and to the definition of
'minor offenses'; redesignating certain fish and game
misdemeanor offenses as class A misdemeanors; relating to
violations and offenses that are committed on state land, water,
and land and water or that are related to water management or
dam and reservoir safety; amending Rule 8(b), Alaska District
Court Rules of Criminal Procedure; and providing for an
effective date."
- HEARD AND HELD
HOUSE BILL NO. 225
"An Act relating to misconduct involving weapons and bail."
- BILL HEARING CANCELED
HOUSE BILL NO. 195
"An Act relating to limited liability companies."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 22
SHORT TITLE: EXTEND BOARD OF GOVERNORS ABA
SPONSOR(s): REPRESENTATIVE(s) STOLTZE, RAMRAS
01/16/07 (H) PREFILE RELEASED 1/5/07
01/16/07 (H) READ THE FIRST TIME - REFERRALS
01/16/07 (H) JUD, FIN
04/27/07 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 163
SHORT TITLE: PROPERTY FORECLOSURES AND EXECUTIONS
SPONSOR(s): REPRESENTATIVE(s) RAMRAS
02/28/07 (H) READ THE FIRST TIME - REFERRALS
02/28/07 (H) L&C, JUD
03/30/07 (H) L&C AT 3:00 PM CAPITOL 17
03/30/07 (H) -- MEETING CANCELED --
04/20/07 (H) L&C AT 3:00 PM CAPITOL 17
04/20/07 (H) Moved CSHB 163(L&C) Out of Committee
04/20/07 (H) MINUTE(L&C)
04/23/07 (H) L&C RPT 1DP 4NR
04/23/07 (H) DP: RAMRAS
04/23/07 (H) NR: BUCH, LEDOUX, NEUMAN, OLSON
04/27/07 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 194
SHORT TITLE: FINES AND OFFENSES
SPONSOR(s): RESOURCES
03/14/07 (H) READ THE FIRST TIME - REFERRALS
03/14/07 (H) RES, JUD, FIN
03/28/07 (H) RES AT 1:00 PM BARNES 124
03/28/07 (H) Scheduled But Not Heard
04/04/07 (H) RES AT 1:00 PM BARNES 124
04/04/07 (H) Moved CSHB 194(RES) Out of Committee
04/04/07 (H) MINUTE(RES)
04/10/07 (H) RES RPT CS(RES) 4DP 2NR
04/10/07 (H) DP: ROSES, SEATON, GATTO, JOHNSON
04/10/07 (H) NR: KOHRING, GUTTENBERG
04/23/07 (H) JUD AT 1:00 PM CAPITOL 120
04/23/07 (H) <Bill Hearing Rescheduled to 04/27/07>
04/27/07 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
JAMES ARMSTRONG, Staff
to Representative Bill Stoltze
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 22 on behalf of one of the
joint prime sponsors, Representative Stoltze.
JOHN TIEMESSEN, President
Alaska Bar Association (ABA)
Anchorage, Alaska
POSITION STATEMENT: During discussion of HB 22, spoke on the
mission and history of the ABA.
STEVE VAN GOOR, Bar Counsel
Alaska Bar Association (ABA)
Anchorage, Alaska
POSITION STATEMENT: During discussion of HB 22, spoke on the
role of the ABA.
PAT DAVIDSON, Legislative Auditor
Division of Legislative Audit
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 22, presented the
legislative audit of the bar association.
JANE W. PIERSON, Staff
to Representative Jay Ramras
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 163 on behalf of the sponsor,
Representative Ramras.
STEPHEN ROUTH, Attorney at Law
Routh & Crabtree, APC
Anchorage, Alaska
POSITION STATEMENT: Provided supporting testimony for HB 163.
HEATH HILYARD, Staff
to Representative Carl Gatto
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 194 on behalf of the sponsor,
the House Resource Standing Committee, which is co-chaired by
Representative Gatto.
DICK MYLIUS, Acting Director
Central Office
Division of Mining, Land and Water
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of
HB 194.
JOHN BAKER, Assistant Attorney General
Natural Resources Section
Civil Division (Anchorage)
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Provided comments to HB 194.
WYN MENEFEE, Chief of Operations
Central Office
Division of Mining, Land and Water
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Provided comments to HB 194.
ACTION NARRATIVE
CHAIR JAY RAMRAS called the House Judiciary Standing Committee
meeting to order at 1:05:34 PM. Representatives Ramras,
Dahlstrom, Coghill, Lynn, Samuels, and Holmes were present.
Representative Gruenberg arrived as the meeting was in progress.
HB 22 - EXTEND BOARD OF GOVERNORS ABA
1:06:01 PM
CHAIR RAMRAS announced that the first order of business would be
HOUSE BILL 22, "An Act extending the termination date for the
Board of Governors of the Alaska Bar Association; and providing
for an effective date."
1:06:34 PM
JAMES ARMSTRONG, Staff to Representative Bill Stoltze, Alaska
State Legislature, relayed on behalf of Representative Stoltze,
joint prime sponsor, that HB 22 extends the appointment of the
Alaska Bar Association (ABA) board of governors from July 1,
2007, to July 1, 2010.
REPRESENTATIVE HOLMES noted that the audit report recommends the
extension to 2014. She asked why the bill only extends the
board to 2010.
MR. ARMSTRONG replied that the sponsors felt that three years
would be fine for right now. If this initial extension went
well, then they would probably recommend this for an eight-year
extension.
CHAIR RAMRAS, speaking as one of the joint prime sponsors of HB
22, surmised that the bill has some complicated components, and
that there would be considerable discussion as to who would be
the stewards of the bar funds, when the bill is heard in the
House Judiciary Standing Committee.
