Legislature(2001 - 2002)
05/10/2002 05:26 PM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE JUDICIARY COMMITTEE
May 10, 2002
5:26 p.m.
MEMBERS PRESENT
Senator Robin Taylor, Chair
Senator Dave Donley, Vice Chair
Senator John Cowdery
Senator Gene Therriault
Senator Johnny Ellis
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 317(FIN)
"An Act relating to stalking and to violating a protective order;
and amending Rules 4 and 65, Alaska Rules of Civil Procedure, and
Rule 9, Alaska Rules of Administration."
MOVED CSHB 317(FIN) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 27(FIN)
"An Act relating to the registration of individuals who perform
home inspections; relating to regulation of contractors; relating
to registration fees for specialty contractors, home inspectors,
and associate home inspectors; relating to home inspection
requirements for residential loans purchased or approved by the
Alaska Housing Finance Corporation; relating to civil actions by
and against home inspectors and to civil actions arising from
residential unit inspections; and providing for an effective
date."
MOVED SCS CSHB 27(JUD) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 182(FIN) am
"An Act relating to certain vehicles, including motorcycles and
trailers; relating to the registration, bonding, and other
regulation of motor vehicle dealers; relating to the registration
and other regulation of certain motor vehicle buyers' agents;
relating to acts and transactions involving vehicles, including
trailers, and to the acts and practices of certain persons and
entities involved in vehicle transactions, including trailer
transactions; relating to consumer protection for used vehicle
buyers; amending Rule 3, Alaska Rules of Civil Procedure; and
providing for an effective date."
MOVED SCS CSHB 182(L&C) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 393(JUD) am
"An Act relating to unfair and deceptive trade practices and to
the sale of business opportunities; amending Rules 4 and 73,
Alaska Rules of Civil Procedure; and providing for an effective
date."
MOVED SCS CSHB 393(L&C) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 489(JUD)
"An Act relating to cruelty to animals."
MOVED CSHB 489(JUD) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 499(JUD)
"An Act declaring legislative intent to reject the continuity of
enterprise exception to the doctrine of successor liability
adopted in Savage Arms, Inc. v. Western Auto Supply, 18 P.3d 49
(Alaska 2001) as it relates to products liability; providing that
a successor corporation or other business entity that acquires
assets of a predecessor corporation or other business entity is
subject to liability for harm to persons or property caused by a
defective product sold or otherwise distributed commercially by
the predecessor only if the acquisition is accompanied by an
agreement for the successor to assume the liability, results from
a fraudulent conveyance to escape liability for the debts or
liabilities of the predecessor, constitutes a consolidation or
merger with the predecessor, or results in the successor's
becoming a continuation of the predecessor; defining 'business
entity' that acquires assets to include a sole proprietorship;
and applying this Act to the sale, lease, exchange, or other
disposition of assets by a corporation, a limited liability
corporation, a partnership, a limited liability partnership, a
limited partnership, a sole proprietorship, or other business
entity that occurs before, on, or after the effective date of
this Act."
MOVED CSHB 499(JUD) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 246(JUD)
"An Act relating to regulation of a person providing insurance
for the cost of medical care, to confidentiality of insurance
records, to insurance hearings, to insurance fees, to annual and
quarterly statements by insurers, to managed care insurance, to
taxes on insurance, to insurer certificates of authority, to risk
based capital for insurers, to unauthorized and nonadmitted
insurers, to surplus lines insurance, to health insurance, to
life insurance, to annuity insurance, to consumer credit
insurance, to insurer liquidation, to multiple employer welfare
arrangements, to the Alaska Insurance Guaranty Association, to
hospital and medical service corporations, and to regulation of
insurance producers, agents, brokers, managers, and adjusters;
and providing for an effective date."
MOVED SCS CSHB 246(JUD) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 252(RLS)
"An Act relating to the construction of certain statutes relating
to children; relating to the scope of duty and standard of care
for persons who provide services to certain children and
families; relating to civil liability for damages to certain
children and their families resulting from failure to comply with
certain statutes; relating to intensive family preservation
services; and providing for an effective date."
MOVED SCS CSHB 252(JUD) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
HB 317 - No previous action to record.
HB 27 - See Labor and Commerce minutes dated 4/30/02.
HB 182 - See Labor and Commerce minutes dated 4/25/02.
HB 393 - See Labor and Commerce minutes dated 4/30/02 and 5/4/02.
HB 489 - No previous action to record.
HB 499 - See Labor and Commerce minutes dated 5/4/02.
HB 246 - See Labor and Commerce minutes dated 4/30/02 and 5/4/02.
HB 252 - No previous action to record.
WITNESS REGISTER
Representative Harry Crawford
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 317.
Ms. Mary Wells
No address given
POSITION STATEMENT: Testified in support of HB 317.
Ms. Janet Seitz
Staff to Representative Norman Rokeberg
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 27.
Representative Norman Rokeberg
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 27 and HB 499.
Ms. Amy Erickson
Staff to Representative Lisa Murkowksi
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 182.
Mr. Steve Alewine
Alaska Auto Dealers Association
3725 Mallard St.
Juneau, AK 99801
POSITION STATEMENT: Testified on HB 182.
Mr. Mark Mueller
No address given
POSITION STATEMENT: Testified in support of HB 182.
Mr. Jim Kiley
No address given
POSITION STATEMENT: Testified in support of HB 182.
Mr. Stan Hurst
Chrysler Corporation
No address given
POSITION STATEMENT: Testified in support of HB 182.
Mr. Rick Morrison
Alaska Auto Dealers Association
935 Gambell St.
Anchorage, AK 99501
POSITION STATEMENT: Testified in support of HB 182.
Mr. Ed Sniffen
Assistant Attorney General
Fair Business Practices Section
Department of Law
th
1031 W. 4 Ave. Ste. 200
Anchorage, AK 99501-1994
POSITION STATEMENT: Testified in support of HB 182.
