02/09/1993 01:40 PM Senate L&C

  As prime sponsor, SENATOR KELLY  introduced SB 73 (LIABILITY                 
  OF  DESIGN/CONSTRUCTION PROFESSIONALS)  and asked  his aide,                 
  JOSH FINK, to review the bill for committee.                                 
                                                                               
  Number 523                                                                   
                                                                               
  MR. FINK   explained a  similar bill had  passed the  Senate                 
  last year, and  he gave  a brief history  on the Statute  of                 
  Repose along with the rationale.  This presumed that after a                 
  building had been utilized safely for 10 years, the facility                 
  should be deemed safe, and the design  professions should be                 
  protected from suit after the passage of a reasonable amount                 
  of time.                                                                     
                                                                               
  MR. FINK  outlined the  legal problems,  and explained  that                 
  currently design professionals are subject  to an indefinite                 
  period of liability.  He reviewed the supreme court decision                 
  arising   from   the   1988   consolidated   cases,   Turner                 
  construction v.  Robert Scales  and Iverson  Construction v.                 
  DeWayne  Carson  and  referred the  committee  to  two legal                 
  opinions in the bill packet.                                                 
                                                                               
  MR. FINK  said SB  73 would  repeal  the 6  year Statute  of                 
  Repose and reenact a 10 year Statute of Repose in its place,                 
  and he  explained the legal  implications of  the bill,  and                 
  referred the Senators to additional  information in the bill                 
  packet.   In his  summation, MR.  FINK said  the bill  would                 
  provide reasonable protection for  design professionals.  He                 
  noted two zero fiscal notes.                                                 
                                                                               
  Number 554                                                                   
                                                                               
  SENATOR KELLY asked  for additional information on  the bill                 
  introduced during the  last legislature,  and MR. FINK  gave                 
  him the voting history on the bill.                                          
                                                                               
                                                                               
  SENATOR KELLY  invited DOUG  GREEN, Chairman  of the  Alaska                 
  Professional Design Council's legislative liaison committee,                 
  and a registered architect, to begin the testimony.                          
                                                                               
  MR.  GREEN  commenced  with  some   history  on  the  Alaska                 
  Professional  Design  Council which  represented all  of the                 
  design  professionals  in  the  State  of  Alaska  -  eleven                 
  different associations and  1400 design professionals state-                 
  wide.   He made  several points  in favor  of  the bill  and                 
  explained  the  Statute of  Limitations  in relation  to the                 
  Statute of  Repose, which  fixes a  time from  the date  the                 
  project is completed  until a  period in the  future.   This                 
  date, 10 years hence, would cut  off the time for litigation                 
  against the  project and  against the design  professionals,                 
  except in the case of gross negligence.                                      
                                                                               
  MR. GREEN predicted the bill would encourage construction in                 
  Alaska, and he  described the number  of third party  claims                 
  for a slip-and-fall type of  incidence that makes the design                 
  professionals vulnerable to litigation.                                      
                                                                               
  Number 580                                                                   
                                                                               
  TAPE 93-9, SIDE B                                                            
  Number 001                                                                   
                                                                               
  MR. GREEN deplored the amount of  research it took to answer                 
  the litigations, and he assured the committee the bill would                 
  not limit the access to courts, even after 10 years.                         
                                                                               
  SENATOR SALO asked for  an example of what would  constitute                 
  gross  negligence  v.  inadequate  design  or  stress  on  a                 
  building.  She said  it might be many years before  a design                 
  flaw comes to light.                                                         
                                                                               
  MR. GREEN  gave an example of what might be concealed in the                 
  construction of a building which  might have a deficiency in                 
  the design.  He said that would not be standard practice and                 
  would constitute gross negligence on the part of a designer,                 
  giving recourse through the courts.                                          
                                                                               
  SENATOR SALO asked about  roofs, which she said  are problem                 
  areas in  Alaska.  She  also asked  whether a change  in the                 
  statute would change the burden of proof.                                    
                                                                               