1:08:31 PM
JOHN TIEMESSEN, President, Alaska Bar Association (ABA), offered
that the one thing the ABA enjoyed about the sunset clause is
the ability to communicate with the legislature, even though,
unfortunately, it is often the only communication between the
ABA and the legislature. He suggested annual meetings between
the ABA and the House and Senate Judiciary Standing Committees.
MR. TIEMESSEN noted that many policies proposed during the last
year started with members from this committee: mandatory
continuing legal education (CLE); a diversity initiative to
increase Native Alaskan membership in the ABA; and a program to
initiate discussions of careers in the legal and judicial
profession with the youth and others from the villages. He
observed that lawyers have been licensed in Alaska since 1895,
and that the ABA has existed since 1955. He commented that the
ABA was an old institution and an old instrumentality of the
state.
MR. TIEMESSEN outlined the audit report recommendations from the
past two audits: CLE, which the board passed, and online access
for [ABA] disciplinary history, though an old software system
had slowed this progress. Disciplinary history would be part of
the new database in 2007 or 2008.
MR. TIEMESSEN commented that the ABA core mission of admission
and discipline is taken very seriously. With the 130-140
applicants to the bar each year, the ABA conducts a full
background check, administers and grades the three-day bar
examination, and makes recommendations to the Alaska Supreme
Court for admissions to the bar. He observed that discipline is
the board's most important role, as it involves their core
mission of protection of the public interest. The ABA
recognizes its unique professional position, as directly
supervised by the supreme court, to ensure only qualified,
ethical, honorable individuals appear before the Alaskan courts.
He said the audit report demonstrates that the board and the ABA
have done a "wonderful job" with their core missions.
1:14:00 PM
MR. TIEMESSEN, in response to Chair Ramras, relayed that
disciplinary matters are confidential until they reach a certain
level.
REPRESENTATIVE COGHILL, referring to the issue of ethics,
questioned how the ABA avoids the perceived conflict of interest
of having attorneys on the board.
MR. TIEMESSEN explained that the board has twelve voting
members, nine of which are attorneys, and three of which are lay
members. One of the board's responsibilities is fact finding to
support their disciplinary recommendations to the Alaska Supreme
Court. All attorney discipline is done by the Alaska Supreme
Court. The Alaska Supreme Court is hardly "a rubber stamp" he
remarked, as often matters are sent back to the board for
further findings. As attorneys, he pointed out, they know what
is and is not right. The board maintains very strict accounting
and accountability of members. There is a good balance on the
board between the attorney members and the lay members. The lay
members bring a lay perspective and other expertise. As
attorney members, they do not want any "whiff" of impropriety
among their [board] members.
1:17:43 PM
REPRESENTATIVE COGHILL concurred.
CHAIR RAMRAS asked a question regarding the aggregate money in
trust accounts and the interest that money accrued.
MR. TIEMESSEN explained that the Alaska Interest on Legal Trust
Accounts (IOLTA) system is available for attorneys to
participate in. This is an "opt out" system. In 2006, the
IOLTA earned $146,822 in interest, and awarded grants totaling
$104,000. These grants went to Alaska Immigration Justice
Project, Alaska Pro Bono Program, United Youth Courts of Alaska,
and Alaska Legal Services Corporation. Much of the money went
to provide legal representation for the indigent, and for access
to justice programs.
CHAIR RAMRAS suggested to Mr. Tiemessen that he speak with
Senator McGuire regarding possible use of the IOLTA funds to
help fund the Alaska Legal Services Fund. Chair Ramras also
asked how much money is in the broader trust account.
MR. TIEMESSEN in response to the question on trust accounts
replied it would be difficult to know how much money is in all
the legal trust accounts, but he could extrapolate that gross
amount using a calculation for a three percent interest return.
He further explained that "opt out" means the interest return is
not required to be used for legal justice programs. For large
amounts of money placed in trust account deposits, some clients
would prefer to have the accrued interest returned to them.
CHAIR RAMRAS asked for clarification that the interest money
does not go to the attorney.
MR. TIEMESSEN responded that the money never goes to the
attorney.
REPRESENTATIVE LYNN asked how many complaints were investigated
that continued through disciplinary action, and what were the
typical areas of complaint or misbehavior.
1:21:56 PM
STEVE VAN GOOR, Bar Counsel, Alaska Bar Association (ABA),
relayed that his principal responsibilities are to supervise the
discipline section of the ABA. The discipline section consists
of 7 of the 17 employees of the bar. The discipline section's
task is to field grievances filed against attorneys, and to give
the public information about the grievance process. He and his
colleagues at the ABA office also provide informal ethics advice
to help lawyers stay out of trouble. Historically, the ABA
annually receives 200-300 complaints concerning members of the
ABA. This is about a 10 percent complaint rate, similar to the
rate of complaints throughout the nation.
MR. VAN GOOR commented that about half the complaints fell into
the "intake stage." This "intake stage" is a stage in which the
lawyer is immediately served with the complaint. At this point,
the ABA asks for a voluntary response, and most lawyers do
respond at this time. The ABA is then able to identify and
determine which complaints should be formally investigated, and
which misconducts should be prosecuted. Of all the complaints
received, 5-10 percent of the complaints may result in some form
of discipline. An even smaller percentage of the complaints
results in public discipline. This is reserved for those
offenses that everyone would recognize as problems, for example,
lying, cheating, and stealing.
MR. VAN GOOR went on to explain that trust accounts, and
mismanagement, misappropriation, or stealing from these accounts
are the "third rail" of attorney discipline. Lawyers are
entrusted with billions of transaction dollars being held in
escrow and this money is not bonded. There is not a bond for
the money because the consequence for misappropriating this
money is significant suspension or disbarment from the practice
of law. He also explained that the discipline section is
identifying those lawyers that have no business being lawyers
because of misconduct, and performing an educational role in
fielding almost 900 calls each year from lawyers requesting
legal ethics advice.
