02/05/2003 01:00 PM House JUD
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= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
February 5, 2003
1:00 p.m.
MEMBERS PRESENT
Representative Lesil McGuire, Chair
Representative Tom Anderson, Vice Chair
Representative John Coghill
Representative Jim Holm
Representative Ralph Samuels
Representative Les Gara
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 68
"An Act relating to the office of victims' rights."
- MOVED CSHB 68(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 9
"An Act relating to the registration of individuals who perform
home inspections; relating to regulation of contractors;
relating to registration fees for specialty contractors, home
inspectors, and associate home inspectors; relating to home
inspection requirements for residential loans purchased or
approved by the Alaska Housing Finance Corporation; relating to
civil actions by and against home inspectors and to civil
actions arising from residential unit inspections; and providing
for an effective date."
- MOVED CSHB 9(JUD) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 68
SHORT TITLE:OFFICE OF VICTIMS' RIGHTS: INCLUDE MUNIS
SPONSOR(S): REPRESENTATIVE(S)SAMUELS BY REQUEST
Jrn-Date Jrn-Page Action
01/29/03 0085 (H) READ THE FIRST TIME -
REFERRALS
01/29/03 0085 (H) JUD
01/29/03 0085 (H) REFERRED TO JUDICIARY
01/31/03 0108 (H) COSPONSOR(S): GARA, HEINZE
02/05/03 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 9
SHORT TITLE:HOME INSPECTORS/CONTRACTORS
SPONSOR(S): REPRESENTATIVE(S)ROKEBERG
Jrn-Date Jrn-Page Action
01/21/03 0032 (H) PREFILE RELEASED (1/10/03)
01/21/03 0032 (H) READ THE FIRST TIME -
REFERRALS
01/21/03 0032 (H) L&C, JUD, FIN
01/29/03 (H) L&C AT 3:15 PM CAPITOL 17
01/29/03 (H) Moved CSHB 9(L&C) Out of
Committee -- Time Change --
MINUTE(L&C)
01/31/03 0098 (H) L&C RPT CS(L&C) 6DP
01/31/03 0098 (H) DP: LYNN, GATTO, CRAWFORD
01/31/03 0098 (H) GUTTENBERG, ROKEBERG,
ANDERSON
01/31/03 0099 (H) FN1: ZERO(REV)
01/31/03 0099 (H) FN2: ZERO(LAW)
01/31/03 0099 (H) FN3: ZERO(LWF)
01/31/03 0099 (H) FN4: (CED)
01/31/03 0099 (H) REFERRED TO JUDICIARY
01/31/03 0106 (H) COSPONSOR(S): HAWKER
02/05/03 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
STEPHEN BRANCHFLOWER, Director
Office of Victims' Rights (OVR)
Alaska State Legislature
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 68 and responded
to questions.
GERAD GODFREY
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 68 on behalf of
the Godfrey family.
MARCI SCHMIDT
Wasilla, Alaska
POSITION STATEMENT: Testified in support of HB 68 and the OVR.
REPRESENTATIVE NORMAN ROKEBERG
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 9.
BRYAN BUTCHER, Legislative Liaison
Alaska Housing Finance Corporation (AHFC)
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 9.
RICK JARVIS
Re/Max Properties Inc.
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 9.
TED VEAL
Homer, Alaska
POSITION STATEMENT: During discussion of HB 9, expressed
concerns and asked questions of the sponsor.
ROBERT MILBY
Wasilla, Alaska
POSITION STATEMENT: Expressed concerns during discussion of HB
9.
BERNIE SCHUYLER
Eagle River, Alaska
POSITION STATEMENT: Testified in opposition to HB 9.
KEVIN JONES
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 9 and asked
questions of the sponsor.
DAVID R. OWENS, owner
Owens Inspections Services
Palmer, Alaska
POSITION STATEMENT: Expressed concerns during discussion of HB
9.
CAROL J. PERKINS, Owner
Active Inspections
Wasilla, Alaska
POSITION STATEMENT: Expressed concerns during discussion of HB
9.
WILLIAM BRUU
Wasilla, Alaska
POSITION STATEMENT: Expressed concerns during discussion of HB
9.
ACTION NARRATIVE
TAPE 03-2, SIDE A
Number 0001
CHAIR LESIL McGUIRE called the House Judiciary Standing
Committee meeting to order at 1:00 p.m. Representatives
McGuire, Samuels, Holm, Gara, and Coghill were present at the
call to order. Representatives Gruenberg and Anderson arrived
as the meeting was in progress.
HB 68 - OFFICE OF VICTIMS' RIGHTS: INCLUDE MUNIS
Number 0045
CHAIR McGUIRE announced that the first order of business would
be HOUSE BILL NO. 68, "An Act relating to the office of victims'
rights."
Number 0083
REPRESENTATIVE SAMUELS, speaking as the sponsor, explained that
HB 68 merely clarifies existing statute with regard to the
jurisdiction of the Office of Victims' Rights (OVR); HB 68 does
not expand the authority of the OVR, which was created by the
22nd legislature in order to give victims an independent voice
in the criminal justice system. In effect, he added, the OVR
[acts as] an ombudsman; the OVR can issue a report at the end an
investigation, with possible requests for any necessary changes
including changes in statutes. He indicated that in the
legislation that originally created the OVR, the language
defining "justice agency" did not specifically include
municipalities. However, in addition to the OVR being
headquartered in Anchorage, over 50 percent of all [Alaska's]
crime victims are subject to investigation by the Anchorage
Police Department (APD) and live within the Municipality of
Anchorage (MOA).
REPRESENTATIVE SAMUELS relayed that the question of the OVR's
jurisdiction was raised as a result of its investigation of the
circumstances following the murder of former Department of
Public Safety (DPS) commissioner, Glenn Godfrey, and the
shooting of his wife, Patricia Godfrey. He noted that although
this particular conflict between the OVR and the MOA has been
resolved, HB 68 would ensure that such a question would not be
raised in the future. He explained that he is sponsoring HB 68
at the request of the mayor of Anchorage, George P. Wuerch, and
noted that in members' packets are letters of support from the
Anchorage Assembly, the OVR, and the Godfrey family.
REPRESENTATIVE HOLM asked whether "municipality" is defined in
statute and, if so, does it clearly indicate that boroughs and
cities are included in that definition.
REPRESENTATIVE SAMUELS opined that in creating the OVR, the 22nd
legislature intended for municipalities and their police
departments to be included in the OVR's jurisdiction. He then
read a portion of that original legislation:
(1) "justice agency" means a department, office,
institution, corporation, authority, organization,
commission, committee, council, court, or board in the
executive or judicial branches of the state government
that is, in any manner, involved with or responsible
for the apprehension, prosecution, incarceration, or
supervision of criminal or juvenile offenders ....
Number 0312
REPRESENTATIVE GRUENBERG directed members to Title 29, which
contains the definition of "municipality" as follows:
"'municipality' means a political subdivision incorporated under
the laws of the state that is a home rule or general law city, a
home rule or general law borough, or a unified municipality".
REPRESENTATIVE GARA, after noting that HB 68 is warranted,
opined that municipalities are already covered by the existing
law. He indicated, however, that HB 68 ought to be passed to
keep anyone from arguing that point in the future. He asked
what reasoning the MOA used in saying that it was not covered.
REPRESENTATIVE SAMUELS remarked that that question would best be
directed at "the city attorney."
REPRESENTATIVE GARA said:
At this point, I can't see the good faith argument
that the [MOA] wasn't covered in the first place. And
that there is somebody who is ... making the
legislature go through this process of enacting a new
bill just to address a concern that I still don't
understand ... rubs me the wrong way.
REPRESENTATIVE SAMUELS relayed that by the time he entered into
the discussion, there were already a lot of misunderstandings, a
lot of hard feelings, and a lot of heels dug in.
Number 0525
STEPHEN BRANCHFLOWER, Director, Office of Victims' Rights (OVR),
Alaska State Legislature, relayed that he was appointed in May
2002 by the 22nd legislature to serve on the OVR, the purpose of
which is to advocate on behalf of crime victims and investigate
their complaints, ensuring that none of a victim's 50-plus
statutory and constitutional rights are violated. He also
relayed that one of the very first cases that the OVR undertook
to investigate was the aforementioned Godfrey case, and this
investigation lasted approximately three months. The OVR
subpoenaed over 4,000 documents, took sworn testimony, and
published its report on its web site on November 26, 2002.
