Legislature(1997 - 1998)
03/07/1997 01:08 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
HB 119 - INCREASE SMALL CLAIMS JURISDICTION CHAIRMAN JOE GREEN announced that members would first consider HB 119, "An Act raising the limit on small claims actions to $10,000; and providing for an effective date." He invited Representative Mark Hodgins, Prime Sponsor of HB 119, to come forward and address the committee. Number 092 REPRESENTATIVE MARK HODGINS advised members that HB 119 would increase the small claims limit from the current ceiling of $5000 to $10,000. He stated that he introduced the legislation because he felt small claims cases were an essential part of the community which enabled people to plead cases without an attorney present, and receive justice at a level that was not too complicated. REPRESENTATIVE HODGINS pointed out that the small claims limit had been raised to $5000 in 1986, and the increase to $10,000 would reflect higher values in disputes. CHAIRMAN GREEN pointed out that when considered by the committee previously, there did not appear to be a problem with the concept; however, there were concerns expressed by the court system that such an increase would significantly impact the court system and increase the fiscal note. REPRESENTATIVE ERIC CROFT advised members that he was in support of the concept and asked for Representative Hodgins opinion on why he felt a limit of $10,000 would be more appropriate than raising the limit to $7500. Number 301 REPRESENTATIVE HODGINS felt the a ceiling of $10,000 would provide the opportunity for someone to argue and get justice at a court level they felt comfortable with, and allow claims that more reflect the mid-range car values, snow machines, et cetera. He noted that the court system would rather increase the small claims limit in incremental amounts, and he did not see the value of revisiting the issue in two to five years. Representative Hodgins pointed out that several people had suggested the limit be raised to $20,000, which he felt was too much of a jump, but felt comfortable with a $10,000 limit and hoped members would concur. REPRESENTATIVE HODGINS noted that if increased to $10,000, the cases falling within the $5000 to $10,000 range, that would be heard in a higher court, would be more expensive for the court system than the small claims court. He stated with respect to the fiscal note submitted by the court system, that it would be important to find out if they were correctly shifting the amounts when considering the cases that would fall under the small claims court, rather then the district court if the $10,000 limit went into effect. Representative Hodgins felt that it had to be more inexpensive to operate a small claims court than it would be to go up to the district court level. REPRESENTATIVE CON BUNDE noted that during previous discussions, the committee had considered increasing the filing fee for small claims court, and asked Representative Hodgins to respond to that. REPRESENTATIVE HODGINS advised members he supported user fees and did not have any particular opinion one way or another. He noted that the filing fee was currently $25, and it was his understanding the committee was considering raising the fee to $50. Representative Hodgins stated that should the committee raise the fee, he would point out that if they were doubling the small claims limit, they could double the filing fee amount. Number 663 CHAIRMAN GREEN asked that Chris Christensen explain to members why there would be a significant increase in the fiscal note because of an increase in the small claims limit, and respond to the Sponsor's statement regarding cases moving from district court to small claims court because of the increase in the limit. CHRIS CHRISTENSEN, General Counsel, Alaska Court System, advised members that the small claims court was important and that it really was the people's court. He expressed that the Supreme Court agreed with Representative Hodgins that an increase in the limit would be appropriate, as the limit had not changed since 1986. Mr. Christensen pointed out that if the increase was consistent with the consumer price index (CPI) in Anchorage, it would amount to $6800 or $6900; however, the Supreme Court felt they could accommodate an increase to $7500. MR. CHRISTENSEN advised members that the court's concern of increasing the limit to $10,000 was not that the number of cases would increase, although there would be some increase because of the shift from district court to small claims. He explained that most folks were under the impression that small claims court was cheaper for the court because it was cheaper for the litigants, but this was not the case. Mr. Christensen pointed out that the judicial costs were lower because magistrates are paid less than district court judges, or superior court judges, but the clerical costs were substantially higher in small claims court. The reason costs were higher was that the clerks were helping litigants things a litigant's attorney normally does under formal rules. MR. CHRISTENSEN advised members that the court's fiscal note did not reflect additional costs for judicial time, only what the court felt the extra clerical costs would be for the transfer of cases, and also some additional training time for magistrates. Mr. Christensen pointed out that many bills affect the court system, noting