Legislature(1997 - 1998)

02/17/1997 01:03 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HB 119 - INCREASE SMALL CLAIMS JURISDICTION                                 
 Number 0037                                                                   
 CHAIRMAN GREEN advised members they would be considering HB 119 -             
 "An Act raising the limit on small claims actions to $10,000; and             
 providing for an effective date."                                             
 Vice Chairman Bunde arrived.                                                  
 CHAIRMAN GREEN invited Tom Manninen, staff to Representative Mark             
 Hodgins, the prime sponsor of HB 119, to provide comments on the              
 proposed legislation.                                                         
 TOM MANNENIN, Legislative Administrative Assistant to                         
 Representative Hodgins, provided an overview of HB 119.  He said              
 the proposed legislation would increase the small claims cap to               
 $10,000, presently set at $5,000.  Representative Hodgins felt the            
 increase would more accurately represent the real dollar costs                
 involved in small claims litigation.                                          
 Number 0154                                                                   
 REPRESENTATIVE NORMAN ROKEBERG asked Mr. Mannenin when the small              
 claims cap was last changed.                                                  
 MR. MANNENIN advised members the cap was changed to $5000 in 1986.            
 Representative Jeannette James arrived.                                       
 REPRESENTATIVE ROKEBERG asked what the inflation rate was over the            
 past 11 years.                                                                
 MR. MANNENIN advised members the inflation rate was between 33.5              
 percent to 40 percent.                                                        
 REPRESENTATIVE ROKEBERG felt the number given might be accurate for           
 the city of Anchorage.  He felt that the United States' city                  
 average rate of inflation was possibly higher than 33.5 percent               
 during that period of time.  He stated that the rate of inflation,            
 over an 11 year period, would account for a significant rationale             
 for the increase in the small claims cap.                                     
 REPRESENTATIVE CON BUNDE asked what kind of input they had received           
 from the legal community regarding the increase in the small claims           
 MR. MANNENIN said they have not received much input from the legal            
 community.  He felt there could be some concern out there, but no             
 one had expressed concern to Representative Hodgins.                          
 REPRESENTATIVE ETHAN BERKOWITZ responded to Representative Bunde's            
 question.  He advised members that usually small claims cases were            
 too small to be of any financial value, or attraction, to                     
 attorneys.  He said there are not many lawyers who become involved            
 in small claims.                                                              
 REPRESENTATIVE BUNDE questioned whether the small claims process              
 would become a more formal procedure because of the increase in the           
 CHAIRMAN GREEN advised members that Chris Christensen from the                
 Alaska Court System would be providing testimony, via                         
 teleconference, and would address the fiscal note submitted by the            
 court system.                                                                 
 REPRESENTATIVE ROKEBERG asked Mr. Mannenin if he knew what the                
 small claims caps were in other states.                                       
 MR. MANNENIN advised members that he could not answer that                    
 Number 0445                                                                   
 REPRESENTATIVE JEANNETTE JAMES asked what the current filing fee              
 CHAIRMAN GREEN responded that the current filing fee was $25.00,              
 adding that the filing fee had not changed for some time.                     
 REPRESENTATIVE JAMES felt the filing fee ought to be increased as             
 well.  She advised members if a person hired an attorney to                   
 represent the case, they would be required to pay an up-front                 
 retainer fee, and by increasing the filing fee for those who handle           
 their own small claims suits, it would provide more of a balance of           
 the two instances.                                                            
 CHAIRMAN GREEN asked that Chris Christensen address the committee             
 on the fiscal note.                                                           
 CHRIS CHRISTENSEN, General Counsel, Alaska Court System, pointed              
 out that more bills affect the judiciary than other executive                 
 branch departments.  Several hundred bills affecting the judiciary            
 are introduced in each legislature.  Mr. Christensen advised                  
 members that, as a general rule, the Alaska Supreme Court did not             
 take a position in favor or against any piece of legislation.  He             
 noted that he would attempt to bring technical problems to the                
 attention of the committee, and advise members of costs relating to           
 proposed legislation.  Mr. Christensen reiterated that the court              
 would only take a position when it believes a bill would have a               
 very significant impact on the internal operations of the branch.             
 MR. CHRISTENSEN noted that he was making the disclaimer because he            
 wanted the committee to know that the court does not take the                 
 position to oppose or support legislation lightly.  However, Mr.              