REPRESENTATIVE LYNN remarked this is similar to the ethics
procedure for the Board of Realtors.
1:25:37 PM
REPRESENTATIVE SAMUELS asked for a description of the ABA
internal review process for an ethics violation.
MR. TIEMESSEN conveyed that once a written complaint is
received, it is screened by Bar Counsel, who makes a
determination whether the allegations, if proven true, would
have a basis for discipline. The attorney is then provided with
an opportunity to respond to the allegations, and the
complainant is allowed to reply. There could then be a second
response from the attorney. After this, Bar Counsel would
conduct an investigation and make a decision. At this point,
the matter is either resolved, or it may go on to an area-wide
hearing committee. This committee, consisting of two attorneys
and one lay person, will then issue a decision. If the issue is
still not resolved, it can go to the ABA Board of Governors
sitting as a disciplinary board. The ABA Board of Governors can
make a recommendation for discipline to the Alaska Supreme
Court.
REPRESENTATIVE SAMUELS asked what happens if the complaint is
against a justice on the supreme court.
MR. TIEMESSEN responded that a special counsel is appointed if
there is a complaint by or against the Board of Governors.
1:28:45 PM
[Chair Ramras turned the gavel over to Vice Chair Dahlstrom.]
MR. VAN GOOR further informed that if there is a complaint
against any judge in the state of Alaska, including a supreme
court justice, the complaint would go to the Alaska Commission
on Judicial Conduct (CJC), which has a process similar to the
ABA Bar Counsel. Most commonly, the complaint would be with
regard to a decision made by a judge, and these do not usually
result in a formal investigation. If the commission determines
that an investigation is necessary, it would move to a higher
special counsel to handle the prosecution. The commission
itself, consisting of three judges, three lawyers, and three
public members appointed by the governor, would consider the
case, and, in a case of serious misconduct, make a
recommendation to the Alaska Supreme Court. If this concerned a
justice of the supreme court, that justice would not
participate. In this instance, Mr. Van Goor surmised that the
supreme court would appoint a superior court judge as a supreme
court judge pro tem to sit in on the disciplinary matter.
MR. VAN GOOR recalled that there have been two instances in the
past wherein the supreme court did appoint a superior court
judge pro tem.
REPRESENTATIVE SAMUELS pointed out, though, that it is a very
small group of people that are judging themselves and who also
have to do business with each other. He pointed out that if the
legislature attempted something similar with regard to ethics
complaints, the electorate would not approve. This would allow
a small group of people to have an inordinate amount of control
over an entire branch of government. The public has very little
say in this, as only three members of the Board of Governors of
the ABA are confirmed. He asked Mr. Van Goor to comment on the
idea of an amendment which would state that all 12 members of
the Board of Governors would need to be confirmed.
[Vice Chair Dahlstrom returned the gavel to Chair Ramras.]
REPRESENTATIVE SAMUELS said that he didn't know how to fix the
perceived problem but opined that he'd once attempted to hire an
attorney to file a complaint against a supreme court justice,
but he was told "I have to do business in front of those
people." Representative Samuels commented that he realized the
practicality of the entire situation, and that he would need to
find a different method to even file the complaint.
1:33:59 PM
MR. TIEMESSEN acknowledged that point, but offered that there
are public members throughout the system. He offered his
personal feeling that when an attorney that he knows comes
before him, his first inclination is "not to cut them slack,"
rather "to flog them" because he knows them. If anything, he
knows that he must instead pull that inclination back. It can
be much easier to be objective with an attorney he does not
know. He went on to further describe that one change in recent
years is public censure as a discipline by the court. This used
to be an order from the court, but now it is an order to appear
before the full court. The person stands in front of the full
court and gets "chewed out" by the entire supreme court.
MR. TIEMESSEN reiterated that he understood the concern, but
could only give his personal assurance of a harsher discipline
for those attorneys appearing before the board who are known by
a committee member.
REPRESENTATIVE SAMUELS reiterated his comments regarding the
makeup of the legal counsels and boards being over weighted with
attorneys who are internally picked and not elected. The pool
of people picking the attorneys is even smaller. He asked Mr.
Tiemessen how many attorneys are in Alaska.
MR. TIEMESSEN responded there are 2,800 active members of the
ABA.
REPRESENTATIVE SAMUELS surmised that not all those are active in
selecting the board and counsel members.
REPRESENTATIVE GRUENBERG pointed out that although those numbers
sound small, Alaska is small state in terms of population and
thus has a smaller pool of attorneys. He recalled that when he
took the bar exam in California, 2,000 members were admitted to
the California bar; but when he took the bar exam in Alaska,
only 32 new members were admitted.
REPRESENTATIVE COGHILL remarked on the need for the public to be
assured [of the integrity of all branches of the government].
One of the reasons for the one-year extension [of the ABA board]
is to try to figure out the best way to ensure integrity. One
of the recommendations is that [an ABA board appointment] fall
to the Alaska Supreme Court as an appointed position. He asked
Mr. Tiemessen how the board felt about this.
MR. TIEMESSEN reiterated that the Alaska Supreme Court does do
discipline. All the supreme court says to the Board of
Governors is that it is busy being the supreme court on a day-
to-day basis and so asks the board to find the facts, do
conclusions of law, and make recommendations on disciplinary
matters to the supreme court.
REPRESENTATIVE COGHILL proposed that an analogous commentary in
the legislature would be that the House majority leader screens
all the legislative issues that go before the ethics committee,
and then make recommendations to the ethics committee.
