03/16/2009 01:00 PM House JUDICIARY

HB 102 - UNIFORM COMMERCIAL CODE                                                                                              
                                                                                                                                
1:08:05 PM                                                                                                                    
                                                                                                                                
CHAIR RAMRAS announced that the  first order of business would be                                                               
HOUSE BILL  NO. 102, "An  Act relating to the  Uniform Commercial                                                               
Code, to the  general provisions of the  Uniform Commercial Code,                                                               
to documents of  title under the Uniform Commercial  Code, to the                                                               
Uniform Electronic  Transactions Act,  and to  lease-purchases of                                                               
personal property;  amending Rules 403  and 902, Alaska  Rules of                                                               
Evidence; and providing for an effective date."                                                                                 
                                                                                                                                
1:08:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAHLSTROM  moved to  adopt the  proposed committee                                                               
substitute  (CS)  for  HB 102,  Version  26-LS0059\S,  Bannister,                                                               
2/24/09, as the work draft.   There being no objection, Version S                                                               
was before the committee.                                                                                                       
                                                                                                                                
REPRESENTATIVE GRUENBERG,  noting that HB 102  was introduced [by                                                               
the House Labor  and Commerce Standing Committee]  at the request                                                               
of  the National  Conference of  Commissioners  on Uniform  State                                                               
Laws  (NCCUSL),  explained  that   the  bill  proposes  technical                                                               
changes to  Alaska's statutes thereby reflecting  changes made to                                                               
Article 1 and Article 7 of the Uniform Commercial Code (UCC).                                                                   
                                                                                                                                
1:09:43 PM                                                                                                                    
                                                                                                                                
TERRY   L.   THURBON,   Commissioner,  National   Conference   of                                                               
Commissioners on Uniform State Laws  (NCCUSL), explained that the                                                               
NCCUSL  has  identified   changes  to  the  UCC   that  would  be                                                               
beneficial for  states to  adopt, and  that the  changes proposed                                                               
via HB  102 pertain  to the statutes  that govern  the commercial                                                               
transactions occurring in  the state, reflect the  use of modern-                                                               
day  technology  for  such  transactions,  and  will  help  bring                                                               
Alaska's laws up  to date.  She mentioned that  she would only be                                                               
addressing the  sections in  Version S that  pertain to  the UCC,                                                               
and  would not  be speaking  to  the bill's  proposed changes  to                                                               
Title 9 or Title 34.                                                                                                            
                                                                                                                                
REPRESENTATIVE  HOLMES noted  that  proposed AS  45.01.211(b)(15)                                                               
says,  "'defendant'   includes  a  person  in   the  position  of                                                               
defendant in a counterclaim,  cross-claim, or third-party claim;"                                                               
and questioned whether  the word "claim" ought to  be included as                                                               
part of that definition.                                                                                                        
                                                                                                                                
REPRESENTATIVE  GRUENBERG explained  that AS  01.10.040(b) states                                                               
that when the words "includes" or  "including" are used in a law,                                                               
they shall  be construed as  though followed by the  phrase, "but                                                               
not limited to".  He  surmised, therefore, that the definition in                                                               
proposed AS 45.01.211(b)(15) already includes claims.                                                                           
                                                                                                                                
1:18:24 PM                                                                                                                    
                                                                                                                                
WILLIAM   H.  HENNING,   Commissioner,  National   Conference  of                                                               
Commissioners  on Uniform  State  Laws  (NCCUSL), concurred  with                                                               
that  explanation,   adding  that  the  UCC   contains  the  same                                                               
definition as proposed AS 45.01.211(b)(15).                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG  observed that  Version S's  proposed AS                                                               
45.07.302  -  regarding  through  bills  of  lading  and  similar                                                               
documents  of title  -  now  reflects current  federal  law.   In                                                               
response to a  question regarding the bill's  indirect court rule                                                               
changes,  he  explained  that   proposed  AS  45.01.303(g)  would                                                               
require that  if there is  evidence of a relevant  trade practice                                                               
offered by one  party, that party must give  sufficient notice to                                                               
the other party  so as not to surprise the  other party; and that                                                               
proposed AS 45.01.307 would establish  that documents required by                                                               
the  contract to  be issued  by a  third party  would be  what he                                                               
characterized  as  "self-authenticating."    Such  documents,  he                                                               
proffered, would be easier to  introduce [in court] and yet still                                                               
be subject to challenge.                                                                                                        
                                                                                                                                