 Christensen advised members that the Alaska Court System did oppose           
 the proposed legislation in its current form.                                 
 MR. CHRISTENSEN explained that HB 119 doubled the jurisdictional              
 limit of small claims actions from $5000 to $10,000.  He advised              
 members that the Alaska Supreme Court did not object to increasing            
 the small claims jurisdiction, quite the contrary.  Mr. Christensen           
 pointed out that since the last increase in the small claims cap,             
 which took place in 1986, the consumer price index (CPI), for                 
 Anchorage had increased by approximately 35 percent.  That increase           
 would reflect that the small claims jurisdiction should be at                 
 approximately $6900.                                                          
 MR. CHRISTENSEN pointed out that he had advised the legislature               
 several times during the last few sessions that the court does not            
 object to an increase above the inflation rate, possibly as high as           
 $7500.  At that point, the court would evaluate the consequences of           
 the increase.  The legislature could revisit the issue in another             
 two years to determine whether the consequences were not too severe           
 as a result of the initial increase and evaluate whether another              
 increase, up to $10,000, would be appropriate at that time.                   
 MR. CHRISTENSEN advised members that the court system believed that           
 a jump to $10,000, at this time, would have potential of imposing             
 some very severe consequences on the court system.  He felt there             
 was a common misunderstanding about small claims court; most people           
 think that because it is a simple, cheap court for the parties, it            
 is also a simple, cheap court for the state.  This understanding is           
 not true.                                                                     
 MR. CHRISTENSEN said small claims cases require far more clerical             
 involvement than low value cases which proceed under formal rules             
 in district court.  He explained that the courts not only create              
 and provide the parties with fill-in-the-blank forms, but they also           
 assist parties in filling out the forms.  Mr. Christensen pointed             
 out that the court provides much more detailed procedural                     
 assistance in the conduct of a claim, as well as performing much of           
 the procedural work for the parties such as serving documents on              
 the opposing party.                                                           
 MR. CHRISTENSEN pointed out that the court system hires the best              
 people they can get; however, he expected that it was quite                   
 possible that there would be many cases, in many locations, where             
 the magistrate would not be able to handle the case because of its            
 complexity.  He noted that magistrates were normally not attorneys.           
 MR. CHRISTENSEN said an additional problem was that the vast                  
 majority of those who file small claims actions never talk to a               
 lawyer first.  Whereas, the majority of those filing a suit in                
 district court would first consult with an attorney.  Many of those           
 cases never see the courthouse because the lawyer was able to                 
 settle the case or explain to the person filing the suit why they             
 would not have an arguable case.                                              
 MR. CHRISTENSEN stated that the filing of small claims actions                
 increased by 11 percent in 1996, but the resources to handle those            
 cases did not increase.  This results in the courts losing the                
 ability to handle the cases in an expeditious manner and HB 119               
 would most likely increase that problem.                                      
 MR. CHRISTENSEN further stated that small claims court is an                  
 essential element in the justice system.  He explained that it                
 provided a forum for people to resolve their disputes                         
 constructively and allows people to deal with small claims that               
 could not be handled economically by an attorney.                             
 MR. CHRISTENSEN pointed out that there was a wide range of opinions           
 on what that cap level should be.  He noted that more than half the           
 states, including states with a higher cost of living than Alaska             
 such as Hawaii, place the limit of small claims jurisdiction at or            
 below $3000, with only two states placing the limit above $5000.              
 MR. CHRISTENSEN pointed out the fact that even though the crime               
 rate decreased the previous year, more people were being prosecuted           
 - presumably because more people were being caught.  The increase             
 in prosecution meant that the court system was falling behind.  He            
 noted that they have more work with no increase in resources.                 
 MR. CHRISTENSEN advised members that the court strongly believed              
 that an increase in small claims jurisdiction to $10,000 would have           
 a serious potential of creating a further imbalance within the                
 system and causing some severe internal problems.                             
 MR. CHRISTENSEN pointed out that it was not just a question of the            
 fiscal note.  He noted that the fiscal note submitted by the court            
 system only reflected an increase in clerical time.  There were               
 additional things that could not be reflected in the fiscal note,             
 which was why the Alaska Supreme Court was concerned.  Mr.                    
