ALASKA STATE LEGISLATURE                                                                                  
               HOUSE JUDICIARY STANDING COMMITTEE                                                                             
                        February 9, 2004                                                                                        
                           1:04 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Lesil McGuire, Chair                                                                                             
Representative Tom Anderson, Vice Chair                                                                                         
Representative Jim Holm                                                                                                         
Representative Dan Ogg                                                                                                          
Representative Ralph Samuels                                                                                                    
Representative Les Gara                                                                                                         
Representative Max Gruenberg (via teleconference)                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 340                                                                                                              
"An Act relating to damages in an action for a defect in the                                                                    
design, construction, and remodeling of certain dwellings; and                                                                  
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED CSHB 340(JUD) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 397                                                                                                              
"An Act relating to defense contacts with and recordings of                                                                     
statements of victims or witnesses; and amending Rule 16, Alaska                                                                
Rules of Criminal Procedure."                                                                                                   
                                                                                                                                
     - MOVED CSHB 397(JUD) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 349                                                                                                              
"An Act amending Rule 412, Alaska Rules of Evidence."                                                                           
                                                                                                                                
     - MOVED CSHB 349(JUD) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 357                                                                                                              
"An Act relating to restitution; and providing for an effective                                                                 
date."                                                                                                                          
                                                                                                                                
     - RESCINDED ACTION OF 1/30/04; MOVED NEW CSHB 357(JUD)                                                                     
       OUT OF COMMITTEE                                                                                                         
                                                                                                                                
HOUSE BILL NO. 227                                                                                                              
"An Act increasing the jurisdictional  limit for small claims and                                                               
for   magistrates  from   $7,500  to   $10,000;  increasing   the                                                               
jurisdictional limit  of district  courts in certain  civil cases                                                               
from  $50,000  to $75,000;  and  amending  Rule 11(a)(4),  Alaska                                                               
District Court Rules  of Civil Procedure, relating  to service of                                                               
process for small claims."                                                                                                      
                                                                                                                                
     - MOVED CSHB 227(JUD) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 342                                                                                                              
"An Act relating to driving  while intoxicated; and providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
     - BILL HEARING POSTPONED                                                                                                   
                                                                                                                                
HOUSE BILL NO. 367                                                                                                              
"An Act relating to the  licensing and regulation of sex-oriented                                                               
businesses  and sex-oriented  business entertainers;  relating to                                                               
protection of the safety and health  of and to education of young                                                               
persons who  perform in  adult entertainment  establishments; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - BILL HEARING POSTPONED TO 2/16/04                                                                                        
                                                                                                                                
HOUSE BILL NO. 414                                                                                                              
"An Act relating  to filling the vacancy in the  office of United                                                               
States senator, and to the definition of 'political party.'"                                                                    
                                                                                                                                
     - BILL HEARING POSTPONED TO 2/16/04                                                                                        
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 340                                                                                                                  
SHORT TITLE: DAMAGES IN CONSTRUCTION CLAIMS                                                                                     
SPONSOR(S): REPRESENTATIVE(S)MEYER                                                                                              
                                                                                                                                
01/12/04       (H)       PREFILE RELEASED 1/2/04                                                                                
01/12/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/12/04       (H)       L&C, JUD                                                                                               
01/23/04       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
01/23/04       (H)       Moved CSHB 340(L&C) Out of Committee                                                                   
01/23/04       (H)       MINUTE(L&C)                                                                                            
01/26/04       (H)       L&C RPT CS(L&C) 1DP 4NR                                                                                
01/26/04       (H)       DP: ANDERSON; NR: CRAWFORD, LYNN,                                                                      
01/26/04       (H)       GATTO, GUTTENBERG                                                                                      
02/04/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
02/04/04       (H)       -- Meeting Canceled --                                                                                 
02/09/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
                                                                                                                                
BILL: HB 397                                                                                                                  
SHORT TITLE: DEFENSE CONTACTS WITH VICTIMS & WITNESSES                                                                          
SPONSOR(S): REPRESENTATIVE(S) MCGUIRE                                                                                           
                                                                                                                                
01/23/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/23/04       (H)       JUD                                                                                                    
01/26/04       (H)       JUD AT 2:00 PM CAPITOL 120                                                                             
01/26/04       (H)       Scheduled But Not Heard                                                                                
01/30/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
01/30/04       (H)       Heard & Held                                                                                           
01/30/04       (H)       MINUTE(JUD)                                                                                            
02/04/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
02/04/04       (H)       -- Meeting Canceled --                                                                                 
02/09/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
                                                                                                                                
BILL: HB 349                                                                                                                  
SHORT TITLE: ILLEGALLY OBTAINED EVIDENCE                                                                                        
SPONSOR(S): REPRESENTATIVE(S) SAMUELS, MCGUIRE, STOLTZE,                                                                        
DAHLSTROM                                                                                                                       
                                                                                                                                
