Legislature(2015 - 2016)BELTZ 105 (TSBldg)

03/31/2015 01:30 PM LABOR & COMMERCE

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01:59:00 PM Start
02:00:02 PM Confirmation Hearings
02:17:00 PM Confirmation Hearing
02:32:19 PM SB76
02:58:14 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Meeting Postponed to 2:00 pm --
-- Public Testimony --
*+ SB 76 REAL ESTATE BROKERS; LIABILITY TELECONFERENCED
Heard & Held
*+ SB 77 SHAREHOLDER ACCESS TO CORP RECORDS TELECONFERENCED
Scheduled but Not Heard
+ Confirmation Hearing: TELECONFERENCED
Commissioner Chris Hladick, Department of
Commerce, Community, & Economic Development
+ Board and Commission Appointees: TELECONFERENCED
Regulatory Commission of Alaska
Real Estate Commission
Alcoholic Beverage Control Board
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 31, 2015                                                                                         
                           1:59 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Mia Costello, Chair                                                                                                     
Senator Cathy Giessel, Vice Chair                                                                                               
Senator Kevin Meyer                                                                                                             
Senator Gary Stevens                                                                                                            
Senator Johnny Ellis                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CONFIRMATION HEARINGS                                                                                                           
                                                                                                                                
     Commissioner, Department of Commerce, Community and                                                                      
Economic Development                                                                                                          
          Chris Hladick - Juneau                                                                                                
                                                                                                                                
     - CONFIRMATION ADVANCED                                                                                                    
                                                                                                                                
     Real Estate Commission                                                                                                   
          Cynthia Cartledge - Anchorage                                                                                         
                                                                                                                                
     - CONFIRMATION ADVANCED                                                                                                    
                                                                                                                                
     Alcoholic Beverage Control Board                                                                                         
          Tom Manning - Juneau                                                                                                  
                                                                                                                                
     - CONFIRMATION ADVANCED                                                                                                    
                                                                                                                                
     Regulatory Commission of Alaska                                                                                          
          Stephen McAlpine - Anchorage                                                                                          
                                                                                                                                
     - CONFIRMATION ADVANCED                                                                                                    
                                                                                                                                
SENATE BILL NO. 76                                                                                                              
"An Act relating to private actions and remedies against real                                                                   
estate licensees for licensee relationships, disclosures, and                                                                   
activity before January  1, 2005; and providing  for an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 77                                                                                                              
"An  Act relating  to the  books  and records  of a  corporation,                                                               
including  the nonapplication  of certain  provisions to  a state                                                               
bank,  the   waiver  or  alteration  of   certain  provisions  by                                                               
shareholder   agreements,   and   the  application   of   certain                                                               
provisions to  shareholder voting  trusts; and amending  Rule 26,                                                               
Alaska Rules of Civil Procedure."                                                                                               
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                              
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB  76                                                                                                                  
SHORT TITLE: REAL ESTATE BROKERS; LIABILITY                                                                                     
SPONSOR(s): JUDICIARY                                                                                                           
                                                                                                                                
03/18/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/18/15       (S)       L&C, JUD                                                                                               
03/31/15       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
CYNTHIA CARTLEDGE, Appointee                                                                                                    
Real Estate Commission                                                                                                          
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Testified  as  an  appointee to  the  Real                                                             
Estate Commission                                                                                                               
                                                                                                                                
TOM MANNING, Appointee                                                                                                          
Alcoholic Beverage Control (ABC) Board                                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Testified as an appointee  to the Alcoholic                                                             
Beverage Control Board                                                                                                          
                                                                                                                                
STEPHEN MCALPINE, Appointee                                                                                                     
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified as  an appointee to the Regulatory                                                             
Commission of Alaska                                                                                                            
                                                                                                                                
CHRIS HLADICK, Commissioner designee                                                                                            
Department  of  Commerce,   Community  and  Economic  Development                                                               
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Testified as  Commissioner  designee  for                                                             
DCCED.                                                                                                                          
                                                                                                                                
GENEVIEVE WOJTUSIK, Staff                                                                                                       
Senator Lesil McGuire                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Introduced SB 76 on behalf of the sponsor.                                                               
                                                                                                                                