MR. BRANCHFLOWER explained that under the terms of the OVR
legislation, the MOA had a statutory right to file a response,
which, in part, raised the question of whether the OVR had
jurisdiction to investigate the MOA. The MOA argued that the
definition of a "justice agency" in AS 24.65.250(1) only
addressed the judicial and executive branches of state
government. He said that counter to the MOA's argument, his
position is that there is other authority granted within AS
24.65.110, which very clearly states that the OVR "shall assist
crime victims in obtaining the rights crime victims are
guaranteed under the constitution and laws of the state with
regard to the contacts crime victims have".
MR. BRANCHFLOWER relayed that as a result of the publicity
surrounding both the Godfrey case and the MOA's assertion that
the OVR did not have jurisdiction, the Anchorage Assembly
adopted a resolution - Resolution No. AR 2002-391(F) - on
December 17, 2002, specifically acknowledging that the MOA was
subject to the jurisdiction of the OVR. He also relayed that on
January 25, 2003, the MOA passed Ordinance No. AO 2003-2, which
states explicitly that, "the jurisdiction of the Office of
Victims' Rights over the Municipality of Anchorage and its
departments, agencies, officials, and employees is officially
acknowledged". He, too, referred to the letters of support in
members' packets.
Number 0784
MR. BRANCHFLOWER opined that it is important to pass HB 68
because, in many areas of the state, crimes are investigated by
local police departments rather than the Alaska State Troopers.
He also opined that in creating the OVR, the 22nd legislature
intended that municipalities would be included in the
jurisdiction of the OVR, particularly the largest law
enforcement agency in the state, the APD. He relayed that most
of his cases originate with the APD, and that at this time, the
OVR has 124 cases.
MR. BRANCHFLOWER surmised that the reason the word
"municipality" was omitted from the original OVR legislation was
because when it was created, it was modeled after statutory
language pertaining to the Office of the Ombudsman, which
specifically did not include "municipality" in order that
individual municipalities could institute their own ombudsman's
offices. He posited that this omission was merely an oversight,
and that the 22nd legislature did intend for the area of the
state with the largest population to fall under the jurisdiction
of the OVR. In closing, he said that the OVR supports the
adoption of HB 68.
CHAIR McGUIRE relayed her belief that "justice agencies" as
defined in AS 24.65.110 is certainly broad enough to include the
largest police force in the state of Alaska, adding that HB 68
will clarify that issue for the future.
REPRESENTATIVE GRUENBERG raised the issue of amendments, and
spoke of possibly adding, to page 1, line 10, after
"municipality" the words "as defined in AS 29.71.800".
MR. BRANCHFLOWER confirmed that such an amendment would preclude
smaller jurisdictions from arguing that somehow they are
excluded from the definition of "justice agency" in AS 24.65.250
simply because they don't qualify as a municipality. He opined
that such a change would be an improvement.
REPRESENTATIVE GRUENBERG asked whether the OVR would be amenable
to adding language that would allow the OVR to assist
individuals with issues related to junk cars.
MR. BRANCHFLOWER pointed out that the OVR is specifically
designed to assist victims of crimes against a person, not
property crimes, and remarked that his preference would be for
the OVR to focus its limited resources on addressing crimes
against a person, as outlined in the original legislation:
felonies, misdemeanors involving domestic violence, and
misdemeanors involving violations of AS 11.41.
Number 1312
GERAD GODFREY, speaking on behalf of the Godfrey family,
recounted for the committee the process that his family and the
OVR went through in investigating the circumstances following
the shooting of his parents, Glenn and Patricia Godfrey, as well
as details of the MOA's response to that investigation. He
relayed that the OVR has proved to be an invaluable resource for
his family, whose primary goal at this juncture is to ensure
that no one else suffers from the same problems uncovered by the
OVR's investigation, including the problems encountered because
of the MOA's - specifically, the city attorney's office -
obstructive stance regarding that investigation. In closing, he
reiterated that the OVR has been an invaluable tool, and
expressed his support for the passage of HB 68.
CHAIR McGUIRE assured Mr. Godfrey that the committee would do
every thing it can to ensure that the OVR's jurisdiction is not
questioned again.
Number 1747
MARCI SCHMIDT said simply that she is in support of HB 68 and
the OVR, and mentioned that it was Victims for Justice that put
her in touch with the OVR. She asked members to continue to do
what they can to support the efforts of the OVR.
REPRESENTATIVE GARA extended an invitation to the Godfrey family
to contact his office regarding the possibility of pursuing a
bar complaint against the city attorney for his conduct related
to the OVR's investigation of the Godfrey case.
Number 1878
REPRESENTATIVE GRUENBERG made a motion to adopt Amendment 1, on
page 1, line 10, after "municipality" add "as defined in AS
29.71.800". There being no objection, Amendment 1 was adopted.
REPRESENTATIVE GRUENBERG then expressed concern regarding the
title of HB 68, and relayed that he had an another amendment to
offer on that point.
The committee took an at-ease from 1:37 p.m. to 1:38 p.m.
REPRESENTATIVE GRUENBERG, after distributing [Conceptual]
Amendment 2, explained that his intent is to narrow the title,
which would then read: "An Act adding municipalities to the
definition of 'justice agency' with regard to the jurisdiction
of the office of victims' rights".
Number 1931
The committee took an at-ease from 1:40 p.m. to 1:42 p.m.
[Not on tape, but reconstructed from the committee secretary's
log notes, was the following motion:]
REPRESENTATIVE GRUENBERG made a motion to adopt Conceptual
Amendment 2.
Number 2010
CHAIR McGUIRE asked whether there were any objections to
adopting Conceptual Amendment 2. There being no objection,
Conceptual Amendment 2 was adopted.
Number 2023
REPRESENTATIVE COGHILL moved to report HB 68, as amended, out of
committee with individual recommendations and the accompanying
zero fiscal note. There being no objection, CSHB 68(JUD) was
reported from the House Judiciary Standing Committee.
HB 9 - HOME INSPECTORS/CONTRACTORS
Number 2063
CHAIR McGUIRE announced that the final order of business would
be HOUSE BILL NO. 9, "An Act relating to the registration of
individuals who perform home inspections; relating to regulation
of contractors; relating to registration fees for specialty
contractors, home inspectors, and associate home inspectors;
relating to home inspection requirements for residential loans
purchased or approved by the Alaska Housing Finance Corporation;
relating to civil actions by and against home inspectors and to
civil actions arising from residential unit inspections; and
providing for an effective date."
Number 2060
REPRESENTATIVE COGHILL moved to adopt CSHB 9(L&C) as the working
document. There being no objection, CSHB 9(L&C) was before the
committee.
Number 2080
REPRESENTATIVE NORMAN ROKEBERG, Alaska State Legislature,
sponsor, relayed that last year, a previous iteration of HB 9,
after the passing the House, did not get a chance to pass the
Senate. He explained that HB 9 will regulate the occupation of
home inspectors, which is one element in the chain of
transactions that lead up to the purchase and sale of new and
existing homes in Alaska. He noted that of all the occupations
involved in a real estate transaction, the occupation of home
inspector is not licensed or regulated in any way. He remarked
that at one time, this legislation had provisions for a board of
home inspectors, but due to the high costs of the biennial
licensing fee, he decided to delete those provisions. Instead,
he added, "we took the novel approach of putting it under the
specialty contractor section" of the [Division of Occupational
Licensing], which in effect lowered the cost of the biennial
license from approximately $600 to $250. He relayed that one of
his concerns was that if the price of a license was too high, it
could actually affect the price of a home inspection.
REPRESENTATIVE ROKEBERG said that the current version of HB 9 is
a good compromise and will still provide consumer protection.
He noted that in a memorandum to the committee, he has outlined
a few legal issues that the committee might wish to focus its
attention on. He remarked that the original idea for this
legislation was brought forth by the real estate industry in an
effort to "do some cost shifting of liability." He said that he
in turn has tried to create a "balanced, equitable bill with the
foremost thought and objective to be the consumer." He
continued:
I believe we've given the home inspectors some
benefits here by lessening their liabilities and the
statute of limitations as it relates to some of their
reports and so forth. On the other hand, we've
removed some immunization that they've had ... under
the current statutes ..., always keeping in focus a
certain balance, here, about Alaska climactic
conditions, the impacts on reports, [and] the cost to
consumers. But the foremost issue is, right now,
anybody without any competency whatsoever can go in
business as a home inspector.
REPRESENTATIVE ROKEBERG, in closing, said, "By providing the
bonding and other sources, we do not affect, in any way other
than timeframes, any rights of cause of action by any
complainant in the state." He noted that there were a couple of
"tune-up" amendments.