Representative Gary Stevens
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 393.
Ms. Cindy Drinkwater
Assistant Attorney General
Fair Business Practices Section
Department of Law
th
1031 W. 4 Ave. Ste. 200
Anchorage, AK 99501-1994
POSITION STATEMENT: Testified in support of HB 393.
Ms. Marie Darlin
Capital City Task Force
AARP Alaska
3101 Penland Pkwy.
Anchorage, AK 99508
POSITION STATEMENT: Testified in support of HB 393.
Representative Mike Chenault
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 489.
Ms. Heather M. Nobrega
Counsel to House Judiciary Committee
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 499.
Ms. Lisa Hanby
Hughes Thorsness
th
550 W. 7 Ave. Ste. 1100
Anchorage, AK 99501
POSITION STATEMENT: Testified in opposition to HB 499.
Mr. Ted Pease
Burr Pease & Kurtz
810 N St.
Anchorage, AK 99501
POSITION STATEMENT: Testified in support of HB 499.
Representative Lisa Murkowski
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 246.
Mr. Bob Lohr
Director
Division of Insurance
Department of Community & Economic Development
3601 C St. Ste. 1324
Anchorage, AK 99503-5948
POSITION STATEMENT: Testified on HB 246.
Mr. Kirk Wickersham
th
236 W. 34
Anchorage, AK 99503
POSITION STATEMENT: Testified on HB 246.
Mr. Jerry Reinwand
Blue Cross/Blue Shield of Alaska
2 Marine Way #219
Juneau, AK 99801
POSITION STATEMENT: Testified on HB 246.
Representative John Coghill
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 252.
Ms. Susan Cox
Assistant Attorney General
Civil Division
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Testified on HB 252.
ACTION NARRATIVE
TAPE 02-29, SIDE A
5:26 p.m.
CHAIRMAN ROBIN TAYLOR called the Senate Judiciary Committee
meeting to order at 5:26 p.m. Present were Senators Cowdery,
Donley, Therriault and Chairman Taylor. Senator Ellis arrived
shortly thereafter.
The first order of business before the committee was HB 317.
HB 317-STALKING & PROTECTIVE ORDERS
REPRESENTATIVE HARRY CRAWFORD, sponsor of HB 317, said HB 317
would fill a gap in Alaska law to protect people from stalkers
that they don't know. He said existing laws only protect victims
from stalkers they had previously been involved with under
domestic violence statutes.
CHAIRMAN TAYLOR asked if there were any questions for
Representative Crawford. There were none. He asked Ms. Mary
Wells to provide testimony.
MS. MARY WELLS said an individual or minor who was stalked could
only call the police and file a report under existing law. She
said the victim could seek assistance through the courts if there
was a threat of physical violence but the court could only have
them escorted to a shelter such as AWAKE in Anchorage.
She said she was lucky that her stalker had been arrested on
other charges and incarcerated for four years. He had since been
released. In order to get a protective order for her family, she
said she would have to have been involved with him or related to
him. She said she got no relief from the legal system and Judge
Murphy told her the law needed to be changed.
She said stalking was not about sex; it was about power. She
said the stalker might focus on something unusual in a person
such as the color of their hair or their eyes. She said her
stalker just wanted to hear her voice. She said it took her two
months to figure out who her stalker was. She said some victims
never learn the identity of their stalker. Some victims went
into hiding. She said it was difficult to go grocery shopping or
take their children to school. She said her children were unable
to participate in physical education activities outdoors because
they risked being exposed to the stalker.
She said she was representing herself and many other stalking
victims that couldn't get any relief. She said HB 317 was needed
to protect victims of stalkers.
5:35 p.m.
SENATOR COWDERY moved CSHB 317(FIN) out of committee with
attached zero fiscal notes and individual recommendations.
There being no objection, CSHB 317(FIN) moved out of committee
with attached zero fiscal notes and individual recommendations.
The next order of business before the committee was HB 27.
HB 27-HOME INSPECTORS/CONTRACTORS
MS. JANET SEITZ, Staff to Representative Norman Rokeberg, sponsor
of HB 27, said HB 27 would require registration for home
inspectors along with certain educational and practice
requirements.
SENATOR THERRIAULT moved the work draft (Version V) as the
working document before the committee.
There being no objection, Version V was adopted as the working
document before the committee.
CHAIRMAN TAYLOR asked Ms. Seitz to explain the changes made in
Version V.
MS. SEITZ said Version V does not contain the section that dealt
with legal actions against home inspectors and associated
language requiring a report to be filed on an existing home
within two years and a new home within one year. She said there
would be no contractual limitation of liability of home
inspectors according to Sec. 17.
CHAIRMAN TAYLOR asked Ms. Seitz for the location of the
provisions that would allow only two certifying entities.
MS. SEITZ said those provisions were in Sections 7 and 43. She
said Sec. 7 would require passage of appropriate examination to
get a home inspector's license and Sec. 43 would provide for
transitional licensing.
CHAIRMAN TAYLOR said those two entities were the American Society
of Home Inspectors (ASHI) and the International Conference of
Building Officials (ICBO).
MS. SEITZ said that was correct.
CHAIRMAN TAYLOR asked if that would include the National
Association of Home Inspectors (NAHI).
MS. SEITZ said no.
CHAIRMAN TAYLOR asked if the American Home Inspector Training
Institute (AHITI) was a different school.
MS. SEITZ said it was. She said ASHI had an Alaska chapter and
the Alaska Housing Finance Corporation (AHFC) required ICBO
certification for new construction.
5:37 p.m.
REPRESENTATIVE ROKEBERG, sponsor of HB 27, said he reviewed a
number of other entities offering training and testing services
that expressed interest in being included. He said ASHI and ICBO
were well respected throughout the country. He didn't want to
list every particular entity and would not object to the
committee adding a provision that would allow inclusion of other
entities by regulation. He didn't want to exclude any entities
but wanted to be sure they were reviewed before they were
approved. He said the legislature didn't have the capacity to
review each of the entities.