JEFFREY PICKETT, Staff Counsel                                                                                                  
Senate Judiciary Committee                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Delivered a sectional analysis of SB 76.                                                                 
                                                                                                                                
HOWARD S. TRICKEY, Attorney                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Described  the  history  of  the  lawsuit                                                             
leading to SB 76.                                                                                                               
                                                                                                                                
ERROL CHAMPION, Chair                                                                                                           
Legislative Issues Committee                                                                                                    
Alaska Association of Realtors (AAR)                                                                                            
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of SB 76.                                                                           
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:59:00 PM                                                                                                                    
CHAIR MIA COSTELLO called the  Senate Labor and Commerce Standing                                                             
Committee meeting  to order at 1:59  p.m. Present at the  call to                                                               
order were  Senators Ellis, and Chair  Costello. Senators Stevens                                                               
and Giessel arrived soon thereafter.                                                                                            
                                                                                                                                
^Confirmation Hearings                                                                                                          
                     CONFIRMATION HEARINGS                                                                                  
                     Real Estate Commission                                                                                 
                Alcoholic Beverage Control Board                                                                            
                Regulatory Commission of Alaska                                                                             
                                                                                                                                
2:00:02 PM                                                                                                                    
CHAIR COSTELLO  announced the  first order  of business  would be                                                               
confirmation   hearings   for    appointments   to   boards   and                                                               
commissions. She explained the procedure  and noted that that the                                                               
board rosters,  fact sheets,  and appointee  resumes were  in the                                                               
packets.                                                                                                                        
                                                                                                                                
CHAIR COSTELLO  recognized Ms.  Cartledge and  asked her  to tell                                                               
the committee  about herself and  her interest in serving  on the                                                               
Real Estate Commission.                                                                                                         
                                                                                                                                
2:00:40 PM                                                                                                                    
CYNTHIA  CARTLEDGE,  Appointee,  Real Estate  Commission,  public                                                               
seat,  said  she's  an  attorney  from  Anchorage  who  has  been                                                               
practicing with  the same firm  since 1988. She was  appointed to                                                               
the board in November 2013 and  she's found the work engaging and                                                               
challenging. She serves as a  public member and believes she adds                                                               
value to the board.                                                                                                             
                                                                                                                                
CHAIR COSTELLO asked what she  sees as the main challenges facing                                                               
the commission.                                                                                                                 
                                                                                                                                
MS. CARTLEDGE offered that the  challenges stem from the statutes                                                               
and  regulations  that govern  the  profession.  The industry  is                                                               
changing  and  the  laws  need  to  reflect  those  changes.  She                                                               
highlighted  an   example  of   the  ongoing  work   on  consumer                                                               
disclosure  information to  help  the  general public  understand                                                               
what real estate agents do and what their responsibilities are.                                                                 
                                                                                                                                
CHAIR  COSTELLO opened  and closed  public testimony  and thanked                                                               
Ms. Cartledge for being willing to continue to serve.                                                                           
                                                                                                                                
2:04:08 PM                                                                                                                    
CHAIR  COSTELLO asked  Mr. Manning  to tell  the committee  about                                                               
himself and  his interest  in serving  on the  Alcoholic Beverage                                                               
Control Board.                                                                                                                  
                                                                                                                                
2:04:37 PM                                                                                                                    
TOM MANNING,  Appointee, Alcoholic Beverage Control  (ABC) Board,                                                               
said he recently retired from teaching  and has been a partner in                                                               
a liquor  store for about  28 years.  His interest in  serving on                                                               
the  board  stems from  the  work  he's  done through  the  CHARR                                                               
organization  on the  Title  4  rewrite. He  has  some ideas  and                                                               
concerns about the ways that  education can become a component in                                                               
dealing with underage drinking.                                                                                                 
                                                                                                                                
CHAIR COSTELLO  asked what he sees  as the main challenge  of the                                                               
ABC Board.                                                                                                                      
                                                                                                                                
MR. MANNING said he'd like to  see an education process that goes                                                               
beyond  conversations  about  fines   to  address  the  issue  of                                                               
underage drinking.                                                                                                              
                                                                                                                                
