00 SENATE CS FOR CS FOR HOUSE BILL NO. 151(L&C) 01 "An Act relating to claims and court actions for defects in the design, construction, and 02 remodeling of certain dwellings; limiting when certain court actions may be brought; 03 and amending Rules 79 and 82, Alaska Rules of Civil Procedure." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 08.18.081 is amended by adding a new subsection to read: 06 (c) If the claim for which a person may bring suit under (a) of this section is 07 subject to AS 09.45.881 - 09.45.899, the person may not bring suit unless the person 08 complies with AS 09.45.881 - 09.45.899. 09 * Sec. 2. AS 09.10 is amended by adding a new section to read: 10 Sec. 09.10.054. Limits on when certain design, construction, and 11 remodeling actions may be brought. (a) For actions covered under AS 09.45.881 - 12 09.45.899, a claimant may not begin an action against a construction professional 13 unless the notice of claim under AS 09.45.881 is given within one year after the 14 claimant discovers the defect that is the subject of the action, except that the action 01 may not be begun more than 10 years after substantial completion of the dwelling 02 construction or remodeling that contains or implements the alleged defect. 03 (b) A limitation imposed under this chapter for an action under AS 09.45.881 - 04 09.45.899 is tolled between the time the claimant serves notice under AS 09.45.881 05 and the time the claimant should reasonably understand that settlement under the 06 procedures in AS 09.45.881 - 09.45.899 will not succeed. 07 (c) In this section, 08 (1) "action," "claim," "construction professional," and "dwelling" have 09 the meanings given in AS 09.45.899; 10 (2) "substantial completion" means the date when the construction or 11 remodeling is sufficiently completed to allow the owner of the dwelling or a person 12 authorized by the owner to use or occupy the dwelling or the improvement to the 13 dwelling in the manner for which the dwelling or improvement was intended. 14 * Sec. 3. AS 09.45 is amended by adding new sections to read: 15 Article 10A. Action for Dwelling Design, Construction, or Remodeling Claims. 16 Sec. 09.45.881. Notice of claim. (a) In an action brought on a claim against a 17 construction professional, the claimant shall, at least 90 days before filing the action, 18 serve written notice of the claim on the construction professional. 19 (b) The notice of the claim in (a) of this section must state that the claimant 20 asserts a claim against the construction professional for a defect in the design, 21 construction, or remodeling of a dwelling and must describe the claim in reasonable 22 detail sufficient to determine the general nature of the alleged defect and the results of 23 the defect if known. 24 (c) At the request of the construction professional, the claimant shall provide 25 to the construction professional any evidence that the claimant possesses that depicts 26 the nature and cause of the defect and the nature and extent of the repairs necessary to 27 repair the defect, including expert reports, photographs, and videotapes. 28 Sec. 09.45.882. Written response to notice of claim. (a) Within 21 days 29 after service of the notice under AS 09.45.881, the construction professional shall 30 serve a written response on the claimant. 31 (b) The written response under (a) of this section must state that the 01 construction professional 02 (1) offers to inspect the dwelling that is the subject of the claim within 03 a specified time to determine if the construction professional will offer to repair the 04 defect, will compromise and settle the claim by payment of money, or will dispute the 05 claim; 06 (2) offers to compromise and settle the claim by a payment of money 07 without inspection; or 08 (3) disputes the claim and will not repair the alleged defect or 09 compromise and settle the claim by a payment of money. 10 Sec. 09.45.883. Court action allowed if claim disputed or not responded 11 to. If the construction professional disputes the claim in the notice under 12 AS 09.45.882(b)(3) or does not respond to the claimant's notice of claim within the 13 time required by AS 09.45.882(a), the claimant may bring an action against the 14 construction professional for the claim described in the notice of the claim made under 15 AS 09.45.881 without further notice. 16 Sec. 09.45.884. Consequence of rejecting inspection or settlement offer. 17 (a) If the claimant rejects the inspection offer under AS 09.45.882(b)(1) or the 18 settlement offer under AS 09.45.882(b)(2), the claimant shall serve written notice of 19 the claimant's rejection on the construction professional. 20 (b) The notice under (a) of this section must include the basis for the 21 claimant's rejection of the construction professional's offer. 22 (c) After service of the rejection notice required by (a) of this section, the 23 claimant may bring an action against the construction professional for the claim 24 described in the notice of claim made under AS 09.45.881 without further notice. 