1:41:43 PM
MR. TIEMESSEN explained that the current board system is a
tremendously powerful and effective method of screening out
"nut" complaints, many of which are by prisoners against the
district attorney, for obvious reasons.
CHAIR RAMRAS asked Ms. Davidson to give a cursory review of the
[legislative audit] recommendations. He offered that it appears
there were two issues to address: an issue with funding that
should be addressed by the finance committees, and an issue to
address the ethical aspect of self-policing. He asked Ms.
Davidson to limit her remarks to the ethical aspect.
REPRESENTATIVE SAMUELS clarified his concern is for lack of
oversight of the judiciary branch by the people.
MR. TIEMESSEN relayed that the board would be willing to look
into that point. He mentioned that in this context, the board
does serve two masters. The board is a creation of and serves
delegated duties from the Alaska Supreme Court, as well as
serves under sunset authority from the legislature. This
highlights the conflict as he perceived.
1:45:04 PM
PAT DAVIDSON, Legislative Auditor, Division of Legislative
Audit, Alaska State Legislature, responded that the concern of
the Division of Legislative Audit was addressed at the
disciplinary level, as the disciplinary function was occurring
within the ABA. For example, the Department of Commerce,
Community, and Economic Development (DCCED) investigative staff
does not report directly to the boards under its purview, in
terms of what they investigate. The investigative staff are
employees of the division, and once they conclude their
investigation, they make recommendations to the board in
question. Therefore, members of the profession are not doing
the investigations, though an investigator may require
expertise, and so may go to the board to ask for recommendations
or discuss some of the issues. There is a separation, though,
between the occupational licensing boards and the investigative
function of the division. The legislative audit's suggestion to
the ABA was to remove the investigation function from the ABA
itself.
MS. DAVIDSON commented that the responses by the court system
and the ABA were that the audit suggestion did not feel either
"particularly workable" or "totally necessary."
REPRESENTATIVE GRUENBERG noted that the third recommendation
from the legislative audit was that the board [of the ABA]
should adopt a due date for its annual report. This would
ensure that it is made available to the supreme court, the
legislature, and the public on a timely basis.
MR. TIEMESSEN responded that the recommendation has been
implemented both in practice and rule. There was an internal
error in tardiness from the ABA, and this would not be repeated.
REPRESENTATIVE COGHILL opined that the transparency issue ought
to be addressed as it pertains to the court system.
REPRESENTATIVE GRUENBERG said he'd planned to introduce a
mandatory continuing legal education bill or amendment, but did
not do so because the board of governors agreed to discuss this
with the Alaska Supreme Court, and has since submitted a
proposed rule for mandatory CLE. The supreme court had reviewed
this rule, and sent it back for further work. He said the
public demands CLE. He continued, stating that this is not just
mandatory reporting, but really good programs so that lawyers
keep up with the law and don't commit malpractice.
REPRESENTATIVE SAMUELS offered to assist Representative Coghill
with the concerns being raised regarding ethics. He expressed
some of the problems with the structure of review boards, and
the background of the members who comprise the boards.
CHAIR RAMRAS added that a reallocation for the distribution of
the trust funds might resolve some of the issues.
MR. TIEMESSEN remarked that of the $14.5 million in trust,
assuming a 3 percent return, about 53 percent of the distributed
funds went directly to pro bono work. The current problem that
the Alaska Legal Services Corporation faces in funding was not
caused by a drop in the IOLTA percentage; it was caused by a
drop in the interest rates.
1:53:50 PM
REPRESENTATIVE GRUENBERG moved to report HB 22 out of committee
with individual recommendations and the accompanying zero fiscal
notes. There being no objection, HB 22 was reported from the
House Judiciary Standing Committee.
HB 163 - PROPERTY FORECLOSURES AND EXECUTIONS
1:54:29 PM
CHAIR RAMRAS announced that the next order of business would be
HOUSE BILL NO. 163, "An Act relating to real property
foreclosures, executions, and deeds of trust." [Before the
committee was CSHB 163(L&C); included in members' packets was a
proposed committee substitute (CS) for HB 163, Version 25-
LS0630\K, Bannister, 4/24/07.]
CHAIR RAMRAS, speaking as the sponsor, relayed that the genesis
of HB 163 was the result of the failure of subprime borrowers.
The bill is meant to clarify things for borrowers, lenders, and
title companies. He mentioned that in the prior committee
hearing it was evident that the lenders and title companies do
an able job of looking out for themselves but no one is looking
out for the interest of the borrowers once it becomes clear that
they are in trouble. No one seems to be the trustee of that
[home] equity when a borrower is going to lose their property.
Once a borrower is in trouble and it is clear the property was
going to be lost, there is often equity in the property with
which neither the lender nor the title company is concerned,
beyond that which the bank was reimbursed.
1:57:09 PM
REPRESENTATIVE DAHLSTROM moved to adopt the proposed CS for HB
163, Version 25-LS0630\K, Bannister, 4/24/07, as the working
document.
REPRESENTATIVE GRUENBERG objected for the purpose of discussion.
REPRESENTATIVE LYNN declared he may have a possible conflict of
interest as he is a licensed real estate broker.
REPRESENTATIVE HOLMES also declared a possible conflict of
interest, as she is a real estate attorney.
REPRESENTATIVE GRUENBERG objected, thus requiring
Representatives Lynn and Holmes to participate in any necessary
voting.