MR. HENNING added that the  language of proposed AS 45.01.307 [is                                                               
identical  to  that  currently]  in the  UCC;  that  proposed  AS                                                               
45.01.303(g) contains language  that has always been  part of the                                                               
UCC,  and  is not  a  burden-shifting  mechanism; and  that  both                                                               
provisions are consistent with federal [court] rules.                                                                           
                                                                                                                                
MS.  THURBON  in response  to  comments,  relayed that  [Alaska's                                                               
NCCUSL  commissioners  and  the   drafter]  took  a  conservative                                                               
approach  with regard  to including  language  that would  effect                                                               
indirect  court rule  changes, and  are therefore  not completely                                                               
certain that the  bill's proposed changes to the  UCC really will                                                               
result in  "standards that are  different than would  occur under                                                               
the  court rules  as  they stand,"  but  included the  provisions                                                               
authorizing  indirect  court  rule  changes in  order  to  update                                                               
Alaska's statutes even if indirect  court rule changes do result.                                                               
She  offered  her understanding  that  "these  provisions of  the                                                               
revised [UCC]  are consistent with  other uniform Acts  that [the                                                               
NCCUSL] has  developed except to  the extent some of  those might                                                               
not yet have been updated."                                                                                                     
                                                                                                                                
MS. THURBON, in response to  a question, relayed that with regard                                                               
to the UCC provisions, there is  wide support - nationally - from                                                               
the warehousing industries, and that  the business section of the                                                               
Alaska  Bar  Association  (ABA)  is  amenable  to  [the  proposed                                                               
changes  to state  law].   Therefore,  although it  might not  be                                                               
urgent that the state adopt the  proposed updates, doing so is in                                                               
order if Alaska  is going to stay  on track with the  rest of the                                                               
country, particularly with regard  to the warehousing provisions,                                                               
and  particularly given  that [almost  40  states either  already                                                               
have adopted or will be adopting  updates to the UCC].  Moreover,                                                               
from the  perspective of various  operators, a failure  to update                                                               
Alaska's warehousing  provisions could  make it a  little riskier                                                               
to do  business in Alaska.   In conclusion, she said  she doesn't                                                               
see a downside to the [updated] UCC provisions.                                                                                 
                                                                                                                                
CHAIR RAMRAS agreed.                                                                                                            
                                                                                                                                
1:32:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAHLSTROM  asked whether shipping rates  to Alaska                                                               
would be positively affected by the adoption of HB 102.                                                                         
                                                                                                                                
MS. THURBON declined  to venture whether such would  be the case,                                                               
but  suggested that  adopting the  bill might  make it  easier to                                                               
litigate excessive rates.   In response to  another question, she                                                               
relayed  that  the bill  is  not  intended  to fix  a  particular                                                               
problem  with Alaska  law, that  Alaska is  already behind  other                                                               
states with  regard to  updating its  commercial code  to reflect                                                               
the use of new technology, and  that the bill would conform state                                                               
law to what is already occurring.                                                                                               
                                                                                                                                
MR. HENNING explained that during  the 1990s, through about 2001,                                                               
there was  a major effort to  revise the UCC generally,  with one                                                               
of  the  goals  being  to  create a  neutral  playing  field  for                                                               
technological  advancements such  as  electronic signatures,  for                                                               
example.   Of the  several revisions to  various articles  of the                                                               
UCC  that have  occurred  over  the last  several  years, HB  102                                                               
reflects some of the latest revisions  as well as aspects of "the                                                               
model that  was created by  the Uniform Transactions  Act," which                                                               
Alaska  has adopted.   Providing  for electronic  certificates of                                                               
title, for example, will help knit  the rest of the UCC together,                                                               
and will  bring Alaska up to  date with regard to  what's already                                                               
occurring in  the commercial community.   In conclusion,  he said                                                               
he couldn't  think of a  single negative aspect [to  adopting the                                                               
revisions to the UCC].                                                                                                          
                                                                                                                                
CHAIR  RAMRAS, after  ascertaining  that no  one  else wished  to                                                               
testify, closed public testimony on HB 102.                                                                                     
                                                                                                                                
1:39:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DAHLSTROM moved  to  report the  proposed CS  for                                                               
HB 102,   Version  26-LS0059\S,   Bannister,   2/24/09,  out   of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  102(JUD)  was                                                               
reported out of the House Judiciary Standing Committee.