Legislature(1995 - 1996)

03/29/1996 01:30 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                   SENATE JUDICIARY COMMITTEE                                  
                         March 29, 1996                                        
                           1:30 p.m.                                           
  MEMBERS PRESENT                                                              
 Senator Robin Taylor, Chairman                                                
 Senator Lyda Green, Vice-Chairman                                             
 Senator Mike Miller                                                           
  MEMBERS ABSENT                                                               
 Senator Al Adams                                                              
 Senator Johnny Ellis                                                          
  COMMITTEE CALENDAR                                                           
 CS FOR SENATE BILL NO. 186(L&C)                                               
 "An Act relating to partnerships; and providing for an effective              
 CS FOR HOUSE BILL NO. 308(JUD)                                                
 "An Act relating to the Uniform Probate Code, including nonprobate            
 transfers, guardianships, trusts, and multiple-party accounts;                
 relating to the Uniform Simultaneous Death Act; and providing for             
 an effective date."                                                           
 CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 75(FIN)                          
 "An Act relating to vehicle theft and the consequences of vehicle             
 theft, including revocation of a driver's license, privilege to               
 drive, or privilege to obtain a license; amending Rule 32.1, Alaska           
 Rules of Criminal Procedure; and providing for an effective date."            
 CS FOR HOUSE BILL NO. 25(FIN)                                                 
 "An Act revising Rule 16, Alaska Rules of Criminal Procedure,                 
 relating to discovery and inspection in criminal proceedings; and             
 providing for an effective date."                                             
  PREVIOUS SENATE COMMITTEE ACTION                                             
 SB 186 - See Labor and Commerce minutes dated 2/8/96, 2/29/96,                
          and 3/7/96, and 3/12/96.                                             
 HB 308 - No previous Senate committee action.                                 
 HB 75 - No previous Senate committee action.                                  
 HB 25 - No previous Senate committee action.                                  
  WITNESS REGISTER                                                             
 Sherman Ernouf                                                                
 Legislative Aide                                                              
 Alaska State Capitol                                                          
 Juneau, Alaska  99811                                                         
  POSITION STATEMENT:   Testified for the sponsor of SB 186                    
 Bob Manley                                                                    
 324 E. Cook                                                                   
 Anchorage, AK  99501                                                          
  POSITION STATEMENT:   Supports SB 186                                        
 Peter Dinn                                                                    
 Deloitte & Touche                                                             
 550 W 7th Ave.                                                                
 Anchorage, Alaska                                                             
  POSITION STATEMENT:   Testified in support of SB 186                         
 Representative Sean Parnell                                                   
 Alaska State Capitol                                                          
 Juneau, Alaska  99801-1182                                                    
  POSITION STATEMENT:   Sponsor of HB 308                                      
 John George                                                                   
 American Council of Life Insurers                                             
 3328 Fritz Cove Rd.                                                           
 Juneau, Alaska  99801                                                         
  POSITION STATEMENT:   Commented on HB 308                                    
 Art Peterson                                                                  
 350 North Franklin St.                                                        
 Juneau, Alaska  99801                                                         
  POSITION STATEMENT:   Testified in support of HB 308                         
 Representative Jerry Sanders                                                  
 Alaska State Capitol                                                          
 Juneau, Alaska  99801-1182                                                    
  POSITION STATEMENT:   Sponsor of HB 75                                       
 Donna Schulz                                                                  
 Juvenile Probation Officer                                                    
 Department of Health and Social Services                                      
 10002 Glacier Highway, Suite 305                                              
 Juneau, Alaska  99801                                                         
  POSITION STATEMENT:   Testified in support of HB 75                          
 Anne Carpeneti                                                                
 Assistant Attorney General                                                    
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, Alaska  99811-0300                                                    
  POSITION STATEMENT:   Testified in support of HB 75 and HB 25                
 Duane Udland, Deputy Chief of Police                                          
 Anchorage Police Department                                                   
 4501 So. Bragaw St.                                                           
 Anchorage, Alaska  99507-1599                                                 
  POSITION STATEMENT:   Testified in support of HB 75                          
 First Sergeant Mike Corkill                                                   
 Alaska State Troopers                                                         
 1979 Peger Rd.                                                                
 Fairbanks, Alaska  99709                                                      
  POSITION STATEMENT:   Testified in support of HB 75                          
 Jerry Shriner                                                                 
 Department of Corrections                                                     
 240 Main Street, Suite 700                                                    
 Juneau, Alaska  99801                                                         
  POSITION STATEMENT:   Testified in support of HB 75                          
  ACTION NARRATIVE                                                             
 TAPE 96-30, SIDE A                                                            
 Number 000                                                                    
             SB 186 LIMITED LIABILITY PARTNERSHIPS                            
 CHAIRMAN TAYLOR called the Senate Judiciary Committee to order at             
 1:40 p.m.  Also present were Senators Green and Miller.  The first            
 order of business before the committee was SB 186.                            