that last year the court had submitted fiscal notes on approximately 140 different pieces of legislation. He expressed that the Supreme Court very rarely oppose a particular piece of legislation as they feel it is the legislature's forum and legislators should make the policy call without input from them. MR. CHRISTENSEN stated that the courts did not only believe the bill would result in an increase in costs, but that the increase had a potential impact on the system that could not be predicted and could be very severe. He pointed out that currently there were 39 court locations scattered around the state which had only a magistrate, with no district judge to assist. Two thirds of the magistrates were not lawyers and when increasing the dollar value of cases, the complexity of the case would also increase. He stated that an increase to $10,000 could over-tax the current training levels and abilities of a lot of the magistrates. MR. CHRISTENSEN advised members that the court system would like to see the small claims limit increase in steps; first to $7500 to see how that worked for two or three years, and if that increase had not caused a serious problem for the court, an increase to $10,000 after that period of time. He noted that this was the tactic that the legislature took during the 1980s when the district court jurisdiction increased. Mr. Christensen pointed out that until the early 80s, the district court jurisdiction was at $10,000 and there was substantial sentiment to increase it to $50,000. Theory was that district judges, as well as superior court judges, were all attorneys and should be able to handle that limit. Mr. Christensen expressed that the legislature increased the district court jurisdiction in three steps; $10,000 to $25,000, from $25,000 to $35,000, and from $35,000 to $50,000 which provided the court system a two to three year interval between each increase to make sure the system was not overloaded. Number 962 CHAIRMAN GREEN asked if the fiscal note would decrease if the small claims jurisdiction was increased to $7500 rather than the proposed $10,000 limit. MR. CHRISTENSEN advised members that he would suspect that the fiscal note would drop by over two thirds. REPRESENTATIVE BRIAN PORTER noted that the small claims caseload appeared to decrease from 15,000 to 10,000 between 1986 and 1996. He asked if Mr. Christensen could provide an explanation as to why the caseload decreased. MR. CHRISTENSEN advised members that caseload was caused by a lot of different things; increases or decreases in population, changes in the state's demographics, changes in law, inflation, et cetera. He pointed out that during the last recession, in 1985 and 1986, a lot of people stopped paying their bills with their creditors bringing them to the small claims court, which was probably the reason for an increase, and an ultimate decrease in claims during the period referenced by Representative Porter. REPRESENTATIVE CROFT asked how Alaska's small claims jurisdiction compared to other states. MR. CHRISTENSEN advised members that more than half the states had a limit of $3000 or less, $5000 was typically the upper limit with 10 states having that, and two states had a higher limit than Alaska. He noted that Alaska's current limit of $5000 was higher than the majority of states, even when compared to states that have higher costs of living, like Hawaii. Number 1186 REPRESENTATIVE JEANNETTE JAMES felt that the small claims court was for cut and dried cases. She stated that filing in small claims court was a procedural matter for one to take that was least expensive and allows for a judgment. Representative James advised members that her concern was the debts that would meet the criteria to file in small claims court, and if they would be between $7500 to $10,000. She felt more comfortable with a $10,000 limit, rather than $7500. MR. CHRISTENSEN expressed that a lot of the comments he had received were from district judges and magistrates. He stated that a lot of times, whether or not something was cut and dried, was very closing tied to how much was involved. The bigger the amount of money involved, the less likely it would be to be a cut and dried case, or perceived as such. CHAIRMAN GREEN moved to amend HB 119, page 1, line 1, delete [$10,000] and insert $7500, and page 1, line 5, delete [$10,000] and insert $7500. Representative Porter objected for the purpose of making a comment. REPRESENTATIVE PORTER advised members that he would support the motion; however, when the committee moved the bill out of committee, he would move it with a zero fiscal note. REPRESENTATIVE NORMAN ROKEBERG advised members that a number of states exempt landlord tenant actions, and other real property actions from small claims jurisdiction. He pointed out that in many commercial transactions, a $10,000 claim could easily be run up after a tenant's only in arrears by more than two months rent, noting that they were not talking about a great deal of delinquency before reaching the small claims limit. Representative Rokeberg expressed that he would reluctantly support the amendment, given the comments presented by Representative Porter regarding the fiscal note. REPRESENTATIVE CROFT asked why the other areas of the bill that referenced $10,000 were not included in the amendment to reduce the limit to $7500. CHAIRMAN GREEN apologized, and