Number 2328
REPRESENTATIVE GARA said:
There is a provision in this bill that addresses when
somebody who writes a home inspection report will be
held liable if they do a very poor job at it, and the
bill as it reads right now allows somebody who
purchases a home to hold a home inspector accountable
if their conduct was negligent, if their conduct was
grossly negligent, if their conduct was reckless or
somehow deficient ...
REPRESENTATIVE ROKEBERG interjected to say that those standards
are not listed in HB 9, adding that "the standards of gross
negligence and so forth are repealed by this bill."
TAPE 03-2, SIDE B
Number 2383
REPRESENTATIVE GARA indicated that he did not mean to imply that
those liability standards were in the bill; rather, he was
merely leading up to an issue he has concerns with.
Number 2327
BRYAN BUTCHER, Legislative Liaison, Alaska Housing Finance
Corporation (AHFC), Department of Revenue (DOR), said simply
that the AHFC supports HB 9.
Number 2296
RICK JARVIS, Re/Max Properties Inc., said simply that he
initiated the concept of this legislation, that it is a consumer
protection issue, and that he is in support of HB 9.
REPRESENTATIVE GRUENBERG requested that at some point someone
"walk us through the bill."
CHAIR McGUIRE indicated that the committee would hear from the
sponsor again and suggested that he would provide more details
at that time; she also noted that in members' packets is a
sectional analysis and a sponsor statement. She noted that a
previous version of the bill passed the House during the last
legislative session.
Number 2211
TED VEAL noted that he is a residential homebuilding contractor
and an International Conference of Building Officials (ICBO)
inspector. He referred to Section 40, which repeals AS
18.56.300(c), and said that by not having that language, "it
more or less puts a target on the back of the inspector to
anybody ... who has any kind of a complaint" regarding the
structure and will make the inspector liable for that structure.
He said that currently, an inspector appears on site and does
spot checks during the construction process; he/she is not able
to continually observe what is done throughout that process.
Therefore, he added, "removing that raises a great deal of
concern on my part, just having to fend off frivolous lawsuits
and liability issues that are prone to happen in our society in
this day."
MR. VEAL said that if [HB 9] passes, it is going to make it much
more difficult to perform the inspection because of the
liability burden; "there are so many things and options - the
contractor can change things after the inspector's left the
site" - he noted, and the contractor would not know that such
had occurred. He reiterated that there are a lot of things that
concern him with regard to repealing that portion of [current
statute]. He expressed a desire to protect the consumer, but
noted that he wanted to "see some more investigation, and maybe
refer to the practice of the code bodies throughout the country
- and how they handle it - and take a similar track in that
manner."
MR. VEAL then referred to page 10, lines 1-4. He noted that it
lists a two-year period for new-construction reports and a one-
year period for existing-construction reports. He asked why
that difference is stipulated. He also noted that homebuilders,
too, have a one-year warranty period.
REPRESENTATIVE ROKEBERG, in response to Mr. Veal's question,
said that the distinction was based upon the premise that in an
exiting home, any defect or omission in a home inspection report
should be evident pretty quickly to anybody that would have
grounds for a cause of action. He noted that currently the
statute of limitations regarding that type of circumstance is
three years; HB 9 would reduce it to one year. With regard to a
new home, however, an error or omission might not make itself
evident until after one year has elapsed, he said, adding that
this distinction was a compromise arrived at while attempting to
lower the "traditional period of contractual statutory
limitation" from a three-year period to a lower period. To the
benefit of home inspectors, he remarked.
Number 2007
REPRESENTATIVE ROKEBERG, in response to a question, noted that a
copy of the statute repealed by Section 40 is included in
members' packets.
MR. VEAL asked whether, as a licensed, homebuilding general
contractor with a residential endorsement and required bonding
and liability insurance, he would have to get more bonding and
liability insurance in order to continue to perform ICBO
inspections. He also asked whether, under HB 9, he will be
required to "use a different form of inspection reports other
than the PUR [purchase] forms that [AHFC] is currently using."
REPRESENTATIVE ROKEBERG, in response, said:
As a contractor, under the exemption section in the
bill, he would be exempt from his contracting business
- would not have to be a licensed home inspector -
unless ... he wished to put himself out and charge
money for home inspections. In that instance, then,
he needs to be licensed as a home inspector. And
presumably the bond would not be duplicative; I'm not
familiar enough with that statute to see if it would,
because he's required to have a bond under the
contracting license and, frankly, I don't know the
answer to that, whether it would be duplicative.
The other question he raises ... came up in a hearing
last week. The current bill requires that a report be
filled out, both for a new and existing home. It came
to my attention that generally ICBO inspectors for
newer homes don't necessarily fill out a report to
make visual inspections, and basically sign off on a
form from [AHFC] which is [an] occupancy permit. So
we have drafted a conceptual amendment ... that takes
care of that, that there either would be a report form
or, that report, in the case of new homes, would be in
the form of a certificate of occupancy. So that would
be consistent with ... current practice.
CHAIR McGUIRE directed attention to the exemption section on
page 15, specifically lines 28-30, which read: "(6) registered
as a general contractor with a residential contractor
endorsement under this chapter and is performing only activities
within the scope of that registration".
Number 1813
ROBERT MILBY noted that he has a general contractor's license
with a residential endorsement, and that he is also "an ICBO-
certified combination dwelling inspector" and inspects new
construction. He opined that [HB 9] contains discriminatory
language with regard to inspections of new residential
construction in rural Alaska. He said that he is opposed to the
deletion of [AS 18.56.300(c) as is proposed via] Section 40 of
the bill. He said that ICBO certifications are required [by]
"municipality inspectors as well as in the private sector, ...
and I don't think leaving this [language] out when the rest of
the inspectors in the state are not ... judged under those -
they're exempt from that." "I believe that we should all be on
the same playing field," he said, adding, "I believe the state
of Alaska should be on [the] same - residential - the same
building codes throughout the state."
MR. MILBY continued:
As inspectors out in rural Alaska, we don't make up
any codes. We inspect by the codes that we're given,
that the [Alaska State Fire Marshal] has adopted. And
I'm not sure what's broken here that we're trying to
fix. ... I'm just not sure of what problems it's
causing anybody, that an ICBO-certified inspector goes
out and inspects a home. Now, the inspection reports
that we make out through each phase of the house is a
written [form]. It's not like ... the final summation
goes on the PUR forms, but we clearly have inspection
reports that state any violations of the code.
And ... I'm not sure, from what I heard ..., if that's
clear. The contractors have it, and we inspect ... to
make sure that those are corrected. The two-year
liability thing sounds like a downplay from a three-
year. However, I've been a general contractor here in
Alaska for almost 30 years, and ... you have that
inherent one-year liability for things that are wrong.
And I think you're always liable for things that are
gross and negligent. And even if I had a mechanical
contractor putting in a furnace, ... he has a one-year
liability also, but not from when the house was
purchased but from when he installed that particular
item. ... I'm just not sure what we're trying to fix
here.
Number 1647
MR. MILBY opined that it would be much more productive to spend
time adopting a single code for the entire state, and ensuring
that inspectors are certified by the state and are inspecting
under the same code.
REPRESENTATIVE GARA asked Mr. Milby whether he is saying he
believes that currently, the standards that are applicable to
home inspectors might be adequate to assure the public that home
inspectors are well enough qualified.
MR. MILBY replied:
I am in the new-construction inspection field, having
had that many years in the building industry here in
Anchorage. And I also have a residential contractor's
license in another state. But what I'm saying is, an
ICBO-certified inspector is qualified to inspect a
home, yes.
REPRESENTATIVE ROKEBERG pointed out that HB 9 calls for certain
competency standards, one of which is passing an ICBO exam.
Thus, he ventured, there are no additional burdens placed on Mr.
Milby other than applying for his license and paying the
licensing fee. He also pointed out that the Uniform Common
[Interest] Ownership Act (UCIOA) requires a two-year warranty
period for condominium-style townhouse developments.
CHAIR McGUIRE noted that the transitional licensing provisions
can be found on page 22, beginning on line 11. She relayed her
belief that Representative Rokeberg has done a good job of
trying to be as accommodating as possible to the people in the
industry. She acknowledged that it can difficult to have one's
industry become regulated, but suggested that the aforementioned
provisions do give some leeway to folks who are already in the
home inspection industry.
REPRESENTATIVE GRUENBERG asked for verification that the
language which two speakers have objected to having removed via
Section 40 reads, "(c) A person may not bring an action for
damages based on a duty imposed by (b) of this section to
inspect a residential unit unless the action is for damages
caused by gross negligence or intentional misconduct", and that
that duty is basically a requirement of inspection in order to
get certain loans. Thus, he surmised, passage of HB 9 will
allow a person to maintain an action for damages based upon
simple negligence.