1:58:11 PM
JANE W. PIERSON, Staff to Representative Jay Ramras, Alaska
State Legislature, sponsor, remarked on behalf of Representative
Ramras that current Alaska statutes on foreclosures are
antiquated, ambiguous, unclear, and prone to litigation. House
Bill 163 would clarify, simplify, and modernize, as well as
reduce litigation. Currently, the process of foreclosure is one
that allows auction on the courthouse steps. At this point,
there is a group, which she characterized as "bottom feeders,"
who regularly attend these auctions, purchase the properties
with the intention of making a quick sale, and don't really care
about the neighborhoods surrounding the foreclosed properties.
House Bill 163 would make property foreclosure auctions more
open and accessible. It would benefit borrowers, lenders, title
insurers, individuals, and neighborhoods. The bill was drafted
using examples from the best practices of 11 other states.
Currently banks are averaging a loss of $20,000 per foreclosure.
This bill would clarify how dispersal of excess income from the
sale would go back to the borrower, and would require properties
to be listed on the internet and in the newspaper. This
increased exposure would attract more bidders to bring up the
price, purchase homes, and repay more money to the borrowers.
MS. PIERSON, referring to Version K, relayed that the versions
of the bill on both sides of the legislature are moving
simultaneously and similarly. The title was changed to remove
"post office" as a place of notification, because some post
offices no longer want to post public notices.
CHAIR RAMRAS added that another change was such that the bill
used to say "three months" and now says 90 days.
2:03:50 PM
REPRESENTATIVE GRUENBERG removed his objection.
CHAIR RAMRAS indicated that Version K was now before the
committee.
CHAIR RAMRAS went on to explain that the Internet offered a
wider base to bring in more potential buyers, and that Version K
addresses the issue of more competition for distressed real
estate; the issue was "who is looking out for the borrower,
who's already in trouble." It is fair to anticipate, as these
issues sweep across the country, that these problems will emerge
in Alaska.
CHAIR RAMRAS stated that when a loan rate goes up significantly,
the borrower cannot afford the higher rate, and so is then
forced to try to find a new loan. However, because the market
could then be much tighter, the borrower may have difficulty
finding a new loan, and yet the borrower cannot afford his/her
current loan at the higher rates, but may have equity in their
home. By creating more clarification for timelines and
broadcasting the notice of de-fault, this will better protect
the consumer.
REPRESENTATIVE GRUENBERG asked for a sectional analysis of the
bill.
2:08:51 PM
STEPHEN ROUTH, Attorney at Law, Routh & Crabtree, APC, mentioned
that his field of expertise is real estate finance and the
foreclosure process, and that he has written and spoken
nationwide on matters relating to non-judicial foreclosures.
His office has identified several areas of foreclosure law that
could be made more efficient, fairer, and less prone to
litigation. This bill addresses many of these areas. Section 1
deletes the requirement of public posting at post offices. It
has become impossible to post at some post offices due to the
interpretation of federal regulations by postmasters that one
cannot post these kinds of notices inside post offices. His
office suggested, instead of requiring three public places
including a post office, just requiring three public places,
none mandated to be a post office.
REPRESENTATIVE GRUENBERG referred to a bill regarding election
notices from a few years ago, and acknowledged that the concept
of posting in public places, especially in larger places, may be
anachronistic. He asked whether such posting is helpful in the
foreclosure field, or whether something besides posting on the
Internet, in addition, should be done.
MR. ROUTH offered that his experience showed the most effective
method was through the Internet.
REPRESENTATIVE LYNN asked what would constitute a "public
place."
MR. ROUTH responded that this is not specifically defined in
statute. However, in practice, in most judicial districts, this
would include any public building, a state court house, and the
post office. However, as it is not defined specifically in
statute, it "could be a tree on the corner, as long as it's
public."
MR. ROUTH continued discussing Sections 2 and 3. He summarized
that both are designed to attract more interest in public
foreclosure auctions. The wider publicity would attract more
bidders. Section 3 provides a mechanism for "proving up the web
site."
REPRESENTATIVE GRUENBERG asked how people would find out where
the web sites are, both to look at and to advertise on.
MR. ROUTH replied that it should be the same way as with legal
newspapers. The final arbiters would be the title companies who
would provide a list of web sites that qualify. People would
most likely learn about these web sites by using a search
engine, and typing in the request, for example, Alaska
foreclosure notices, or something similar. This would result in
a list of sites.
MR. ROUTH continued, explaining that Section 3 simply allows for
a mechanism to approve a web site, similar to the current system
to approve newspapers. Section 4 refers to time limits for
reinstatement. It changes some language from three months to 90
days, and also puts a limit of 5 days before the foreclosure
auction to reinstate or pay off. The reason for this limit is
that one of the most litigation-prone areas of this practice is
at the sale.
2:16:41 PM
REPRESENTATIVE HOLMES offered that [Section 4] appears to limit
the rights of property owners to hold on to their property if
they could come up with the money, for example, in the last five
days before the sale.
REPRESENTATIVE GRUENBERG expressed similar concerns. He pointed
out there are some people who might have a temporary problem.
He asked whether deleting the phrase "up to five days" and
allowing the bill to state "up to the date of the sale", would
be alright.
MR. ROUTH said he has no objection to such a change. He
commented that his experience is that no bank would refuse a
payment if it had time to process the payment. This [provision]
gives the bank this right, if there is a mix up at the sale, to
say it is too late. A last minute flurry can be expensive for
the borrower, because the deed of trust says any money spent to
protect the security of the deed of trust goes to the borrower's
account. He characterized this section as system friendly and
efficient adding that he did not feel this section is "borrower
hostile."
REPRESENTATIVE GRUENBERG commented that the law tries to ensure
borrowers are given a fair shake.
MR. ROUTH reported that Section 5 clarifies mailing
requirements; it proposes to change the language of "grantor" to
"trustor" to make it consistent with the rest of the bill. It
also clarifies actual possession, an area of some litigation.
