SB 129 - WRONGFUL FILING OF LIS PENDENS 1:49:19 PM CHAIR McGUIRE announced that the next order of business would be CS FOR SENATE BILL NO. 129(JUD), "An Act relating to the wrongful recording of a notice of pendency of an action relating to title to or right to possession of real property." SENATOR CHARLIE HUGGINS, Alaska State Legislature, sponsor of SB 129, thanked Representative Gruenberg for his assistance in reviewing the bill, and characterized the bill as non- contentious, essentially correcting faults currently in the system. In the situation that engendered the bill, a state employee had "fragrantly" filed [a notice of lis pendens] against some people that he had no legitimate claim against. He explained that a lis pendens notice is essentially a lien of sorts, and in the aforementioned situation, the pendens action was filed against an assistant attorney general, a real estate developer, and some members of the Board of Game; it cost those people thousands of dollars to "remove that action." In conclusion, he offered his belief that adopting SB 129 and instituting the correction it proposes is the right thing to do. DEBORAH GRUNDMANN, Staff to Senator Charlie Huggins, Senate Transportation Standing Committee, Alaska State Legislature, added on behalf of Senator Huggins, sponsor, that SB 129 seeks to discourage abusive filings of illegal lis pendens notices and, in fact, makes filing such illegal notices a class A misdemeanor. While the filing itself does not create a formal lien, such a notice can have a similar impact on the ability of the targeted person to do business with the affected real estate. She, too, referred to the situation that engendered the legislation, and mentioned that that case took months, thousands of dollars, and attorney time to solve. She then pointed out that Section 2 of CSSB 129 now proposes to also add the words, "in writing" to AS 11.46.560(b). 1:53:26 PM RUTH HAMILTON HEESE, Assistant Attorney General, Environmental Section, Civil Division (Juneau), Department of Law (DOL), offered that a lis pendens is basically a filing that one puts in the recorder's [office] of a notice of a pending suit, and is defined in part in Black's Law Dictionary as a notice filed, on public records, for the purpose of warning all persons that the title of certain [property] is in litigation and that that they are in danger of being bound by an adverse judgment. It essentially creates a cloud on the title of one's property. In creating SB 129, the DOL considered existing law regarding the crime of filing wrongful liens on property, and the legislation merely amends that existing law to include wrongful filing of lis pendens. It essentially closes the loophole that some are using to harass people for certain decisions they may have made. The bill is narrowly focused, she concluded, adding that the criminal intent for this crime is reckless disregard, which involves an individual consciously going forward with an act even though he/she knows that there is a substantial risk that the act will be found wrongful. 1:55:13 PM REPRESENTATIVE ANDERSON characterized SB 129 as an important piece of legislation, and noted that abuses of the lis pendens procedure can even be seen in "family law" cases. CHAIR McGUIRE, after ascertaining that no one else wished to testify, closed public testimony on SB 129. SENATOR HUGGINS, in response to a comment, offered his understanding that by using the term, "reckless disregard" in the bill, it ensures that the behavior is not merely careless behavior. In response to a further comment, he pointed out that there is no evidence of abuse of the current law regarding offering a false instrument for recording even though that law uses the same standard of reckless disregard. MS. HEESE also pointed out that the "in writing" provision would allow someone to submit to having a lis pendens filed on him/her and thus the person that filed the notice would be fairly safe from prosecution under this proposed statute. She, too, pointed out that the current law regarding offering a false instrument for recording has not been abused, and suggested that the same standard of criminal intent should apply to the filing of all such false instruments. It would be foolhardy for someone to file such an instrument knowing that it is false, she concluded. CHAIR McGUIRE offered her belief that reckless disregard means a conscious disregard, not just a mistaken disregard. REPRESENTATIVE GARA disagreed, offering his understanding that with reckless disregard, one could know that a behavior is wrongful and still "accidentally" do it. He opined that providing a criminal penalty for behavior that is reckless would be doing a disservice. MS. HEESE offered to read the definition of "reckless disregard." CHAIR McGUIRE said that doing so wouldn't be necessary. She added that she didn't see how someone could consciously disregard a risk and then claim that doing so was an accident. 2:01:12 PM SENATOR HUGGINS relayed that after discussing this issue with others, he feels 100 percent comfortable that the language currently in the bill will not be abused. REPRESENTATIVE GARA made a motion to adopt Amendment 1, to "make it a crime of intent rather than a crime of recklessness." REPRESENTATIVE ANDERSON objected. CHAIR McGUIRE surmised that Amendment 1 would replace "reckless" on page 1, line 8, with "intentional". 2:02:32 PM A roll call vote was taken. Representative Gara voted in favor of Amendment 1. Representatives McGuire, Anderson, Coghill, Kott, Dahlstrom, voted against it. Therefore, Amendment 1 failed by a vote of 1-5. 2:03:12 PM REPRESENTATIVE ANDERSON moved to report CSSB 129(JUD) out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE GARA objected. He then provided comments regarding the term reckless in the civil context and as it related to physicians. CHAIR McGUIRE ruled those comments out of order. REPRESENTATIVE GARA removed his objection to the motion to report the bill from committee. CHAIR McGUIRE stated that CSSB 129(JUD) was reported from the House Judiciary Standing Committee.