Legislature(2001 - 2002)
03/15/2002 01:10 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
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
March 15, 2002
1:10 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chair
Representative Scott Ogan, Vice Chair
Representative Jeannette James
Representative John Coghill
Representative Kevin Meyer
Representative Ethan Berkowitz
MEMBERS ABSENT
Representative Albert Kookesh
COMMITTEE CALENDAR
HOUSE BILL NO. 499
"An Act relating to the sale, lease, exchange, or other
disposition of business property and assets."
- HEARD AND HELD
HOUSE BILL NO. 501
"An Act relating to the use of unclaimed property to pay court-
ordered restitution; and providing for an effective date."
- MOVED HB 501 OUT OF COMMITTEE
HOUSE BILL NO. 489
"An Act relating to cruelty to animals."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 499
SHORT TITLE:DISPOSITION OF BUSINESS ASSETS
SPONSOR(S): JUDICIARY
Jrn-Date Jrn-Page Action
02/27/02 2407 (H) READ THE FIRST TIME -
REFERRALS
02/27/02 2407 (H) JUD
02/27/02 2407 (H) REFERRED TO JUDICIARY
03/15/02 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 501
SHORT TITLE:UNCLAIMED PROPERTY & RESTITUTION
SPONSOR(S): JUDICIARY
Jrn-Date Jrn-Page Action
02/27/02 2408 (H) READ THE FIRST TIME -
REFERRALS
02/27/02 2408 (H) JUD
03/15/02 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 489
SHORT TITLE:CRUELTY TO ANIMALS
SPONSOR(S): REPRESENTATIVE(S)CHENAULT
Jrn-Date Jrn-Page Action
02/19/02 2319 (H) READ THE FIRST TIME -
REFERRALS
02/19/02 2319 (H) JUD
02/19/02 2319 (H) REFERRED TO JUDICIARY
02/22/02 2370 (H) COSPONSOR(S): KOTT
03/01/02 2450 (H) COSPONSOR(S): CROFT
03/06/02 2497 (H) COSPONSOR(S): JAMES, FOSTER
03/15/02 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
HEATHER M. NOBREGA, Staff
to Representative Norman Rokeberg
House Judiciary Standing Committee
Alaska State Legislature
Capitol Building, Room 118
Juneau, Alaska 99801
POSITION STATEMENT: Presented HB 499 and HB 501.
THEODORE M. PEASE, JR., Attorney
Burr, Pease & Kurtz, PC
810 North Street
Anchorage, Alaska 99501
POSITION STATEMENT: Testified in support of HB 499, provided
information regarding Savage Arms Inc. v. Western Auto Supply
Co., and responded to questions.
RONALD COBURN, Chairman and Chief Executive Officer
Savage Sports Corporation
(No address provided)
New Hampshire
POSITION STATEMENT: Provided testimony during discussion of HB
499.
JAMES D. DeWITT, Attorney
813 Lancaster Drive
Fairbanks, Alaska 99709
POSITION STATEMENT: Provided testimony during discussion of HB
499 and urged its passage.
RACHEL LEWIS
Unclaimed Property Section
Treasury Division
Department of Revenue
PO Box 110405
Juneau, Alaska 99811-0405
POSITION STATEMENT: Answered questions regarding HB 501.
ACTION NARRATIVE
TAPE 02-30, SIDE A
Number 0001
CHAIR NORMAN ROKEBERG called the House Judiciary Standing
Committee meeting to order at 1:10 p.m. Representatives
Rokeberg, Ogan, James, Coghill, and Meyer were present at the
call to order. Representative Berkowitz arrived as the meeting
was in progress.
HB 499 - DISPOSITION OF BUSINESS ASSETS
Number 0047
CHAIR ROKEBERG announced that the first order of business would
be HOUSE BILL NO. 499, "An Act relating to the sale, lease,
exchange, or other disposition of business property and assets."
Number 0082
HEATHER M. NOBREGA, Staff to Representative Norman Rokeberg,
House Judiciary Standing Committee, Alaska State Legislature,
explained that HB 499 was created in response to a decision made
by the Alaska Supreme Court in the Savage Arms, Inc. v. Western
Auto Supply Co. case. Last year the Alaska Supreme Court
considered, for the first time, the doctrine of successor
liability, which holds, for example, that when a corporation
purchases a company and its assets, the general rule is that the
purchasing company is not held responsible for the selling
company's liabilities unless the purchasing company expressly
assumes those liabilities. The successor liability theory, she
noted, holds that there are exceptions to this [general] rule,
and the courts throughout the nation have [recognized these]
different exceptions to this rule.
MS. NOBREGA said that the Alaska Supreme Court decided to adopt
two exceptions to the aforementioned general rule. She remarked
that there are varying opinions on the validity of these [two]
exceptions, noting that one of these exceptions has not been
adopted by most of the courts around the country and is also not
recognized by the [American Law Institute's Restatement (Third)
of the Law of Torts ("Third Restatement of Torts")] which is a
general doctrine that many attorneys and courts refer to as the
rule of law regarding certain issues.
MS. NOBREGA, referring to the two exceptions to the general rule
of not being held liable for a [selling] company's assets, said:
We have decided that [one of] these exceptions [is]
not appropriate [with regard to] corporate liabilities
in this state. And we have decided to present HB 499,
which basically says, unless you expressly assume
these liabilities, you will not be held responsible
for the liabilities [of] the corporation whose assets
you are purchasing. We have applied this principle to
corporations, to limited liability companies (LLCs),
[to] partnerships, and [to] general businesses across
the board so that there is uniform application [of]
this rule.
MS. NOBREGA, in response to the question of why she thinks the
state should adopt this policy, said that in her opinion, it is
the generally accepted policy across the nation, and what the
Alaska Supreme Court did was to adopt [an area] of the law that
could be considered a "fringe [area] of exceptions," and HB 499
would just be going back to the generally accepted practice.
CHAIR ROKEBERG asked, then, if it would be fair to say that by
adopting HB 499, the legislature would be adopting somewhat of a
national standard so that commerce can take place in a more
orderly and uniform fashion.
MS. NOBREGA said yes.
Number 0358
REPRESENTATIVE BERKOWITZ surmised, however, that the policy
adopted via HB 499 would be a change from the existing state
policy as articulated through various [Alaska] Supreme Court
decisions.