01/12/04       (H)       PREFILE RELEASED 1/2/04                                                                                
01/12/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/12/04       (H)       JUD                                                                                                    
01/26/04       (H)       JUD AT 2:00 PM CAPITOL 120                                                                             
01/26/04       (H)       Heard & Held                                                                                           
01/26/04       (H)       MINUTE(JUD)                                                                                            
02/02/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
02/02/04       (H)       Scheduled But Not Heard                                                                                
02/04/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
02/04/04       (H)       -- Meeting Canceled --                                                                                 
02/09/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
                                                                                                                                
BILL: HB 357                                                                                                                  
SHORT TITLE: RESTITUTION                                                                                                        
SPONSOR(S): REPRESENTATIVE(S) SAMUELS, STOLTZE, MCGUIRE,                                                                        
DAHLSTROM                                                                                                                       
                                                                                                                                
01/12/04       (H)       PREFILE RELEASED 1/2/04                                                                                
01/12/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/12/04       (H)       JUD                                                                                                    
01/26/04       (H)       JUD AT 2:00 PM CAPITOL 120                                                                             
01/26/04       (H)       Heard & Held                                                                                           
01/26/04       (H)       MINUTE(JUD)                                                                                            
01/30/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
01/30/04       (H)       Moved CSHB 357(JUD) Out of Committee                                                                   
01/30/04       (H)       MINUTE(JUD)                                                                                            
02/04/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
02/04/04       (H)       -- Meeting Canceled --                                                                                 
02/09/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
                                                                                                                                
BILL: HB 227                                                                                                                  
SHORT TITLE: DISTRICT COURTS & SMALL CLAIMS                                                                                     
SPONSOR(S): JUDICIARY                                                                                                           
                                                                                                                                
03/28/03       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/28/03       (H)       L&C, JUD                                                                                               
05/14/03       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
05/14/03       (H)       Scheduled But Not Heard                                                                                
05/16/03       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
05/16/03       (H)       -- Meeting Canceled --                                                                                 
05/17/03       (H)       L&C AT 12:00 AM CAPITOL 17                                                                             
05/17/03       (H)       -- Meeting Postponed --                                                                                
01/21/04       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
01/21/04       (H)       Moved Out of Committee                                                                                 
01/21/04       (H)       MINUTE(L&C)                                                                                            
01/23/04       (H)       L&C RPT 3DP 3NR 1AM                                                                                    
01/23/04       (H)       DP: GUTTENBERG, GATTO, ANDERSON;                                                                       
01/23/04       (H)       NR: DAHLSTROM, LYNN, CRAWFORD;                                                                         
01/23/04       (H)       AM: ROKEBERG                                                                                           
01/23/04       (H)       FIN REFERRAL ADDED AFTER JUD                                                                           
02/02/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
02/02/04       (H)       Scheduled But Not Heard                                                                                
02/04/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
02/04/04       (H)       -- Meeting Canceled --                                                                                 
02/09/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE KEVIN MEYER                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Sponsor of HB 340.                                                                                         
                                                                                                                                
DAVE DILLARD, Owner                                                                                                             
3-2-1 Construction, Inc.                                                                                                        
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Provided comments and responded to                                                                         
questions during discussion of HB 340.                                                                                          
                                                                                                                                
STEVE ORR                                                                                                                       
Wasilla, Alaska                                                                                                                 
POSITION  STATEMENT:    Provided  comments  and  responded  to  a                                                               
question during discussion of HB 340.                                                                                           
                                                                                                                                
JESS HALL, National Representative                                                                                              
Area 15 Vice President                                                                                                          
Alaska State Home Builders Association (ASHBA)                                                                                  
Palmer, Alaska                                                                                                                  
POSITION  STATEMENT:     Provided   comments  and   responded  to                                                               
questions during discussion of HB 340.                                                                                          
                                                                                                                                
SIDNEY K. BILLINGSLEA, Attorney                                                                                                 
Alaska Academy of Trial Lawyers (AATL)                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Provided comments  during discussion  of HB                                                               
340.                                                                                                                            
                                                                                                                                
JEFF DeSMET                                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Testified  in   support  of  HB  340  and                                                               
responded to questions.                                                                                                         
                                                                                                                                
KELLY STEPHENS, Owner                                                                                                           
Superior Builders, Inc.                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   During discussion  of HB 340,  testified in                                                               
support of HB 340 and in opposition to HB 289.                                                                                  
                                                                                                                                
ROBIN WARD, Legislative Chair                                                                                                   
Alaska State Home Builders Association (ASHBA)                                                                                  
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    During discussion  of  HB  340,  provided                                                               
comments and responded  to questions, and spoke  in opposition to                                                               
HB 289.                                                                                                                         
                                                                                                                                
SARA NIELSEN, Staff                                                                                                             
to Representative Ralph Samuels                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   During  discussion  of  HB 349,  presented                                                               
information on Version H and  responded to questions on behalf of                                                               
Representative  Samuels, one  of the  prime sponsors  of HB  349;                                                               
discussed two  amendments to HB  357 on behalf  of Representative                                                               
Samuels, one of the prime sponsors of HB 357.                                                                                   
                                                                                                                                