 Christensen explained that if the case load became substantially              
 more complex, with many magistrates unable to handle those complex            
 cases, injustice would result.  He said this was not the kind of              
 thing one could attach to a fiscal note.                                      
 MR. CHRISTENSEN strongly urged the committee to consider an                   
 amendment to HB 119 which would place the small claims cap at $7500           
 and then revisit the issue in two years, after the court system had           
 time to evaluate the consequences of an increase.                             
 Number 1255                                                                   
 CHAIRMAN GREEN asked Mr. Christensen to comment on what happened to           
 the court system when the small claims limit was increased from               
 $2000 to $5000.                                                               
 MR. CHRISTENSEN could not answer that, although he felt that they             
 might be able to figure it out by looking through the annual                  
 CHAIRMAN GREEN noted the court system was concerned over the                  
 doubling of the cap, and mentioned that the increase from $2000 to            
 $5000 was a two and a half fold increase.                                     
 MR. CHRISTENSEN advised members he had some statistics available.             
 The statistics showed the age of pending cases in small claims                
 court as of December 31, 1996.  These were cases the court was                
 attempting to get out as quickly as possible because that is what             
 small claims court is all about.  The median case in Anchorage was            
 300 days old and the average case 400 days old.   In Ketchikan it             
 was 450 days old.  Mr. Christensen explained that the delays, in              
 part, were the result of the 11 percent increase in case loads the            
 previous year without any increase in resources.                              
 MR. CHRISTENSEN advised members that taking 300 days to get a small           
 claims case resolved was wrong.  If the state dramatically                    
 increases the jurisdictional limit, the number of days could extend           
 further.  He added that "justice delayed is justice denied," which            
 he did not believe was the intent of the legislature.                         
 CHAIRMAN GREEN said the large difference between the median and the           
 average would indicate a heavy end to the curve.                              
 Number 1417                                                                   
 REPRESENTATIVE JAMES asked how the fee, for filing a small claims             
 suit, was established.                                                        
 MR. CHRISTENSEN said the Alaska Supreme Court had been given the              
 authority to establish filing fees for various types of cases.  The           
 fee to file in small claims court is $25.  Mr. Christensen pointed            
 out the fee for small claims court was low because it was supposed            
 to be the people's court, an inexpensive court where a lawyer is              
 not needed.   The court system did not want to the fee to serve to            
 bar small claims.                                                             
 REPRESENTATIVE JAMES understood that small claims court was                   
 supposed to be inexpensive, but that did not mean it was not                  
 suppose to pay its own way.  She proposed the establishment of a              
 sliding scale in conjunction with the size of the claim.                      
 MR. CHRISTENSEN said the Alaska Supreme Court had always believed             
 very strongly that small claims cases were not supposed to pay                
 their own way.  He stated that justice was one of the basic                   
 functions of state government.  Providing a justice system was not            
 something the state does because people want it or because it makes           
 them feel good, but because the state has to provide it.  Mr.                 
 Christensen noted that without a justice system there would not be            
 much point in government.                                                     
 MR. CHRISTENSEN added that justice should be funded at the level              
 needed, whether or not it actually paid its own way.  He advised              
 members that the legislature could enact a sliding scale fee and              
 overturn the court rule if it chose to.                                       
 Number 1651                                                                   
 REPRESENTATIVE BUNDE felt that possibly some of the small claims              
 case load would diminish if there was some personal investment                
 involved in achieving access to small claims court.  He suggested             
 that the application should pay for itself and did not see how a              
 filing fee of $25 would cover all the court assistance procedures             
 and paper work costs.  Representative Bunde asked Mr. Christensen             
 what the filing process cost the court system per claimant.                   
 MR. CHRISTENSEN expressed that it was low cost to the litigant, but           
 not for the state.  He explained, that although the court charges             
 the $25 filing fee, the claimant could pick up the forms and                  
 receive free assistance from the clerks in completing the forms.              
 Mr. Christensen pointed out that the Alaska Supreme Court did                 
 review filing fee rates every four or five years to make sure they            
 are reasonable and does so by comparing the rate with other states.           
 He added that filing fees in Alaska were not particularly low.  He            
 noted that the state would not want to impose a filing fee so high            
 that it would make people feel they have been barred from justice.            