CHAIRMAN TAYLOR said HB 27 limits certification to just two
entities. He received correspondence from someone who suggested
also including NAHI and AHITI because those entities offered
training and testing services. He didn't want to pass HB 27 only
to discover that a good portion of the home inspectors in Alaska
could no longer practice because they got their certification
from some other entity.
REPRESENTATIVE ROKEBERG said he had been working on the issue for
four years and that work spawned the Alaskan ASHI chapter. He
said there was some competition between ASHI and one of the
entities Chairman Taylor mentioned but he didn't believe that
affected Alaska. He felt comfortable including only ASHI and
ICBO.
CHAIRMAN TAYLOR moved conceptual Amendment 1 to change the
semicolon on page 4, line 24 to a comma and add AHITI and NAHI to
the list of eligible entities offering examination and courses
for inspecting existing homes.
REPRESENTATIVE ROKEBERG was not sure of the quality or competency
of AHITI and NAHI.
SENATOR THERRIAULT asked why it would be preferable to specify
certain entities when there could be other qualified entities.
He said they could delete all of the language from line 20 to
line 27 on page 4.
REPRESENTATIVE ROKEBERG said there must be basic standards. He
said AHFC required ICBO certification for inspecting new
construction. He said Senator Therriault's suggestion would
lower requirements and he didn't think they wanted to do that.
He said existing home inspection certification was what was at
issue and ASHI was the normally accepted standard.
CHAIRMAN TAYLOR said members of the committee had received
correspondence from people who wouldn't be able to get a license
unless they went back through the educational process.
REPRESENTATIVE ROKEBERG had reviewed some of the entities. He
read the complete curriculum from one of the entities mentioned
that was in a one-room second-floor walk-up in Connecticut and he
didn't believe they had sufficiently demonstrated their
qualifications to be included in HB 27. He said entities that
could show sufficient qualifications should be included.
CHAIRMAN TAYLOR said he wasn't concerned with where the
inspectors got their certification because they would be liable
if they did anything wrong.
REPRESENTATIVE ROKEBERG said the same change should be made on
page 22, line 6 to be consistent.
CHAIRMAN TAYLOR said they could change the "or" on page 22, line
6 to an "and." He said that would require all inspectors to take
an examination by the board.
REPRESENTATIVE ROKEBERG said there wasn't a board.
CHAIRMAN TAYLOR said the language on page 22, lines 7-8 referred
to, "the Examination Board of Professional Home Inspectors." He
asked if HB 27 created that board.
MS. SEITZ said that examination was already given by a group
called Professional Home Inspectors and some people in the state
had already taken that examination.
CHAIRMAN TAYLOR reiterated that conceptual Amendment 1 would
include AHITI and NAHI on page 4, line 24 and page 22, line 6.
He asked if there was any objection to Amendment 1.
There being no objection, Amendment 1 was adopted.
SENATOR COWDERY moved SCS CSHB 27(JUD) out of committee with
attached fiscal notes and individual recommendations.
There being no objection, SCS CSHB 27(JUD) moved out of committee
with attached fiscal notes and individual recommendations.
The next order of business before the committee was HB 182.
HB 182-MOTOR VEHICLE SALES AND DEALERS
MS. AMY ERICKSON, staff to Representative Lisa Murkowski, sponsor
of HB 182, said HB 182 addresses the relationship between motor
vehicle dealers, manufacturers and prospective buyers. She said
the bill would:
· Provide guidelines to protect dealers and consumers from
abuses within the industry;
· Create a platform for dispute resolution between
manufacturers and dealers with regard to franchise
agreements;
· Include franchise agreements under the jurisdiction of
Alaska courts;
· Create a uniform process for transferring, terminating or
conveying franchise agreements;
· Provide protection against the placement of new dealerships
within proximity of a current dealership;
· Provide uniform guidelines for designating successors in the
case of death or incapacity of a franchisee; and
· Provide safeguards to protect consumers from deceptive
advertising, price comparison and availability of advertised
items.
CHAIRMAN TAYLOR asked Mr. Steve Alewine if he wished to testify.
MR. STEVE ALEWINE, Alaska Auto Dealers Association, said he did
not.
CHAIRMAN TAYLOR asked Mr. Mark Mueller to provide testimony.
MR. MARK MUELLER said he was comfortable with HB 182.
CHAIRMAN TAYLOR asked Mr. Jim Kiley to provide testimony.
MR. JIM KILEY said he supported HB 182.
CHAIRMAN TAYLOR asked Mr. Stan Hurst to provide testimony.
MR. STAN HURST, Chrysler Corporation, said Chrysler is
comfortable with the bill.
CHAIRMAN TAYLOR asked Mr. Rick Morrison to provide testimony.
MR. RICK MORRISON, Alaska Auto Dealers Association, thanked
everybody that had worked on the bill. He thanked the committee
for its support.
CHAIRMAN TAYLOR asked Mr. Ed Sniffen to provide testimony.
MR. ED SNIFFEN, Assistant Attorney General, Fair Business
Practices Section (FBPS), Department of Law (DOL), said DOL
supported HB 182.
SENATOR COWDERY moved SCS CSHB 182(L&C) out of committee with
attached zero fiscal notes and individual recommendations.
There being no objection, SCS CSHB 182(L&C) moved out of
committee with attached zero fiscal notes and individual
recommendations.
The next order of business before the committee was HB 393.
HB 393-SALES OF BUSINESS OPPORTUNITIES
5:53 p.m.
REPRESENTATIVE GARY STEVENS, sponsor of HB 393, said HB 393 is a
consumer protection bill that would help Alaskans confronted with
consumer scams known as business opportunities. He said he had a
packet of examples of the business opportunities people received
in the mail. He said HB 393 would not hurt legitimate
businesses; it would only protect against the high-pressure
business opportunities that promised people high earnings. He
said vulnerable Alaskans such as senior citizens and people with
disabilities, were especially taken in by them. He said HB 393
would require these businesses to register, disclose information,
use an escrow account for delivery and allow a 30-day
cancellation period. He said direct sellers for companies such
as Avon, Mary Kay and Amway would be exempted from requirements
of the bill.