2:07:19 PM                                                                                                                    
CHAIR  COSTELLO opened  and closed  public testimony  and thanked                                                               
Mr. Manning.                                                                                                                    
                                                                                                                                
CHAIR COSTELLO  asked Mr.  McAlpine to  tell the  committee about                                                               
himself and his interest in  serving on the Regulatory Commission                                                               
of Alaska.                                                                                                                      
                                                                                                                                
2:07:45 PM                                                                                                                    
STEPHEN  MCALPINE, Appointee,  Regulatory  Commission of  Alaska,                                                               
said  he's  an  active  attorney   who  has  maintained  his  bar                                                               
membership for over  35 years. Since he joined  the commission he                                                               
has  read  over   1,200  pages  of  material,   sat  in  numerous                                                               
adjudications,  and  either  watched  or  participated  in  three                                                               
hearings.  He's attended  two training  sessions and  is actively                                                               
involved in preparing for an upcoming rate case.                                                                                
                                                                                                                                
2:08:51 PM                                                                                                                    
SENATOR STEVENS asked how much time this position will take.                                                                    
                                                                                                                                
MR. MCALPINE replied  it's a fulltime job  for virtually everyone                                                               
involved.  He   described  the  work  as   a  great  intellectual                                                               
experience,  and  offered his  suspicion  that  the challenge  to                                                               
attract and  retain engineers relates  to the relatively  low pay                                                               
compared to private industry.                                                                                                   
                                                                                                                                
SENATOR STEVENS  thanked former lieutenant governor  McAlpine for                                                               
his long and continued dedication to the state.                                                                                 
                                                                                                                                
SENATOR  GIESSEL   commented  that  she  would   expect  the  RCA                                                               
positions  to  be  a  fulltime   job;  they're  range  27salaried                                                               
positions.                                                                                                                      
                                                                                                                                
CHAIR  COSTELLO  asked if  the  legislature  should be  aware  of                                                               
upcoming regulatory issues.                                                                                                     
                                                                                                                                
MR. MCALPINE responded that the  legislature should be aware that                                                               
despite  the fact  that there  are multiple  utilities throughout                                                               
the state, we are but one  small utility. The RCA is a ratemaking                                                               
body that  also has to  ensure sustainability and  reliability at                                                               
the  utilities.   He  discussed  challenges  going   forward  and                                                               
expressed  concern that  a utility  might  be adversely  affected                                                               
given that  the Environmental Protection Agency  (EPA) is looking                                                               
at clean air.                                                                                                                   
                                                                                                                                
2:13:33 PM                                                                                                                    
SENATOR  ELLIS thanked  former lieutenant  governor McAlpine  for                                                               
being willing to serve on the  RCA and attested to his intellect,                                                               
his knowledge  of the state and  issues relevant to the  RCA, and                                                               
his strong work ethic.                                                                                                          
                                                                                                                                
2:14:34 PM                                                                                                                    
CHAIR  COSTELLO  stated  that   this  concludes  the  committee's                                                               
consideration of the Governor's  appointments to state boards and                                                               
commissions. She  thanked the members  for reviewing  the resumes                                                               
and the appointees for being willing to serve the state.                                                                        
                                                                                                                                
She  stated, "In  accordance  with AS  39.05.080,  the Labor  and                                                               
Commerce  Committee reviewed  the  following  and recommends  the                                                               
appointments be forwarded to a  joint session for consideration."                                                               
Finding no objection, it was so ordered.                                                                                        
                                                                                                                                
[The  intention of  the chair,  and the  paperwork the  committee                                                               
signed,  was to  forward  the board  and commission  appointments                                                               
from the hearings  on February 24, March 12, March  17, March 19,                                                               
and March 31.]                                                                                                                  
                                                                                                                                
2:15:23 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
^Confirmation Hearing                                                                                                           
                      CONFIRMATION HEARING                                                                                  
  Commissioner, Department of Commerce, Community and Economic                                                              
                      Development (DCCED)                                                                                   
                                                                                                                                
2:17:00 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
confirmation  hearing   of  Chris  Hladick  as   Commissioner  of                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED).                                                                                                                        
                                                                                                                                