REPRESENTATIVE ROKEBERG confirmed that. He said that that is
part of the balance achieved by HB 9. "We're making some
concessions - I know that Representative Gara has some of those
concerns - but that's really a major part of the whole balancing
act," he added.
Number 1421
BERNIE SCHUYLER noted that he is "an ICBO-certified inspector
for combination dwellings and business, and a building inspector
in the UBC [Uniform Building Code]." He said that he is not in
favor of HB 9, the main reason being the deletion of the
language cited in Section 40. He also opined that there is not
enough delineation between "new construction and prior
construction," adding that they are two different inspections.
REPRESENTATIVE GRUENBERG said:
Just for the record, I've heard three of you testify,
and you're all in the business, and you'd all like to
be immunized unless somebody can show you acted
grossly negligent or ... did something intentional.
That's a very high standard. Why, on a public policy
basis, do you think you deserve such special
protection, sir?
MR. SCHUYLER said, "Well, for one reason, the municipalities are
covered; they don't have any of that problem that we have."
REPRESENTATIVE GARA remarked that the current standard that
applies to most people in society when they act towards another
person is that they're not liable unless they engage in
unreasonable care that causes somebody harm. "That's what we
define as negligence," he added, "that's the standard that has
been applied in this country for over 100 years in all sorts of
circumstances, and that's the standard that I believe
Representative Rokeberg has said should stay in place and not be
altered in this bill. But sometimes, he noted, people hear the
term negligence and they think that that's not very
irresponsible conduct. But one would never be held negligent
unless it were determined that he/she engaged in conduct that
was unreasonable and that showed a lack of reasonable care.
That is quite a burden, he opined.
Number 1264
KEVIN JONES said that he performs home inspections in the
Anchorage area as well outside that area. He explained that he
mainly concentrates on preexisting homes rather than new
construction, although he is an ICBO-certified combination
dwelling inspector and could "do that" should he choose. He
said that overall, he is supportive of HB 9, although he does
understand the concern regarding Section 40. He noted that he
is also president of the local chapter of the American Society
of Home Inspectors (ASHI), and that they do support licensing of
the industry.
MR. JONES referred to page 8, line 3, which reads: "(b) All
advertising and business cards prepared by a registered home
inspector or associate home inspector for the home inspection
business must show the inspector's name, mailing address, and
registration number". He asked why that requirement is
included, and whether such is required of everyone who's
licensed in any type of business in the state.
REPRESENTATIVE ROKEBERG said that this particular provision "is
found in other forms of statutes in occupational licensing," but
as written only applies to home inspectors. He added that [such
a requirement] is consistent with a number of other occupations.
He indicated that this requirement will enable authorities to
identify and "grab" those who fail to comply with the [proposed]
licensing provisions.
MR. JONES referred to Section 18, page 10, lines 20-22, which
read: "Contractors and home inspectors may not advertise that
they are bonded and insured simply because they have complied
with the bond and insurance requirements of this chapter". He
asked what the intent of that language is.
CHAIR McGUIRE surmised that that language merely modifies
existing law to include home inspectors.
REPRESENTATIVE ROKEBERG agreed, adding that the language being
modified is located in the "specialty contractors license"
[requirements]. He remarked, however, that "it seems rather
redundant."
CHAIR McGUIRE suggested that the language is intended to mean
that because new requirements are being imposed, simply
complying with any other bonding and licensing elements of the
chapter does not then enable a person to advertise as being
"licensed and bonded."
Number 1061
REPRESENTATIVE GRUENBERG remarked that the language in Section
18 relates back to and conforms to language in Section 15 on
page 9. After noting that the bonding requirements in Section
15 stipulate $10,000 for a general contractor and $5,000 for a
home inspector, he posited that the policy behind [proposed] AS
08.18.111 is to indicate that a contractor, and in this case a
home inspector, may not claim to the general public that he/she
is properly bonded and insured merely by acquiring "this very
small bond," which probably would not cover him/her in most
circumstances. He said he thinks that this provision is a good
one and, turning back to the provision pertaining to business
cards, stated that that provision is really good public policy.
MR. JONES, on the issue of what shall be visually examined
during a home inspection, referred to page 18, lines 14-15,
which reads: "(I) other systems or components as specified by
the department in regulations". He remarked that that is a
pretty broad statement, and asked the sponsor to comment.
REPRESENTATIVE ROKEBERG replied that when defining "home
inspection" for the purposes of this legislation, he tried to be
as thorough as possible. However, in the event that changes
need to be made at a later date, the language in [subparagraph
(I)] gives the department the flexibility to further define
"home inspection" via regulations without having to petition the
legislature for a statutory change.
Number 0729
DAVID R. OWENS, owner, Owens Inspections Services, said that he
has been a building inspector for 20 years as of this year. He
went on to say:
In general ... I believe that this is a pretty good
bill for existing-home inspectors; I don't see
anything in here that is too flagrant for the portion
of the work that's for existing-home inspectors. ...
But the other part of this is the new-home inspection,
and this is not a good bill. I do not endorse it.
I'm strongly opposed to ... [Section 40, which repeals
AS AS 18.56.300(c)]. We were instrumental in the
early '90s in getting that [language] put in there,
and that is the same type of protection that any
municipal inspector has under the ... administrative
section of the code - they are not personally
responsible unless it's gross negligence or
intentional misconduct. And that language appears
throughout all the codes, and is given to all
municipal inspectors that do that type of work.
One of the things that's always bothered me about the
way this has gone together is that not all inspectors
... that do inspection work are being regulated by
this bill. ... They're picking and choosing who we're
going to regulate. And ... if we're going to regulate
an activity, such as building inspection, then we
ought to include all building inspectors; ... there's
a list of 20 or 30 different types of commercial
inspectors that are not being regulated. A few of my
buddies that do that kind of work kind of chuckle a
little bit saying, "You're under the regulation and
I'm not," and I simple don't think that that's fair.
Number 0586
CAROL PERKINS, Owner, Active Inspections, noted that she is an
ICBO combination dwelling inspector in Wasilla and does
inspections on existing homes. She indicated that as an
existing-home inspector, she likes HB 9. However, she remarked,
as a new-construction inspector she has the same concerns that
were previously expressed regarding Section 40 and the lack of
clarity pertaining to the inspection reporting of new and
existing [buildings].
Number 0533
WILLIAM BRUU noted that he is an ICBO inspector, does existing-
home inspections, and is also an "energy rater." He said, "The
current proposed legislation is flawed, in my opinion, in that
it assesses a common set of liabilities to two totally different
activities." He continued:
As to certification, a home inspector is an individual
who says, "I am a home inspector." Meanwhile, [an]
ICBO-certified combination dwelling inspector is a
person who has proven his knowledge of all the
applicable codes through a comprehensive test. Many
of the current ICBO inspectors in Alaska obtained that
certification by attending a weeklong series of
seminars and then challenging the test. For those
attempting the test the first time, the test had a
failure rate in excess of 50 percent. The test is
comprehensive and tough. The ICBO inspector is also
required to maintain his or her certification by
testing on code changes and additions, typically on a
three-year cycle.
One aspect of the legislation before you: [page] 5,
lines 21-31, and [page] 6, lines 1-12, in summary lay
out the required reports that a home inspector is
required to provide and perform as part of his
inspection. An ICBO inspector is already required to
leave a copy of his field notes at each phase
inspection. The requirement that he provide a verbal
report to the customer is counterproductive. In most
cases, the customer is not there. The builder is
nowhere on site.
All the inspections performed by the ICBO inspector on
new construction are required to be formally
documented on an [AHFC] form PUR-102. The ... [PUR-
102] becomes a recordable document upon completion.
The completed PUR-102 is then recorded and becomes
attached to the deed on the property. The name and
the ICBO certification number of the inspector becomes
a matter of record and, in reality, the inspectors can
stand liable for those inspections as long as that
document exists. A previous legislature has provided
some protection for the inspectors from unscrupulous
clients by adopting the provision in [AS
18.56.300(c)]. This legislation proposes to drop that
protection, and we feel that that is a violation.
Number 0325
MR. BRUU continued:
As to the function of the home inspector versus the
ICBO inspector, there is a world of difference. The
ICBO inspector is required to perform a series of
inspections during the construction of new houses.