CHAIRMAN TAYLOR said many people who were appreciative of HB 393
had contacted him. He asked Ms. Cindy Drinkwater to provide
testimony.
MS. CINDY DRINKWATER, Assistant Attorney General, Department of
Law (DOL), said DOL strongly supported HB 393.
CHAIRMAN TAYLOR asked if there were any questions for Ms.
Drinkwater. There were none. He asked Ms. Marie Darlin to
provide testimony.
MS. MARIE DARLIN, Capital City Task Force, AARP Alaska, said they
supported HB 393. She said the committee had AARP Alaska's
letter of support and had heard from many of its members, many of
who had really been ripped off by business opportunities. She
said the latest CS cleared up any questions.
CHAIRMAN TAYLOR asked if there were any questions for Ms. Darlin.
There were none.
SENATOR ELLIS noted that HB 393 passed the floor of the House of
Representatives with a vote of 37 to one. He said the nay vote
was from Representative Vic Kohring. He asked Representative
Stevens if he knew why Representative Kohring had voted against
HB 393.
REPRESENTATIVE STEVENS thought Representative Kohring was opposed
to any governmental regulations that would impact people.
CHAIRMAN TAYLOR said he spoke to Representative Kohring, who
indicated that his primary concern was that HB 393 would add
another level of government and more employees and would result
in more cost to other small businesses. He said the language
that would allow the department to set the cost of fees based
upon the cost of issuing licenses was fairly broad. He felt
Representative Kohring was philosophically supportive of HB 393
but had concerns about the cost of government.
He asked if there was any further discussion on HB 393. There
was none.
SENATOR COWDERY moved SCS CSHB 393(L&C) out of committee with
attached zero fiscal note and individual recommendations.
There being no objection, SCS CSHB 393(L&C) moved out of
committee with attached zero fiscal note and individual
recommendations.
The next order of business before the committee was HB 489.
HB 489-CRUELTY TO ANIMALS
REPRESENTATIVE MIKE CHENAULT, sponsor of HB 489, said it is well
documented that animal abuse is a precursor to child abuse. He
said studies by the American Humane Society and the American
Psychiatric Association strongly suggested that a great deal of
adult domestic abuse could be avoided if animal cruelty was
identified and treated as a juvenile problem. He said HB 489
would allow prosecutors to charge a person with cruelty to each
animal found to be neglected or abused and suggests that the
courts mandate behavioral counseling. He said the bill would
also create the duty to report abuse to authorities and hold a
person harmless if they reported animal abuse in good faith.
6:00 p.m.
CHAIRMAN TAYLOR asked if HB 489 would have any impact on the
process of raising domestic animals for food production.
REPRESENTATIVE CHENAULT said that was not his intent.
CHAIRMAN TAYLOR asked if there were any further questions. There
were none.
SENATOR COWDERY moved CSHB 489(JUD) out of committee with
attached zero fiscal notes and individual recommendations.
There being no objection, CSHB 489(JUD) moved out of committee
with attached zero fiscal notes and individual recommendations.
The next order of business before the committee was HB 499.
HB 499-SUCCESSOR LIABILITY FOR PRODUCT LIABILITY
MS. HEATHER NOBREGA, counsel to the House Judiciary Committee,
sponsor of HB 499, said HB 499 would determine when a successor
in a corporation could be held liable for a previous
corporation's products liability.
CHAIRMAN TAYLOR said HB 499 was a complex piece of legislation
that would involve the legislature reversing a Supreme Court
decision. He said whether or not a successor corporation that
purchased the assets of a bankrupt business would be liable for
the activities of the previous corporation was a significant
policy question.
SENATOR THERRIAULT asked what kind of liability was being
addressed.
6:07 p.m.
CHAIRMAN TAYLOR said the case involves Savage Arms, Inc. and the
Western Auto Supply Corporation and is very unique. Western Auto
sold a .22 Savage Industries rifle that had design factors or
problems that caused a tragic accident. He explained that
Representative Chenault employed the father of the young man who
was shot in the temple by the rifle. Suit was brought against
Western Auto and full compensation has been provided to the
victim but additional subrogation claims have gone back and forth
between Western Auto and Savage Arms as to who was liable. He
said the matter was up on an interlocutory appeal to the Supreme
Court from a decision made by Judge Link. He said the Supreme
Court rendered a decision using a four-part test as to whether or
not the successor corporation was liable for the previous
corporation's products liability. He said Savage Industries had
been purchased along with the name. He thought Alaska's Supreme
Court was one of only three that came out with a different
continuity of enterprise theory. The Supreme Court decided that
the new corporation might have become liable with the purchase of
the assets of Savage Industries. He said the matter had not been
resolved yet and the new corporation would go to trial in the
fall to determine the matter of liability. He said the Supreme
Court indicated that successor liability affected the manner in
which the case would be tried and who would be held liable.
6:09 p.m.
SENATOR COWDERY thought the gun had been sold by Western Auto but
had passed through many owners before the young man was injured.
MS. NOBREGA said that was correct.
SENATOR COWDERY said he purchased a Helio Courier factory when
Piper Aircraft went bankrupt. He said they would have been
liable for the entire history of the aircraft even though they
were manufacturing a different model. He said that made him ask,
"Is the plumber responsible for what goes through the pipe?"
MS. NOBREGA said products liability was very interesting because
it could hold any entity liable throughout the chain of
possession. She said liability moved down the chain from the
manufacturer to the wholesaler and the retailer.
SENATOR COWDERY asked if that model of gun was still made and if
they had corrected the flaws if there were flaws.