2:17:30 PM                                                                                                                    
CHRIS  HLADICK, Commissioner  designee,  Department of  Commerce,                                                               
Community and Economic Development  (DCCED), reviewed his resume.                                                               
He's served as  a city manager for 25 years  and his record shows                                                               
that he likes to get things done.                                                                                               
                                                                                                                                
SENATOR STEVENS commented  that it's natural that  a city manager                                                               
would be considered for this  position. He expressed appreciation                                                               
for his service.                                                                                                                
                                                                                                                                
2:19:37 PM                                                                                                                    
SENATOR GIESSEL noted that he would  be the designee for the AGDC                                                               
board.  She  asked if  he's  kept  abreast  of the  gas  pipeline                                                               
project.                                                                                                                        
                                                                                                                                
COMMISSIONER  HLADICK  replied  he's   been  studying  and  looks                                                               
forward to the first meeting.  "It's an important project for the                                                               
state and we need to figure out how to get it done."                                                                            
                                                                                                                                
SENATOR GIESSEL  commented on his  efforts to get natural  gas to                                                               
Unalaska.                                                                                                                       
                                                                                                                                
COMMISSIONER  HLADICK described  it as  a natural  evolution once                                                               
you figure out  the supply chain. "I think you  have to go beyond                                                               
the ISO tanks to get to long-term storage."                                                                                     
                                                                                                                                
SENATOR  GIESSEL highlighted  that Senate  Bill 138  provides for                                                               
distributing the gas  beyond the main corridor of  the state. She                                                               
then asked him to elaborate  on his understanding of the National                                                               
Environmental Policy Act (NEPA)  and Endangered Species Act (ESA)                                                               
issues.                                                                                                                         
                                                                                                                                
COMMISSIONER   HLADICK  explained   that  there   is  a   lot  of                                                               
environmental  scrutiny  on  projects  in Unalaska  so  he's  had                                                               
considerable  experience dealing  with federal  agencies on  NEPA                                                               
and ESA matters.                                                                                                                
                                                                                                                                
2:22:15 PM                                                                                                                    
SENATOR GIESSEL thanked him for being willing to serve.                                                                         
                                                                                                                                
CHAIR  COSTELLO   asked  him  to   talk  about  his   vision  for                                                               
diversifying the economy.                                                                                                       
                                                                                                                                
COMMISSIONER HLADICK said the first  step is to locate sources of                                                               
cheap electricity.                                                                                                              
                                                                                                                                
SENATOR  STEVENS  asked  for  examples  of  value  added  in  the                                                               
products that are produced in Alaska.                                                                                           
                                                                                                                                
COMMISSIONER  HLADICK said  there's  a lot  being  done now  with                                                               
value-added  seafood.  He  mentioned   that  the  Alaska  Seafood                                                               
Marketing Institute (ASMI),  in particular, has done  a great job                                                               
working on that issue.                                                                                                          
                                                                                                                                
SENATOR STEVENS  asked if there  are options to do  processing in                                                               
Alaska rather than shipping the seafood to China.                                                                               
                                                                                                                                
COMMISSIONER  HLADICK  replied  it's dependent  on  low  overhead                                                               
costs, which  goes back  to finding sources  of cheap  energy. He                                                               
noted that the effort in Anchorage several years ago failed.                                                                    
                                                                                                                                
2:25:47 PM                                                                                                                    
CHAIR COSTELLO asked what boards  and commissions he'll sit on as                                                               
commissioner and  if he plans to  send a designee or  be involved                                                               
personally.                                                                                                                     
                                                                                                                                
COMMISSIONER HLADICK said it would  be impossible to attend every                                                               
meeting  and  still  run  the   department.  He  and  the  deputy                                                               
commissioners will  split the responsibilities. He  will serve on                                                               
the  Railroad  Board, the  Alaska  Marine  Pilot Board,  and  the                                                               
Alaska  Gasline  Development  Corporation. Fred  Parady  and  Jon                                                               
Bittner will sit on the others.                                                                                                 
                                                                                                                                
CHAIR COSTELLO  asked if he's  had time  to look at  the progress                                                               
the legislature has made on moving forward on the AGDC plan.                                                                    
                                                                                                                                
