Legislature(1993 - 1994)
04/07/1993 01:00 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 105: MOTOR VEHICLE DEALERS & BUYERS' AGENTS Number 321 JOE AMBROSE, LEGISLATIVE AIDE TO SENATOR ROBIN TAYLOR, PRIME SPONSOR of SB 105, testified that SB 105 had been introduced in response to a constituent concern. In early January, he said, an auto broker had abruptly shut down his business and left customers without vehicles for which they had paid, or without titles, or being dunned by automobile dealers when they thought they had already paid for their cars. He stated that SB 105 differentiated between a dealer and a buyer's agent. MR. AMBROSE said the bill required that any car sold as new include the manufacturer's certificate of origin. That would prevent a car from being sold a second time while being represented as new, he said. This was important for warranty reasons, he added. He mentioned that SB 105 required purchase agreements which fully disclose warranty terms between buyer's agents and buyers. Warranties would remain with the vehicle and pertain specifically to the vehicle, he said, resulting in consumer protection. MR. AMBROSE noted that SB 105 created a "paper trail" of any transaction between a buyer's agent and a buyer, with specific records' retention requirements. He noted that the bill increased penalties for violation of the law from a current $300 fine to a class B misdemeanor, or up to a $1,000 fine. He indicated that the sponsor had reviewed a House Judiciary Committee draft committee substitute for SB 105 and supported it. He added that SB 105 would not result in a fiscal impact to the state. Number 362 STEVEN ALLWINE, representing the ALASKA AUTO DEALERS, testified in support of SB 105. He mentioned that there had been a significant number of instances in which customers purchased automobiles, but received cars different than what they had expected. Additionally, he said, customers sometimes bought cars that were supposed to be new, but in fact were used. These situations resulted in warranty problems for the customers and for auto dealers. MR. ALLWINE commented that manufacturers had expressed concern over this method of car distribution, particularly in relation to warranty coverage, product safety, and recall issues. He noted that the Senate had unanimously passed SB 105. The draft committee substitute provided an additional safeguard for consumers, by implementing a bonding requirement for buyers' agents. He urged support for the bill. Number 418 MS. HORETSKI called the members' attention to a draft committee substitute for SB 105 dated April 6, 1993. She said that the draft committee substitute took SB 105, as amended on the Senate floor by Senator Al Adams, and added new material which had been suggested for inclusion by the Alaska Auto Dealers. She noted that Senator Adams' amendment could be found on page 2, lines 3-5, and addressed situations in which a car was purchased and subsequently shipped to a rural area. In such a situation, she said, it might not be feasible to have a dealer perform warranty work. The language allowed a buyer and a dealer to reach agreements regarding repairs and payment. MS. HORETSKI commented that new language began at line 31 on page 2, and continued through line 25 of page 4. She said that this new language required registration and bonding of buyer's agents. She noted that the amount of the bond was the same as the amount that automobile dealers had to put up under existing law. She stated that language on page 4, lines 26-28 was also new, and added a requirement that before a buyer's agent negotiated on behalf of a buyer the purchase of a motor vehicle from a dealer, the buyer's agent had to have a written contract with the buyer. MS. HORETSKI said that in reviewing SB 105, she did not find any legal problems. She called the members' attention to a potential problem on page 2, line 28, which made changes to existing law relating to penalties. She said that a reference to class B misdemeanors was added. Also, she said, the old statute used the culpable mental state of "willfully," which was no longer a part of the Alaska criminal code. For that reason, she asked the drafters to change the term "willfully" to "knowingly," which was the closest equivalent culpable mental state. MS. HORETSKI called the members' attention to page 6, line 7, where a new penalties section referred to "criminal negligence." That, she said, was a different culpable mental state than that on page 2, and resulted in the law containing different culpable mental states for buyer's agents and dealers. She stated that the committee could either leave the language as it was, or change it to make the required culpable mental state the same for both dealers and buyer's agents. Number 499 CHAIRMAN PORTER suggested making the two culpable mental states the same. Number 505 MS. HORETSKI reviewed the four culpable mental states in criminal law, from least serious to most serious: criminal negligence, recklessly, knowingly, and intentionally. Number 521 CHAIRMAN PORTER recommended using "knowingly" for both dealers and buyer's agents in SB 105. REPRESENTATIVE NORDLUND made a MOTION to DELETE "with criminal negligence" from page 6, line 7 of SB 105 and to INSERT "knowingly." REPRESENTATIVE KOTT OBJECTED. He asked to hear from the sponsor's representative. Number 532 MR. AMBROSE stated that the sponsor would concur with the change. REPRESENTATIVE KOTT REMOVED his OBJECTION. Then, without further objection, the AMENDMENT WAS ADOPTED. Number 550 REPRESENTATIVE NORDLUND made a MOTION to ADOPT CSSB 105 (JUD), as amended. There being no objection, IT WAS SO ORDERED. Number 554 REPRESENTATIVE KOTT asked the members if they felt that buyer's agents should put up a larger bond than dealers. He said that $10,000 seemed like a very small amount. Number 569 REPRESENTATIVE JAMES echoed Representative Kott's concern. She said that dealers were usually stationary, whereas buyer's agents were more transient, creating more risk for buyers. However, she said that dealers were probably much more able than buyer's agents to come up with $10,000. Number 585 MR. AMBROSE stated that the bill's sponsor did not intend to make SB 105 punitive. He said that there were many communities within Senator Taylor's district which did not have auto dealerships. He said that the bill simply made buyer's agents comply with the same requirements as automobile dealers. Number 600 REPRESENTATIVE KOTT commented that $10,000 would not go far to help a consumer who had purchased a $25,000 car from an unscrupulous buyer's agent. But, he understood Mr. Ambrose's desire not to place too many restrictions on buyer's agents. Number 608 REPRESENTATIVE JAMES stated that a "crooked" individual would not be able to get a bond at all, unless they put up cash for the bond. She thought that the bonding requirements in SB 105 were sufficient. REPRESENTATIVE KOTT made a MOTION to MOVE CSSB 105 (JUD), as amended, out of committee with a zero fiscal note and with individual recommendations. REPRESENTATIVE PHILLIPS OBJECTED, and then REMOVED her OBJECTION. There being no further objections, CSSB 105 (JUD) MOVED OUT COMMITTEE. ADJOURNMENT CHAIRMAN PORTER adjourned the meeting at 5:05 p.m.
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