 SHERMAN ERNOUF, legislative aide to the Senate Labor and Commerce             
 Committee, gave the following summary of SB 186.  The bill was                
 introduced by way of request, has been worked on for two years, and           
 has had extensive input from Alaska bankers, the Alaska Board of              
 Certified Public Accountants, and the Division of Banking and                 
 Securities.  The limited liability partnership (LLP) is a new type            
 of general partnership that is sweeping the nation.  The District             
 of Columbia and 38 states have adopted the LLP as a business form,            
 and 12 states, including Alaska, are considering this type of                 
 legislation in 1996.  The LLP is particularly appealing to small              
 businesses and start-up ventures.  The benefits to an LLP are: it             
 is simple to and operate because there are no required articles of            
 incorporation, board of directors' meetings, shareholders                     
 arrangements, etc.; tax liability flows through the LLP directly to           
 the partners themselves; and it provides for partial limited                  
 liability for its partners.  Individual partners in an LLP are not            
 personally liable for the debts and obligations of the LLP arising            
 out of errors, omissions, negligence, incompetence, or malfeasance            
 committed in the course of the partnership business by another                
 partner, or representatives of the partnership not working under              
 their direction or supervision.  All partners are personally liable           
 for their own acts and omissions and for the acts and omissions for           
 those persons over whom they exercise control.  Additionally, all             
 partners continue to be personally liable for all other debts and             
 obligations of the partnership itself.  The LLP remains liable for            
 all actions of its owners and employees, and the LLP owners                   
 personally remain liable for those persons under their control.               
 Beyond any investments in the LLP itself, the personal assets of              
 the owners and their families need not be sacrificed to pay                   
 judgments arising from events or actions over which they exercise             
 no control.                                                                   
 MR. ERNOUF noted concern expressed during hearings in the Labor and           
 Commerce Committee about people switching to a limited liability              
 partnership to avoid tax liability.  The Division of Banking does             
 not expect a mass exodus of people changing from one business form            
 to another.  The bill is narrowly tailored to assist firms that do            
 business in several states, particularly accounting firms.  He knew           
 of no opposition to the bill.                                                 
 Number 107                                                                    
 BOB MANLEY testified in support of SB 186 since many major                    
 accounting firms are operating as limited liability partnerships in           
 other states.                                                                 
 CHAIRMAN TAYLOR asked if law firms could form under limited                   
 liability partnerships.                                                       
 PETER DINN replied a limited liability partnership is not                     
 dissimilar to a limited liability corporation; it has less                    
 limitation as to the openness of the partners, but is simpler to              
 form and operate in.  He imagined a partnership of attorneys could            
 form as a LLP.                                                                
 CHAIRMAN TAYLOR asked if they would gain the ability to limit                 
 liability to only those people directly under their management or             
 control by doing so.  He was under the impression that the                    
 Professional Corporations Act did not provide any shield from                 
 liability but was created for tax and other corporate purposes.               
 Mr. Dinn was unsure, but clarified the LLP is for those partners              
 who are not directly involved, so that the assets of the                      
 organization are available and partners are responsible for all of            
 the general liabilities, but it limits them from the acts of                  
 someone outside of the norm.  A law firm may look to the                      
 professional corporation or sub S corporation as providing a better           
 form of protection.                                                           
 CHAIRMAN TAYLOR believed there is no protection in either of those            
 forms because liability pierces through to all members of the                 
 SENATOR GREEN moved SB 186 out of committee with individual                   
 recommendations.  There being no objection, the motion carried.               