  MR. GREEN described  the circumstances and remedies  for the                 
  failure  of a  roof as a  maintenance item, and  he said the                 
  Statute of Repose  could inform  the design professional  to                 
  look to the maintenance record by  the owners as part of the                 
  defense.                                                                     
                                                                               
  Number 066                                                                   
                                                                               
                                                                               
  SENATOR  KELLY  next  called  on  RICHARD RITTER  and  COLIN                 
  MAYNARD to testify.                                                          
                                                                               
  MR. RITTER said that  45 states currently have a  Statute of                 
  Repose, and  of the 45, 32 have been declared constitutional                 
  in actual  court cases.   He  explained Alaska's  Statute of                 
  Repose had been declared unconstitutional.                                   
                                                                               
  MR.  MAYNARD  assured  the  committee  of support  from  the                 
  engineering society for  the Statue of Repose, but he didn't                 
  think they  should be subjected  to an indefinite  period of                 
  liability.                                                                   
                                                                               
  He described being dragged into a  suit even though his firm                 
  had been retired for 10 years.  He quoted some statistics to                 
  show  design  problems after  10  years was  for  other than                 
  failure by the design professionals, but from remodeling and                 
  neglected maintenance.                                                       
                                                                               
  SENATOR LINCOLN questioned  the letter from  the legislative                 
  counsel, MIKE FORD,  as to why the change had been made from                 
  7 to 10 years.  MR. FORD explained the correction.                           
                                                                               
  SENATOR LINCOLN, in  reference to  the studies by  Shinnerer                 
  Management  Services, Inc.,  quoted  the "vast  majority  of                 
  claims filed against Design Professionals are brought within                 
  six  years  of   substantial  completion..."     She  quoted                 
  additional statistics from the legislation  as stating 83.6%                 
  of the claims were filed the  first 5 years, and 45% of  the                 
  claims were  filed  during construction.    SENATOR  LINCOLN                 
  wanted to know why the legislature was going to 10 years for                 
  such a small percent of claims.                                              
                                                                               
  MR. GREEN explained the legislation stretches out the number                 
  of possible claims to  97% of everyone who would,  or could,                 
  file a claim.  He further explained the design professionals                 
  want to  provide some  end point  fair to  everyone, but  as                 
  design professionals  wanted to  be able  to retire  and not                 
  have to be called to be accountable for a building.                          
                                                                               
  Number 145                                                                   
                                                                               
  MR. RITTER added  that without  a Statue  of Repose,  design                 
  professionals are  forced  to consider  "tail" insurance  to                 
  retire their business.                                                       
                                                                               
  SENATOR SALO asked  if after the  10 year period, would  the                 
  insurance premiums be less?                                                  
                                                                               
  MR. MAYNARD  said they  were unable  to  see any  difference                 
  immediately, but it would enable the design professionals to                 
  throw away their files after 10 years.                                       
                                                                               
  MR.   RITTER   discussed   insurance    problems   including                 
                                                                               
                                                                               
  deductibles and claims.  In answer to questions from SENATOR                 
  KELLY, MR.  RITTER  described expensive  court costs,  legal                 
  fees, and insurance premiums.                                                
                                                                               
  Number 180                                                                   
                                                                               
  SENATOR RIEGER directed  MR. FORD to  Sections 2 and 3,  and                 
  questioned him  about an equal  protection case  on page  3,                 
  line  5,  where a  number  of  trades and  crafts  have been                 
  included  in  the  exemption  rather  than just  the  design                 
  professionals.                                                               
                                                                               
  MR. FORD  explained why he  thought it might help  to have a                 
  broad  base  of  people.    He  cited the  lack  of  several                 
  liability as a success  factor in the bill.   SENATOR RIEGER                 
  and  MR.  FORD  discussed some  other  aspects  of the  bill                 
  including joint several liability.                                           
                                                                               
  SENATOR KELLY called for a motion on the bill.                               
                                                                               
  SENATOR  RIEGER  moved  to  pass  SENATE  BILL NO.  73  from                 
  committee   with   individual   recommendations.     Without                 
  objections, so ordered.