 Number 1851                                                                   
 REPRESENTATIVE ROKEBERG asked that Mr. Christensen explain the                
 jurisdiction of the district court, the small claims court and how            
 they mesh.                                                                    
 MR. CHRISTENSEN advised members that the district court had                   
 jurisdiction over civil claims up to $50,000 while the small claims           
 court has jurisdiction up to $5000.  He noted that the small claims           
 court was also barred from hearing certain kinds of cases which the           
 district court is allowed to hear.  These cases include the ability           
 to file a claim against the state, a claim involving equity, or               
 certain types of tort actions such as; false arrest, false                    
 imprisonment, malicious prosecution, defamation or slander.                   
 Number 1920                                                                   
 MR. CHRISTENSEN advised members that there were actually two kinds            
 of judges in a district court; district judges appointed by the               
 governor who have the full district court jurisdiction, and                   
 magistrates who are hired by the court system who have limited                
 district court jurisdiction.  Magistrates can only hear infractions           
 and small claims cases.                                                       
 Number 2074                                                                   
 REPRESENTATIVE BRIAN PORTER referenced the court's practice of                
 serving process in small claims court and asked why the court chose           
 to offer that service.                                                        
 MR. CHRISTENSEN advised members that the court charges the fee,               
 fills out the paperwork and provides it to the process servers.  He           
 understood this was because the legislature had instructed the                
 Alaska Supreme Court to make the rules simple and expeditious.  He            
 pointed out, in the distant past, this was one way to simplify the            
 procedure.  He added that the average citizen did not understand              
 the service of process and, if that was done improperly, there                
 would not be a case.                                                          
 REPRESENTATIVE ETHAN BERKOWITZ asked if the courts would have more            
 problems, as a result of the increase in the small claims cap, with           
 higher numbers of pro se litigants.                                           
 MR. CHRISTENSEN said this would be one distinct problem the court             
 system felt it would have as a result of HB 119.  Pro se litigants            
 were very expensive, difficult and time consuming to handle, but it           
 was a duty of the court to handle those cases as a matter of public           
 service.  Mr. Christensen advised members that the court had over             
 8,000 small claims cases, which was close to 10 percent of the                
 court's case load, and the court was already delaying those cases             
 way beyond the point that they should have been resolved.                     
 Number 2212                                                                   
 REPRESENTATIVE BERKOWITZ expressed concern about the apparent gap             
 for people seeking justice between $5000 and $50,000.  He asked how           
 many suits had been filed in district court between $5000 and                 
 $10,000 in 1996.                                                              
 MR. CHRISTENSEN could not answer that, although would attempt to              
 get that statistic.  He did not know if the court's computer system           
 had the ability to produce that information.                                  
 REPRESENTATIVE BERKOWITZ asked which two states had a small claims            
 cap over $5000 and what their experience had been.                            
 MR. CHRISTENSEN advised members that the two states were Nevada and           
 Tennessee, but he did not know what their experiences had been.               
 REPRESENTATIVE BERKOWITZ asked Mr. Christensen if he could suggest            
 any alternatives, in lieu of raising the cap to $10,000, that would           
 provide more civil justice to a greater amount of people in the               
 small claims court.                                                           
 MR. CHRISTENSEN advised members that would be something he would              
 have to give some serious thought to.                                         
 CHAIRMAN GREEN pointed out that the inflation rate had increased              
 approximately 35 percent over the past 11 years and that rate would           
 increase the present $5000 small claims cap to almost $7000.  He              
 asked Mr. Christensen if the court would support an increase to               
 $7500, and then revisit the issue in a couple years.                          
 MR. CHRISTENSEN advised members the court system would support                
 that.  He explained that the court system was a strong supporter of           
 small claims court and thinks it is essential, it increases                   
 justice.  Mr. Christensen stated that the court system felt $7500             
 would be appropriate, the court system could evaluate the                     
 consequences with the issue being revisited in two years.  He noted           
 that if it was not causing the kinds of problems the court system             
 felt might occur then it might be appropriate to raise the cap                
 again at that time.                                                           
 Number 2320                                                                   
 REPRESENTATIVE ROKEBERG asked if HB 119 were amended to a $7500               
 small claims limit, if the fiscal note would be reduced.                      