             HB 308 UNIFORM PROBATE CODE REVISIONS                            
 REPRESENTATIVE SEAN PARNELL, sponsor of HB 308, reviewed the                  
 measure as follows.  The National Conference of Commissioners on              
 Uniform State Law has prepared a revision of the Uniform Probate              
 Code which was enacted 24 years ago.  HB 308 contains those                   
 revisions, which are designed to update and clarify the UPC.  HB
 308 has been reviewed and supported by the Estate Planning Section            
 of the Alaska Bar Association.                                                
 Number 207                                                                    
 BOB MANLEY explained HB 308 contains a number of technical fixes              
 and responds to problems that have developed.  It expands the                 
 Uniform Simultaneous Death Act to a 120 hour survival requirement             
 to joint bank accounts and joint property to better carry out                 
 people's expectations if they have not properly planned their                 
 estate.  It also expands the automatic revocation of disposition of           
 property by divorce to life insurance policies.  Problems have                
 occurred in cases where a person divorced ten years ago started a             
 new family but forgot to change the beneficiary designation on the            
 life insurance policy.  In such a case, the ex-spouse would obtain            
 all of the life insurance to the detriment of the new family.  HB
 308 changes the intestacy law to better reflect social patterns               
 over the past twenty years, to deal with blended families.  HB 308            
 also expands the ability to disclaim property to nonprobate                   
 property.  Frivolous disclaimers are used to fix faulty estate                
 planning after a person has passed away.                                      
 SENATOR GREEN asked if it would supersede the naming of the                   
 beneficiary if you have a succeeding family.  MR. MANLEY responded            
 HB 308 would provide for an automatic revocation of an ex-spouse as           
 a beneficiary if a person is divorced.  The divorced parties can              
 reinstate, after the divorce, the ex-spouse as a beneficiary if so            
 inclined, however if that is not done, the revocation would occur.            
 SENATOR GREEN remarked the person who bought the policy and                   
 designated beneficiaries would not have to take responsibility for            
 their own business.  MR. MANLEY stated that in the divorce context,           
 people occasionally forget to redesignate beneficiaries.  He has              
 seen cases where an ex-spouse may receive the proceeds from a                 
 policy, while the new spouse and children receive nothing at all.             
 CHAIRMAN TAYLOR stated the no-fault divorce policy removes the                
 legal profession from many divorce cases, and often results in                
 JOHN GEORGE, representing the American Council of Life Insurance,             
 testified in opposition to the inclusion of life insurance in the             
 Probate Code.  Insurance proceeds might be designated to take care            
 of children from a prior marriage, or a prior spouse, as part of a            
 divorce settlement.                                                           
 CHAIRMAN TAYLOR commented if a divorced person wanted to retain the           
 ex-spouse as a beneficiary, he/she would only have to reinstate               
 that person on the policy, which is no more difficult than changing           
 the name of a beneficiary.  He asked why the insurance industry               
 would care who the beneficiary is.                                            
 MR. GEORGE replied the insurance industry believes once a policy              
 holder dies, if the named beneficiaries do not receive the                    
 proceeds, the insurance company will have to become involved.  If             
 the provision applies to policies sold after the date of passage,             
 agents can inform clients when they purchase policies.                        
 Number 320                                                                    
 SENATOR GREEN stated she believes it is bad policy for the                    
 legislature to step in and allow a party to negate a contract.                
 She repeated it is the policy holder's responsibility to indicate             
 who the beneficiary of the policy will be.                                    
 CHAIRMAN TAYLOR explained that one of the primary reasons that                
 wills were included in the Uniform Probate Code was because people            
 frequently forget to change their wills.  If the previous spouse is           
 designated as the beneficiary in a will, he/she receives 50                   
 percent, while the current spouse receives 50 percent under the               
 Intestate Code.                                                               
 REPRESENTATIVE PARNELL clarified Mr. George was referring to the              
 spousal elective share of 33 percent.  Under current law, if a                
 person tries to disinherit a current spouse and leaves that spouse            
 with no assets, but has left a life insurance policy to another               
 person, the spousal elective share provides the spouse with 33                
 percent of anything in the augmented estate.  Life insurance                  
 policies are not considered part of the augmented estate.  HB 308             
 would include life insurance policies in the augmented estate but             
 the spouse would have to make the claim against the beneficiary,              
 not the insurance company, for 33 percent.  This bill would enforce           
 a policy against leaving a spouse with nothing.                               