COMMISSIONER HLADICK  replied he's  followed the  project closely                                                               
and is now  reviewing the minutes and bylaws trying  to get up to                                                               
speed on what's transpired.                                                                                                     
                                                                                                                                
CHAIR  COSTELLO asked  why  the governor  solicited  him for  the                                                               
position.                                                                                                                       
                                                                                                                                
COMMISSIONER HLADICK  explained that he showed  the governor what                                                               
they'd accomplished when he visited  in October, and he must have                                                               
liked what he saw in Unalaska.                                                                                                  
                                                                                                                                
CHAIR COSTELLO asked what she would see if she visited Unalaska.                                                                
                                                                                                                                
COMMISSIONER  HLADICK replied  it's a  friendly, vibrant,  multi-                                                               
cultural  working  community.  There's no  unemployment  and  the                                                               
school system generally scores in the top three ever year.                                                                      
                                                                                                                                
2:29:24 PM                                                                                                                    
CHAIR COSTELLO opened and closed public testimony.                                                                              
                                                                                                                                
She stated that  "In accordance with AS 30.05.080,  the Labor and                                                               
Commerce  Committee reviewed  the  following  and recommends  the                                                               
appointments be forwarded to a joint session for consideration."                                                                
                                                                                                                                
Finding no  objection, the  name Chris  Hladick was  forwarded to                                                               
the full  body for further  consideration as Commissioner  of the                                                               
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
2:29:49 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
             SB  76-REAL ESTATE BROKERS; LIABILITY                                                                          
                                                                                                                                
2:32:19 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration of  SB 76. "An Act relating to private  actions and                                                             
remedies   against    real   estate   licensees    for   licensee                                                               
relationships, disclosures, and activity  before January 1, 2005;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
2:32:45 PM                                                                                                                    
GENEVIEVE WOJTUSIK, Staff, Senator Lesil McGuire, introduced SB
76 speaking to the following sponsor statement: [Original                                                                       
punctuation provided.]                                                                                                          
                                                                                                                                
     Under  AS  08.88.396,  a real  estate  licensee  acting                                                                    
     before January 1, 2005 was  authorized to act as both a                                                                    
     buyer's and  a seller's representative, but  only after                                                                    
     the licensee informed both the  buyer and the seller of                                                                    
     his  or her  dual agency  and obtained  written consent                                                                    
     from both. The statute,  as originally enacted, did not                                                                    
     specify remedies  if a real estate  licensee (or agent)                                                                    
     violated its provisions.                                                                                                   
                                                                                                                                
     In 2003,  the Alaska  Legislature acted to  correct the                                                                    
     remedies-omission. The  Legislature was  concerned that                                                                    
     without   specifying  its   intent   with  respect   to                                                                    
     appropriate  remedies in  the  case of  a violation,  a                                                                    
     court might  feel compelled  to impose  the potentially                                                                    
     business-ending  remedy  of forfeiture  of  real-estate                                                                    
     sales  commissions.  The Legislature  was  particularly                                                                    
     concerned  that this  could occur  in cases  even where                                                                    
     the plaintiffs had suffered no actual damages.                                                                             
                                                                                                                                
     In  order  to  address this  concern,  the  Legislature                                                                    
     enacted  House Bill  257, legislation  that fixed  this                                                                    
     ambiguity  by  retroactively  limiting the  remedy  for                                                                    
     violations of  AS 08.88.396  to actual  damages. [House                                                                    
     Bill] 257  passed the Legislature, was  signed into law                                                                    
     and  has  been  found   constitutional  by  the  Alaska                                                                    
     Supreme Court.                                                                                                             
                                                                                                                                
     Despite the  enactment of House  Bill 257,  and despite                                                                    
     the Alaska  Supreme Court's determination that  the law                                                                    
     is constitutional, questions  have arisen regarding the                                                                    
     Legislature's intent  in amending AS  08.88.396. Senate                                                                    
     Bill  76 is  intended to  make clear  the Legislature's                                                                    
     intent  when  it  amended  AS   08.88.396  in  2003  by                                                                    
     specifying  and clarifying  that  the "actual  damages"                                                                    
     limitation of the 2003 amendment  applies to all claims                                                                    
     that  are based  upon or  arise out  of allegations  of                                                                    
     violations of AS 08.88.396.                                                                                                
                                                                                                                                