 MR. CHRISTENSEN stated that this cap would reduce the fiscal note             
 possibly by half because it would result in much less clerical work           
 being provided by the court system.                                           
 Number 2380                                                                   
 REPRESENTATIVE JAMES pointed out that the fiscal note was                     
 requesting funds for one more person, but with the existing backlog           
 and delay in hearing small claims cases she felt an additional                
 person was needed anyway.  If that staff was located in Anchorage             
 it would not help other areas of the state with their backlog                 
 MR. CHRISTENSEN explained that the court could hire part-time                 
 people in several locations, attempt to move clerical work from one           
 site to another, or use the funds to pay overtime in various                  
 locations.  He noted that the court system had alerted the                    
 Judiciary Committees and the Finance Committees, over the past                
 several years, that they would be seeing a large case load increase           
 because of the increase of law enforcement officers in Anchorage,             
 which the legislature did not fund.  He referred to a discussion              
 with clerk of court in Anchorage two weeks ago, who said that                 
 traffic tickets for the calendar year 1996 had increased by 8,000.            
 Mr. Christensen pointed out that these tickets were not paid by               
 mail, but tickets where people actually showed up in court.  The              
 Anchorage court system was falling dramatically behind because of             
 the municipality's increased police force.                                    
 TAPE 97-19, SIDE B                                                            
 Number 000                                                                    
 REPRESENTATIVE BUNDE felt that an increase in the small claims                
 jurisdiction should increase the filing fee at the same rate.  He             
 asked that Mr. Christensen comment on that suggestion, and provide            
 some ideas as to how to accomplish that.                                      
 REPRESENTATIVE PORTER said, if there are 8,000 cases now and the              
 jurisdiction is increased and we estimate that the case load would            
 increase by half, increasing the filing fees from $25 to $50 would            
 bring in another $100,000.                                                    
 Number 0042                                                                   
 MR. CHRISTENSEN pointed out that filing fees were set in the court            
 rules.  The  legislature could instruct a legislative drafter to              
 add a court rules change to the bill.  Mr. Christensen thought the            
 filing fee for district court was currently set at $60.00.  He                
 pointed out that the Alaska Court System did not get program                  
 receipts.  All fees, fines and forfeitures accepted by the courts             
 each year are turned over to the general fund, this amount was                
 approximately $7 million in 1996.                                             
 REPRESENTATIVE BERKOWITZ asked if the chairman would accept a                 
 motion to table HB 119 for the purpose of allowing Representative             
 Croft, as a co-sponsor to the proposed legislation, to speak to the           
 concerns expressed during the meeting.                                        
 Number 0220                                                                   
 REPRESENTATIVE ROKEBERG felt the proposed legislation could be held           
 over for further consideration, rather than tabled.                           
 REPRESENTATIVE PORTER had no objection to holding the bill for                
 further consideration of an appropriate increase in the small                 
 claims cap, as well as an increase in filing fees for those types             
 of cases.                                                                     
 Number 0298                                                                   
 REPRESENTATIVE JAMES stated that the existing $25 filing fee had              
 been in existence for a long period of time and felt it should                
 increase along with the small claims cap.  It was her desire that             
 the bill be held in order to speak with the prime sponsor,                    
 Representative Hodgins, on those issues.  She agreed with                     
 Representative Rokeberg that it would not be necessary to table the           
 REPRESENTATIVE BUNDE advised members that he would feel more                  
 comfortable if the small claims cap were increased to $7,500 in               
 addition to increasing the filing fee.  He felt the sponsor should            
 be aware of it and comfortable with the suggestions presented by              
 members of the House Judiciary Standing Committee.                            
 Number 0520                                                                   
 TOM MANNENIN noted that he would feel more comfortable with                   
 Representative Hodgins speaking for himself, but stated it did not            
 seem reasonable to increase the cap to $7,500 this year and raise             
 it again in a year or two.  He said it would require a change in              
 filing forms which would result in additional costs to the system.            
 He felt, in the long run, it would cost the state more time, energy           
 and effort.  He said if we realize that this is a problem, accept             
 it as such, change the cap one time, then everything would be done.           
 CHAIRMAN GREEN felt it was a convincing argument and advised                  
 members he would hold the bill for further consideration and notice           
 from the chair.                                                               

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