SB 76-REAL ESTATE BROKERS; LIABILITY  2:21:06 PM CHAIR COSTELLO reconvened the meeting and announced the consideration of SB 76. "An Act relating to private actions and remedies against real estate licensees for licensee relationships, disclosures, and activity before January 1, 2005; and providing for an effective date." She noted that this was the second hearing. 2:21:42 PM GENEVIEVE WOJTUSIK, Staff, Senator McGuire, summarized that SB 76 addresses notification requirements for real estate transactions before January 1, 2005 when the licensee represents both the buyer and seller. The original statute did not specify remedies if a real estate licensee violated its provisions and had no timeline. In 2002 a lawsuit was brought and it became a class action suit in 2010. SB 76 broadens the language in [AS 08.88.396(e)] to help with that suit. During the previous hearing, Senator Giessel asked what the law said in 1998 regarding dual representation. At that time, AS 08.88.396(c) said: "A person licensed under this chapter may act as an agent for both the prospective seller and a prospective buyer of real estate, only after the licensee informs both the seller and the buyer of the dual agency and receives written consent to the dual agency from both principals." The statute did not include a timeline for obtaining the written consent to the dual representation. 2:24:04 PM CHAIR COSTELLO recalled previous testimony that prospective homeowners were making on the spot offers after viewing the properties. As a result, a situation came up where a buyer felt he/she made an offer without receiving communication from the agent about their dual representation. MS. WOJTUSIK confirmed that two people felt that they were not informed that the real estate licensee represented both the buyer and seller. They brought legal action in 2002. CHAIR COSTELLO asked why the new language on page 1, line 6, striking the term "for" and inserting "arising out of" is a clarification. MS. WOJTUSIK deferred to Mr. Pickett. 2:25:34 PM JEFFREY PICKETT, retained counsel for the Senate Judiciary Committee, explained that the term "arising out of" is a more broadly interpreted term by Alaska courts and would cover both common law and statutory actions. This would clarify the legislature's intent in 2003 when it limited damages to actual damages for violations of the dual agency notice requirement. CHAIR COSTELLO asked if this change might bring consumer protection concerns. MR. PICKETT replied he has heard nothing on the consumer advocate side that would indicate concern with this change. He explained that the change is focused on the damages a consumer is entitled to if the dual representation was not properly disclosed. Should forfeiture be allowed as a remedy for failure to properly disclose, some 3,500 transactions that took place during this timeframe would be at risk. That would gravely damage the entire industry. 2:28:55 PM CHAIR COSTELLO asked how the bill clarifies the will of the legislature in 2003. MR. PICKETT replied the will of the legislature is determined by courts after a review of the legislative history. This includes testimony, written comments and anything put on the record. His understanding is that the legislature in 2003 was trying to clarify the same thing that SB 76 seeks to clarify. That is that permitting forfeiture as a remedy for violations of the dual agency provisions would have a very disruptive impact on the real estate industry. CHAIR COSTELLO asked Senator Ellis if he had supplemental information. SENATOR ELLIS replied the previous comments reflect his memory. 2:30:53 PM SENATOR STEVENS asked why the bill is retroactive [to January 1, 1991], if anyone would be harmed by the retroactivity and how they would be harmed. MR. PICKETT explained that the bill is necessarily retroactive so it applies to cases and claims brought since the 1998 amendment made disclosure of dual agency a requirement. The bill makes it clear to the courts that the intent of the legislature in 2003 was that only actual damages would be awarded to a consumer if provisions of the dual agency requirement were violated. SENATOR STEVENS asked if there are ongoing court cases to which this would apply and if it would provide a definitive answer for any court decisions. MR. PICKETT confirmed that a case has been ongoing since 2010 could be affected, and others could be brought based on transactions between 1998 and 2003. He said the ambiguity in the law is related to whether the limitation to actual damages applies to common law actions. It clearly applies to statutory actions. The pending case could be affected because the bill would require the courts to apply the limitation to actual damages in any case arising out of the failure to disclose dual agency representation. 2:34:23 PM CHAIR COSTELLO asked how to rationalize a retroactive effective date when one legislature is not able to bind another legislature. MR. PICKETT explained that retroactivity is a permitted power of a sitting legislature. One legislature may not bind a future legislature, but it is permissible for a legislature to change what an earlier legislature has done. SENATOR STEVENS asked for an explanation of actual damages as opposed to other types. MR. PICKETT explained that actual damages are out-of-pocket losses a buyer or seller might have suffered as a result of not understanding that the agent was representing both parties. The claimants in the pending case are seeking the punitive damage of forfeiture. Those claimants would like the real estate agents that didn't technically comply with the disclosure requirement to disgorge the commissions and fees that they earned. 2:37:05 PM CHAIR COSTELLO found no further questions or testimony and closed public testimony. 2:37:24 PM SENATOR STEVENS motioned to report SB 76 from committee with individual recommendations and attached fiscal note(s). CHAIR COSTELLO announced that without objection, SB 76 is reported from the Senate Labor and Commerce Standing Committee.