MS. NOBREGA said that she does not necessarily agree with
Representative Berkowitz's statement because the general policy
is that a purchasing company is not held liable for the
[selling] company's liabilities unless expressly assumed. And
so this was the general rule until just last year, when the
[Alaska] Supreme Court decided that there were exceptions.
CHAIR ROKEBERG requested confirmation that in its decision, the
Alaska Supreme Court stated that "... neither this court nor the
Alaska state legislature has resolved the successor liability
questions presented in this case," and thus Alaska had
heretofore relied on common law.
MS. NOBREGA confirmed this.
CHAIR ROKEBERG opined that the statement made by the Alaska
Supreme Court begs the Legislature to make a specific policy
decision.
Number 0488
THEODORE M. PEASE, JR.; Attorney; Burr, Pease & Kurtz, PC, urged
the committee, on behalf of his client, Savage Arms, Inc., to
pass HB 499. He said that HB 499 would repudiate and overturn a
doctrine of corporate successor liability that was embraced by
the Alaska Supreme Court in a ruling handed down about a year
ago in the Savage Arms, Inc. v. Western Auto Supply Co. case.
He opined that HB 499 is vitally important to the continuing
existence of Savage Arms, as well as to business and commerce -
indeed, to any person or company that ever bought all or part of
the assets of an ongoing business, or that plans to do so in the
future. Therefore, he added, he is also speaking on behalf of
fairness and predictability in business and commercial dealings.
MR. PEASE said that when a person, partnership, or corporation
buys assets from another company, the buyer must be able to know
what is being bought and not be at risk of being held liable
years later for the seller's liabilities that were unknown at
the time of the sale or that, in fact, may not even have
existed. The Alaska Supreme Court, however, adopted a doctrine
called "continuity of enterprise," which does just that: [holds
the purchaser liable]. Mr. Pease opined that a brief recitation
of the Savage Arms, Inc. v. Western Auto Supply Co. case would
make clear the unfairness of the Alaska Supreme Court's ruling
and its devastating effect on a company like Savage Arms that
purchases assets from another company and then finds itself
subject to a liability it did not know about at the time of
sale.
MR. PEASE recounted that on April 8, 1989, in Kenai, Alaska, a
young man named Taylor - who was a minor - was badly injured
when a .22 caliber rifle malfunctioned. The rifle had been
manufactured in 1982 by a company called Savage Industries,
Inc., which at that time was manufacturing under the "Savage"
name and had been making these firearms for some time. Savage
Industries manufactured this particular gun and sold it to
Western Auto Supply Co. ("Western Auto"), which then sent it out
to a store in Maine where it was sold in 1983; the gun was then
resold two or three times after that and ended up in Kenai,
where it was purchased as a used gun by Taylor's father - Jack
Taylor.
Number 0718
MR. PEASE noted that on February 2, 1988, before the accident
happened, Savage Industries, which was in bad financial
condition, filed for bankruptcy. When the bankruptcy was filed,
there were efforts made to find somebody to purchase some or all
of the assets of "this defunct company." Some investors in
Texas thought they'd have a go of it, so they incorporated a
Texas corporation called Savage Arms, Inc., and entered into
negotiations with the trustee in bankruptcy; they worked out an
agreement to purchase most, but not all, of the assets. They
purchased the name; four lines of product, though not the line
of firearm that was later involved in the court action; and the
manufacturing plant. They agreed on a price, they got it
approved by the bankruptcy court, and the deal closed in
November of 1989, but in the meantime, the accident with Mr.
Taylor's son occurred, although nobody at either of the
companies knew about it.
MR. PEASE explained that for about a year and a month, the new
company - Savage Arms - went about making firearms. [At this
time] Mr. Taylor filed suit in Kenai against Savage Industries,
not knowing that that company had gone bankrupt. Upon finding
out about the bankruptcy, he proceeded to sue Western Auto.
Western Auto was a big company with plenty of assets and plenty
of insurance with Allstate Insurance Company ("Allstate") and
Certain Underwriters at Lloyd's of London ("Underwriters"); "so
they came in to defend." It was a long defense and "they"
ultimately settled with the plaintiff in June of 1995 for $5.4
million. Meantime, Western Auto - or its insurers, Allstate and
Underwriters - "saw a big a exposure here so they were looking
around for somebody to lay it off on and recover from."
MR. PEASE relayed that "they" brought in Savage Arms; "they"
found that Savage Arms bought assets [from Savage Industries],
and so sued Savage Arms on a theory of successor liability,
specifically, "continuity of enterprise," which had been
discussed by some courts but adopted by almost none. He added
that [this theory] was really out of favor and had never been
the law in Alaska. He noted that this third-party action of
Western Auto against Savage Arms was separated - severed - while
the main action went forward. However, once the settlement was
made, "it" heated up and there were various motions before Judge
Jonathan Link [Third Judicial District Kenai, Superior Court,
Alaska Court System] related to what the law is, whether there
was a cause of action, and whether Texas law should apply.
MR. PEASE recounted that Judge Link made rulings on these
various motions and concluded that there should be some sort of
successor liability in Alaska. "He didn't really articulate it,
but after he made his rulings, he urged Savage Arms to petition
the [Alaska] Supreme Court to review it before the case went any
further," added Mr. Pease. "We accepted that invitation, we
filed a petition for review, it was accepted by the Alaska
Supreme Court, and Judge Link stayed the proceedings in the case
while that was decided." In due course - March of 2000 - the
Alaska Supreme Court came down with its decision, which adopted
"this generally rejected" theory of successor liability, and
sent [the case] back to Judge Link for further trial with "that
doctrine in place." Mr. Pease relayed that this trial is set
for November, 2002.
Number 0976
MR. PEASE pointed out that HB 499 is, by its terms, made
retroactive so that if it passes during this [Legislative]
session, which he hopes will happen, it will apply to the
pending case. He noted that while there have been some concerns
expressed regarding whether laws "like this" can be made
retroactive, his research has indicated that, clearly, the
legislature can do so; "there's a statute that says that laws
are not retroactive unless the legislature makes them
retroactive, and the Alaska Supreme Court has recognized that."
He added that in many cases, laws have been made applicable
retroactively.
MR. PEASE opined that fairness requires retroactivity in this
case because in adopting "this rule," the Alaska Supreme Court
was relying on a couple of law review articles, one written so
recently that it came out after the briefing had been completed.