 Number 373                                                                    
 SENATOR GREEN asked if an ex-spouse could claim against the current           
 spouse for 33 percent.  REPRESENTATIVE PARNELL answered no.                   
 CHAIRMAN TAYLOR noted this would impact people who do not get                 
 remarried because it is triggered on the divorce.  REPRESENTATIVE             
 PARNELL commented the spousal elective share would not be triggered           
 if the policy holder was not married when he/she died.                        
 CHAIRMAN TAYLOR asked if the beneficiary provision of the insurance           
 policy would revoke upon the action of the divorce, if the prime              
 beneficiary is one of the spouses being divorced.  MR. MANLEY                 
 replied that is correct; the revocation would be automatic and                
 could be reinstated only by completing new beneficiary forms.  The            
 insurance industry's concern is bureaucratic; it simply wants to              
 pay the designated beneficiary.  Life insurance would be included             
 in the augmented estate under HB 308 because the Uniform Probate              
 Code set up the augmented estate to prevent disinheriting thousands           
 but left a large loopholes.                                                   
 ART PETERSON, Uniform Law Commissioner for the State of Alaska,               
 agreed with Mr. Manley and Representative Parnell.  He explained              
 the bill does not include life insurance in probate; it includes              
 life insurance in the augmented estate which has a very limited               
 role in probate matters.  Its use occurs when a spouse is                     
 disinherited.  All states, except Georgia, have some sort of                  
 spousal elective share provision.  That policy kicks in when the              
 disinherited spouse elects to exercise his or her right.  HB 308              
 would no longer exempt life insurance from the augmented estate in            
 such an occurrence.                                                           
 Number 455                                                                    
 SENATOR GREEN asked who would be responsible in a case where a                
 mistake was made and the settlement was contrary to the originally            
 named beneficiary, and that beneficiary made a claim for that                 
 CHAIRMAN TAYLOR questioned how the following scenario would be                
 handled.  There is an original contract of insurance which insures            
 husband A with the beneficiary as wife B.  HB 308 passes.   At a              
 later date, husband A and wife B divorce.  The divorce action                 
 pursuant to HB 308 would nullify the beneficiary provision of that            
 contract of insurance.  The insurance company is not notified of              
 the divorce.  Husband A has remarried wife C, and then dies.  The             
 insurance company pays wife B because of an existing instruction,             
 then wife C finds out the policy has been paid.  She failed to give           
 prompt notification to the insurance company that husband A died,             
 but had she done so, she would have received the beneficiary                  
 portion as opposed to wife B.  Now the company has mistakenly paid            
 everything to wife B.  Wife C chooses to exercise her right to an             
 augmented share to the deceased's estate and asks that the life               
 insurance policy be included in that estate.  Would she be limited            
 to bringing a cause of action against wife B?                                 
 MR. PETERSON replied if the insurance company did not have notice             
 and paid the original beneficiary, it would not be required to pay            
 twice.  The issue would be the value amount of the augmented                  
 estate.  Wife C has the right to have that value included in the              
 augmented estate.  If an insurance company knows of a dispute, it             
 can pay the money into the court.  Wife C's recourse would be to              
 take action against the estate.                                               
 MR. MANLEY referred to lines 17-24 on page 64, and explained that             
 section removes any risk from the insurance company unless they've            
 ignored notices provided to them.                                             
 MR. PETERSON noted the AARP strongly endorses HB 308, as does the             
 Alaska Commission on Aging.                                                   
 SENATOR MILLER moved CSHB 308(JUD) out of committee with individual           
 recommendations.  There being no objection, the motion carried.               
              HB  75 VEHICLE THEFT AND JOYRIDING                              
 REPRESENTATIVE JERRY SANDERS, sponsor of HB 75, explained the bill            
 raises vehicle theft to a class C felony with the exception of                
 first offense theft of snow machines and other off-road vehicles.             