STEPHEN BRANCHFLOWER, Director                                                                                                  
Office of Victims' Rights (OVR)                                                                                                 
Alaska State Legislature                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:  During  discussion   of  HB  349,  answered                                                               
questions.                                                                                                                      
                                                                                                                                
DOUG WOOLIVER, Administrative Attorney                                                                                          
Administrative Staff                                                                                                            
Office of the Administrative Director                                                                                           
Alaska Court System (ACS)                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    During discussion  of  HB  357,  answered                                                               
questions; related concerns with regard to HB 227.                                                                              
                                                                                                                                
VANESSA TONDINI, Staff                                                                                                          
to Representative Lesil McGuire                                                                                                 
House Judiciary Standing Committee                                                                                              
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Answered questions during  discussion of HB                                                               
227,  which  was  sponsored  by   the  House  Judiciary  Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
EILEEN McVEY                                                                                                                    
(No address provided)                                                                                                           
POSITION STATEMENT:   During discussion  of HB 227,  testified in                                                               
support  of increasing  [the  small-claims jurisdictional  limit]                                                               
from $7,500 to $10,000 or greater.                                                                                              
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 04-11, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR  LESIL   McGUIRE  called   the  House   Judiciary  Standing                                                             
Committee  meeting  to  order  at   1:04  p.m.    Representatives                                                               
McGuire, Holm,  Ogg, Samuels, and  Gara were present at  the call                                                               
to   order.     Representatives  Anderson   and  Gruenberg   (via                                                               
teleconference) arrived as the meeting was in progress.                                                                         
                                                                                                                                
HB 340 - DAMAGES IN CONSTRUCTION CLAIMS                                                                                       
                                                                                                                                
[Contains reference  to HB 151; contains  testimony in opposition                                                               
to HB 289.]                                                                                                                     
                                                                                                                                
Number 0042                                                                                                                     
                                                                                                                                
CHAIR McGUIRE  announced that the  first order of  business would                                                               
be HOUSE BILL  NO. 340, "An Act relating to  damages in an action                                                               
for  a defect  in  the design,  construction,  and remodeling  of                                                               
certain  dwellings;   and  providing  for  an   effective  date."                                                               
[Before the committee was CSHB 340(L&C).]                                                                                       
                                                                                                                                
Number 0081                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KEVIN MEYER,  Alaska State  Legislature, sponsor,                                                               
said that  HB 340  limits the  damages that can  be awarded  in a                                                               
construction  defect lawsuit  to the  actual cost  of fixing  the                                                               
construction  defect  and other  closely  related  costs such  as                                                               
reasonable temporary  housing expenses  during the repair  of the                                                               
defect, any  reduction in market  value cause by the  defect, and                                                               
reasonable and necessary attorney fees.   House Bill 340 does not                                                               
apply to,  limit, or otherwise affect  lawsuits alleging personal                                                               
injury  or wrongful  death resulting  from construction  defects.                                                               
He  referred to  the bill  as  a necessary  and significant  step                                                               
towards  assisting  homebuilders  and  contractors  in  obtaining                                                               
affordable and  necessary liability insurance, which  affects the                                                               
actual  cost  of  a  house   because  builders  will  pass  those                                                               
insurance costs  on to the  [homebuyer].   Such costs do  not add                                                               
any value to the home; they simply raise its cost.                                                                              
                                                                                                                                
CHAIR  McGUIRE  asked  Representative   Meyer  whether  he  could                                                               
guarantee that  passage of  HB 340  will lower  the cost  of home                                                               
prices.                                                                                                                         
                                                                                                                                
REPRESENTATIVE MEYER  said he could  not because there are  a lot                                                               
of factors that  go into the cost  of a new home.   He suggested,                                                               
however,  that HB  340 will  affect insurance  costs, which  is a                                                               
factor  in the  cost of  a home.   He  relayed that  according to                                                               
information from  Nevada, for every  $1,000 increase in  the cost                                                               
of [a  home], 1,400 people no  longer qualify for [a  home loan].                                                               
Since  2001, the  cost of  general liability  insurance has  been                                                               
going up  while its  availability has  been declining;  thus many                                                               
builders are  unable to purchase  adequate insurance  even though                                                               
they are  required to  under current law.   Currently,  there are                                                               
only  two   "national  providers"  willing  to   provide  general                                                               
liability insurance in Alaska:   A conglomerate of companies that                                                               
offer  surplus   lines  [of   insurance],  and   Alaska  National                                                               
Insurance Company (ANIC).                                                                                                       
                                                                                                                                