MS. NOBREGA said she didn't know but assumed that either the gun
was no longer being made or the problem that resulted in the gun
exploding had been fixed.
REPRESENTATIVE ROKEBERG, Chairman of House Judiciary Committee,
said when Savage Industries purchased Savage Arms they purchased
four product lines but did not purchase that particular product
line. He said Western Auto had settled the case. He said the
case was now between the subrogated insurance companies AllState
and Lloyd's of London. He said HB 499 addressed the Restatement
(Third) of Torts to determine successor liability.
CHAIRMAN TAYLOR asked Ms. Lisa Hanby to provide testimony.
MS. LISA HANBY, Hughes Thorsness, said her supervisor, Mr. Jim
Powell, wished to provide testimony but was not available.
CHAIRMAN TAYLOR asked if Ms. Hanby had any testimony to provide.
MS. HANBY said Hughes Thorsness' major concern was that the
retroactivity of HB 499 would make the law applicable to parties
already in litigation.
CHAIRMAN TAYLOR asked how HB 499 would affect their case.
MS. HANBY thought it would eliminate their case. She said they
were seeking indemnification for about $12 million.
CHAIRMAN TAYLOR asked if there were any further questions for Ms.
Hanby. There were none.
REPRESENTATIVE ROKEBERG said HB 499 would overturn one of two
theories that were adopted by the Supreme Court to be utilized by
the trial court in applying products liability law. He said the
Supreme Court adopted the mere continuation theory, which was one
of the four tests allowed under the Restatement (Third) of Torts,
and the continuity of enterprise theory. He said HB 499
overturned the continuity of enterprise theory. He said the
Supreme Court retroactively applied that standard because the
legislature had never addressed the issue. He said HB 499 would
clarify what the law should be because the case was before the
Supreme Court to get clarification of the law. He said HB 499
would simply do what the Supreme Court had done in making it
retroactive. He felt the Supreme Court had picked the wrong law.
He said 46 other states agreed with the Restatement (Third) of
Torts. The Supreme Court picked a law that had been discredited
throughout the judiciary of the country.
TAPE 02-29, SIDE B
6:15 p.m.
REPRESENTATIVE ROKEBERG said the previous testimony from Mr.
Powell was that there was approximately $14 million involved in
the case. He said the case was a clear tort case and it was
clear in case law that there was no vested right to the $14
million until the entire case had been tried and brought to final
judgment. He said there was case law in the brief in the bill
packet going all the way back to Chief Justice John Marshall's
decision in the The Schooner Peggy case in 1801 that stated that
legal principle. He said it was very well tested and HB 499
would not interfere with the case. He said the Superior Court
would look at the Supreme Court's decision and HB 499 in making
judgment. He said they would get to retry the case based on what
the law should be. He said it was up to the facts to determine
responsibility.
CHAIRMAN TAYLOR asked Mr. Ted Pease to provide testimony.
MR. TED PEASE, Burr Pease & Kurtz, said his firm was counsel to
Savage Arms. He pointed out that HB 499 would adopt section 12
of the American Law Institute's Restatement (Third) of Torts. He
said the American Law Institute was a respected agency that
studied laws and presented an analysis on what the law was and
what it should be. He said they adopted the following four
conditions that would make a successor corporation liable in
1998:
· If the successor corporation expressly assumed liability;
· If it was a merger or consolidation of two corporations;
· If it was fraud; or
· If the new corporation was a clear continuation of the old
corporation.
He said clear continuation was when the two companies had the
same shareholders, stockholders, directors and business but was a
different corporation.
MR. PEASE said HB 499 would eliminate Western Auto's ability to
use the continuity of enterprise theory to answer the question of
liability in their case against Savage Arms. He said the
continuity of enterprise theory was a wide-open theory that said
if a successor company appeared to be the same corporation the
jury could decide the successor corporation was liable.
He said the original corporation went bankrupt because of
financial problems. He said the new corporation decided to
purchase part of the bankrupt corporation including most, but not
all, of the assets. It did not purchase the product line that
included the gun that hurt the young man. He said the accident
hadn't happened when the negotiations were going on. He said the
accident had happened by the time the deal was closed but neither
corporation nor the bankruptcy court knew about it. He said a
year later the suit was filed. He said Savage Industries was
looked at for liability but had gone out of business so the suit
went after Western Auto, the original seller of the gun.
He urged the passage of HB 499 because it would protect any
corporation or individual who purchased all or part of the assets
of another business that could find themselves liable for
products liability for an accident that hadn't even happened yet.
CHAIRMAN TAYLOR maintained that the Restatement (Third) of Torts
said the successor corporation was liable if liability was
assumed, if fraudulent conveyance was used to escape debts or
liabilities, if it was a consolidation or merger or if the
successor corporation was really a continuation of the
predecessor. He asked if the Supreme Court decided that Savage
Arms was a continuation of Savage Industries.
MR. PEASE said Judge Link decided that there were fact issues to
be examined and recognized two theories that might be applicable.
One theory was the continuity of enterprise theory.
CHAIRMAN TAYLOR asked if that applied in this case.
MR. PEASE said it did not. He said the corporation that
purchased the assets of Savage Industries was wholly owned by an
international, publicly traded corporation called Challenger.
CHAIRMAN TAYLOR said he appreciated the hard work Mr. Pease and
Mr. Powell had put in on HB 499. He wasn't convinced that HB 499
was appropriate but believed there should be some finality in the
marketplace. He thought everyone would agree that liability
should continue if the transaction fell under any of the
exceptions under the Restatement (Third) of Torts.
SENATOR COWDERY asked if the corporation was purchased at a
bankruptcy.
MR. PEASE said it was purchased from Chapter 11 bankruptcy
proceedings with the approval of the bankruptcy court.
CHAIRMAN TAYLOR asked if there was anyone else who wished to
testify on HB 499. There was nobody.
SENATOR COWDERY moved CSHB 499(JUD) out of committee with
attached zero fiscal note and individual recommendations.