25 Sec. 09.45.885. Consequence of accepting inspection offer. If a claimant 26 elects to allow the construction professional to make an inspection under 27 AS 09.45.882(b)(1), the claimant shall provide the construction professional and its 28 contractors or other agents reasonable access to the claimant's dwelling during normal 29 working hours to inspect the dwelling and the alleged defect to determine the nature 30 and cause of the alleged defect and the nature and extent of any repairs necessary to 31 repair the alleged defect. 01 Sec. 09.45.886. Procedure after inspection. Within 14 days after completion 02 of an inspection made under AS 09.45.885, the construction professional shall serve 03 on the claimant a written 04 (1) offer to repair the defect without charge to the claimant; the offer 05 must include a report of the scope of the inspection, the findings and results of the 06 inspection, a description of any repairs necessary to repair the defect, and a schedule 07 for the completion of the repairs; 08 (2) offer to compromise and settle the claim by a payment of money 09 under AS 09.45.882(b)(2); or 10 (3) statement that the construction professional will not repair the 11 defect. 12 Sec. 09.45.887. Court action allowed after failure to repair or to settle. If 13 the construction professional does not respond within the time required by 14 AS 09.45.886, does not repair the defect to the satisfaction of the claimant within the 15 time agreed under AS 09.45.886(1), does not provide an offer under AS 09.45.886(2), 16 or serves a statement under AS 09.45.886(3), the claimant may bring an action against 17 the construction professional for the claim described in the notice of claim without 18 further notice. 19 Sec. 09.45.888. Court action allowed if claimant rejects offer. (a) If the 20 claimant rejects an offer made by the construction professional under AS 09.45.886(1) 21 or (2), the claimant shall serve written notice of the claimant's rejection on the 22 construction professional that includes the basis for the claimant's rejection of the 23 construction professional's offer. 24 (b) After service of the notice under (a) of this section, the claimant may bring 25 an action against the construction professional for the claim described in the notice of 26 claim made under AS 09.45.881 without further notice. 27 Sec. 09.45.889. Unreasonable rejection of offer. (a) If a claimant 28 unreasonably rejects an offer made under AS 09.45.881 - 09.45.899 or does not give 29 the construction professional a reasonable opportunity to repair the defect under an 30 accepted offer of settlement, the claimant may not recover an amount that exceeds 31 (1) the reasonable cost of the repairs offered under AS 09.45.886(1) 01 that are necessary to cure the defect and that are the responsibility of the construction 02 professional; or 03 (2) the amount of a reasonable settlement offer of money that was 04 made under AS 09.45.886(2). 05 (b) If a claimant unreasonably rejects a construction professional's offer made 06 under AS 09.45.881 - 09.45.899 or does not give the construction professional a 07 reasonable opportunity to repair the defect under an accepted offer of settlement, the 08 court may deny the claimant an award of attorney fees and costs and may award 09 attorney fees and costs to the construction professional. 10 Sec. 09.45.890. Acceptance of offer. (a) To accept an offer of a construction 11 professional to repair a defect under AS 09.45.886(1), a claimant shall serve the 12 construction professional with a written notice of acceptance within a reasonable 13 period of time, not to exceed 30 days, after receiving the offer. 14 (b) A claimant who accepts an offer under (a) of this section shall provide the 15 construction professional and its contractors or other agents reasonable access to the 16 claimant's dwelling during normal working hours to perform the repairs by the time 17 stated in the offer. 18 Sec. 09.45.891. Presumption of mitigation. If a claimant fails to allow a 19 construction professional to make a reasonable inspection requested by the 20 construction professional under AS 09.45.882(b)(1), or fails to provide a good faith 21 written response to a construction professional's offer under AS 09.45.882(b)(2) or 22 09.45.886(1) or (2), the failure establishes a rebuttable presumption that the claimant's 23 damages could have been mitigated. 24 Sec. 09.45.892. Noncompliance assertion prohibited. Unless there is good 25 cause for the failure, a construction professional may not assert that the claimant did 26 not comply with AS 09.45.881 - 09.45.899 if the construction professional fails to 27 respond in good faith to the claimant's notice of claim made under AS 09.45.881. 28 Sec. 09.45.893. Notice required in contract. (a) In order to take advantage 29 of any rights of a construction professional under AS 09.45.881 - 09.45.899, when a 30 construction professional enters into a contract with another person to design, 31 construct, or remodel a dwelling, the construction professional shall give the person a 01 notice of the construction professional's right to offer to cure a defect before the 02 person may file an action in court against the construction professional. 