Those periodic inspections include: a plans review,
which may take up to four hours depending on the
complexity of the plan; footings and foundations -
some foundation types require as many as five trips to
the site to view the progress until the foundation
itself is complete; rough-ins inspections, which shall
include at least four major sub assemblies - framing,
mechanical rough-ins, electrical rough-ins, and
plumbing rough-ins; ... insulation and vapor retarder
inspections - this, of course, is extremely important
in our sever climate; and a final inspection, [for]
which [the AHFC] has published very specific policy
and guidelines ....
All installed appliances and systems are checked for
installation and function. It would be very, very
unusual if any of the appliances or mechanical
equipment installed in new construction would be
"used" and would require the inspector to render an
opinion as to the life expectancy, which is normally
expected of an existing-home inspector. Conversely,
the home inspector visits a house once for a period of
time, usually less than three hours. He is expected
to visually inspect the property. He cannot and is
not expected to view the interior of walls and other
hidden parts of the constructions. He is expected to
comment on the age and condition of appliances and
systems that are installed. The American Society of
Home Inspectors [ASHI] in their "Standards of
Practice" fully recommend that an inspector not
address code issues because they are not trained nor
equipped with the knowledge to do so.
Number 0212
There are other major differences in the scope and
responsibilities of an ICBO inspector and a home
inspector that this legislation does not address. If
this legislation passes as written, we feel there will
be a major reduction in the standards to which homes
have been built in order that they be financed by [the
AHFC]. Sections 33 and 34, when implemented, will
allow anyone who claims to be a home inspector, and is
licensed by the state, to perform new-house code
inspections on new construction. The inspector will
not have to be certified by any of the code-writing
organizations. He can do so voluntarily, but he does
not need to be, under this legislation.
MR. BRUU concluded:
If the legislature wishes to keep the standards as
high as they are today and have the inspectors respond
to changes and advancements, then they should continue
to call for the new-home inspectors to be certified by
the code-writing organizations. Alaska Housing
Finance [Corporation] should continue to be required
to have their collateral inspected to ensure that they
have code-compliant dwellings in compliance with the
legislature's wishes and provide some consumer
protection. One matter of administrative change that
I think needs to be understood by the committee ... as
well [as] the sponsor is [that] the International
Conference of Building Officials basically no longer
exists. All the code-writing organizations across the
United States have now come together and created the
International Code Conference, and that will be the
governing and authoring agency for all the building
codes. Thank you for the opportunity to testify.
CHAIR McGUIRE, with regard to Mr. Bruu's comments about the oral
report, turned to page 6, line 9, and pointed out that it merely
says that an oral inspection report "may" be given. In other
words, she explained, it is not a requirement.
MR. BRUU mentioned that in previous versions of the legislation,
it was mandatory to give both a written report and an oral
report.
TAPE 03-3, SIDE A
Number 0001
CHAIR McGUIRE turned to the language on page 6, line 11,
regarding the 180-day period, and asked for an explanation of
how "that matches up with the statute of limitations."
REPRESENTATIVE ROKEBERG offered that the 180-day period pertains
to the amount of time in which a home inspection report has
validity. He recounted that a previous version of the
legislation had a one-year period, and that some have argued for
a 24-hour period of validity; the 180-day period is a
compromise. He remarked that a home inspection report is not an
engineering report; it is merely a report of a three-hour visual
inspection that costs $350. He noted that in Alaska, the
climactic conditions are such that a home inspection can be
performed one day but then the next day it could snow two feet
and cause damage to the building, or an earthquake could occur
and cause damage.
CHAIR McGUIRE turned to page 10, lines 1-4. She noted that the
statutes of limitations for [filing] claims are based on a
report that is only valid for 180 days. She surmised,
therefore, that "that defect had to have been discovered during
that 180-day period upon which the home inspector signs off."
REPRESENTATIVE ROKEBERG indicated that that is incorrect;
instead, the defect or omission can be discovered within the
one- or two-year period, depending upon what type of home the
report was related to. He elaborated:
One of the problems that we found in practice is that,
number one, whoever would purchase the report, say a
buyer of a home, would purchase a home inspection
report at the advice of a real estate licensee. ...
They would have the inspection done, they'd own the
report, [and] they'd then make an offer on the home;
many times the seller would even [have] ... an
inspection [done as well]. ... Then the report becomes
part of the bargaining process - usually for
correction of defects ... [listed] in the report. ...
Remember, ... the disclosure form under state law ...
even advises people to get a home inspection report.
But at this point, ... in the real estate business we
call it a "DFT," deal fell through. ... What we found
is [that] this particular report keeps getting handed
around to lenders, to other people, [and] it could ...
end up with buyer number two.
REPRESENTATIVE ROKEBERG said that the questions then become:
Who has liability? Who owns this report? House Bill 9, he
opined, makes clear that the ownership of the report is in
control of the person who has purchased it or "has given written
consent for that, because the lender may want to see that." The
lender can see it, but cannot pass it on to a third party. This
will ensure that someone unrelated to the original transaction
regarding the home inspection report does not rely on an
obsolete report. This provision, he noted, does not preclude
someone from bringing forth a cause of action.
Number 0428
REPRESENTATIVE GARA surmised as follows:
As to whether or not somebody is harmed by a report
and has a right to seek to hold the home inspector
accountable, the one- or two-year statute-of-
limitations period applies. As to whether or not a
report that is written can be used for purposes of a
home sale, [it's] a separate question. And this
section that says the 180-day period applies, applies
only in those circumstances where you're determining
how long the report is valid for purposes of home
sales and deals that fall through, and this is not
related to the liability issue; this is related to the
"who gets to rely on the report in purchasing a home"
issue.
REPRESENTATIVE ROKEBERG said that is correct.
REPRESENTATIVE GRUENBERG reiterated that he would like someone
to walk him through the bill. He mentioned that he would like a
little time, a day or two, to figure out what the bill entails
before passing it from committee.
CHAIR McGUIRE said that it is her intention to pass HB 9 from
committee at this meeting. She expressed the hope that
Representative Gruenberg would have his concerns addressed by
the sponsor after the meeting or some other time before the bill
goes to the House floor.
Number 0603
REPRESENTATIVE GARA pointed out that although many of the
members of the committee are already familiar with HB 9 and many
of the people who have testified have been working on the
legislation for many years, he and other members are not
familiar with the topic. He said:
I do not believe that we can go through as detailed a
bill like this, and answer everybody's questions about
a bill as detailed as this - a bill that changes as
many liability standards and rules of law as this - in
a hasty manner. We have 10 minutes left under our
schedule for this meeting; I have many questions
[that] are going to take more than 10 minutes. I am
generally supportive of this bill. There are some
provisions that cause me concern, I have some
substantive questions, and, I hate to say this, but I
think that I would request that maybe we continue this
discussion at our next [House Judiciary Standing
Committee] meeting. And I think that would be a
decent practice for other bills that involve sort of a
significant amount of analysis, as this one does. So,
that would be my request for the chair, that we invite
the folks back, including Representative Rokeberg, for
another meeting on this bill. It's a complex bill,
and we shouldn't vote before we fully understand what
we're voting upon.
REPRESENTATIVE GRUENBERG said, "Madam Chair, I'm not trying to
delay this, but I would like to know what I'm voting on so I can
defend it on the [House] floor."
REPRESENTATIVE ROKEBERG pointed out that HB 9 also has a House
Finance Committee referral. He again mentioned that a
memorandum he provided listed the points that he anticipated the
House Judiciary Standing Committee would focus on, adding that
he provided that memorandum in an effort to expedite the
process. He said that although he can appreciate the comments
made by Representatives Gara and Gruenberg, reading the bill is
"the responsibility of a particular member."
REPRESENTATIVE GARA interjected to say, "Point of personal
privilege." He went on to say:
I would assume that every single member of this
committee has read this bill. I have read this bill.
I have many questions for you, Representative
Rokeberg; you are the [person most familiar] with this
bill. I would like to field those questions to you,
and I would like to have a debate on the record as to
whether or not this is good public policy for the
state of Alaska. This bill could be referred to six,
seven, or eight committees; if all six, seven, or
eight committees do not have adequate time to review
the merits of this bill, then that doesn't help
anybody. It's not so much a matter of how many
committees this bill is referred to, it is a matter of
whether any committee has adequate time to ask the
questions and engage in the debate that is relevant to
the bill. So that's why I would like to have more
time to talk about this. I'm perfectly ready to start
with my questions; the problem is, we have five
minutes left.
Number 0865
REPRESENTATIVE ROKEBERG opined that there should be adequate
time for members to acquaint themselves with the bill before it
is heard on the House floor, indicating that he would be happy
to answer any questions before that time.