REPRESENTATIVE MEYER  surmised that a  couple of reasons  for the                                                               
dearth of  providers in  Alaska is  that the  market is  so small                                                               
that insurance providers  don't even want to "mess  with it," and                                                               
that Alaska  has a very  dangerous construction environment.   He                                                               
offered his  hope that HB  340 will  assist in making  Alaska and                                                               
Alaska's  homebuilders more  attractive  to insurance  companies,                                                               
which  in  turn will  benefit  consumers  because there  is  some                                                               
concern that if  builders cannot get insurance,  they will simply                                                               
build without it.   He relayed that according  to Alaska Economic                                                             
Trends, since 1989, construction  has provided more certainty and                                                             
more  steadiness   to  the  state's   economy  than   most  other                                                               
industries,  especially with  regard  to  overall employment  and                                                               
growth.   Therefore, he  surmised, if  there are  fewer insurance                                                               
companies and [thus] fewer people  building homes, then that will                                                               
impact Alaska's economy.                                                                                                        
                                                                                                                                
Number 0369                                                                                                                     
                                                                                                                                
REPRESENTATIVE MEYER noted that there  are other states that have                                                               
either passed legislation  similar to HB 340,  or are considering                                                               
such  legislation.   In  conclusion,  he offered  that  HB 340  -                                                               
coupled with  HB 151, which he  described as the right  to cure -                                                               
is  a   necessary  and  final  step   towards  getting  insurance                                                               
companies to  come back to  Alaska; HB  340 provides that  if the                                                               
homeowner  cannot get  the problem  corrected  and has  to go  to                                                               
court,  the damages  that can  be awarded  will be  limited.   He                                                               
relayed  that he  has been  told  by an  insurance provider  that                                                               
although the  right to  cure is  a good first  step, a  bill that                                                               
limits the damages  that can be awarded is necessary  and of more                                                               
interest to providers.                                                                                                          
                                                                                                                                
REPRESENTATIVE GARA  said that philosophically, he  tends to have                                                               
a hard  time telling  people that they  can't recover  their full                                                               
actual damages.   He  asked what  damages HB  340 is  supposed to                                                               
prevent people from recovering.                                                                                                 
                                                                                                                                
REPRESENTATIVE MEYER  suggested that HB 340  would prevent people                                                               
from recovering  damages for items  unrelated to the home  or its                                                               
construction; for example, damage awards for emotional stress.                                                                  
                                                                                                                                
REPRESENTATIVE  GARA asked  whether  the  insurance industry  has                                                               
indicated that  passage of HB  340 would result in  reductions in                                                               
insurance rates and,  if so, how much might  those reductions be.                                                               
"Have they made any commitments?" he asked.                                                                                     
                                                                                                                                
REPRESENTATIVE  MEYER said  that the  insurance industry  has not                                                               
made any  such commitments  to him.   Instead,  he has  only been                                                               
told  that  if  HB  340  were in  place,  Alaska  would  be  more                                                               
attractive to insurance providers.                                                                                              
                                                                                                                                
CHAIR  McGUIRE opined  that it  would  be nice  if the  insurance                                                               
industry would  weigh in  on these  issues in  committee.   It is                                                               
very  frustrating,  she added,  when  taking  on issues  of  tort                                                               
reform, to never  be provided any information  from the insurance                                                               
industry.                                                                                                                       
                                                                                                                                
Number 0682                                                                                                                     
                                                                                                                                
DAVE DILLARD,  Owner, 3-2-1 Construction,  Inc., relayed  that at                                                               
the end  of the year,  he was having  to look for  new insurance,                                                               
both liability  and workers' compensation.   His former insurance                                                               
provider of  almost 18 years,  State Farm, has  completely pulled                                                               
out of Alaska  because of costs and "mold  issues" in California.                                                               
Last year, he said, he paid $6,500,  and this year he was given a                                                               
quote of  $20,000 [for  the same coverage];  this quote  was then                                                               
refigured to  $50,000.   He said  that there is  no way  he could                                                               
pass those costs on to his  consumers.  Additionally, the cost of                                                               
his workers'  compensation insurance went  from 14 percent  to 21                                                               
percent.                                                                                                                        
                                                                                                                                
MR. DILLARD suggested that HB  340, along with other legislation,                                                               
will  make Alaska  more [attractive  to] the  insurance industry,                                                               
and noted  that his current insurance,  although more reasonable,                                                               
is still  twice what he  paid last  year and doesn't  "cover" his                                                               
shop.   He warned that if  insurance prices continue to  rise, it                                                               
will limit the  number of people who can afford  to build houses,                                                               
which will  in turn drive the  cost of homes  up.  If there  is a                                                               
problem with  a home, it  is the builder's responsibility  to fix                                                               
it, but the  Alaska market must be made more  competitive so that                                                               
insurance  providers  will  return  to Alaska  and  offer  decent                                                               
rates.  In  response to questions, he said that  he'd never had a                                                               
liability  claim  filed against  him,  and  again suggested  that                                                               
State Farm pulled out of Alaska  due to mold issues in California                                                               
and Alaska's lack of a liability cap for damages.                                                                               
                                                                                                                                
CHAIR McGUIRE  surmised, then, that  State Farm's pulling  out of                                                               
Alaska  wasn't due  to  the  number of  claims  filed in  Alaska,                                                               
rather  it  was  due  to  the possibility  of  being  exposed  to                                                               
limitless damages.                                                                                                              
                                                                                                                                