03 (b) The notice required by (a) of this section must be included on a separate 04 page attached to the contract and must contain a title at the top of the page that reads 05 "Notice of Potential Claims Must Be Provided Within One Year." This form shall be 06 signed by the purchaser or purchaser's authorized representative. The signature of 07 either spouse to a design, construction, or remodeling contract shall be considered to 08 be the authorization of both spouses. 09 (c) The notice required by (a) of this section must be conspicuous and must be 10 in substantially the following form: 11 ALASKA LAW AT AS 09.45.881 - 09.45.899 CONTAINS 12 IMPORTANT REQUIREMENTS THAT YOU MUST FOLLOW 13 BEFORE YOU MAY FILE A COURT ACTION FOR DEFECTIVE 14 DESIGN, CONSTRUCTION, OR REMODELING AGAINST THE 15 DESIGNER, BUILDER, OR REMODELER OF YOUR HOME. 16 WITHIN ONE YEAR OF THE DISCOVERY OF A DESIGN, 17 CONSTRUCTION, OR REMODELING DEFECT, BEFORE YOU 18 FILE A COURT ACTION, YOU MUST DELIVER TO THE 19 DESIGNER, BUILDER, OR REMODELER A WRITTEN NOTICE 20 OF ANY DESIGN, CONSTRUCTION, OR REMODELING 21 CONDITIONS YOU ALLEGE ARE DEFECTIVE IN ORDER TO 22 PROVIDE YOUR DESIGNER, BUILDER, OR REMODELER WITH 23 THE OPPORTUNITY TO MAKE AN OFFER TO REPAIR OR PAY 24 FOR THE DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT 25 ANY OFFER MADE BY THE DESIGNER, BUILDER, OR 26 REMODELER. THERE ARE STRICT DEADLINES AND 27 PROCEDURES UNDER STATE LAW, AND FAILURE TO 28 FOLLOW THEM MAY AFFECT YOUR RIGHT TO FILE A COURT 29 ACTION. 30 Sec. 09.45.894. Additional construction defects; additional notice of claim 31 required. A court action for a defect that is discovered after a claimant has provided a 01 construction professional with a notice of claim required in AS 09.45.881 - 09.45.899 02 may not be commenced until the claimant has complied with the provisions of 03 AS 09.45.881 - 09.45.899. 04 Sec. 09.45.895. Collateral sources. In an action under AS 09.45.881 - 05 09.45.899, a court shall deduct from the compensation awarded to a claimant any 06 compensation paid to the claimant under a homeowner's warranty contract or a 07 homeowner's insurance policy as compensation for the defects that are the subject of 08 the action. The amount of this deduction does not include any compensation paid by 09 the construction professional to the claimant to satisfy the claim or any compensation 10 paid under an insurance policy issued to the construction professional to satisfy the 11 claim. 12 Sec. 09.45.896. Exemption. AS 09.45.881 - 09.45.899 do not apply to claims 13 for personal injury, including death. 14 Sec. 09.45.899. Definitions. In AS 09.45.881 - 09.45.899, 15 (1) "action" means a civil action or an arbitration proceeding for 16 damages or indemnification; 17 (2) "claim" means a claim against a construction professional 18 concerning a defect in the design, construction, or remodel of a dwelling; 19 (3) "claimant" means a person who owns or is purchasing a dwelling 20 and who asserts a claim; 21 (4) "construction professional" means a registered contractor, architect, 22 or engineer who is engaged in the business of designing, constructing, or remodeling a 23 dwelling; in this paragraph, "contractor" has the meaning given in AS 08.18.171; 24 (5) "dwelling" means a single-family house, a duplex, or a multi- 25 family housing unit, and the mechanical and other systems, the other components, and 26 all improvements that are part of the house, duplex, or housing unit when the dwelling 27 is constructed or remodeled; for purposes of this paragraph, "multi-family housing 28 unit" means 29 (A) an individual housing unit in a multi-family housing 30 facility; and 31 (B) the interest of the owner of an individual housing unit in 01 the common areas and improvements of a multi-family housing facility; 02 (6) "multi-family housing facility" means a residential horizontal 03 property regime organized under AS 34.07, a residential condominium organized 04 under AS 34.08, and a residential cooperative organized under AS 10.15; 05 (7) "remodel" means a change to a dwelling if the change has a value 06 that is more than 25 percent of the value of the structure being changed; 07 (8) "serve" means to deliver by personal service or by certified mail, 08 return receipt requested, to the last known address of the addressee. 09 * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 INDIRECT COURT RULE AMENDMENTS. AS 09.45.889(b), enacted by sec. 3 of 12 this Act, has the effect of changing 13 (1) Rule 82, Alaska Rules of Civil Procedure, by allowing the court to deny 14 attorney fees to a claimant in the situation described by AS 09.45.889(b), even if the claimant 15 is the prevailing party; 16 (2) Rule 79, Alaska Rules of Civil Procedure, by allowing the court to deny 17 costs to a claimant in the situation described in AS 09.45.889(b), even if the claimant is the 18 prevailing party. 19 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 20 read: 21 APPLICABILITY. This Act applies to a claim if the contract for the work on which 22 the claim is based was entered into on or after the effective date of this Act. In this section, 23 "claim" has the meaning given in AS 09.45.899. 24 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 25 read: 26 CONDITIONAL EFFECT. AS 09.45.889(b), enacted by sec. 3 of this Act, takes 27 effect only if sec. 4 of this Act receives the two-thirds majority vote of each house required by 28 art. IV, sec. 15, Constitution of the State of Alaska.