     The  clarification is  necessarily retroactive  because                                                                    
     the Legislature  enacted House Bill  29 in  2004 which,                                                                    
     among other things, specified  that AS 08.88.396 ceased                                                                    
     to apply to  real estate transactions as  of January 1,                                                                    
     2005; and  the Legislature  desires to ensure  that any                                                                    
     claims  pre-dating the  2005  effective  date of  House                                                                    
     Bill 29 are appropriately subject  to the intent of its                                                                    
     2003 enactment of House Bill 257.                                                                                          
                                                                                                                                
     The  retroactivity of  the bill  is constitutional,  as                                                                    
     provided in both U.S. Supreme  Court and Alaska Supreme                                                                    
     Court  decisions.1 This  bill  preserves  the right  of                                                                    
     purchasers of  real estate to  seek redress  for actual                                                                    
     damages  under AS  08.88.396  while  ensuring that  the                                                                    
     Legislature's  intent  that   only  actual  damages  be                                                                    
     awarded is  recognized by courts hearing  cases arising                                                                    
     within the relevant time periods.                                                                                          
                                                                                                                                
2:35:45 PM                                                                                                                    
JEFFREY PICKETT, Staff Counsel to the Senate Judiciary                                                                          
Committee, Anchorage, Alaska, proved the following sectional                                                                    
analysis:                                                                                                                       
                                                                                                                                
     Section 1 amends the wording  of AS 08.88.396(e) which,                                                                    
     for  real  estate  transactions  that  occurred  before                                                                    
     January  1, 2005,  limits  civil  litigation and  other                                                                    
     remedies for the  failure of a real  estate licensee to                                                                    
     comply    with    certain    requirements    concerning                                                                    
     relationships  with  and   disclosures  to  buyers  and                                                                    
     sellers.                                                                                                                   
                                                                                                                                
     Section  2 provides  that the  bill applies  to a  real                                                                    
     estate  transaction  that  occurred on  or  before  the                                                                    
     bill's effective  date, and to  a court  action related                                                                    
     to such a transaction pending  on the effective date of                                                                    
     bill.                                                                                                                      
                                                                                                                                
       Section 3 makes sec. 1 of the bill retroactive to                                                                        
     January 1, 1991.                                                                                                           
                                                                                                                                
     Section 4 makes the bill effective immediately.                                                                            
                                                                                                                                
2:37:20 PM                                                                                                                    
SENATOR MEYER joined the committee.                                                                                             
                                                                                                                                
SENATOR GIESSEL asked if it's  possible to make a law retroactive                                                               
if there's an ongoing case.                                                                                                     
                                                                                                                                
MR. PICKETT explained that there is  case law that says a law may                                                               
be retroactive in a pending case so  long as there is not a final                                                               
judgment. The  U.S. Supreme  Court has found  that this  does not                                                               
violate the  separation of  powers, and that  type of  action has                                                               
been found constitutional.                                                                                                      
                                                                                                                                
SENATOR  GIESSEL asked  if there  have been  any cases  that this                                                               
bill would impact.                                                                                                              
                                                                                                                                
MR. PICKETT answered  yes; there's a case from 2002.  In 2003 the                                                               
legislature amended  the statute  to limit  any remedy  to actual                                                               
damages.  The litigants  continued their  motion practice  and in                                                               
2005 Judge Hensley  ruled that the amendment to  AS 08.88.396 was                                                               
a  constitutional  amendment  and  it limited  remedies  only  to                                                               
actual damages.  In 2007 another  judge affirmed  Judge Hensley's                                                               
2005  finding. In  2010 another  judge followed  the theory  that                                                               
says there  is a common law  duty among real estate  licensees to                                                               
disclose if they're  acting in a dual role. Because  it is common                                                               
law  duty and  not statutory  duty, the  remedy of  forfeiture is                                                               
available.                                                                                                                      
                                                                                                                                
SB 76  clarifies that the  remedy of forfeiture is  not available                                                               
to any action arising out of a failure to disclose dual agency.                                                                 
                                                                                                                                