He noted that one of the authors [of the aforementioned
articles] was advocating for this theory of [successor]
liability. This author had added, however, that if it is
applied, it needs to be prospective in effect because it's not
the accepted law; it would be unfair to make people liable who
had no knowledge of any potential liability and who had relied
upon the prior law. Mr. Pease indicated that the author, in his
article, said:
The purchaser has to know in advance if he's going to
be held liable under this theory. Now that means ...
that any decision imposing expanded successor
liability can be prospective only with regard to asset
acquisitions that occur after the court has announced
the rule of expanded successor liability.
MR. PEASE said: "When we got the [Alaska Supreme] Court's
decision, we petitioned them to reconsider and we called their
attention specifically to that, and said, 'Look, if you're going
to do this, for goodness sakes, in all fairness, you've got to
do it only prospectively - but don't apply it to us.'" He added
that there was no further opinion forthcoming on that petition;
"they just denied it." The only way that justice can be done,
he opined, is if HB 499 is made retroactive.
Number 1147
MR. PEASE said that under HB 499, a purchaser is liable, of
course, for any liabilities assumed by that purchaser. There is
also, he noted, one other exception [regarding liability] not
affected by HB 499: if it's a fraudulent case - if there's an
attempt [to escape liability] - then the purchaser remains
liable. He pointed out HB 499 says that "except as otherwise
expressly provided by another statute" - for example, as in AS
34.40.010-130 - a successor is not liable. He said "HB 499 is
needed for fairness, for helping any business that wants to get
into business, to know what he is getting into."
MR. PEASE noted that although the court says that a purchaser
can get insurance for "this" and can factor "this" into the
price, the fact is, there is no insurance for "this." He opined
that if this case goes forward under the doctrine that the
Alaska Supreme Court has espoused, the jury will be given an
opportunity to find liability against Savage Arms, which will be
"looking at $8 [million] or $10 million, and they're out of
business; it's that simple." He offered a final point for
members' consideration: When [the Taylor boy] was injured, the
company that made the rifle was bankrupt, and if Savage Arms had
not been formed as a corporation and bought any of Savage
Industries' assets, [the plaintiff] would have had nowhere to go
other than Western Auto; now, Western Auto is trying to get its
money back from Savage Arms.
REPRESENTATIVE JAMES, after noting that she has served as a
bankruptcy trustee, opined that the Alaska Supreme Court
decision will have a chilling effect on bankruptcy trustees
during any liquidation proceedings regarding corporate assets.
When a corporation goes bankrupt, the more [money] that can be
gotten "in a chunk," the better, since that money then goes to
the creditors. She posited that it would be better to adopt HB
499 than to allow the court decision to remain in effect.
REPRESENTATIVE BERKOWITZ asked whether passage of HB 499 would
jeopardize the injured boy's settlement of $5.4 million.
MR. PEASE said no.
Number 1382
REPRESENTATIVE BERKOWITZ asked whether any of the "ownership or
upper management" of Savage [Industries] become any of the
ownership or upper management of Savage Arms.
MR. PEASE said: Yes and no. Although the stock of Savage Arms
is not owned by any of the original owners of Savage Industries,
the chief executive officer (CEO) of Savage Arms - who is now a
substantial owner of it - had, at the time of the bankruptcy,
been managing Savage Industries; "he'd been brought in to try
and turn it around."
REPRESENTATIVE BERKOWITZ sought confirmation that this person
was not entirely new to the equation, that this was someone who
was aware of the preexisting company's conditions.
MR. PEASE, in response, said that the new company, Savage Arms,
was actually incorporated by a company called Challenger, Ltd.,
which was a large, publicly traded company. To his
understanding, he said, Challenger was approached by the
principal shareholders of Savage Industries for the purpose of
"setting this company up and buying some of the assets." He
noted that the principal shareholder of Savage Industries was a
partnership called Cerrito Partners, Ltd., and that although
Cerrito Partners may have had some shares in Challenger, this
did not constitute a major holding.
REPRESENTATIVE BERKOWITZ asked whether Savage Arms was insured
and, if not, why not.
MR. PEASE said that to his understanding, any insurance that
Savage Arms had did not cover any past liabilities of Savage
Industries.
REPRESENTATIVE BERKOWITZ observed, then, that it was a question
of what kind of coverage Savage Arms chose to acquire rather
than not having access to "prior coverage."
MR. PEASE said that he did not think it was available.
REPRESENTATIVE BERKOWITZ, after noting that this issue is the
subject of ongoing litigation, asked whether "the other party"
was given notice of today's hearing and would be testifying
later.
MR. PEASE said that he did not notify "them," and did not
believe "they" were going to testify. In response to questions,
he confirmed that the accident involving the Taylor boy occurred
before the closing of the asset sale of Savage Industries.
Number 1597
REPRESENTATIVE BERKOWITZ said: Putting aside the facts of this
case and looking at how this bill would work in the future,
suppose there was a situation in which a manufacturer produced a
product while aware that there were some defects in the product,
and the owners then sell the company. The owners of this
hypothetical company will get "good dollars" for the sale of the
company because, under HB 499, the liabilities aren't going to
transfer. How is a victim of the defective product going to be
entitled to compensation if this bill were to pass?
MR. PEASE surmised that if the claim were known about, it would
probably be considered a fraudulent transaction.
REPRESENTATIVE BERKOWITZ, notwithstanding Mr. Pease's statement,
said:
But you know the liabilities aren't transferred; ...
if we merge, and I know that the company I'm selling
you has some liabilities, you're not acquiring those
liabilities. Because of that, you're not responsible
for anything, at least as I understand the bill. I
get top dollar, since I'm, in essence, selling you a
company without having those kind of liabilities, and
you don't acquire the liabilities. How does the
injured party -- who/where are they going to go for
compensation.
MR. PEASE said that if the company that manufactured the product
has substantial assets and sold them for full market value,
[that company] would have the full market value in the company
treasury, though [that company] might invest it in something
else. Of course if [that company] had insurance covering
liabilities, the insurance would still be there to cover loses
resulting from any accidents that occurred while the premiums
were being paid, he added. If it's a wealthy ongoing company,
the injured party has "somebody" to recover from; if it's a
company that's right on the brink of bankruptcy, the injured
party cannot recover. He pointed out that if the sale hadn't
taken place, the injured party would not be able to recover
anything anyway. So, he added, it really depends [on the
specifics of the situation].
MR. PEASE said that what the Alaska Supreme Court is doing, via
its ruling, is giving a windfall to an injured party against "an
innocent purchaser who had nothing to do with the manufacture of
this gun."
