Legislature(1995 - 1996)
03/29/1996 01:30 PM Senate JUD
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* first hearing in first committee of referral
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+ teleconferenced
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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
date."
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
corporation.
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
oversights.
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
settlement.
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
bill.
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
prison.
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
committee.
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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