Legislature(2015 - 2016)BELTZ 105 (TSBldg)
03/31/2015 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearings | |
| Confirmation Hearing | |
| SB76 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 76 | TELECONFERENCED | |
| *+ | SB 77 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| + | 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 |