 HB 75 provides a strong deterrent to those who might otherwise                
 commit vehicle theft.  Under current law, those caught joyriding              
 can only be convicted of a class A misdemeanor.  Current law ties             
 the hands of police and provides no deterrent for the car thief               
 unless he/she caused $500 in damage or is caught for a second                 
 offense.  HB 75 calls for license revocation, mandatory restitution           
 to be paid to the victim, raises the maximum jail time from one to            
 five years, and changes the maximum fine from $5,000 to $50,000.              
 The bill was drafted to address extreme problems in Anchorage, but            
 should be helpful in deterring car theft around the state.                    
 CHAIRMAN TAYLOR asked about the fiscal note.  REPRESENTATIVE                  
 SANDERS replied DOC estimated $1,049,000.                                     
 CHAIRMAN TAYLOR commented that last year the committee tried to               
 create an effective bill but it was watered down at the request of            
 the Department of Law.  The Governor then vetoed the bill because             
 he wanted to create a more comprehensive juvenile crime package.              
 REPRESENTATIVE SANDERS indicated HB 75 provides for heavier                   
 sanctions, but does not waive minors into Superior Court                      
 automatically.  Prosecutors would have that option, however.                  
 SENATOR GREEN asked if there is an age component included in the              
 ANNE CARPENETI, Assistant Attorney General, responded the offender            
 would be treated as a minor if under the age of 18.                           
 CHAIRMAN TAYLOR noted the bill makes the adult offense more serious           
 but does not address juvenile offenses.                                       
 REPRESENTATIVE SANDERS explained the offense has been raised to a             
 felony for both minors and adults.                                            
 CHAIRMAN TAYLOR observed many offenders are not prosecuted while              
 the crime is considered a misdemeanor.                                        
 DONNA SCHULZ, a probation officer with the Division of Family and             
 Youth Services, testified in support of HB 75 since it acknowledges           
 vehicle theft for what it is.  By raising the offense to a felony,            
 DFYS will petition such juvenile cases to court.  Currently it                
 tries to handle 60 to 70 percent of misdemeanor cases in-house.               
 CHAIRMAN TAYLOR asked why, if 3,000 cars are stolen per year in               
 Anchorage, and at least 50 percent of those cars are stolen by                
 minors, more cases are not petitioned into court.                             
 MS. SCHULZ did not have DFYS data available and explained                     
 statistics are not specific as to the number of auto thefts.                  
 CHAIRMAN TAYLOR expressed frustration that the problem of car theft           
 by juveniles is not being addressed now and questioned how changing           
 the classification will change the level of enforcement.  He noted            
 the fiscal note for the Department of Corrections appears to apply            
 to car thieves over the age of 18.   He asked Ms. Schulz if she               
 believed more minors will be brought to court if HB 75 passes.                
 MS. SCHULZ believed that would occur because the offense would be             
 raised to the felony level.                                                   
 MS. CARPENETI noted there were 600 arrests for joyriding in 1994,             
 403 of which were for adults, and 205 were for juveniles.  That               
 number does not reflect the number of cars stolen, only the number            
 of arrests made.  The Department of Law supports HB 75.                       
 DUANE UPLAND, Deputy Chief of the Anchorage Police Department,                
 stated law enforcement agrees that the crime of car theft should be           
 a felony.  Law enforcement has been frustrated with both minor and            
 adult convictions as a misdemeanor offense because it is not                  
 treated seriously.   He urged committee members to raise the                  
 offense to a felony.                                                          
 CHAIRMAN TAYLOR asked Mr. Udland what the normal protocol is if an            
 officer pulls over a stolen car with three juveniles in it, and the           
 juvenile driver was speeding.  He asked if the juvenile driver                
 would be treated as an adult for the moving traffic violations, but           
 as a juvenile for the actual theft of the car.                                
 MR. UDLAND replied that is correct and causes a lot of frustration            
 for law enforcement officers.                                                 
 CHAIRMAN TAYLOR asked what the law officer does with the juveniles            
 in the car under that scenario.  MR. UDLAND stated there are a                
 number of variables, but police would have the option of booking              
 them into juvenile intake if they all had knowledge the vehicle was           
 stolen, but odds are they would be cited for reckless driving or              
 speeding and would be summoned into court at a later date.                    
 CHAIRMAN TAYLOR asked if any of the juveniles end up booked or                
 locked up.  MR. UDLAND replied it depends on their ages, past                 
 records, availability of parents, and a number of other variables.            