REPRESENTATIVE BERKOWITZ reminded Mr. Pease that he was not
referring to the Savage Arms, Inc. v. Western Auto Supply Co.
situation. An innocent purchaser, "in my mind," he said, is
someone who is totally unaware of anything that happened prior
to the purchase. "If you have people acquiring a company who
were actively involved in the prior company, they're not
innocent in the sense that all you had is a transaction; you
haven't had a change in ownership or management," he added.
Number 1781
MR. PEASE said he is having trouble understanding why
Representative Berkowitz thinks "this injured party is being
hurt by a sale like this." A purchaser is not going to purchase
the assets of a company if the purchaser knows that by doing so,
he/she will be subjected to a $10 million liability suit, for
example.
REPRESENTATIVE BERKOWITZ said that is his point: HB 499
provides that "you're not subject to that liability, so you can
buy it without acquiring the liability." And the predecessor
has sold the company, so the predecessor now has cash; how does
the injured party go back and get compensation, he asked. "You
can't get it from the new owner because they're insulated on
account of this bill, and you can't get it from the old owner
because all they have is money - they're not the corporation
anymore."
MR. PEASE interjected, saying that that money goes to the seller
- the entity that made the defective product - so those assets
are [still] available unless the seller goes and hides them
somewhere, which could result in a fraudulent-conveyance
situation.
REPRESENTATIVE BERKOWITZ said, "So you think that an injured
party would have a cause of action against a prior owner, or a
prior holder of a corporation?"
MR. PEASE said that if it were a corporation, [the cause of
action] would be against the corporation.
REPRESENTATIVE BERKOWITZ stipulated, hypothetically, that the
corporation has been sold or merged.
CHAIR ROKEBERG asked: What if the corporation had been
liquidated?
MR. PEASE said that if the corporation has been liquidated and
there is a claim there, the injured party can "move against the
corporation." Whatever the selling entity is, if liquidation
occurs without making provisions for claims, it could be
considered a fraudulent transfer.
REPRESENTATIVE BERKOWITZ asked: What's the fraud?
MR. PEASE clarified that it would be fraud if the seller - who
has the money - knows about any claims:
If the seller knows it's got this big liability out
here, so it sells its assets off to somebody else and
... takes the money, liquidates the corporation, puts
[the money] in its own pocket, and the reason for
[doing all of this] is to avoid this liability, that's
a fraudulent situation.
Number 1903
CHAIR ROKEBERG asked whether it is typical for "a larger class
'C' type corporation" to have insurance if solvent, or, if the
company doesn't have insurance, it is usually because it isn't
solvent and is probably "in bankruptcy." Therefore, he opined:
The only way that they could avoid being entirely
judgment-proof is if there were a sale of some of
their assets - or their entire asset-and-liability
base, if there was an assumption of the stock. So,
typically, if you get a C corporation in an asset-
merger situation, you're going to have the purchaser
purchase all of their stock and, therefore, would
automatically inherit the liabilities as well as the
assets. Is that correct?
MR. PEASE replied: If they buy the stock.
CHAIR ROKEBERG said:
But if they didn't buy the stock, they would buy just
the assets out of a bankruptcy court, which would
leave at least some money in the corpus of the
remainder corporation that would be available for
anybody who had a claim against it. Is that correct?
MR. PEASE said that is correct.
CHAIR ROKEBERG continued: "So without the ability to sell the
assets out of bankruptcy court, there would be no way to make
any money available for somebody who had a legitimate claim -
either a creditor or a victim of a tort. Is that correct?"
MR. PEASE said that was a fair statement.
CHAIR ROKEBERG said that he is familiar with situations in which
the company is on the verge of bankruptcy and, rather than
proceed with bankruptcy, the company liquidates its assets at
that particular juncture to save what value the company has. He
added:
Therefore, when you have an assuming entity that takes
over the asset base, they don't want to have the
liabilities along with that, [since] if they were to
... not buy the stock, for example, ... just the
assets, ... they can cut off the liabilities that may
be attached to [the selling] entity. Is that correct?
MR. PEASE said that is correct.
CHAIR ROKEBERG stated that he has a potential conflict of
interest with HB 499.
Number 2035
RONALD COBURN, Chairman and Chief Executive Officer, Savage
Sports Corporation, testified via teleconference and said that
his company is Massachusetts-based, Delaware-registered, and is
a private company. In response to a question, he said that
Savage Sports is a holding company that includes the company
that is now called Savage Arms, Inc. As background, he
explained that he used to be vice president of a company called
Savage Industries, Inc., which he joined in 1987, and which by
February 1988 had filed for bankruptcy. He noted that he had no
part in that filing, and was just one of 17 different vice
presidents at the time. Savage Industries let off 80 percent of
its employees, dropped 10 or 11 products, and started looking
for new owners.
MR. COBURN recounted that in November of 1989, Savage Industries
sold certain assets to a public company called Challenger, Ltd.,
and left behind the discontinued products. Savage Industries
was under the oversight of the Massachusetts bankruptcy court,
and the sale was viewed as the only way to save both some
employees and continuity of the company. He explained that at
the time, he was made an officer [in order] to join Challenger
and begin a program to develop new products and new markets on
[Challenger's] behalf. In December of 1990, Jack Taylor filed a
suit against a number of parties for having made a firearm, or
sold a firearm, or repaired a firearm, which was then involved
in an accident with his son.
MR. COBURN explained that the distributor that sold the firearm
defended the action. At the time, Savage Industries was in
bankruptcy. "We had no idea that this took place, we had no
idea that an accident took place at the time; our first
understanding of an accident was when the suit was filed in
1990," he added. After the case was tried and won by the
defendants, "insurance" had some difficulties in their summary,
apparently; the judge ruled that there was jury misconduct and
that improper closing arguments were made by the distributors'
attorney, and so ordered a new trial even though the defendant
had won. The distributors' insurance providers settled for $5.4
million. "There [was] no input with Savage Arms at that time;
it was two years later that Savage Arms, Inc. was suited by the
insurance company through the distributor," he added.
CHAIR ROKEBERG asked: Was that under a theory of subrogation?
MR. COBURN said: Correct, and successor liability. "They" were
trying to recoup what the settlement cost and "their" legal
fees, which at the time was over $8 million. Savage [Arms]
appealed to the courts on the grounds that they did not make the
product; they did not distribute the product; they made no
profit from the product; and that the company [that had done all
these things - Savage Industries] was in bankruptcy and had sold
assets, which did not include that product, to a new company,
specifically based on the liability's staying with the old
bankrupt company as part of the purchase and sale agreement.