SENATOR ELLIS objected.
SENATOR DONLEY had not made up his mind about HB 499. He didn't
know if he opposed moving it out of committee. He asked what
Senator Ellis' objection was.
SENATOR ELLIS said he had a bad feeling about HB 499. He didn't
think the committee understood the bill. He said the next
committee of referral was the Senate Rules Committee and then the
bill would be on the floor where a group of uninformed people
would be asked to cast a vote on this complicated measure in the
closing days of session.
SENATOR DONLEY said he would not oppose moving HB 499 out of
committee but he shared Senator Ellis' concerns.
Upon a roll call vote, Senators Donley and Cowdery and Chairman
Taylor voted in favor of moving CSHB 499(JUD) out of committee
and Senator Ellis voted in opposition. Therefore, CSHB 499(JUD)
moved out of committee by a vote of three to one with attached
zero fiscal note and individual recommendations.
The next order of business before was HB 246.
HB 246-OMNIBUS INSURANCE BILL
REPRESENTATIVE LISA MURKOWSKI, Chair of the House Labor &
Commerce Committee, sponsor of HB 246, said the majority of HB
246 was technical cleanup language. She said there were a few
policy provisions that she wanted to point out to the committee.
REPRESENTATIVE MURKOWSKI said the first policy provision related
to multiple employer welfare arrangements (MEWAs). HB 246 would
establish a more appropriate regulatory structure for MEWAs in
regard to appropriate capital, surplus reserving and financial
reporting requirements.
She said the second policy provision would establish tighter
confidentiality of records laws so that Alaska would continue to
be accredited by the National Association of Insurance
Commissioners. She said there were sharing agreements to allow
the Division of Insurance (DOI) to obtain information.
She said there would also be fees for late payment of premium
taxes. She said there was also a provision that would allow an
annual fee to operate as a joint insurance arrangement (JIA).
She said there was probably an amendment relating to that
provision.
CHAIRMAN TAYLOR asked if there were questions for Representative
Murkowski. There were none.
He moved Amendment 1 to delete Sec. 52 on page 20, lines 12-22
and renumber the remaining sections accordingly. He said Sec. 52
added a new provision that would charge a fee against the pooling
organizations created by the legislature for school districts and
municipalities. He said those were not regulated by DOI and
there was no reason for DOI to charge them a fee. He asked DOI
to provide testimony on Amendment 1.
MR. BOB LOHR, Director, DOI, Department of Community & Economic
Development, said Sec. 52 addressed a very specific situation in
which a JIA complained to DOI that the competing JIA was
operating unfairly by doing things that weren't allowed under the
JIA statutes. He said that had happened approximately four
times. He said JIAs were not normally subject to regulation. He
said DOI was being asked to be the gatekeeper for competitive
forays by each JIA into the territory of the other by using Title
21 to define the boundary. He said those JIAs should pay the
actual cost of that regulation. He said DOI was a fee-based
agency and other fee payers were paying those costs. DOI was
concerned that Sec. 52 had been drafted too broadly and he had a
more narrowly crafted amendment to offer the committee.
CHAIRMAN TAYLOR said it seemed like the JIAs were simply asking
DOI to do its job.
MR. LOHR said DOI was being asked to regulate the competitive
playing field between JIAs. He said that was beyond their scope
of regulation because they did not regulate JIAs.
CHAIRMAN TAYLOR said DOI didn't regulate JIAs but they did
regulate the insurance business. He said if somebody tried to
set up a phony insurance corporation and they received a
complaint, he assumed they would enforce the insurance laws of
the state.
MR. LOHR said that was correct.
CHAIRMAN TAYLOR thought Sec. 52 would have a chilling effect upon
anyone wanting to turn to DOI for assistance and enforcement of
the laws they were supposed to enforce.
MR. LOHR said it wasn't designed to have a chilling effect except
when one JIA wanted DOI to regulate the other's conduct.
CHAIRMAN TAYLOR said that was DOI's purpose. He said that would
be like going to the police to get a driver to slow down in a
neighborhood and being charged to lodge the complaint. He
thought that would have a tremendous chilling effect on anyone
coming to DOI. He said it would be like charging a fee to file a
complaint.
MR. LOHR said DOI didn't object to Amendment 1.
CHAIRMAN TAYLOR asked if there was any further discussion on
Amendment 1. There was none. He asked if there was any
objection to Amendment 1.
There being no objection, Amendment 1 was adopted.
CHAIRMAN TAYLOR asked Mr. Kirk Wickersham to provide testimony.
MR. KIRK WICKERSHAM said he was a lawyer and a real estate
broker. He said he was also the owner of a small title agency
called Attorneys Title Guaranty. He offered an amendment to the
committee. He said the amendment was the result of a variety of
actions related to Attorneys Title Guaranty.
He said the legislature adopted a bundle of laws governing title
insurance in 1974. He said AS 21.66.170 required title companies
to prepare a title report before issuing a title insurance
policy. He said AS 21.66.200 and AS 21.66.210 provided two
methods by which to do that. He said AS 21.66.200 required title
companies to have a title plant consisting of approximately 25
years of public records; that would equal about 11 million
documents in Anchorage. He said AS 21.66.210 allowed companies
to join together to form a joint title insurance company that
would be allowed to use the public records.
MR. WICKERSHAM said Attorneys Title Guaranty and it's
underwriter, Old Republic, formed a joint title company the
previous summer, applied for and obtained a certificate of
authority from DOI and started selling title insurance and doing
title searches using the public records. He said complaints from
other title companies resulted in a lawsuit that had been
dismissed, a license action that was still pending and a bill
that would clarify the law in the opposite direction of his
proposal.
He said his amendment would grandfather Old Republic and
Attorneys Title Guaranty to allow them to continue in the
business. He said it would foster more competition in the
industry. His company was able to offer price competition
because they didn't have to build and maintain a copy of the
public records.