MR. DILLARD concurred.                                                                                                          
                                                                                                                                
REPRESENTATIVE GARA  pointed out that the  insurance industry was                                                               
using just such an excuse in  1988 before tort reform took place,                                                               
and again in 1996, and so more  tort reform took place.  But even                                                               
after twice enacting tort reform  measures in the past, there has                                                               
never been  any demonstrable  reduction in  insurance rates.   So                                                               
why  would doing  it a  third time  have a  different result,  he                                                               
asked,  and  how will  limiting  damages  in non  personal-injury                                                               
cases lower rates?                                                                                                              
                                                                                                                                
MR.  DILLARD opined  that  the first  step  is getting  insurance                                                               
providers back  in Alaska; once  they are providing  insurance to                                                               
Alaskans  again,  then there  can  be  discussion about  lowering                                                               
prices.                                                                                                                         
                                                                                                                                
REPRESENTATIVE GARA  noted that in workers'  compensation claims,                                                               
one is not entitled to recover  for pain and suffering, yet those                                                               
rates are also going up.   Thus, he suggested, rates are going up                                                               
for reasons other  than the award of pain  and suffering damages,                                                               
though that is not to discount  the problems faced by Mr. Dillard                                                               
and others in the home building industry.                                                                                       
                                                                                                                                
REPRESENTATIVE ANDERSON said  he believes in the  bill and agrees                                                               
with Mr. Dillard's  comments.  He suggested that  when people sue                                                               
for  damages caused  by defects,  they often  attempt to  recover                                                               
more than the value of what was corrected.                                                                                      
                                                                                                                                
MR.  DILLARD concurred,  and reiterated  that he  has never  been                                                               
sued.                                                                                                                           
                                                                                                                                
Number 1177                                                                                                                     
                                                                                                                                
STEVE ORR,  after noting that he  is an "entry local  builder" in                                                               
the  Matanuska-Susitna  ("Mat-Su")  valley -  the  Wasilla/Palmer                                                               
area - testified  that he, too, has  experienced higher insurance                                                               
rates in  the last year:   general liability insurance  that used                                                               
to cost him $8,000 now costs  him $80,000.  This does nothing for                                                               
the homes  he builds except  to make  them more expensive  - thus                                                               
taking a  few people out  of the market.   He opined  that Alaska                                                               
needs to  slow down  the progression  of rising  insurance rates,                                                               
which he described as a  national problem, adding that he doesn't                                                               
want to see  anybody left without the ability to  go to court and                                                               
that  he  sees  no harm  coming  from  passage  of  HB 340.    He                                                               
suggested that nuisance cases overshadow legitimate cases.                                                                      
                                                                                                                                
REPRESENTATIVE  GARA asked  Mr. Orr  how many  times he  has been                                                               
sued  for  pain and  suffering  in  a  case that  didn't  involve                                                               
personal injury.                                                                                                                
                                                                                                                                
MR. ORR said that someone tried to do so once.                                                                                  
                                                                                                                                
Number 1303                                                                                                                     
                                                                                                                                
JESS  HALL,  National  Representative, Area  15  Vice  President,                                                               
Alaska State  Home Builders  Association (ASHBA),  after relaying                                                               
that he  has been building homes  for 25 years, said  that HB 340                                                               
together with HB 151 make  a complete package designed to address                                                               
what  he  called  a  crises  in  liability  insurance  rates  and                                                               
availability.  He  described this problem is  a national problem,                                                               
adding  that  his rates,  too,  have  gone up  approximately  800                                                               
percent, and  this increase is  not something that  builders wish                                                               
to  pass on  to  consumers.   He  pointed  out  that even  though                                                               
builders are paying between 500  percent and 800 percent more for                                                               
general  liability policies,  the coverage  of those  policies is                                                               
only about one-fourth  of what it used to be  even just two years                                                               
ago.                                                                                                                            
                                                                                                                                
MR.  HALL suggested  that when  a builder  is taken  to court  to                                                               
redress a  construction defect, the attorneys  have always viewed                                                               
the  insurance companies  as being  the pocket  to go  to if  the                                                               
builder  wouldn't cure  the defect.   However,  current policies,                                                               
except for bodily  injury, now exempt most things  that a builder                                                               
can be  sued for, thus leaving  the builder with the  burden.  He                                                               
characterized   current  policies   as  providing   mere  license                                                               
insurance, since,  in order  to get  a contractor's  license, one                                                               
must have  a liability policy;  however, when a  liability policy                                                               
doesn't  really cover  liability,  builders are  left with  "self                                                               
insurance."   He remarked  that HB  340 is  important in  that if                                                               
there is  a lawsuit,  only actual damages  can be  recovered, and                                                               
predicted  that  lawsuits for  punitive  damages  will result  in                                                               
builders  filing for  bankruptcy, which  will in  turn leave  the                                                               
consumers with no one to seek recourse from.                                                                                    
                                                                                                                                