2:41:23 PM                                                                                                                    
CHAIR COSTELLO asked what is at  stake and what the bill seeks to                                                               
resolve.                                                                                                                        
                                                                                                                                
MR. PICKETT explained  that the issue is what  penalties might be                                                               
imposed  on a  real estate  licensee  who did  not disclose  that                                                               
he/she was acting  in a dual capacity. His  understanding is that                                                               
prior  to 2002,  real  estate licensees  didn't  comply with  the                                                               
requirement to  disclose because there  wasn't a penalty  for not                                                               
doing  so.  He surmised  that  there  were  a lot  of  back-dated                                                               
disclosures  following the  lawsuit. The  purpose was  to provide                                                               
the required  notice and, in  situations where nobody  was harmed                                                               
by the  failure to disclose,  to remove the threat  of forfeiture                                                               
of commissions.                                                                                                                 
                                                                                                                                
CHAIR  COSTELLO asked  if  part of  the vagary  is  that the  law                                                               
neglected to say when the disclosure had to occur.                                                                              
                                                                                                                                
MR.  PICKETT said  he didn't  know what  the timing  requirements                                                               
were in 2002.                                                                                                                   
                                                                                                                                
2:44:08 PM                                                                                                                    
CHAIR  COSTELLO asked  what  significance it  has  to change  the                                                               
language  on  page  1,  line  6,  striking  the  term  "for"  and                                                               
replacing it with "arising out of."                                                                                             
                                                                                                                                
MR. PICKETT replied the term "arising  out of" has a much broader                                                               
meaning so  any claim arising out  of a failure to  disclose dual                                                               
agency now  would come  within the  remedy restriction  of actual                                                               
damages.                                                                                                                        
                                                                                                                                
CHAIR  COSTELLO questioned  how  this  legislation clarifies  the                                                               
intent of the legislature when the  courts have been unable to do                                                               
so.                                                                                                                             
                                                                                                                                
MR. PICKETT  opined that the  "arising out of" language  is broad                                                               
enough to  encompass common law  claims. He acknowledged  that it                                                               
would ultimately be decided by a judge.                                                                                         
                                                                                                                                
CHAIR  COSTELLO  commented  on the  court  reviewing  the  public                                                               
record to determine the intent of the legislature.                                                                              
                                                                                                                                
SENATOR  ELLIS  suggested  the committee  hear  from  Mr.  Howard                                                               
Trickey who could  provide the history of the  matter in layman's                                                               
terms.                                                                                                                          
                                                                                                                                
CHAIR COSTELLO opened public testimony.                                                                                         
                                                                                                                                
2:48:09 PM                                                                                                                    
HOWARD S.  TRICKEY, Attorney, related  that he testified  in 2003                                                               
about why it was necessary for  the real estate industry to limit                                                               
damages for  the statutory  violation to  actual damages.  At the                                                               
time  the industry  was potentially  exposed to  $70 million  for                                                               
forfeiture  and disgorgement  of  all commissions  that may  have                                                               
been earned  over a three-year  period by people in  the industry                                                               
who were involved in dual-agency  transactions. The law permitted                                                               
dual agency transactions once there  was a disclosure and written                                                               
consent was  obtained. The industry  practice at the time  was to                                                               
make the written and oral  disclosures at the time the properties                                                               
were  being  showed to  a  potential  buyer. There  were  written                                                               
disclosure forms that disclosed "I'm  an agent for the seller" or                                                               
"I'm  an agent  for this  buyer" and  then written  consents were                                                               
obtained both  from the buyer  and the  seller. It was  a buyer's                                                               
market so  when someone showed up  at a residence that  was being                                                               
shown by a listing agent, offers were often made on the spot.                                                                   
                                                                                                                                
He said  he's always characterized the  violation that's asserted                                                               
in  the lawsuit  as a  technical timing  violation. The  industry                                                               
made  the  disclosures and  obtained  the  written consents,  but                                                               
there  was confusion  because  the statute  did  not specify  the                                                               
timing  for  making  those  disclosures.  That  technical  timing                                                               
violation  was exploited  in the  lawsuit and  the threat  to the                                                               
industry was  forfeiture of all  commissions earned. It was  a no                                                               
harm no  foul situation  but aggregating  claims through  a class                                                               
action creates a  bet the farm type of case  that puts the entire                                                               
business  at risk.  The claim  that's being  asserted is  for $30                                                               
million, which is  what led the legislature in 2003  to limit the                                                               
remedy to actual damages.                                                                                                       
                                                                                                                                