REPRESENTATIVE GRUENBERG said:
I was seriously considering co-sponsoring the bill - I
didn't know enough about it to do it - because I think
it's a good idea these people be licensed. I didn't
do it because it seemed like a very complex bill -
maybe it's not - I had no idea how long it had been
around. And I don't mean to be goring your ox,
because I'm really not. I am talking about the way
our committee needs to work. And I had previously sat
on this committee for eight years; I was the only one
who sat on it in the legislature for eight years while
I was here. Sometimes ... this committee seemed to
take time to do work on bills, and it was aggravating
to those of us who sponsored bills that came before
the committee. The bills that came out were generally
pretty [good] product, were defended on the floor
pretty easily, and passed, and passed both bodies
because they knew this committee did its work. And I
was always proud, have always been proud, to be on
this committee, because that has been the reputation
of this committee. And I would hope that ...
CHAIR McGUIRE interjected to call for an at-ease, which lasted
from 2:54 p.m. to 2:55 p.m.
CHAIR McGUIRE noted that because the House Labor and Commerce
Standing Committee was not meeting that afternoon, the House
Judiciary Standing Committee meeting could continue past 3:00
p.m. in order to address some of the issues raised. She said:
I respect all the comments that have been made. There
is always a very tenuous balance ... between getting
it 100 percent right and getting bills moved through.
... I don't know that 10 hours more would make [all
members] 100 percent comfortable. ... I respect ...
[the participation of Representatives Gara and
Gruenberg]; I don't intend to marginalize that, or
make you feel ... that your views are not important.
At the same time, I do have the background, and I
guess you'll just have to trust ... that fact, ...
that ... I've seen the bill, I think it's a good
compromise, I think it's a good consumer-protection
bill, and there will be a period of time between
today, when this bill moves out, and ... [when it
moves] on to Finance Committee. And I would hope that
both of you would take the opportunity to read the
packet ... that contains numerous pages of testimony
and opinions and so on, and to absorb the public
testimony today, [and] if you have amendments that you
would like [offered], that you would take ... time to
meet ... with Representative Rokeberg prior to its
final hearing before the Finance Committee.
Number 1062
REPRESENTATIVE COGHILL made a motion to adopt Amendment 1, which
read:
Page 13, following line 12:
Insert a new bill section to read:
"* Sec. 27. AS 08.18.123 is amended to read:
Sec. 08.18.123. Denial, suspension, and
revocation of endorsement or home inspector
registration. (a) The department may suspend,
revoke, or refuse to grant or renew a residential
contractor endorsement, a home inspector registration,
or an associate home inspector registration upon a
finding that
(1) the application is fraudulent or
misleading;
(2) the endorsement holder or registrant
[CONTRACTOR] has knowingly violated this chapter or a
lawful order or regulation of the department;
(3) the endorsement holder or registrant
[CONTRACTOR] is incompetent or has engaged in
fraudulent practices.
(b) Proceedings for the denial, suspension, or
revocation of residential contractor endorsement, home
inspector registration, or associate home inspector
registration are governed by AS 44.62 (Administrative
Procedure Act)."
Renumber the following bill sections accordingly.
Renumber internal references to bill sections in
accordance with this amendment. Below are all
internal bill section references in this bill:
Page 22, lines 1, 12, 20, and 31
Page 23, lines 7, 17, 19, 20, 21, 22, 24, 25, and
26
REPRESENTATIVE ROKEBERG noted that Amendment 1, which pertains
to registration, is merely a conforming amendment requested by
the Division of Occupational Licensing. He said that he
supports the adoption of Amendment 1.
Number 1122
CHAIR McGUIRE asked whether there were any objections. There
being no objection, Amendment 1 was adopted.
Number 1133
REPRESENTATIVE GARA made a motion to adopt Amendment 2, which
read [original punctuation provided]:
Section 17. Add the following provision:
(e) the limitations periods in this section will
not begin until the later of the date of the home
inspection report, or the date a claimant should
reasonably become aware of an actionable claim.
CHAIR McGUIRE objected for purposes of discussion.
REPRESENTATIVE GARA said:
There is a rule in our civil justice system that has
been around for a good 50 years. It's called the
"date of discovery" rule, and I'll discuss that in a
moment. My overview of this bill is that largely it
gives consumers some additional assurances than what
they had before about the quality of home inspections.
Those provisions are good. But what it gives, it also
takes away. As currently written, this bill takes
away the rights of consumers to enforce the new rights
they've been given. In that sense, many of the
provisions of this bill are - probably unintentionally
... - empty, and that's what I'd like to address.
Let me give you an explanation of what the date of
discovery rule is; it's been in our courts for a
number of decades. And, for frame of reference, for
those of you who've seen the popular movie Civil
Action, the popular movie Silkwood, those involved
sever, fatal injuries that people suffered - cancers,
very debilitating injuries, injuries that people
suffered many, many years after somebody did something
bad. ... The movie Civil Action involved groundwater
pollution, groundwater pollution that occurred in the
1970s. For many, many years, children in a community
in Massachusetts were exposed to toxic ground water.
They didn't know it; nobody knew they were drinking
polluted groundwater. Within a number of years - 10,
12, 15, let's say - many, many children in the
neighborhood started coming down with leukemia. Many,
many children in the neighborhood started dying.
Number 1242
REPRESENTATIVE GARA continued:
There's a provision in this bill that says an action
has to be brought within two years of the inspection
report. The date of discovery rule says, "You don't
make somebody bring an action before they have one:
you don't make somebody bring an action before they
even know they're injured." The time period doesn't
begin to run until somebody reasonably has some
indication that somebody else did something bad. So,
in this bill right now, as it is written, there is a
one-year and a two-year statute of limitations. It
says the people who write home inspection reports can
only be liable for up to a year or two years, at the
outset, from the date they write the report.
Let me give you an example of where a consumer ... has
paid a good bit of money - and I don't consider $350
to be a trivial amount of money - let's say we have a
circumstance where a consumer purchases a home. They
want to know that the home is safe for their children;
they hire a home inspector, the home inspector says
exactly what Representative Rokeberg says, which is,
"I'm not going to tear this house apart for you to
find every single defect in it." But the purchaser
says, "You know, I'm really concerned about the wiring
in this house; that's really all I want to know about
- is the wiring okay."
... Well, maybe one home inspector says, "I'm not
willing to do that for you." But the consumer finds a
home inspector who says, "I am willing to do that for
you." The home inspector gives the house a clean bill
of health but, in fact, there was glaringly bad wiring
in the house. And this is ... close to a circumstance
that has happened ... in the bush. Three, four, five
years afterwards, the house burns down. The children
in the house are killed; the family is killed.
Significant injury has occurred, five years from the
date of construction or from the date of the home
inspection report. The consumer all along thought
that the house was okay.
Number 1359
REPRESENTATIVE GARA went on to say:
But ... you don't have a timetable for when fires
happen; you don't have a timetable for when faulty
wiring will finally sort of manifest its inadequacies.
In the case I'm referring to, the courts said the
consumers' cause of action didn't run out two years
from the date they bought the house. They didn't know
there was going to be a fire two years from the date
they bought the house; they thought the house was
okay. They knew there was going to be a fire when
there was a fire; they didn't have any reason to
disbelieve what they were told about the house, ... to
disbelieve that the house was a safe house, until the
fire occurred.
So the date of discovery rule says whatever your
statute of limitations, ... it begins to run at this
point: either the date of the person's bad act - so
let's say the negligent home inspection report, [in]
this case - or at the time the consumer should have
first had any reasonable indication that something was
wrong with the product they purchased - the home
inspection report, in this case. How can you let
somebody's rights disappear before they even know that
they have them? How can you let somebody's
opportunity to hold somebody accountable disappear
even before they know that they have any reason to
hold the person accountable? That's the point of the
home inspection report. If the point is that a person
wants to find out whether they have a safe house, and
if the home inspector says, "Yes, I'm willing to
provide this particular service" - to check the
wiring, let's say - why are we giving people rights
that they can't enforce?
So, what this Amendment [2] does is it says your
limitations period will not disappear before you have
any reason to know that you have a claim. It's a
traditional rule - it's applied in Republican states,
it's applied in Democratic states, it's been applied
by conservative judges, it's been applied by liberal
judges - it first started in cases involving toxic
chemicals like the ... Civil Action [example] I talked
to you about. Or, let's envision a circumstance where
many, many years ago a cigarette company tried to
convince children to start smoking - in year 1960,
let's say - the child started smoking and became
addicted and developed cancer in year 1975.
