Legislature(2003 - 2004)
04/06/2004 02:08 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 227
An Act increasing the jurisdictional limit for small
claims and for magistrates from $7,500 to $10,000;
increasing the jurisdictional limit of district courts
in certain civil cases from $50,000 to $75,000; and
amending Rule 11(a)(4), Alaska District Court Rules of
Civil Procedure, relating to service of process for
small claims.
VANESSA TONDINI, STAFF, REPRESENTATIVE LESIL MCGUIRE,
advised that the jurisdictional limit for district courts
was last raised in 1990 when the Legislature raised the
limit from $35,000 to $50,000 dollars. By raising the
jurisdictional limit from $50,000 to $100,000, HB 227 will
allow for increases in inflation and provide increased
flexibility for litigants regarding whether to file in
district court or superior court.
Ms. Tondini added that the jurisdictional limit on small
claims court and magistrate court was last raised in 1997
when the Legislature raised the limit from $5,000 to $7,500
dollars. Small claims court offers many advantages over
district court to private litigants, including less formal
discovery requirements, reduced filing fees, and relaxed
evidentiary rules. The bill would increase the limit to
$10,000 dollars. She added that the bill would also remove
prohibitions against the district court hearing claims for
false imprisonment, libel, slander, and malicious
prosecution. The restrictions were adopted shortly after
statehood. District court judges are well qualified and
there is no reason to prohibit them from hearing these types
of cases.
Ms. Tondini concluded that the bill would expand small
claims jurisdiction over out-of-state defendants. Under
current law, small claims actions against out-of-state
defendants may only be brought under the landlord-tenant act
or under AS 09.05.020, which authorizes service of process
against owners or operators of motor vehicles involved in an
accident in the State. The bill would authorize small
claims jurisdiction over out-of-state defendants under
traditional long-arm principles. The expanded long-arm
jurisdiction is limited to district court judges.
Magistrates would continue to be limited by the standards
set forth in current law.
REPRESENTATIVE MAX GRUENBERG offered to answer questions of
the Committee.
Co-Chair Harris asked what the benefits of the legislation
would be. Representative Gruenberg replied that it would
become more simple and faster than district court.
· Section 1 increases the jurisdictional limit of
district courts from $50,000 to $100,000 dollars.
· Sections 2 increases the jurisdictional limits of
the small claims court from $7,500 to $10,000
dollars.
· Section 3 extends the jurisdiction of the district
court to include claims for false imprisonment,
libel, slander and malicious prosecution.
· Section 4 increases the jurisdictional amount for
claims heard by magistrates from $7,500 to $10,000
dollars.
· Section 5 precludes magistrates from hearing cases
brought under the expanded small claims
jurisdiction over out-of-state defendants provided
for in Section 6 of the bill. Magistrates would
continue to be able to hear claims against out-of-
state defendants only under the landlord-tenant
act or in accordance with the AS 09.05.20 relating
to service of process on nonresident owner or
operator of motor vehicle.
· Section 6 amends District Court Rule 11(a) to
allow suits in small claims court against out-of-
state defendants under traditional long-arm
jurisdictional authority.
· Section 7 provides that Sections 5 and 6 of the
bill only take effect if the court rule changes in
Section 6 of the bill receive the two-thirds
majority vote of each house required by art. IV,
sec. 15 of the Alaska Constitution.
Representative Hawker asked if to date, there had been a
compelling argument against the legislation.
TAPE HFC 04 - 78, Side A
DOUG WOOLIVER, ADMINISTRATIVE ATTORNEY, ALASKA COURT SYSTEM,
stated that the Court is neutral on the bill. There are
potential down sides in making the proposed changes. The
bill is consistent with the Courts overall philosophy.
Section 1 raises the juristical limit of district court to
$100,000 dollars, which the court does not object to.
Sections 2 & 4 raise from $7,500 dollars to $10,000 dollars,
the jurisdictional limit for small claims courts. Judges
are split if that is a good idea or not. The concerns are
if that change is necessary, it is a lot of money to have at
stake and that most people cannot avail themselves of that
amount.
Mr. Wooliver continued, another category of complaint of a
more serious nature is claims up to $10,000 dollars are
consistent with the purpose of small claims court. The
purpose in general is to move many small claims more quickly
through. He pointed out that the higher the claim amount,
the more tenaciously the cases are fought, which could be a
potential downside. Also, related to that, the same things
that make it easier to sooth somebody in the small claims
court, can make it easier to loose in that arena. It would
be a trade off between speed, efficiency and due process.
Several judges are concerned that with the higher
jurisdictional limit, the more likely it is that the
unsophisticated defendants are going to loose. It is true
that they have the option for more formal district court
action. Many people do not understand the distinctions or
the benefits between the two types of courts.
Regarding the limit of $10,000 dollars, he advised that most
judges and magistrates are comfortable moving to that level,
however, it needs to be understood that defendants can loose
out in the process. The other significant change deals with
more out-of-state defendants in the small claims court.
That does not create new problems but it would be moving
into a more informal process. Out-of-state defendants are
frequently more time consuming.
Mr. Wooliver reiterated that the Alaska Court System is
neutral on the bill. He pointed out that more and more
people are coming to court without attorneys.
Co-Chair Harris referenced the interminent fiscal note from
the Alaska Court System. Mr. Wooliver clarified that the
Alaska Court System does not know the impact. Small claims
courts are easier, faster and cheaper for litigants but not
necessarily for the Court System. There could be more court
effort involved. Co-Chair Harris did not think the fiscal
impact would be much.
Representative Stoltze thought that increasing the amount to
$10,000 dollars would increase caseloads and that there
would be more court action. Mr. Wooliver pointed out that
the last two times that the jurisdiction rate was raised for
small claims, the courts did not see a spike in those files.
Representative Fate commented on damage recovery and
problems associated with that in the lower jurisdiction
courts. Mr. Wooliver was not aware of the connection
between those two factors. He acknowledged it would be
interesting to see if there was a correlation between the
amount in small court and recovery percentages.
Representative Fate believed that recovery could become
problematic and thought it could be predicated on the amount
at stake.
In response to Representative Fate, Representative Gruenberg
advised that all the bill does is to clarify that the
decision can be brought to either small claims court,
district and/or superior court. The judgment will remain
the same.
Representative Croft pointed out that small claims court are
generally handled without lawyers and the situation is more
relaxed. Lawyer fees can get high quickly. If the amount
discussed was under $7,500 dollars, the person previously,
could stay in the small claim court venue. Small claims
court is the simplified place for people to go without
having to hire an attorney.
Representative Foster MOVED to report CS HB 227 (JUD) out of
Committee with individual recommendations and with the
accompanying fiscal note.
CS HB 227 (JUD) was reported out of Committee with a "do
pass" recommendation and with indeterminate note #1 by the
Alaska Court System.
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