REPRESENTATIVE GRUENBERG asked whether the term, "actual
physical possession," may cause additional litigation,
particularly since raw land or similar property is not
necessarily subject to actual possession.
MR. ROUTH answered that the law has always said "physical
possession" or "possession". This proposed change would simply
clarify this. There was prior litigation regarding what
possession really meant, whether that was inferred possession.
Section 5 states, in combination with the change in Section 6,
how to deal with determining possession. He went on to detail
Section 6, which as a follow on of Section 5, clarified what
kind of notice is inferred from possession. The mailing
requirement is just one of five types of notices mandated by the
statute. Internet notification would be an added type of notice
with this bill. Section 6 also speaks about non-possession
liens, and cleans up some of the language.
REPRESENTATIVE GRUENBERG commented that the [Version] is not a
statute of limitations but a conclusive presumption, which is
fairly unusual in the law. He surmised that the reason for
using conclusive presumption rather than statute of limitations
is that the sponsors did not want two parties to waive a statute
of limitation that might impact others who might not be privy to
that information and are, instead, relying just on the records
as to the ownership of the property.
MR. ROUTH concurred with that summation. In response to a
question, he explained that this is an area of litigation that
can unsettle title to real estate. This provision sets a time
limit regarding complaints pertaining to affidavits of posting.
He recognized the conclusive presumptive is not often used, but
if one had complied with the requirements of the statute, then
one could not go back and complain about the affidavit. The
affidavit is considered to be correct after one year. This
allows real property settlements; record title to real property
could be relied upon.
2:25:22 PM
REPRESENTATIVE GRUENBERG voiced that a statute of limitations
can be waived in civil cases by the parties involved, but a
conclusive presumption cannot be waived. He said he assumes
this is a good policy.
MR. ROUTH agreed with Representative Gruenberg, stating the
issue is to get to the same place of settling the title of real
estate.
MR. ROUTH continued the overview of Section 6: the procedure on
delivering notice if the property is raw land or inaccessible;
the procedure if the borrower is deceased and the necessity of
extra notices; and clarification of who could bring an action to
restrain a trustee sale.
MR. ROUTH went on to discuss Section 7: what happens with the
proceeds from a sale and that it is mandated that the proceeds
go into escrow until dispersal. He explained that Section 7
allows the trustee to accept bids in places which are in
addition to the court house steps, such as by telephone,
internet, and e-mail, as long as the trustee has taken steps to
ensure that those methods are workable and would result in fair
access for people. It is designed to allow money for dispersal
to be available immediately after the sale.
MR. ROUTH continued with Section 8: confirmation of the present
practice that agents for the trustee may conduct the foreclosure
auction. Section 9 clarifies the procedure on postponing a
sale.
REPRESENTATIVE GRUENBERG referred to Section 8, and asked
whether the rules and conditions for the conduct of a sale must
be made available in advance.
MR. ROUTH responded that yes, in practice the published notice
of sale that is mandated by statute would contain some
information. Currently, the practice is to have the rules read
prior to the opening of the auction. This bill would clarify
that the current system, which works well, would continue.
REPRESENTATIVE GRUENBERG questioned who will qualify an Internet
bidder.
MR. ROUTH responded that this qualification process would be
left to the discretion of the trustee. He continued by
explaining an already tested solution: the bidder would go to a
bank and put money on deposit and that deposit would be made
instantly available and transferable to the trustee.
MR. ROUTH continued on to Section 9, which dealt with the
procedure of postponement of a sale.
REPRESENTATIVE DAHLSTROM asked who would be responsible for the
maintenance and security of the property during a postponement,
and who would be responsible for that expense.
MR. ROUTH explained the reason for the postponement would be
that the borrower is still in the house and is simply trying to
work out a payment plan. This situation would not involve a
vacant property. He said he could think of no reason for a
vacant property sale to be postponed. In general, the lender
doesn't have a right to access the property.
REPRESENTATIVE DAHLSTROM asked who would make that determination
for the postponement of a sale, referred to in Section 9.
MR. ROUTH relayed that this decision would come from the lender.
Current law determines that the lender can postpone for any
period of time, for any reason. The change in law would also
protect the borrower with the requirement to give new notice.
2:35:52 PM
MR. ROUTH went on to explain Section 10, which clarifies the
division of the proceeds of a sale, and addresses the unwinding
of a foreclosure auction should a mistake occur in the process.
Sections 11 and 12 clarify the substitution of trustees.
Section 13 requires a bond on foreclosure trustees, since
currently foreclosure trustees have no fiscal responsibility
requirements.
MR. ROUTH, in response to a question from Representative
Coghill, said that one bond exemption is for title underwriters
and one exemption is for the agents of the underwriters, because
both are already licensed through the state.
REPRESENTATIVE COGHILL asked if these are the only exceptions to
the bonding.
REPRESENTATIVE GRUENBERG asked whether the bond amount of
$250,000 would be adequate in all cases. He suggested, instead,
a bond amount tied to the value of the property.
MR. ROUTH explained the bond was not per transaction but for
each trustee. He agreed that the bond might not be enough but
since currently there is no bond requirement, it might be good
to have an incremental approach. He continued to explain that
bonding companies feel this is a reasonable bond which the
companies are comfortable bonding.
2:40:19 PM
REPRESENTATIVE GRUENBERG remarked that this bond amount might
not be enough to satisfy the cumulative claims.
MR. ROUTH acknowledged that this could be the case, since the
bond is per trustee, not per property. The bond requirement is
similar to current contractor bond requirements. To have a bond
requirement per sale, the sale cost to the borrower would go up
so much that it wouldn't be workable. As there is no current
requirement, this would be a modest first step.