 If the offense is a felony, police officers will lean more towards            
 a booking.                                                                    
 CHAIRMAN TAYLOR stated the offender needs to be booked and to wake            
 up in jail.  MR. UDLAND stated more times than not, juveniles are             
 only cited for moving traffic violations.  He noted the frustration           
 often stems from the fact that the jail or juvenile intake system             
 is often full which dictates whether an offender is booked.  Police           
 are requested to bring in only the most serious offenders on nights           
 when there is limited space at the jails.  He stated the question             
 in his mind is which system will deal with juveniles most                     
 appropriately.  At this time, he does not believe a Superior Court            
 judge will sentence minors to jail for a long term, whereas minors            
 at McLaughlin would probably get longer sentences.  He did not                
 agree that the adult court system is necessarily the best place to            
 deal with juveniles.                                                          
 FIRST SERGEANT MIKE CORKILL, Alaska State Troopers, testified in              
 support of HB 75 as it will help people protect one of their major            
 investments - vehicles.                                                       
 JERRY SHRINER, representing the Department of Corrections (DOC),              
 testified in support of HB 75.  He explained the fiscal note                  
 submitted with the original version of the bill was reduced in the            
 House Finance Committee.  The fiscal note was calculated using a              
 standard procedure consisting of the average daily cost of care               
 across the state which is $107.  The committee objected to that               
 calculation because DOC did not know how many prisoners would be              
 housed in which facility.  DOC then calculated the total amount by            
 using the same estimate of 32 people but placing them in the Palmer           
 facility.  That calculation requires an additional post at that               
 facility which is actually five positions, working around the                 
 clock.  The amount equals the amount in the original fiscal note.             
 Number 427                                                                    
 CHAIRMAN TAYLOR asked how many new prisoners DOC expects to                   
 receive.  MR. SHRINER replied the primary cost will be to house               
 people convicted of a second felony.  It is expected that most                
 people convicted of a first felony charge will go to halfway                  
 houses.  Second time convicts will spend approximately two years in           
 CHAIRMAN TAYLOR commented that the fiscal matters can be taken up             
 in the Senate Finance Committee.                                              
 SENATOR GREEN moved CSSSHB 75(FIN) out of committee with individual           
 recommendations.  There being no objection, the bill moved from               
                HB  25 CRIMINAL DISCOVERY RULES                               
 REPRESENTATIVE PARNELL, sponsor of HB 25, explained the bill                 
 pertains to criminal rules of discovery.  In the civil context,               
 discovery is an open exchange of relevant and non-privileged                  
 information.  In the criminal context, the flow of information is             
 a one-way street: from the prosecution to the defense.  HB 25                 
 requires reciprocal discovery.  He referred to a spreadsheet in               
 members' packets delineating who would be required to provide what            
 information at what time.  The underlying issue is fairness; HB 25            
 will eliminate surprise witnesses, will avoid delays in trial, will           
 inform victims and witnesses whether their character or distant               
 past will be questioned in court and will guarantee a fair process            
 when confidential records are sought by the defense.  HB 25 still             
 gives the defense early access to information about the                       
 prosecution's case, and contains a uniform procedure for the                  
 defense to get access to confidential records.  Most requirements             
 on the spreadsheet are from Rule 16, the others are from the                  
 American Bar Association's Model Criminal Code.  The Department of            
 Law and Public Defenders' Office have provided input on HB 25.                
 CHAIRMAN TAYLOR asked Ms. Carpeneti if the Department of Law                  
 supports HB 25.  MS. CARPENETI replied the Department strongly                
 supports HB 25 and worked extensively with Representative Parnell's           
 staff and the Public Defenders' Agency to address concerns.                   
 CHAIRMAN TAYLOR noted it is his understanding the Public Defenders'           
 Office does not object to this legislation.                                   
 Number 358                                                                    
 CHAIRMAN TAYLOR congratulated Representative Parnell for working on           
 this legislation as it will provide a roadmap for those people                
 involved in the practice of criminal law.                                     
 SENATOR GREEN moved CSHB 25(FIN) from committee with individual               
 recommendations.  There being no objection, the motion carried.               
 CHAIRMAN TAYLOR adjourned the meeting.                                        

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