MR. HALL predicted that adoption of  HB 340 [and HB 151] will let                                                               
all  parties know,  up front,  that if  there is  a problem,  the                                                               
problem  needs to  be  corrected.   In  conclusion  he said  that                                                               
adoption of HB 340 is an important step that needs to be taken.                                                                 
                                                                                                                                
CHAIR  McGUIRE referred  to page  2, lines  28-30, and  mentioned                                                               
that  proposed AS  09.45.895(b) appears  to disallow  the damages                                                               
that could  be recovered via  proposed AS  09.45.895(a)(1)-(4) if                                                               
they exceed the greater of  the claimant's purchase price for the                                                               
residence  or the  current  fair market  value  of the  residence                                                               
without the  defect.  In  other words, subsection (b)  appears to                                                               
place  an additional  limit on  the compensation  allowed for  in                                                               
subsection (a); thus,  even if a claimant is  entitled to damages                                                               
allowed  for  in  subsection  (a),  if  they  exceed  the  amount                                                               
specified  in subsection  (b), he/she  will not  be awarded  that                                                               
excess amount.  She said that  she supports the idea of excluding                                                               
punitive damages  and limiting  awards to  those things  that are                                                               
"compensatory and ... reasonable."                                                                                              
                                                                                                                                
Number 1684                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HOLM relayed  a personal  experience in  which he                                                               
had to  go to court to  get redress for a  construction defect in                                                               
his home; the attorney fees  for both sides combined far exceeded                                                               
not only  the cost of  fixing the problem  but also the  value of                                                               
the  home.    Noting  that  proposed  AS  09.45.895(a)(4)  allows                                                               
compensation  for "reasonable  and necessary  attorney fees",  he                                                               
asked who would be making  the determination of "reasonable" with                                                               
regard to  attorney fees, particularly  given the fact  that many                                                               
insurance  companies  have a  seemingly  endless  pocket when  it                                                               
comes  to  paying  attorneys  to  fight  their  case,  whereas  a                                                               
homeowner  might not  have that  kind  of financial  leeway.   He                                                               
indicated that  he wants the limitations  set forth in HB  340 to                                                               
be fair,  but he is not  sure that limiting compensation  to just                                                               
the value of the home would be fair.                                                                                            
                                                                                                                                
CHAIR McGUIRE  suggested as a  solution simply  removing proposed                                                               
AS 09.45.895(b) altogether.                                                                                                     
                                                                                                                                
MR. HALL, in  response to questions, reiterated his  view that HB                                                               
340  is an  important step  towards  relieving what  he termed  a                                                               
crises in  Alaska -  the lack of  insurance providers  willing to                                                               
underwrite in  this state -  and his earlier  comments pertaining                                                               
to builders now  having to shoulder the burden  of liability even                                                               
when they  succeed in purchasing  what providers are  now calling                                                               
liability insurance.  He suggested that  passage of HB 340 and HB                                                               
151 will entice insurance providers into coming back to Alaska.                                                                 
                                                                                                                                
REPRESENTATIVE  OGG said  he is  concerned that  HB 340  does not                                                               
currently   address   situations   of  willful   or   intentional                                                               
[misconduct],  malicious conduct,  or fraud  on the  part of  the                                                               
builder.   In those  situations, he  opined, the  limitations set                                                               
forth in HB 340 should not apply.                                                                                               
                                                                                                                                
MR. HALL  suggested that such  conduct is addressed  elsewhere in                                                               
statute, adding  that he agrees  that fraudulent  behavior should                                                               
be   addressed   differently    than   instances   of   defective                                                               
construction due  to mistakes,  though he would  want to  see any                                                               
proposed language  change addressing that issue  before having it                                                               
included in HB 340.                                                                                                             
                                                                                                                                
Number 2126                                                                                                                     
                                                                                                                                
SIDNEY K. BILLINGSLEA, Attorney, Alaska Academy of Trial Lawyers                                                                
(AATL), offered the following comments on HB 340:                                                                               
                                                                                                                                
     This   law  comes   into  effect   when  builders   and                                                                    
     remodelers and  contractors do bad work.   The question                                                                    
     seems  to be  whether or  not they  can get  affordable                                                                    
     insurance to  cover the possibility  of them  doing bad                                                                    
     work that  needs to  be compensated  for.   There [has]                                                                    
     historically been absolutely  no correlation whatsoever                                                                    
     between  tort reform  if you  will, or  lawsuit reform,                                                                    
     and  the   reduction  of  insurance   rates,  primarily                                                                    
     because  the  insurance  industry is,  historically,  a                                                                    
     cyclical industry that is tied  to the market - tied to                                                                    
     the stock  market.  Insurance  companies, historically,                                                                    
     invest their  premiums into the  market place  and, for                                                                    
     example, in  the 1990s,  no insurer  could fail  in the                                                                    
     market; the insurance premiums can  either hold fast or                                                                    
     be reduced so that the  insurers can get a larger share                                                                    
     of the market, by cutting  their prices, and still make                                                                    
     a lot of money on their investments.                                                                                       
                                                                                                                                