Number 2195
MR. COBURN said that the original intent of both parties, both
the selling party - [Savage] Industries - and the purchasing
party - [Savage] Arms - was to start a new company. [Savage]
Industries "stayed behind," they continued to have assets, they
continued to have liabilities, it was not a party to the new
company; [Savage Industries] did have stock [in Savage Arms]
that was part of the purchase price but it had no authorship or
ownership of [Savage Arms] otherwise. "Allstate Insurance was
the insurance company rather than ... the distributor," he
added. Texas law should have prevailed, he opined, because
Texas was where the agreement between Savage Industries and
Savage Arms was conducted in the first place; the owners of "the
company that sold" lived in Texas, and it was incorporated in
Texas; the "new owners of the company were living and
incorporated in Texas," and they had their offices there; and
there was nobody in Massachusetts, where the company was
manufacturing, involved in that transaction at all.
MR. COBURN noted that Alaska's court system has previously ruled
in both directions, and because of "this confusion" his party
asked the Alaska Supreme Court to intervene and provide an
opinion. He added that it was a big surprise to his party to
find that the Alaska Supreme Court [favored] successor
liability, particularly when the company that he currently
manages had no involvement whatsoever in the product [that
caused the accident], never made the product, never made a
product like it, and had no involvement in the "first case".
Now, he said, "we are defending ourselves for successor
liability."
MR. COBURN, in response to previously asked questions, said that
there [was] no insurance; when [Savage] Industries sold their
company, they closed down the business a year later and stopped
paying insurance premiums. Had Savage Arms, the purchasing
company at the time in 1989, known that there would have been
liability in any form, they could have taken out insurance, "but
the purchase and sale agreement specifically stated otherwise";
there was not supposed to be any carryover liability whatsoever
on the assets.
Number 2320
MR. COBURN said that he was not an officer of Savage Industries;
he only became an officer of Savage Arms "in the new purchase of
the company in 1989. So there really was no continuity of
authorship or senior management between the two companies, he
offered. Since "this" has happened, the owners of the company,
Challenger, got into financial difficulties, closed down the
business and started a second business, and then closed that one
down and opened a third business. He noted that he purchased a
company from [Challenger] in 1995 with a similar agreement that
no liability would transfer - that [Challenger] would take full
ownership [of any liabilities]. Unfortunately, he added,
[Challenger] is not now in a financial position to support him.
MR. COBURN remarked that as it stands now, he owns a company
that has been held liable for something that happened in 1989,
which he only became aware of in 1990, and "it was too late to
get insurance to cover it." "The total amount is in excess of
$12 million," he said, but the income last year from "the total
company" was less than $1 million, and so any settlement or
judgment against his company would put him out of business; the
company is heavily leveraged, which was how he purchased it in
the first place.
MR. COBURN said that what he views as unfair is that had "we had
any understanding of this liability - had it been something we'd
have considered - we could have gotten insurance or we could
have changed the selling or purchasing price to allow for that
eventuality." The company was purchased with the understanding
that no liability of those assets would go forward. In Texas,
where this whole transaction took place, the law specifically
states that liability is precluded from transferring to a new
company unless that company knowingly accepts the liability.
REPRESENTATIVE JAMES asked if the bankruptcy filed by Savage
Industries was a "Chapter 11."
MR. COBURN said that it was.
REPRESENTATIVE JAMES asked whether the sale involved the folks
running the corporation rather than the bankruptcy trustee.
MR. COBURN said that was correct.
REPRESENTATIVE JAMES asked what percentage of Savage Industries
was purchased.
Number 2440
MR. COBURN said "there were 11 product lines." "When the
company went into bankruptcy, it was hemorrhaging really badly";
it had $19 million in debt and $4 million of assets, so it
discontinued almost every single product line except one, it let
off 78 percent of its workforce, and it closed down two out of
three of its factories. Therefore, there weren't many assets
left to sell, but there were some that were viable and so the
company kept those and proceeded to look for a new owner.
REPRESENTATIVE JAMES asked whether the rest [of the assets] were
sold to someone else.
MR. COBURN said that according to his understanding, "there was
no really value in the rest," so the company did not gain any
return for the balance; "I think they just liquidated and closed
down."
REPRESENTATIVE JAMES said: So then for all practical purposes,
the purchaser of the assets actually purchased the company. Is
that correct?
MR. COBURN said: They purchased the name of the company and one
product line, plus the right to "mix up" all their products if
they chose to in the future. "We did not know at the time -
this is Challenger - what would happen to [Savage] Industries,
they didn't tell us what they were going to do; we thought
initially [that] they were going to start up again, if they
could, or sell more assets - raise more money," he added, but to
his knowledge they were unable to sell more assets.
REPRESENTATIVE JAMES asked what the purchase price was.
MR. COBURN said it was $1 million.
REPRESENTATIVE JAMES pointed out that if the company had a total
of $4 million in assets and sold some assets to [Challenger] for
$1 million, "that certainly isn't all of it." "Is it because it
was such a good deal," she asked.
MR. COBURN said that wasn't it; nobody else wanted [the
remainder of the assets]. [Savage Industries] tried to sell
their company from 1985 all the way through the declaration of
bankruptcy in 1988, and it wasn't until November of 1989 that
they were able to sell [certain] assets to Challenger; [Savage
Industries] was distressed: distressed assets and distressed
conditions. The difference between a distressed purchase and
the true market value is substantial, he explained; nobody was
interested in buying the company.
TAPE 02-30, SIDE B
Number 2506
REPRESENTATIVE BERKOWITZ requested confirmation that the product
line that is the subject of this litigation was not purchased.
MR. COBURN confirmed that.
REPRESENTATIVE BERKOWITZ asked: So, in order for you to be
found liable based on the "continuity of enterprise" theory,
doesn't the court have to find that there was a de facto
continuation of the same business with the same name?
MR. PEASE, answering in Mr. Coburn's stead, posited that the
Alaska Supreme Court decision does not require that it be the
same product line. He offered that the record of the case made
it clear that the product line that the [Taylor] boy was injured
by had not been purchased.
REPRESENTATIVE BERKOWITZ said that according to his
understanding, then, it is still a subject for the trier of fact
to determine whether or not liability exists.
MR. PEASE said that's right, but under the criteria spelled out
by the Alaska Supreme Court.