CHAIRMAN TAYLOR asked how other companies could participate in
the field if the amendment was adopted.
MR. WICKERSHAM said they could join the joint title company,
which he was open to. He said he was advised not to propose an
overall policy change, which was why he presented a grandfather
amendment. He believed every skilled title examiner could do a
title search from the public records.
CHAIRMAN TAYLOR asked if the other companies would be
grandfathered in.
MR. WICKERSHAM said they would because they could either be or
become a participant in or an owner of a joint title company.
CHAIRMAN TAYLOR asked if his joint title company was the only one
that new companies could join.
MR. WICKERSHAM said that was a problem and that was why they had
to create their own joint title company. He said there were only
two joint title companies, theirs and the one owned by three of
the four other title insurance companies in Anchorage
CHAIRMAN TAYLOR said grandfathering his joint title company would
put him in a select group that had built their plants over the
years. He said there wouldn't really be another option for a
competing company to form and create a title plant in the same
manner that he did.
MR. WICKERSHAM said that would be the effect of the amendment.
He said he could also suggest a very simple amendment that would
allow any two title companies to join and form a joint title
plant.
CHAIRMAN TAYLOR asked what that would be.
MR. WICKERSHAM said the first sentence of AS 21.66.210(a)
provided that two or more title insurance companies or limited
producers could join together to form a joint title company for
the purposes of producing title searches. He said the second
sentence provided that a title insurance company or a limited
producer that belonged to a joint title company that complied
with AS 21.66.210 was in compliance with the section. He said
the amendment would simply include AS 21.66.200 in that
compliance. He said that would end the controversy and allow
anybody to form a joint title company. It would also bring
Alaska into conformance with 39 other states that did not have
title plant requirements.
CHAIRMAN TAYLOR asked Mr. Wickersham to work with Mr. Lohr and
Representative Murkowski to work out that amendment and come back
to the committee. He asked if the committee had any objection to
Mr. Wickersham's approach. He said he would rather provide a
more generic solution than try to pass an amendment that would
only take care of one operator and wouldn't provide opportunities
in the future for expansion in the field.
SENATOR ELLIS asked if the new amendment would make the one Mr.
Wickersham passed out unnecessary.
CHAIRMAN TAYLOR said it would.
MR. LOHR said there was an adjudicatory matter pending in front
of DOI in which Mr. Wickersham's company was appealing a cease
and desist order. He would be the ultimate decision-maker for
that matter. He said he needed to maintain distance from the
issue and could not work with Mr. Wickersham on the amendment.
CHAIRMAN TAYLOR said that was appropriate and apologized for
making the request. He hoped that Mr. Lohr's decision would be
easier to make if they passed the amendment.
MR. WICKERSHAM said the cease and desist order was not against
his company; it was against the underwriter.
CHAIRMAN TAYLOR said he understood that. He asked Mr. Jerry
Reinwand to provide testimony.
MR. JERRY REINWAND, Blue Cross/Blue Shield of Alaska, said he
wanted to present two technical amendments that had been worked
out between Blue Cross/Blue Shield and DOI. He said the
committee should have those amendments in their packets. He said
the first amendment dealt with AS 21.42.365(b).
MR. LOHR said the proposed amendment related to the timing of
adjusting the cost inflation factor for the statutorily described
benefits for alcoholism and drug abuse treatment services
provided under insurance plans. He said it would avoid the
problem of having to amend policies already in place to include
the increases. He said policies starting after the date of the
inflation adjustment by DOI would be affected. He said DOI
supported the amendment.
CHAIRMAN TAYLOR asked if it would make regulation easier for DOI.
MR. LOHR said it would.
MR. REINWAND said the second amendment dealt with an error that
was made in Blue Cross/Blue Shield's favor and would change the
law back to the way it was intended to be. He said they worked
with Representative Pete Kott on a bill regarding retaliatory
taxes several years ago. He said they asked for some relief for
the public entities covered by Blue Cross/Blue Shield that
shouldn't be charged retaliatory taxes. He said there was a
mistake made in the drafting of that amendment at the end of
session that expanded what was intended. He said the proposed
amendment would narrow that provision back to the intent. The
existing law could be interpreted in such a way that Blue
Cross/Blue Shield didn't have to pay retaliatory taxes.
MR. LOHR said Blue Cross/Blue Shield had acted honorably in
accord with the original intent.
CHAIRMAN TAYLOR asked if Mr. Lohr recommended the proposed
amendment.
MR. LOHR said yes.
CHAIRMAN TAYLOR said the first proposed amendment would be
Amendment 2 and the second proposed amendment would be Amendment
3.
MR. REINWAND said Blue Cross/Blue Shield and DOI were involved in
a lawsuit and the proposed amendments would not affect that
lawsuit in any way.
CHAIRMAN TAYLOR asked if Mr. Lohr agreed.
MR. LOHR said he did.
SENATOR ELLIS moved Amendment 2 to replace "January 1, 1999" with
"July 1, 2004" on page 14, lines 30-31 and add to page 15, line 4
the language, "The adjusted benefits shall be applicable to
coverage issued or renewed on or after January 1 of the calendar
year following the July 1 adjustment by the Director."
There being no objection, Amendment 2 was adopted.
SENATOR ELLIS moved Amendment 3 to replace the language on page
7, lines 19-23 with the following language:
(f) For purposes of the application of subsection (a)
of this section, a health care insurer may not include
taxes, assessments, or other similar obligations on
health care insurance premiums received from the state,
a municipality, a city or borough school district, a
regional educational attendance area, the University of
Alaska, or a community college operated by the
University of Alaska. For purposes of this paragraph,
"health care insurer" has the meaning given in AS
21.54.500.
There being no objection, Amendment 3 was adopted.