Number 1462
REPRESENTATIVE GARA continued:
The statute of limitations would have been two years -
... not two years from the date they started smoking,
[but] two years from the date they realized that
something wrong had happened. Maybe in 1970 they
found out that cigarettes were dangerous for them,
finally; maybe the studies finally came out. Well,
maybe they had two years from that date, but not two
years from the date that somebody handed them the
cigarettes, when they had no idea something wrong had
happened. So, I'll give you maybe two examples of
where this ...
CHAIR McGUIRE interjected to ask: "Do you honestly believe that
a judge would not apply a date of discovery rule with a case
such as you described? Honestly?"
REPRESENTATIVE GARA said, "If the statute directs ... I worry."
CHAIR McGUIRE said, "I don't." "That's why you have judicial
discretion, and the reality is, you've set statutes of
limitations that you have a reasonable expectation of the
liability that's hanging out there for you," she added. But in
cases where situations as described occur, where there is gross
negligence, where a serious harm has been done, there is
judicial discretion to apply a date of discovery, she posited,
remarking, "And you know that."
REPRESENTATIVE GARA said:
I don't know that, and here's why I don't know that:
In this state, ... there have been many, many attempts
to get of rid of and limit the date of discovery rule.
This statute reads that your cause of action
disappears specifically within one or two years from
the date of the report. It's specific. Courts are
very wary about overriding what a legislature tells
them the law is. In this bill we are telling the
courts the law is that ... a home inspector is only
liable for one or two years from the date of the
report.
Number 1563
If somebody wants to comfort me, that we have a
general statute within Alaska law that applies the
date of discovery rule - even apart from what this
statute says - if somebody comforts me that ... there
is a provision in Alaska law that applies the date of
discovery rule, I have no problem with this bill. If
you can convince me that a court is going to ignore
the specific wording of this [proposed] statute and
impose a date of discovery rule, I have no problem
with the bill. I am not convinced at this point that
... I would be comfortable ... passing a bill that
says the opposite of what I hope it would say.
REPRESENTATIVE GARA concluded:
To be careful, what we would do is adopt either this
amendment or an amendment stating that this provision
does not do anything to disturb the date of discovery
rule. If we did that, I would withdraw my Amendment
[2] in favor of an amendment like that. But if it is
this committee's intention to apply a rule like the
date of discovery rule, I believe it has to be stated
somewhere in the statutes. I am worried that the
specific language of this [proposed] statute, which is
that the legislature directs the courts to allow a
cause of action only one or two years from the date of
the report, will be applied as written.
CHAIR McGUIRE assured members that during the next two years,
the extent of liability, personal and otherwise, and statutes of
limitations would be issues for ongoing debate. She remarked
that statutes of limitations are in place in order to allow a
reasonable businessperson to move on. At the same time, she
noted, the legislature has to be protective of consumers. A
balance must be achieved, and that's what tort reform and
statute of limitations are about, she posited. She observed:
And the date of discovery has been something that in
my experience - in reading - ... [has] even been
applied in cases where there was a specific statute of
limitations. So it is a tool in a judicial [toolbox]
that is there for cases that are egregious, where a
judge can say "You know what, there was no reasonable
chance that this innocent victim could have discovered
it." And so I don't know that [what] Representative
Rokeberg wants to do is to say that; I think what he
wants to do is say, "We're going to try to limit this
statute of limitations." That tool is out there, but
I think it's a very specific public policy message
that [Representative Rokeberg is] trying to convey.
Number 1683
REPRESENTATIVE ROKEBERG said he opposes Amendment 2. He went on
to say:
I think that Representative Gara's arguments are well
founded in law and have a place in the law, but not in
this place. It is the intention of the author of this
bill to place a pretty stringent fence around those
periods when causes of action be brought forward. And
... there's numerous reasons here. Number one, the
example he cited regarding the wiring: ... a home
inspector ... is not generally competent to comment on
... the state of the wiring. ... To make a complete
analysis of that, number one, you should be [an]
electrical engineer and/or a competent journeyman in
that trade. And, additionally, the scope of work,
which is required under this bill to be defined in the
report and the contract one engages in, should be
clearly delineated: the level of competence and what
degree of inspection you're going to do.
... So the consumer has ... been put on notice;
therefore, anybody who would undertake the example of
the bad wiring would ... be in breach of the basic
concepts of this bill. ... Let's not use wiring
[examples]; let's use a roof or a foundation
[example]. Those are the two primary elements that
come into play a lot when you are dealing with home
inspections and there's some dispute about that. This
is precisely the point here. To have a full roof
inspection, you need to have an invasive inspection -
you need to take the ... thing apart - and you should
have an engineer or somebody that's competent to do
that. Not a home inspector. That's the whole point.
A competent home inspector who's licensed - takes the
exam, follows the regulations of a regulated
occupation - shouldn't even be doing that. ... If he
does it, then he should be actionable.
Number 1727
REPRESENTATIVE ROKEBERG continued:
... And the same goes for a foundation. To make a
proper inspection of a foundation, a home inspector
will go down and kind of visually look at it. And ...
guys that know the business can kind of tell you,
"This doesn't look too good"; they can sniff it out,
... people with talent, they can do that kind of
stuff. And that's what they get paid for, for $350.
... That's a trifling amount in the whole world
universe of economic activity; I think it's pretty ...
small to try to lay ... liabilities of literally
hundreds of thousands of dollars on something like
that. But I would agree, there is certain amount of
reliance upon that, but it is limited and that's part
of the whole process here of the bill.
Point in fact ..., if there is a structural problem
with that, particularly obviously in [a] new home,
there's going to be a warranty, there's going to be a
contractor and/or there should be a disclosure
statement in the liability on the part of the seller
if they don't properly disclose a defect that would be
readily ... apparent to somebody. So there's other
elements here. The home inspector is only one of a
number of people that could have culpability or
liability in any kind of a transaction. To try to
focus on all this attention on one party is not fair.
And that's why, as [Chair McGuire] ... points out
here, it's the effect on commerce here. To do
otherwise, to use ... the concept of date of discovery
rule, is basically open ended. It doesn't affect the
[facts] that we're having to deal with here.
... If there's an architectural design problem, if
there's a structural problem in the engineering of a
structure, you're right: sometimes this doesn't show
up for some time. ... And that's why we have a longer
statute of reposes and statute of limitations for
those types of things. This is a matter of public
policy. We're trying to define and contain the
liability on the one hand ... and also remove some of
the immunities ... granted before, to kind of get a
balance here, and also make sure we do the two-pronged
thing we want to do. We want to have good consumer
protection - as well as try to keep the cost of it
down to the public - and to make sure that commerce
can go on.
Number 1869
REPRESENTATIVE ROKEBERG concluded:
So, to try to say that we ... can't adopt some kind of
a modification to these time-honored rules of law,
that's precisely, as legislators, what we're all about
here. It is making sure that we can get a fair
balance to fit the circumstances here. I would say,
Madam Chair, when I first introduced this bill, we
were one of the first states in the union to even
undertake this. Since that time, ... at least half of
the other states have already adopted regulation. So
it's a matter of the type and form here. But it's
clear to me that this situation doesn't lend itself to
that type of imposition of this particular date of
discovery rule, and I think the clear public policy,
from all standpoints, bears up that type of policy.
REPRESENTATIVE SAMUELS, on the issue of Amendment 2, said he
agrees with Chair McGuire.
REPRESENTATIVE HOLM indicated that he is opposed to Amendment 2.
He said:
Why, in heaven's name, would anybody want to be a home
inspector if he had unlimited liability? ... This
bill, to me, is good public policy, as it's written,
to promote orderly economic activity. I think that's
what we should be doing and I respectfully promote
that idea ...; Representative Rokeberg did a very good
job drafting this bill. As I've read this bill, there
are certain things that I don't particular care about,
and I don't particularly understand why the timing is
there.
I, personally, have had problems with buying a home,
and in my history I understand what caveat emptor is;
I understand what "Let the buyer beware" is. I also
understand what personal responsibility for my
purchasing power is all about, that I have personal
responsibility to myself to make good decisions.
There are no perfect solutions, and the reliance of
the buyer is upon his or her knowledge, money, and the
seller's representation. The home inspector is just a
piece of the puzzle ..., and I respectfully submit
that we cannot make a perfect bill that will protect
all people from no damage being done to them. So, I
speak against this Amendment [2].
Number 1978
REPRESENTATIVE GARA, in defense of Amendment 2, said:
What we have is one bill. We have a chairwoman who
believes that the date of discovery rule will apply
under the terms of this bill, we have a sponsor who
believes the date of discovery rule will not apply
under the terms of ... this bill, and we have a person
speaking, myself, who is not sure whether the date of
discovery rule will apply and who wants to make it
clear that it should apply. Let me address the thrust
of Representative Rokeberg's comments. Representative
Rokeberg is correct in stating that a home inspector
does not ... warrant that everything is great about a
house. A home inspection is a limited function; a
home inspection report is a limited document. It's
pretty clear that a home inspector only warrants
certain things when the home inspector writes a
report, and doesn't undertake to warrant other things.