REPRESENTATIVE BERKOWITZ said that his concern is:
We're jumping in ahead of the trier of fact's ability
to come to a determination in this case. But there is
no showing that the continuity of enterprise theory
that the court espouses is, on its face, wrong policy
for the State of Alaska. What the bill would do would
in essence immunize your client prior to going to
court.
MR. PEASE said: And anyone else in a like position, past or
future.
Number 2397
JAMES D. DeWITT, Attorney, testified via teleconference. He
indicated that the implications of the Savage Arms decision are
serious in regards to his own legal practice. He remarked that
he felt so strongly about this court decision that he wrote an
article for the Alaska Bar Rag taking the Alaska Supreme Court
to task for its decision. He said that his primary concern is
that the court gave this decision retrospective application
rather than limiting it to prospective application. "My
reaction to reading this decision was to notify my malpractice
carrier that I may have screwed up some 100-150 asset sales that
I have done in my professional career, because the reach factor
is without limitation." He acknowledged that he did not know
how the court, the House Judiciary Standing Committee, or the
legislature wants to balance the risk Representative Berkowitz
has addressed: the risk that when someone is hurt by a product,
there may not be anyone available to respond in damages.
MR. DeWITT noted that the legislature gets tasked with finding
that balance. He added, however, that it strikes him as being
fundamentally unfair to change the rules, not just in the middle
of the game, but after the game is over and everybody has gone
home, which, he opined is what the Alaska Supreme Court did in
the Savage Arms decision. The effect of this decision, he
added, is to punish the successful. According to Fortune
magazine, 90 percent of all businesses fail in the first two
years, so if young Mr. Taylor had been injured by the product of
a company that failed quickly and promptly, he'd be without a
remedy, but if the business succeeds and prospers, then he gets
some money, he noted.
MR. DeWITT, referring to issue of fraudulent conveyances, said
that he is "not completely satisfied that statute provides
protection." He posed the hypothetical sale of a corporation
owned by ten people. It is sold to a new corporation owned by
the same ten people; the management is the same, the ownership
is the same, and the product lines are same. Mr. Pease, he
surmised, is satisfied that such a situation would constitute a
fraudulent conveyance under Alaska statutes, and yet he, Mr.
DeWitt, said that that is kind of a stretch for the statute. In
fact, he observed, what that is, is a lesser form of successor
liability that has the approval of the courts in a majority of
the states, and so is probably the majority rule. It doesn't
have to be an identity of ownership, it doesn't have to be a
discounted price, and it doesn't have to be anything inherently
crooked either. "If it's just too much the same, then the
court's not going to respect the sale," he noted.
Number 2207
MR. DeWITT pointed out that the sale that occurred in the Savage
Arms case was nothing like the aforementioned hypothetical
situation; "it was a sale out of bankruptcy." And as
Representative James can attest to, he said, all of this could
have been avoided if the first corporation, after filing
bankruptcy, had confirmed a Chapter 11 plan that said, "All of
our debts are discharged; we don't owe the money anymore," and
then had sold the assets or a portion of the assets to a
successor corporation. If such had been done, the lawsuit
driving this legislation would not have occurred. He said that
in a sense, the unsuccessful are being punished as well in terms
of the employees of the failed corporations and their wage
claims, the creditor claims, and everyone else. Mr. DeWitt
urged the enactment of HB 449 and, if Representative Berkowitz
prevails in his concerns, that at least HB 499 be passed "not
giving Savage Arms prospective effect."
CHAIR ROKEBERG remarked that many times, businesses on the verge
of bankruptcy or failure endeavor to sell assets to try to save
any remaining "monetary basis" their firms have.
MR. DeWITT confirmed that that does happen. He surmised that
Chair Rokeberg's point is that such a decision "impacts persons
in that position" and the impact is real - its financial; "it
doesn't, if you will, kill the deal, but it's going to reduce
the price in very significant ways." He said he supposed the
minimum impact on a price would be to reduce it by the amount of
suitable long-term insurance premiums, in order to guard against
unknown risks - "some broad, blanket form of policy" that the
seller would require, to insure both the purchaser and the
seller in the event of a claim not known at the time of the
sale. He added that once a claim is known about, it can be
dealt with during the course of the negotiations.
CHAIR ROKEBERG opined that "the general applicability of this
principal in business in commerce transactions is much greater
than [the] narrow area of product liability."
MR. DeWITT said he agreed, but added that the claims that are
known about are easier to deal with than unknown claims. He
noted that in a commercial transaction, a person would generally
go to his/her creditors and offer what was available, even if it
was not sufficient to cover those liabilities, rather than
simply filing for bankruptcy. Most creditors, he opined, would
prefer the former option. And most people know who their
commercial creditors are, he noted, although he is aware of some
companies whose records were in such bad shape that they did not
know who their creditors were. But those cases are the
exception, and to the extent that those creditors can't be
identified, that should not be the legislature's problem.
Number 2025
REPRESENTATIVE BERKOWITZ said that in looking at HB 499 and
other aspects of [the Savage Arms case] - and putting aside the
continuity of enterprise theory - the Alaska Supreme Court
talked about other means of exception to the rule of non-
liability for asset transfers. Specifically, the Alaska Supreme
Court said:
Courts have traditionally recognized four exceptions
to this rule of non-liability, where (1) the purchaser
expressly or implicitly agrees to assume liability,
(2) the asset purchase amounts to a consolidation or
merger, (3) the purchasing corporation is a "mere
continuation" of the selling corporation, or (4) the
transfer amounts to little more than a "sham"
transaction to avoid liabilities.
REPRESENTATIVE BERKOWITZ said that according to his
interpretation, HB 499 seems to throw out all of those
[exceptions].
MR. DeWITT surmised that Representative Berkowitz's concern is
that because Section 1, [paragraph] (2), of HB 499 specifies
that "except as otherwise expressly provided by another statute"
a purchasing entity is not responsible for [prior] liabilities,
it is referring only to [AS 34.40.010-130], and so would not
include the exceptions referred to by the Alaska Supreme Court.
Mr. DeWitt said that he disagrees with that interpretation. He
relayed that in past litigation, he has had success in getting
the current statute to reach to those exceptions.
MR. DeWITT posited that that statute is going to "give you what
you need to use that exception" in a pure sham transaction,
"where there is a substantial identity between the buyer and the
purchaser"; or where the price is fraudulent for one reason or
another; or where there are other "badges" of fraud. The harder
case, he noted, is going to be when there is an overlap of
ownership, when the price is depressed and suspiciously
depressed, "or some variation on that." He said that this is
where perhaps he and Mr. Pease disagree on whether the statute
is going to provide adequate remedy to creditors.