advised members that had been an oversight. The amendment should reflect the change of $10,000 to $7500 where ever it appeared in the bill. REPRESENTATIVE ETHAN BERKOWITZ advised members he was in support of the amendment; however, did not see how they could say the increase in the small claims jurisdiction would not cost anything, when the court says differently. He noted that they should recognize when giving the court system additional duties and responsibilities, they would need the means to handle that responsibility. Number 1789 CHAIRMAN GREEN asked if Mr. Christensen would address that issue, and if it would result in a zero fiscal note if the limit were dropped from $10,000 to $7500. MR. CHRISTENSEN advised members the court would expect to realize some increase in costs even at the $7500 limit. REPRESENTATIVE JAMES expressed that she would support the amendment, and also agreed with Representative Porter regarding the fiscal note. She would also like to increase the filing fee from $25 to $50. REPRESENTATIVE PORTER withdrew his objection. There being no objection, Amendment 1, HB 119 was adopted. REPRESENTATIVE BUNDE agreed with Representative James that the filing fee should be increased. He noted that a filing fee was not addressed in the proposed legislation, but if the Chair would entertain a conceptual amendment, he would move for that increase. REPRESENTATIVE BUNDE moved a conceptual amendment to HB 119 to change the fee from $25 to $50. There were objections. CHAIRMAN GREEN pointed out that Mr. Christensen had testified previously that an increase in the filing fee would also impact the court system. MR. CHRISTENSEN advised members that his concern was the importance of small claims court for the little guy. He stated that when they start increasing the filing fee, they could be making it more difficult for some people to attempt to seek justice. Mr. Christensen pointed out though, that all fees were turned over to the general fund, and not kept by the court system for operation costs. He stated that the fiscal note should probably be higher, noting that currently the court charged $60 to file a district court case, and if transferring district court cases to small claims court, there would be a reduction in the fees they collect and turn over to the general fund. MR. CHRISTENSEN advised members that the Supreme Court sets the fees and does a thorough review of the fees every five years, and frequently changes individual fees on the chart every year. He expressed that when the court changed fees, they consider what was being done in other states, the cost of living, et cetera and attempt to arrive at a fee that would not deter people from seeking access to justice. REPRESENTATIVE ROKEBERG felt there was no reason they could not raise the fees, or have a two-tiered fee schedule, based on the amount of the claim. REPRESENTATIVE PORTER expressed that it was his belief that to change a fee would involve a change in the court rules and would require a two thirds vote of the body. He advised members that he would be more inclined to support a change in the fee if the limit was increased to $10,000. REPRESENTATIVE BUNDE made note that the last time the small claims fee was set was in the mid 80s, and would point out the difference in the permanent dividend check between the mid 80s and what it was now. Representative Bunde called for the question. REPRESENTATIVE ROKEBERG advised members the reason for his objection was that he would prefer to see a two tiered fee, and asked if the maker of the motion would consider that as a friendly amendment. REPRESENTATIVE BUNDE felt that would involve more and more paperwork, and did not feel a $50 filing fee would present an impediment for people filing in small claims court. REPRESENTATIVE BERKOWITZ maintained his objection. He stated that when raising fees there should be an understanding what the impact would be. He noted that when taxes are raised, they consider the effect of the tax, and when other revenue enhancement goes on for the state, it was the legislatures responsibility to see who would be affected. CHAIRMAN GREEN requested a roll call vote. In favor: Representatives Bunde and James. Opposed: Representatives Rokeberg, Croft, Berkowitz and Chairman Green. Representative Porter was not present during this roll call vote. Amendment 2, HB 119, failed adoption, 4 to 2. REPRESENTATIVE ROKEBERG moved a conceptual amendment to implement a fee schedule of $25 for claims ranging from $1 to $2500, and a $50 fee schedule for claims ranging from $2501 to $7500. Representatives Croft and Berkowitz objected. CHAIRMAN GREEN requested a roll call vote. In favor: Representatives Bunde, Porter, Rokeberg and James. Opposed: Representatives Croft, Berkowitz and Chairman Green. Amendment 3, HB 119, was adopted, 4 to 3. REPRESENTATIVE PORTER moved to report CSHB 119 (JUD) out of committee with a zero fiscal note, pointing out that the court could address that issue in the House Finance Committee. Representatives Croft objected to the zero fiscal note. CHAIRMAN GREEN requested a roll call vote. In favor: Representatives Bunde, Porter, Rokeberg, James and Chairman Green. Opposed: Representatives Croft and Berkowitz. CSHB 119 (JUD) was reported out of committee with a zero fiscal note prepared by the House Judiciary Committee.
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