Legislature(1997 - 1998)

03/07/1997 01:08 PM JUD

Audio Topic
* first hearing in first committee of referral
+ 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            
 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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