REPRESENTATIVE GRUENBERG added that this bond would be in force
and cover all claims made through the statute of limitations on
any action against the trustee. He asked what the statute of
limitations would be for the bond coverage.
MR. ROUTH replied he is not sure there is an endpoint for these
bonds. His basic understanding, though, is that the bond would
be period to period.
REPRESENTATIVE GRUENBERG questioned whether there should be a
requirement that a bond be in force until the end of the statute
of limitations.
MR. ROUTH agreed that a "tail period" would be a good
requirement, but not at this time. He said he would prefer to
see how the current proposal works, particularly given that
nothing currently exists.
[HB 163 was held over.]
HB 194 - FINES AND OFFENSES
2:46:12 PM
CHAIR RAMRAS announced that the final order of business would be
HOUSE BILL NO. 194, "An Act relating to fines for certain
offenses involving aeronautics, alcoholic beverages, boats, fish
and game, health care records and public health, medical review
organizations, public restroom facilities, smoking, shelter
cabins, refrigerators and similar equipment, radiation sources,
high voltage lines, child labor, employment in underground
mines, marriage licenses, motor vehicles and driver's licenses,
ignition interlock devices, pipelines, use of the state seal,
and emissions requirements; relating to the maximum fine
provided for violations and infractions and to the definition of
'minor offenses'; redesignating certain fish and game
misdemeanor offenses as class A misdemeanors; relating to
violations and offenses that are committed on state land, water,
and land and water or that are related to water management or
dam and reservoir safety; amending Rule 8(b), Alaska District
Court Rules of Criminal Procedure; and providing for an
effective date." [Included in members' packets was CSHB
194(RES).]
2:46:27 PM
HEATH HILYARD, Staff to Representative Carl Gatto, Alaska State
Legislature, on behalf of Representative Gatto, co-chair of the
House Resources Standing Committee, sponsor of HB 194, commented
that the bill was a carry over from the prior legislative
session, with one additional proposed change. The Department of
Public Safety (DPS) requested an update of the fine level for
non-criminal violations. The fine level had not been increased
in approximately 30 years, and so the concern was that the fine
structure was not currently robust enough to act as a deterrent.
There were also some misdemeanor fines associated with fish and
game violations, which the Alaska Department of Fish & Game
(ADF&G) said had not been increased, although similar violations
from other departments had been increased. He continued that
this lead to discussions with Department of Law (DOL) which
resulted in a request to review and update all sections of
statute that had these similar fine structures. He referred to
the sectional statute index included in the members' packets,
which outlined the basic component of each statute the various
sections of the bill propose to change.
MR. HILYARD mentioned that the greatest amount of discussion had
been on Section 37 -the aforementioned additional proposed
change- which refers to the penalties and enforcement authority
of the Department of Natural Resources (DNR). The DNR asked for
an extension of its penalty and enforcement authority to now
cover all the lands over which the DNR has oversight and
management. He also offered to comment on some proposed
amendments in members' packets pertaining to the powers of
police officers.
CHAIR RAMRAS asked whether it is fair to say the bill deals with
updating penalties and enforcement.
MR. HILYARD responded this was correct.
2:51:10 PM
DICK MYLIUS, Acting Director, Central Office, Division of
Mining, Land and Water, Department of Natural Resources (DNR),
stated that the main reason for Section 37 is that the primary
means of enforcement of regulations on state land is a civil
procedure. If a violation is detected, the offender is asked to
stop and if they do not comply, then the officer has to have the
attorney general send the offender a letter because there is no
statutory provision for field citation; this bill would give the
DNR the authority to issue such citations. The Division of
Alaska State Troopers has also commented that it does not have
the authority to issue citations on DNR land.
CHAIR RAMRAS relayed that a Knik Arm public recreation bill was
passed last year, and mentioned that the commissioner of the DPS
recently met with Representative Stoltze to address the
lawlessness that is now going on in that public recreation area.
Chair Ramras suggested that the biggest weapon that law
enforcement now had is, "stop or I'll send you a letter."
MR. MYLIUS stated that this is correct with regard to the
enforcement authority for a division employee. The
aforementioned legislation for the Knik Public Use area provided
for stronger enforcement authority, but this was only 230,000
acres out of 93 million acres that was state owned. The Knik
Public Use legislation triggered the discussion with
Representative Gatto regarding the lack of enforcement authority
in the field and so Representative Gatto proposed to add this
change. Mr. Mylius mentioned there was one change made in the
House Resources Standing Committee because members did not want
division staff to have the authority to arrest people, but
instead only wanted police officers to have that authority. The
problem, however, was that a previous draft of the bill from
House Resources Standing Committee had agreed for both police
officers and state park rangers to have that authority on other
state lands. When HB 194 returned from legislative drafting,
however, the bill limited this authority to police officers.
REPRESENTATIVE GRUENBERG referred to the statutes to be
repealed, via Section 43, and said he was concerned about
repealing AS 41.23.220(b), which states:
(b) The supreme court shall establish by order or rule
a schedule of bail amounts for violations under (a) of
this section that allow the disposition of a citation
without a court appearance.
REPRESENTATIVE GRUENBERG pondered whether this will repeal the
Alaska Supreme Court's authority generally, and why AS
41.23.220(b) is being repealed, given that it now allows the
court to set the bail amounts.
2:57:26 PM
JOHN BAKER, Assistant Attorney General, Natural Resources
Section, Civil Division (Anchorage), Department of Law (DOL),
responded that the intent is to "have a more comprehensive bail
forfeiture schedule statutory provision that would make AS
41.23.220(b) unnecessary."
