SB 272 SMALL CLAIMS CT JURISDICTION & PROCEDURE SENATOR TORGERSON, sponsor of SB 272, explained the purpose of the bill is fourfold: it allows creditors without legal representation in relatively small claims cases; it increases the maximum amount of a claim from $5,000 to $10,000; it allows a motion to practice in small claims court; and allows service for small claim cases on defendants outside Alaska. SB 272 amends existing statute so the corporation can appear without an attorney in cases under $10,000, and amends three court rules. The legislation was introduced on behalf of an attorney in his district. Number 320 CHRIS CHRISTENSEN, general counsel to the judicial branch, discussed two primary components of SB 272. It raises the jurisdictional limit of the small claims court from $5,000 to $10,000. The Supreme Court opposes an increase of that magnitude because although there has been no increase since 1986, the federal CPI has only increased 32.8 percent since 1986. That would equate to $6,650 in 1996 dollars. The Court System believes the change to $10,000 will cause cases of much greater evidentiary complexity to be placed before magistrates, and would prefer an incremental change, raising the current amount to $7,500. SENATOR TAYLOR asked about the second component regarding attorneys having to appear on behalf of creditors. MR. CHRISTENSEN stated the Supreme Court has not yet reviewed that portion of the bill, therefore he cannot state a position. He relayed comments from some district court judges who expressed concern about how the proposed court rule changes will change the nature of small claims court in ways that are detrimental to the system as a whole. The primary effect of SB 272 is to make it easier and cheaper for collection agencies to engage in commercial litigation. Collection agencies attempt to collect money on behalf of a third party. Section 4 provides that collection agencies will no longer have to use an attorney when they go into small claims court on behalf of another business or individual. The individual judges who have commented worry that collection agencies are not bound by the same set of ethical rules that licensed attorneys are bound by. Collection agencies have no prohibitions on conflict of interest, no rules on candor with the court, no rules regarding fairness to the other parties, no rules regarding communication with the other party, and no rules with regard to the degree of truthfulness they have to maintain. The same judges are also concerned that Section 5 will make it easier for agencies and others who are familiar with the small claims process to take advantage of the lack of familiarity the defendant has with the small claims process. Section 5 allows the court to grant a decision based on a summary judgment motion which would almost invariably be filed by the plaintiff. Court rules require the magistrate or clerks to assist the litigants in a small claims case by providing legal advice to both sides. If a plaintiff filed a summary judgment motion, the judge would not be able to offer assistance to the defendant. A defendant in such a case would eventually take far more clerical time keeping defendants informed and prepare documents. MR. CHRISTENSEN continued. Section 6 will allow out-of-state service on defendants. Presently, court rules only allow a small claims plaintiff to serve an out-of-state defendant in landlord/tenant cases and in cases involving motor vehicles. This particular issue was visited by the Supreme Court Small Claims Committee the last time the limit was changed. The magistrates and clerks in small rural courts are not trained and qualified in long arm jurisdiction. Current law excepts landlord/tenant cases and motor vehicle cases because the plaintiff can serve the Commissioners of Commerce and Public Safety if the defendant is out-of-state. SENATOR ADAMS asked if the Court System used federal figures to determine the CPI. MR. CHRISTENSEN replied it did. SENATOR ADAMS asked if the figure would be higher than $6,650 if the Alaska CPI was used. MR. CHRISTENSEN answered he was under the impression the federal figure for Anchorage was used. Number 400 SENATOR TAYLOR asked Senator Torgerson if he would object to a limit of $7,500. SENATOR TORGERSON indicated he did not. SENATOR ADAMS asked if the fiscal note would change if the limit were placed at $7,500. MR. CHRISTENSEN believed the figure would be lower because the number of new cases would decrease, and would be less complex since they would be of lower value.  SENATOR TAYLOR felt the collection agencies should be held more accountable and be required to hire a person with some legal talent to represent them. Regarding Section 6, he shared Mr. Christensen's concern that out-of-state cases are complex. SENATOR TAYLOR moved to delete Sections 4 and 6, and to change every place that the bill reflects $10,000 to $7,500. There being no objection, the motion carried. Number 445 AL TAMAGNI testified from Anchorage in support of SB 272. The court takes a narrow approach as to what is good for the court which is not always what is good for the public. People with small automobile accident claims over $5,000 have no access to the court system. He would prefer to see the limit raised to $15,000 because if you adjust the $5,000 for cost-of-living increases since 1986, the amount would be $3,200. SB 272 will open the doors of the court to people who cannot get access now. He recommended keeping the limit at $7,500 but indexing it annually. SENATOR TAYLOR noted he thought an incremental approach to be most practical, and agreed with Mr. Tamagni that people's courts should be expanded. SENATOR MILLER moved SB 272 as amended out of committee with individual recommendations. There being no objection, the motion carried.