     When the stock market declines,  as it did, insurers no                                                                    
     longer  [have] the  huge cash  reserves they  once had,                                                                    
     and they go  to the insured - their customers  - to get                                                                    
     those funds  restored by raising their  premiums.  When                                                                    
     their coffers  are rebuilt by increased  premiums, they                                                                    
     can then reinvest in the  stock market and go back into                                                                    
     a competitive industry, where  they can reduce premiums                                                                    
     to get yet  a larger share of the  market of consumers,                                                                    
     because  some  insurance  companies  won't  have  large                                                                    
     enough reserves  to survive the  falling markets.   And                                                                    
     the  larger insurance  companies  who  do survive  will                                                                    
     then exploit  that gap in  the market and  reduce their                                                                    
     premiums  in  order  to  get  a  larger  share  of  the                                                                    
     consumers that  are left.  Unfortunately,  what happens                                                                    
     is that  the insurers  become somewhat tolerant  of the                                                                    
     higher prices of their premiums,  and the premium costs                                                                    
     don't, necessarily,  drop to  below the rate  they were                                                                    
     when the markets were fat.                                                                                                 
                                                                                                                                
Number 2237                                                                                                                     
                                                                                                                                
     The  other observation  I  have  about this  particular                                                                    
     bill  is  that  [subsection]  (b) takes  away  all  the                                                                    
     awards   of  [subsection]   (a),  because,   as  [Chair                                                                    
     McGuire]  observed a  little bit  earlier, what  if the                                                                    
     cost of  (a) exceeds the  value of (b)  that's awarded:                                                                    
     You don't  get recovery for  the provisions in  (a), if                                                                    
     that  happens,  under  the way  this  proposed  law  is                                                                    
     written.   The other  thing it  doesn't account  for is                                                                    
     the loss of  personalty that would occur if  a house is                                                                    
     damaged due  to bad construction, remodeling,  or other                                                                    
     defects that the  bill covers or is  intended to cover.                                                                    
     So,  if I  were  to make  a claim  on  my ...  personal                                                                    
     homeowners' insurance policy for  the personalty I lost                                                                    
     - my stereo,  my rugs, my furniture, et  cetera, my car                                                                    
     - my insurance policy would  be canceled or my premiums                                                                    
     would  be increased  through  no fault  of  my own  but                                                                    
     through, in fact, the fault of a negligent builder.                                                                        
                                                                                                                                
MS. BILLINGSLEA concluded:                                                                                                      
                                                                                                                                
     So, I don't  think the law is helpful  to consumers; in                                                                    
     fact,  it's only  helpful to  one industry,  and that's                                                                    
     the insurance  industry who -  I can tell you,  and you                                                                    
     know  from  two rounds  of  tort  reform -  have  never                                                                    
     responded with  a decrease in premiums.   They've never                                                                    
     made a  promise to decrease their  premiums and they've                                                                    
     never come  through, nor do they  actually testify that                                                                    
     they will,  and the reason  that they don't  is because                                                                    
     ...  the  insurance company  can't  make  that kind  of                                                                    
     promise  in  the  way they  operate  in  this  cyclical                                                                    
     market-driven economy.  Thank you very much.                                                                               
                                                                                                                                
Number 2356                                                                                                                     
                                                                                                                                
JEFF DeSMET  noted that he  has been  a builder and  remodeler in                                                               
Juneau since 1977, and that he  is considering retiring.  He said                                                               
he supports HB 340 in the  interest of doing whatever it takes to                                                               
bring the  cost of  construction down so  that those  costs don't                                                               
have to be  passed on to the  homeowners and so that  there is at                                                               
least an attempt  at providing affordable housing  during what he                                                               
termed "this  crisis."  He noted  that he, too, was  dropped from                                                               
State Farm  after many years,  and that  he is now  paying double                                                               
for  less  [liability]  insurance   and  paying  20  percent  for                                                               
workers'  compensation insurance,  the cost  of which,  he's been                                                               
told, will increase next month.                                                                                                 
                                                                                                                                
TAPE 04-11, SIDE B                                                                                                            
Number 2395                                                                                                                     
                                                                                                                                
MR. DeSMET added  that he is at this hearing  to support the rest                                                               
of  the homebuilding  industry in  whatever needs  to be  done to                                                               
attract affordable insurance [to Alaska].  He went on to say:                                                                   
                                                                                                                                
     It's   difficult  enough   to  get   people  that   are                                                                    
     qualified, good builders that  don't have claims, don't                                                                    
     fraudulently represent  their work,  they're interested                                                                    
     in building  affordable, quality, healthy houses.   And                                                                    
     I'm here to  testify to that, not so much  in detail as                                                                    
     to  the  bill,  but   anything  that  would  bring  the                                                                    
     competitive  insurance  market  back to  the  state  of                                                                    
     Alaska I'm in support of ....                                                                                              
                                                                                                                                