REPRESENTATIVE GRUENBERG raised a concern that Section 37 would
define as peace officers people who are currently not defined as
peace officers under Title 1. He asked, therefore, whether the
language in Section 37 would invest people who are currently
simply employees of the department with more authority than
would be desirable.
MR. BAKER offered his understanding that the generic definition
of peace officer is already very broad, much broader than the
definition of police officer, as has been noted in prior
attorney general opinions. He said he did not believe [Section
37] would be broadening that definition of peace officer. He
surmised that the question would be which individual has arrest
authority versus citation authority.
REPRESENTATIVE SAMUELS asked for an example of the type of
problem that the DNR is attempting to address.
MR. MYLIUS responded this could be someone blocking a trail, or
squatting on state land. [Section 37] would give [division
staff] the ability to give a citation in the field.
REPRESENTATIVE SAMUELS asked if the department is speaking about
park rangers or maintenance employees, and who would be able to
issue a citation. He continued, wanting to know if this would
be addressed in regulations.
MR. MYLIUS allowed that it would be addressed through
regulations, and it would be an employee who is trained to do
enforcement. The department would adopt regulations that
describe the specific violations that could receive citations,
and doesn't envision having armed employees; furthermore, only
certain employees would be trained to do enforcement.
REPRESENTATIVE SAMUELS commented that the division already had
the ability to call on the troopers. He asked if training is
addressed in the bill.
MR. MYLIUS answered that the bill does not expressly address
training, but he does envision that there would be training.
REPRESENTATIVE COGHILL said the "qualification" provision, the
"authorized by the commissioner" provision, and the definition
of police officer all troubled him.
MR. HILYARD provided that the statute which Mr. Baker referred
to was for a peace officer, which had a different meaning than
police officer. He said he understood that park rangers could
be considered peace officers. He further commented that the
DNR's concern is that the park rangers' authority not be
compromised, and that park rangers qualify as peace officers.
3:06:17 PM
REPRESENTATIVE GRUENBERG referred to a proposed conceptual
amendment he had written and distributed, which read [original
punctuation provided]:
Page 9, lines 25-26
Delete
Page 10, line 3
Insert after "AS 46.17,"
and execute a warrant or other process issued by an
officer or officer of competent jurisdiction and
MR. MYLIUS responded that this proposed amendment would clarify
that issue.
REPRESENTATIVE GRUENBERG continued and noted that he has the
same concerns as Representative Coghill with regard to benefits
for peace officers, and the corresponding definition of
designated DNR employees as peace officers under HB 194.
Representative Gruenberg pointed out that Section 37 on page 9,
line 27, authorized individuals mentioned on page 9, lines 18-20
to "administer or take an oath, affirmation, or affidavit;"
however, AS 09.63.010 only lists certain people who were
authorized to give those oaths. He opined that to have DNR
employees authorized to give these oaths, it would be necessary
to have a conforming amendment in that other statute. He asked
that the bill be held over to allow him time to review this
issue.
MR. MYLIUS offered that state park rangers are currently not
included in the 20-year benefits programs, which is only
available for state troopers and police officers.
REPRESENTATIVE COGHILL mentioning that an advisory committee
would be via language on page 10, lines 14-17, noted a legal
issue he would like to explore.
MR. MYLIUS responded this language was taken from the current
procedures for state parks for doing the exact same thing.
MR. BAKER added that the language was taken verbatim from
existing AS 41.21.960, which includes the procedure for
establishing the bail forfeiture schedule. This is boilerplate
language that exists in other statutes and has been the
procedure the legislature has chosen; it has been a workable
system.
REPRESENTATIVE COGHILL asked for a history of the workability of
such advisory committees, how many times they have convened, and
whether there has been any tension within such groups.
MR. BAKER relayed that he would research that issue adding that
the bail forfeiture schedules are set on regular committee
schedules; he offered his understanding that such meetings have
not been difficult or contentious.
3:12:29 PM
WYN MENEFEE, Chief of Operations, Central Office, Division of
Mining, Land and Water, Department of Natural Resources (DNR),
explained that park rangers, with the authority of going through
the "bail schedule set up," convened every year, made some
readjustments [to the bail schedule], and took these
readjustments to the Alaska Supreme Court. This system has been
very workable for the state park rangers, who have the authority
to make arrests and issue citations and warrants, because they
are trained and certified to that level.
REPRESENTATIVE COGHILL sought confirmation that these park
rangers convened, set bail amounts at the outset, and then have
the bail amounts adjusted without convening after that.
MR. MENEFEE offered his understanding that they did go before
the Alaska Supreme Court every year, but they did not
necessarily convene the committee every year when they made an
adjustment.
REPRESENTATIVE COGHILL pointed out that the language on page 10,
line 15, said "shall appoint and consult" when establishing and
amending the schedule of bail.
MR. MENEFEE offered that this might be performed via
correspondence.
3:15:01 PM
REPRESENTATIVE GRUENBERG commented it is his own feeling to
triple check that the [bill] title covers every provision of the
bill.
CHAIR RAMRAS reflected there would obviously be a few questions
with this issue. He noted that he also had a few amendments to
offer.
MR. HILYARD asked whether the sponsor should prepare a CS for
the committee, or whether the committee would prefer to address
concerns via amendments.
CHAIR RAMRAS surmised that simply altering CSHB 194 (RES) via
amendment should be workable, unless there are title changes.
In conclusion, he recapped that the primary concerns expressed
thus far were the nature of the training, and the method of
selection for these new DNR enforcement employees.
REPRESENTATIVE COGHILL added a request of accountability
measures for the enforcement employees.
CHAIR RAMRAS closed public testimony on HB 194.
[HB 194 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 3:19 p.m.
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