SENATOR ELLIS moved Amendment 4 to amend AS 21.66.210(a) to read:
(a) Two or more title insurance companies or two or
more title insurance limited producers, or a
combination of title insurance companies and title
insurance limited producers, may apply to the director
of insurance to form an association, corporation, or
other legal entity, for the purpose of engaging in the
business of preparing abstracts of title searches from
public records or from records to be owned by the
entity, upon the basis of which a title insurance
limited producer or a title insurance company will
issue title policies. The owners or participants are
considered to be in compliance with the provisions of
this section and AS 21.66.200 if the title plant of the
association, corporation, or other legal entity
complies with the provisions of this section. The
application must contain
(1) a copy of the proposed articles of incorporation
or association and the bylaws or agreement governing
the operation of the entity;
(2) a list of the owners or participants;
(3) the names and addresses of the persons who will
operate the entity, with a description of their
experience and qualifications;
(4) the conditions under which ownership or
participation in the entity may be sold or acquired;
(5) a statement of whether or not title information
will be compiled and sold to persons other than owners
of or participants in the entity;
(6) a pro forma balance sheet and other financial
information to indicate the sufficiency of financing
the entity.
CHAIRMAN TAYLOR asked Mr. Wickersham to explain Amendment 4.
MR. WICKERSHAM said Amendment 4 would resolve the situation he
previously described. He said AS 21.66.200 required a title
company to own a title plant while AS 21.66.210 gave title
companies the option of joining with another title company to
form a joint title company to use public records. He said the
Attorney General and DOI had taken the position that even if the
public records were used, a title company was not exempt from the
provisions of AS 21.66.200. Therefore, these companies would
still have to make a copy of the public records. He said
Amendment 4 would allow any two title companies or limited
producers, or any combination thereof, to form their own joint
title company and use public records and be in compliance with AS
21.66.200.
He thought this was good law and good public policy. He said it
would bring price competition to the field and would be good for
the consumers of Alaska.
6:55 p.m.
REPRESENTATIVE MURKOWSKI stated for the record that Amendment 4
would be a significant public policy change. She said Alaska was
a title plant state and Amendment 4 would make it a non-title
plant state. She said the discussion was very similar to the
discussion before the House Labor & Commerce Committee. She said
being a non-title plant state would open Alaska up for
competition and hopefully there would be some price reductions.
CHAIRMAN TAYLOR appreciated the background she provided. He knew
she had worked on the issue in the past and was sure that it was
a controversial issue. He asked if there was any further
discussion on Amendment 4.
SENATOR ELLIS was even more excited to be the sponsor of
Amendment 4 after hearing what Representative Murkowski had to
say. He looked forward to the committee's support.
CHAIRMAN TAYLOR said Amendment 4 had his support. He withdrew
his objection to Amendment 4.
There being no objection, Amendment 4 was adopted.
SENATOR COWDERY moved SCS CSHB 246(JUD) out of committee with
attached zero fiscal note and individual recommendations.
There being no objection, SCS CSHB 246(JUD) moved out of
committee with attached zero fiscal note and individual
recommendations.
The final order of business before the committee was HB 252.
HB 252-CHILDREN IN NEED OF AID: SERVICES & LIAB.
6:59 p.m.
CHAIRMAN TAYLOR said the committee had a work draft (Version U)
of HB 252. He asked if Representative John Coghill was familiar
with Version U.
REPRESENTATIVE JOHN COGHILL, sponsor of HB 252, said he was.
CHAIRMAN TAYLOR asked if Representative Coghill would prefer that
the committee work it.
REPRESENTATIVE COGHILL said he would but wanted to make a minor
adjustment to it.
SENATOR ELLIS moved Version U as the working document before the
committee.
There being no objection, Version U was adopted as the working
document before the committee.
REPRESENTATIVE COGHILL said HB 252 dealt with Title 47 dealing
with protection of children. He said children had been
emphasized to the point that parents were being excluded from the
process. He said HB 252 attempted to include parents with the
intent language and the construct language in Sec. 2. He said
there was new language on page 2 that would allow the parents to
participate in the child's upbringing once the child was in the
jurisdiction of the court if it was within the best interest of
the child. He felt that was appropriate.
CHAIRMAN TAYLOR asked if he had an amendment to present to the
committee.
REPRESENTATIVE COGHILL said the words "by the department" should
be struck on page 5, line 4 because that would specify the
Department of Health & Social Services. He said many agencies,
including local police officers, were involved in these
situations.
CHAIRMAN TAYLOR moved Amendment 1 to strike the words "by the
department" on page 5, line 4. He asked if there was any
objection to Amendment 1.
There being no objection, Amendment 1 was adopted.
CHAIRMAN TAYLOR asked if there were any other changes
Representative Coghill wished to make.
REPRESENTATIVE COGHILL said there were none.
CHAIRMAN TAYLOR asked Ms. Susan Cox to provide testimony.
TAPE 02-30, SIDE A
7:02 p.m.
MS. SUSAN COX, Assistant Attorney General, Civil Division, DOL,
said HB 252 had been changed many times by many committees in the
House of Representatives. She said Amendment 1 and the other
changes made in the work draft were acceptable to DOL.
SENATOR ELLIS asked about the word "construction" on page 1, line
1 in the title. He said he had never seen that term in a title
before.
CHAIRMAN TAYLOR said it meant the intent. He said the word
"construction" was often used in terms of how the law would be
construed, not how it was drafted or developed.
REPRESENTATIVE COGHILL said there were so many new provisions in
Title 47 that they began with the construction language.
CHAIRMAN TAYLOR asked if the changes to Version U would require a
title change.
REPRESENTATIVE COGHILL said they would not.
CHAIRMAN TAYLOR asked if there was any further discussion on HB
252. There was none. He asked if there was anybody else who
wished to testify on HB 252. There was nobody.
SENATOR COWDERY moved SCS CSHB 252(JUD) out of committee with
attached zero fiscal notes and individual recommendations.
There being no objection, SCS CSHB 252(JUD) moved out of
committee with attached zero fiscal notes and individual
recommendations.
The Senate Judiciary Committee recessed to the call of the chair.
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