MR.  TRICKEY said  this  matter is  before  this committee  again                                                               
because  a judge  who  didn't like  the statute  came  up with  a                                                               
creative  decision   that  allows   the  use  of   the  statutory                                                               
violations to  support the  remedy of  a breach  of a  common law                                                               
duty. The  proof is  based on identifying  the problems  that the                                                               
legislature originally addressed in  House Bill 257, which simply                                                               
had to  do with  the timing  of the  written disclosures  and the                                                               
timing of  obtaining the  written consent. SB  76 seeks  to bring                                                               
the needed clarification.                                                                                                       
                                                                                                                                
He explained that the reason for  using the term "arising out of"                                                               
is that  it's broader  than the original  statute but  it's broad                                                               
only in  limiting remedies  for the violation  of the  statute to                                                               
actual damages.  It doesn't take  away any other  existing claim.                                                               
This remedy for violating the statue is actual damages.                                                                         
                                                                                                                                
Addressing  Senator Giessel's  question, he  explained that  it's                                                               
constitutional  because  there is  no  contractual  right to  the                                                               
remedy of punitive damages or  to the remedy of forfeiture. There                                                               
isn't any vested right because there  is no final judgment in the                                                               
case. When  the legislature first  passed tort reform  and capped                                                               
punitive damages,  there were pending lawsuits  that applied. The                                                               
Alaska  Supreme Court  ruled  that  it was  not  an improper  and                                                               
unconstitutional  retroactive application  because no  one had  a                                                               
judgement  entitling them  to damages.  It's a  matter of  public                                                               
policy  for  the  legislature  not  the  courts  because  it's  a                                                               
penalty,  not  a  remedy  for actual  damages  that  someone  has                                                               
suffered.                                                                                                                       
                                                                                                                                
The industry supports the legislation.                                                                                          
                                                                                                                                
2:56:26 PM                                                                                                                    
CHAIR COSTELLO  asked if he's  testifying as a  representative of                                                               
the defendants or as a member of the public.                                                                                    
                                                                                                                                
MR. TRICKEY confirmed  he is being paid to address  the issues as                                                               
part of the representation he undertook years ago.                                                                              
                                                                                                                                
2:57:02 PM                                                                                                                    
ERROL  CHAMPION,  Chair,  Legislative  Issues  Committee,  Alaska                                                               
Association  of Realtors  (AAR),  stated support  for  SB 76  and                                                               
noted that he submitted a letter stating the reasons.                                                                           
                                                                                                                                
CHAIR COSTELLO announced  that she would hold SB  76 in committee                                                               
and public testimony would remain open.                                                                                         
                                                                                                                                
2:58:14 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Costello  adjourned the Senate Labor  and Commerce Standing                                                               
Committee meeting at 2:58 p.m.                                                                                                  
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
SB 76 - Version H.PDF SL&C 3/31/2015 1:30:00 PM
SB 76
SB 76 - Fiscal Note.pdf SL&C 3/31/2015 1:30:00 PM
SB 76
SB 76 - Sectional Analysis.PDF SL&C 3/31/2015 1:30:00 PM
SB 76
SB 76- Sponsor Statement.pdf SL&C 3/31/2015 1:30:00 PM
SB 76
SB 77 - Fiscal Note DCCED 2.pdf SL&C 3/31/2015 1:30:00 PM
SB 77
SB 77 - Fiscal Note DCCED.pdf SL&C 3/31/2015 1:30:00 PM
SB 77
SB 77 - Sectional Analysis.PDF SL&C 3/31/2015 1:30:00 PM
SB 77
SB 77 - Version E.PDF SL&C 3/31/2015 1:30:00 PM
SB 77
SB 77 Sponsor Statement.pdf SL&C 3/31/2015 1:30:00 PM
SB 77