Notwithstanding this, he said that at a minimum, what needs to
be fixed is: "make it prospective only; don't allow the effect
of [the Savage Arms case] to be retrospective."
Number 1889
REPRESENTATIVE BERKOWITZ indicated that he agrees on that point.
He noted, however, that another one of the exceptions states
that "the purchaser expressly or implicitly agrees to assume
liability"; he wanted to make sure that neither that nor the
[exception] that states "the asset purchase amounts to a
consolidation or merger" is upset by HB 499.
MR. DeWITT said that HB 499 does not preclude a purchaser from
assuming debt.
REPRESENTATIVE BERKOWITZ asked what HB 499 does for the instance
of a de facto merger or consolidation.
MR. DeWITT conceded that the court is going to have to decide
whether a de facto merger is a species of fraudulent conveyance.
He added that he did not understand HB 499 to be taking away a
court's "equitable" powers, either.
REPRESENTATIVE BERKOWITZ, on the latter point, said that as he
reads Section 1, [paragraph] (1), in essence, the corporation
gets to make that determination itself because the language
stipulates that the sale, lease, exchange, or other disposition
by a corporation of any, all, or substantially all if its assets
or property isn't considered a merger unless "they" file a plan
of merger. He said that it seems to him that if a company
simply doesn't file a plan of merger, regardless of the reason,
it enables the corporation rather than the court to make the
ultimate determination.
MR. DeWITT acknowledged that the language is as Representative
Berkowitz describes in the case of a merger; however, mergers
aren't quite that straightforward, he noted, and there are de
facto mergers in which a court, after the fact, deems there to
have been a merger. Notwithstanding this, he remarked: "We're
a long ways from [an] asset sale getting to a de facto merger."
He said he sees the risk that Representative Berkowitz is
pointing to, but offered that the court will be willing to
extend fraudulent conveyances to reach that specific risk, since
there already is a body of law pertaining to the doctrine of
equitable merger.
Number 1762
REPRESENTATIVE BERKOWITZ asked: Even in non-fraudulent
situations?
MR. DeWITT said yes. Although, he added, the indicia of
equitable merger, at least in his experience, tend to include
badges of fraud.
REPRESENTATIVE BERKOWITZ, in terms of drafting, asked: Wouldn't
it be preferable just to spell it out? To clarify his point, he
said that it seems to him that when the legislature spells
things out for the courts, [statutes] are more likely to be
interpreted in a fashion that the legislature intends, compared
to instances when "we just sort of throw the ball up in the air
and leave the room."
MR. DeWITT agreed.
REPRESENTATIVE BERKOWITZ said he would feel more comfortable
with some express declaration of what the legislative intent is
regarding de facto mergers - "even those that may or may not
ultimately be fraudulent." There are times when the court needs
a little direction, he added.
CHAIR ROKEBERG asked Mr. DeWitt whether he thinks HB 499 is
clear on the issue of "assumption of liability or assets."
MR. DeWITT said yes and no. He added that in his experience,
"the more words you put in, the more opportunities for
ambiguities you have." He offered that language could be
written, for example, to the effect that sham transactions
aren't under the protection of this [proposed] statute. Another
option would be to statutorily adopt the "Restatement of Torts'
Third standard," which, he added, is the standard "our court
rejected." Even there, he noted, he would urge for "prospective
and not retrospective application."
CHAIR ROKEBERG surmised, then, that Mr. DeWitt is not
necessarily happy with the way HB 499 is drafted.
MR. DeWITT clarified that his concern is that "we have
prospective rational for a rule of law that's being applied
retroactively." The proposed legislation fixes that problem.
If the legislature wishes to go further and tinker with the
"continuity of enterprise" decision, "that's great too," though
"clearer is better." And stability is even better, he noted;
stability is even more important. He continued:
With this standard ... we hurt liquidation companies
and hurt creditors who had nothing to do with any of
this. We also hurt Alaska [when] we make our
businesses less attractive as purchase candidates to
larger companies ... in the other states ... because
you can't quantify - you can't manage the risk - short
of severely handicapping the purchase price.
Number 1520
CHAIR ROKEBERG asked Mr. DeWitt to clarify his statements
regarding the retrospective application of HB 499.
MR. DeWITT opined that HB 499 "is just peachy" for purposes of
getting rid of the retrospective application problem. He added,
however, that he is not comfortable advising the legislature on
issues of tort law and risk allocation regarding what the rules
ought to be prospectively. To the extent that he represents
both buyers and sellers, everybody involved gets a better deal -
a more certain deal - if HB 499 is enacted in a nice clear way
that reverses [the Savage Arms decision] and returns to a more
conventional standard.
MR. COBURN, returning to the question of why assets were sold
for $1 million when Savage Industries was worth $4 million, said
that the purchasing company, Challenger, additionally took on
$10 million of then-current debt. In response to further
questions, he clarified that Challenger paid $1 million into the
estate of [Savage] Industries to satisfy the creditors - and
only the creditors. Challenger then put another $1 million of
its own money into working capital after the sale was completed,
and assumed $10 million of current liability from [Savage]
Industries as part of the deal.
CHAIR ROKEBERG surmised, then, that [Challenger] knew precisely
what the scope of that liability was.
MR. COBURN said they did; they had details on all open
liabilities. He added that that was why "it was worth so little
in cash: because of the liabilities."
CHAIR ROKEBERG closed public testimony on HB 499.
REPRESENTATIVE ROKEBERG said that he is not comfortable with HB
499, but added that one of the things that might assuage him the
most is if the committee heard from the "other side of the
litigation." He noted also that fundamentally, he is
uncomfortable interceding in ongoing litigation. He said he
would feel more comfortable that "we weren't favoring one side
or another," which, he opined, would be inappropriate, by
hearing from the "other law firm" before taking action on HB
499.
MR. PEASE noted that opposing counsel is Jim Powell from the
firm of Hughes Thorsness Powell Huddleston & Bauman, LLC.
Number 1225
REPRESENTATIVE BERKOWITZ remarked that he wants to make sure
that the committee is "not dispensing of more than the
continuity of enterprise theory," and that other theories remain
available. He noted that the committee has not yet had an
express conversation regarding the theory that the [Alaska
Supreme] Court used in adopting the continuity of enterprise
theory. He also mentioned that if the committee intends to
expand the scope of HB 499 beyond simply addressing the
continuity of enterprise theory, then he would prefer that the
committee statutorily "spell out" its intention.