All I'm talking about is those things that the home
inspector promises the buyer that the home inspector
is doing. A court could not hold a home inspector
liable for things that the home inspector didn't
promise they were doing; a court could not hold a home
inspector liable for things that were beyond the home
inspector's scope of responsibilities or duties. So
the problem that we all suffer is, none of us build
homes, none of us are home inspectors, and none of us
- I think - have a great grasp on those circumstances
where a home inspector might do a bad job and put
somebody's life at risk and those circumstances that
wouldn't really occur in a home inspection report.
But Representative Rokeberg mentions these sort of
structural problems.
Number 2062
REPRESENTATIVE GARA continued:
I'll give you an example that really doesn't apply to
homes, but I suppose an analogous situation could
occur. There was a terrible hotel skywalk collapse a
number of years ago. We're not talking about hotels
today, but just assume a similar smaller-scale
circumstance that involves a house. It was a skywalk
that was built more than two years prior to the date
of collapse, and it killed over 100 people - I believe
those are the right numbers. In any case, a tragic
loss of life occurred, and it was a very poorly built
and poorly inspected structure. Now, I don't know
that ... anything similar to that would fall within
the scope of home inspectors duties. What is clear is
there are things that will fall within the scope of a
home inspector's duties. And we can't tell home
inspectors that, "We're not going to hold you
accountable for the things you promised to do,"
whatever they are.
Under today's law, ... until we adopt this bill, the
date of discovery rule does apply. And the question
is whether or not we should do anything that threatens
to take away that right of consumers to rely upon the
date of discovery rule. And I would urge, Madam
Chair, that if she believes the date of discovery rule
should apply implicitly, ... [that] we take some time
to figure out whether or not a court would determine
that the date of discovery rule does apply to this
bill as written. I think that requires that some of
us open up a law book and look through some cases to
make sure that it applies. It's a question that I
think is lingering out here.
REPRESENTATIVE GARA concluded:
But all I'm trying to say is, as to the things home
inspectors promise they're going to do, as to the
warranties of safety that they do give to consumers,
as to the things that do fall within their job duties,
they should be held accountable for the promises that
they make. It might not include wiring in all cases,
though I would say that if a home inspector came to
you and says, "I'm also going to warrant the wiring,"
then they're warranting the wiring. Maybe if they
came to you and said, "Look, I'm not going to look
inside any walls; I'm not an electrician," they're not
warranting the wiring. Maybe in most cases they're
not warranting the wiring, but if they said they were,
then they better be.
Number 2133
CHAIR McGUIRE, in response, said:
What's happening right now is that we're talking about
one specific piece of legislation. There is a whole
framework of laws that are out there, dealing with
consumer protection, dealing with date of discovery,
dealing with all kinds of things. And what I meant to
say, and I thought I said clearly, was that I believe
that Representative Rokeberg intent is to limit the
statute of limitations to one year and two years; I
believe that that's his intent. But what I also said
was that I have never seen a case where a very
egregious situation has happened where a judge has not
been able to access a tool in their tool belt, to go
back and say, "date of discovery." So that's what I
mean to say, is that we do have branches of
government: we make the laws, the judiciary goes
ahead and takes those cases, they have various tools
in their toolbox, we don't always like those, but I
believe that it is Representative Rokeberg's [intent]
to limit that, and I think it's appropriate.
Representative Holm has, I think, very eloquently
stated: You're looking at it as one piece of the
puzzle. And what you're talking about is a group of
people that prior to now have never even been
regulated. ... They've been going around doing home
inspections, promising who knows what. And so this is
a big step that Representative Rokeberg has taken on
over the last ... [four] years, ... to try to say
let's bring people together and do some regulating of
it. I think it's appropriate that you say there's
going to be some time limit that we're going to impose
so that people can ... move on with their lives from a
business standpoint.
CHAIR McGUIRE indicated that amongst people who have gone to law
school, there could be any number of viewpoints regarding the
possible interpretation of a judicial proceeding. She said,
"You can continue to do your debate, and we will go forward,"
noting that other members still wished to speak to [this issue].
Number 2214
REPRESENTATIVE ANDERSON opined that Representative Gara's
[argument] has some merit. He remarked that he has suffered the
date of discovery rule while trying to set a time regarding a
tort action. He said that he is as pro-business and as pro-
builder as they come, but accountability and consumer protection
are important. He added:
And I think the interesting thing is, as we get these
bills, it would be so easy to pass the buck and say,
"Hey, this bill is just addressing one issue - home
inspection/home inspectors as whole - and there's so
many other people that could be sued and we can't get
them in this setting at this meeting."
REPRESENTATIVE ANDERSON surmised that Representative Gara's
point is, what better time than the present to prevent ambiguity
and litigation with regard to legislation. He noted that
although Representative Rokeberg has said that the example
regarding electric wiring is a bad example, [paragraph] (12)(B)
on page 18 specifically refers to a visual inspection of
electrical systems.
REPRESENTATIVE ROKEBERG pointed out that there is a provision
requiring a pre-inspection agreement, and that this agreement
would outline the specific scope of what a particular inspection
entails. He remarked that Representative Gara's example
regarding the hotel skywalk pertains to commercial construction
issues, not home inspection issues.
The committee took an at-ease from 3:26 p.m. to 3:29 p.m.
Number 2332
REPRESENTATIVE COGHILL called for the question on Amendment 2.
CHAIR McGUIRE asked whether there were any objections.
REPRESENTATIVE GARA objected.
CHAIR McGUIRE announced that there would be a roll call vote on
the calling of the question.
A roll call vote was taken. Representatives Anderson and Gara
voted yes. Representatives Coghill, Holm, Samuels, and McGuire
voted no. Representative Gruenberg was absent for the vote.
Therefore, the vote was 2-4.
Number 2382
CHAIR McGUIRE asked that roll call vote be taken on Amendment 2.
A roll call vote was taken. Representatives Gara, Gruenberg,
and Anderson voted in favor of Amendment 2. Representatives
Coghill, Holm, Samuels, and McGuire voted against it.
Therefore, Amendment 2 failed by a vote of 3-4.
Number 2386
REPRESENTATIVE COGHILL made a motion to adopt Conceptual
Amendment 3, which read [original punctuation provided]:
Page 6, line 7 after "section." insert:
In cases of new homes, this report can be in the
form of a certificate of occupancy.
TAPE 03-3, SIDE B
Number 2356
REPRESENTATIVE ROKEBERG indicated that Conceptual Amendment 3 is
a clarifying amendment that reflects the current practice of the
ICBO inspectors who inspect new homes for the AHFC. He added
that a certificate of occupancy is the equivalent of the AHFC's
PUR-102 form.
Number 2340
CHAIR McGUIRE asked whether there were any objections to
Conceptual Amendment 3. There being no objection, Conceptual
Amendment 3 was adopted.
Number 2334
REPRESENTATIVE COGHILL moved to report CSHB 9(L&C), as amended,
out of committee with individual recommendations and the
accompanying fiscal notes.
Number 2317
REPRESENTATIVE GRUENBERG objected for the purpose of asking the
sponsor a question. He referred to page 9, Section 17. He
said:
I take it that the statute of limitations in that
provision only applies to actions against individuals
registered under the (indisc. - voice faded away).
REPRESENTATIVE ROKEBERG said it is his understanding that the
licensees registered under this proposed legislation would be
individuals rather than corporations.
CHAIR McGUIRE asked whether there were any further objections to
the motion.
Number 2276
REPRESENTATIVE GARA objected. He said, "With the Chair's
permission I would request just probably less than two minutes
to discuss one conceptual amendment."
CHAIR McGUIRE said: "At this point in time, I'm going to
continue moving the bill out, and if you'd like to continue
discussing that with Representative Rokeberg prior to it moving
on to [the House Finance Committee], I think it'd be fantastic;
you two could even use my office."
A roll call vote was taken. Representatives Holm, Samuels,
Anderson, Coghill, and McGuire voted in favor of reporting CSHB
9(L&C), as amended, out of committee. Representatives Gara and
Gruenberg voted against it. Therefore, CSHB 9(JUD) was reported
from the House Judiciary Standing Committee by a vote of 5-2.
ADJOURNMENT
Number 2211
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 3:35 p.m.
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