CHAIR ROKEBERG recalled that Mr. DeWitt had indicated that one
option would be to adopt in statute language from the Third
Restatement of Torts. He asked Mr. Pease to comment.
MR. PEASE noted that the Third Restatement of Torts does not
adopt the continuity of enterprise theory, and that he agrees
with Mr. DeWitt that "the general language is better." He
mentioned that in the Savage Arms case, the [Alaska Supreme
Court] refused to consider the "product line" theory as being
inapplicable to the case. And although that theory was not
considered in the Savage Arms case, he pointed out that it might
be applicable in other cases, and, thus, he opined, it would be
best to have, as Texas does, a general statement that limits
successor liability to liabilities assumed and to fraud
situations.
CHAIR ROKEBERG mentioned that he would like to proceed with HB
499, and that he has concerns regarding the late hour of the
legislative session.
REPRESENTATIVE BERKOWITZ noted that legislation can move
quickly, and offered that there is still plenty of time.
CHAIR ROKEBERG noted that it would probably be at least a week
before another hearing on HB 499 occurs.
REPRESENTATIVE JAMES noted that regardless of what "the other
side" has to say, this issue is an important one and she is
willing to move it out of committee today.
REPRESENTATIVE MEYER said that he agrees with Representative
James, adding that since this meeting was publicly noticed, if
there was any interest from the other party, "they should have
been here."
Number 0949
REPRESENTATIVE JAMES moved to report HB 499 out of committee
with individual recommendations and the accompanying zero fiscal
note.
Number 0935
REPRESENTATIVE BERKOWITZ objected. He said that he thinks it is
fundamentally unfair to intercede in ongoing litigation without
extending an express invitation to both sides of the litigation
in order that they may both testify before the committee. He
also noted that even though Mr. DeWitt has suggested changes, no
amendments to HB 499 have been proposed. On a third point, he
said: "It's better form for us, as drafters of legislation, to
expressly spell out when - if we're going to do away with
continuity of enterprise - are we going to except product line
or duty to warn exceptions, [and] where are we going with de
facto consolidations." "We haven't done any of that," he
cautioned, saying that gives him a lot of concern.
CHAIR ROKEBERG, referring to Representative Berkowitz's third
point, asked Mr. Pease: "Have we not done that by setting out
[an] expression of the precise procedure [regarding] how to make
that business transaction work?"
MR. PEASE said, "I believe so." The language in [HB 499] is
broad enough to tell the [Alaska] Supreme Court that they
shouldn't adopt product line or duty to warn theories, he
opined; [the current statute] needs this general language.
CHAIR ROKEBERG suggested that HB 499 could be amended to say
that the legislature is specifically overturning the findings
[in the Savage Arms] case. He asked Mr. Pease if it would give
him any more comfort.
MR. PEASE said that it might give Representative Berkowitz more
comfort.
REPRESENTATIVE BERKOWITZ remarked that he tends to give the
[Alaska] Supreme Court a lot of deference, and that he gives
even a little more deference to the thought that they put into
creating their opinion. He reminded members that Mr. Pease is
speaking as an advocate of HB 499 on behalf of a client, and
although that is an appropriate role for Mr. Pease, it is not
the legislature's role; the legislature is supposed to think
more globally.
CHAIR ROKEBERG asked Representative Berkowitz if he would assist
in developing some amendments if the bill were to be held over.
REPRESENTATIVE BERKOWITZ said he would.
Number 0725
CHAIR ROKEBERG noted that he might have a potential conflict of
interest, were he to be sued [regarding this issue].
REPRESENTATIVE JAMES withdrew her motion to report HB 499 out of
committee.
CHAIR ROKEBERG announced that HB 499 would be held over and that
the public testimony would be reopened when it is next heard.
CHAIR ROKEBERG called an at-ease from 2:34 p.m. to 2:37 p.m.
HB 501 - UNCLAIMED PROPERTY & RESTITUTION
Number 0643
CHAIR ROKEBERG announced that the next order of business would
be HOUSE BILL NO. 501, "An Act relating to the use of unclaimed
property to pay court-ordered restitution; and providing for an
effective date."
Number 0609
HEATHER M. NOBREGA, Staff to Representative Norman Rokeberg,
House Judiciary Standing Committee, Alaska State Legislature,
informed the committee that [the need for] HB 501 was brought to
her attention by the Department of Revenue. This legislation
would enable the department to take unclaimed property and use
it to satisfy a criminal defendant's unpaid restitution or
judgments awarded to the state. Currently, the department is
required to take additional court action - via a Writ of
Execution - before the unclaimed property can be used towards
the collection of fees. This legislation would make this
additional court action unnecessary and thus the unclaimed
property would be available for restitution and judgments owed
to the state. Ms. Nobrega highlighted that child support
obligations still have priority, and that [HB 501] doesn't
impact any civil judgments.
REPRESENTATIVE BERKOWITZ asked whether there are any other
obligations that aren't specified [in HB 501].
Number 0450
RACHEL LEWIS, Unclaimed Property Section, Treasury Division,
Department of Revenue, indicated that currently, the only
obligation is child support [and HB 501 would add the
aforementioned second obligation].
CHAIR ROKEBERG requested an example of why HB 501 would be
necessary.
MS. LEWIS explained that there have been several cases in which
persons residing in a correctional facility have made claims on
unclaimed property. She explained that after a few phone calls,
she was able to determine that these individuals did owe
restitution or have an outstanding judgment against him/her, but
Ms. Lewis wasn't able to pay the judgment or restitution
directly because a Writ of Execution was still required. Ms.
Lewis noted that there are only a handful of such cases a year;
in the seven years that she has been in her position, [HB 501]
might apply to only about 15 such cases.
Number 0331
REPRESENTATIVE BERKOWITZ moved to report HB 501 out of committee
with individual recommendations and the accompanying zero fiscal
notes. There being no objection, HB 501 was reported from the
House Judiciary Standing Committee.
CHAIR ROKEBERG called an at-ease from 2:43 p.m. to 2:44 p.m.
HB 489 - CRUELTY TO ANIMALS
Number 0291
CHAIR ROKEBERG announced that the sponsor of HOUSE BILL NO. 489,
"An Act relating to cruelty to animals," has requested that the
hearing on it be postponed for the purpose of redrafting. [HB
489 was held over.]
ADJOURNMENT
Number 0236
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 2:45 p.m.
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