MR. DeSMET also said:                                                                                                           
                                                                                                                                
     I  see  this  as  being  more of  a  problem  ...  with                                                                    
     licensing  and  enforcement,  [which] we  don't  really                                                                    
     have right  now because we  are in a crisis,  ... [and]                                                                    
     trying to have  enforcement paid for.  I  think all the                                                                    
     builders  that are  on line  ... would  be in  favor of                                                                    
     increased  fees   if,  in  fact,  we   would  get  some                                                                    
     enforcement.    Unfortunately,  I think  builders  like                                                                    
     myself, who've  never had claims  and try to  ... build                                                                    
     quality  homes,  fall  victim to  those  that  are  the                                                                    
     fraudulent  ones   that  are  operating   either  under                                                                    
     handyman licenses  or with no license  whatsoever.  And                                                                    
     ultimately, those  end up in  court in  litigation and,                                                                    
     unfortunately,  the  whole  industry  has  to  pay  for                                                                    
     those.                                                                                                                     
                                                                                                                                
MR.   DeSMET,   in   response  to   questions,   suggested   that                                                               
professional  homebuilders  would support  enhancing  enforcement                                                               
through the bill  in order to prevent  fraudulent and unqualified                                                               
builders from getting into the field to begin with.                                                                             
                                                                                                                                
REPRESENTATIVE ANDERSON  suggested that the possibility  of being                                                               
sued for  pain and suffering  might be deterring new  people from                                                               
getting into the construction field.                                                                                            
                                                                                                                                
MR. DeSMET indicated  agreement, adding he would  counsel his son                                                               
against going  into the  construction business  because it  is no                                                               
longer profitable;  "we can't pass  ... those excessive  costs on                                                               
until we have  some assurance ... that ...  the insurance coffers                                                               
are back  up to  full mark,  where they can  go back  [and] start                                                               
offering  competitive rates."   He  suggested  that HB  340 is  a                                                               
proactive stance that may encourage  the insurance industry to at                                                               
least justify its high premiums if not actually lower them.                                                                     
                                                                                                                                
Number 2182                                                                                                                     
                                                                                                                                
KELLY STEPHENS,  Owner, Superior Builders, Inc.,  relayed that he                                                               
agrees with and supports HB 340  100 percent.  Even though no one                                                               
can guarantee that insurance premiums  will go down, he remarked,                                                               
hopefully things can be done  to attract insurance companies back                                                               
to Alaska so that more  competitive rates become available.  With                                                               
only  two insurance  providers serving  Alaska, there  is no  way                                                               
that insurance  rates will  drop, he  added.   He noted  that the                                                               
cost of  his builder's insurance  is no longer just  a percentage                                                               
of the cost of  a home he builds; it is now  "a line figure" that                                                               
gets added to  the list of what the purchaser  is paying for when                                                               
buying a home.  In response  to a question, he predicted that not                                                               
passing HB  340 will encourage more  builders to lie in  order to                                                               
get insurance or to do  without insurance because insurance costs                                                               
are  so high.    The  problem with  lying  to  get insurance,  of                                                               
course,  is that  it voids  the policy  should something  happen.                                                               
He, too,  suggested that attention  should be given to  the issue                                                               
of enforcement.                                                                                                                 
                                                                                                                                
MR. STEPHENS,  in response to  a question regarding HB  289, said                                                               
he  does not  support that  bill because  people will  think that                                                               
contractors  have  deep  pockets;   additionally,  there  is  the                                                               
likelihood that it will leave young  people with no chance to get                                                               
into the  industry.  Returning  to the issue  of HB 340,  he said                                                               
that the increases  in insurance costs make it  very difficult to                                                               
stay in business.                                                                                                               
                                                                                                                                
Number 1947                                                                                                                     
                                                                                                                                
ROBIN  WARD,  Legislative  Chair,   Alaska  State  Home  Builders                                                               
Association (ASHBA), offered:                                                                                                   
                                                                                                                                
     First  of all,  this is  absolutely an  insurance bill;                                                                    
     this is our main thrust here.   We are one of 28 states                                                                    
     who  have either  just recently  or over  the last  two                                                                    
     years ... adopted  ... a "right to repair"  bill.  This                                                                    
     is the  next section of this.   There are 14  of us ...                                                                    
     across the United  States that are doing  this piece of                                                                    
     it.   We can't do it  alone; we are a  very, very small                                                                    
     market.   We are painted  with the brush  from national                                                                    
     markets.   So we are  actually working in  concert with                                                                    
     other associations to do this very piece.                                                                                  
                                                                                                                                
     Second of  all, this  bill is meant  to keep,  and help                                                                    
     keep,  our  good  builders  in  business,  but  not  to                                                                    
     protect our bad ones.   If we need to, under exemptions                                                                    
     -  with, of  course, the  approval and  support of  our                                                                    
     sponsor - ... go back  and clarify that fraud and gross                                                                    
     negligence  need  to be  exceptions,  we  don't have  a                                                                    
     problem with  that; we  don't want  to protect  our bad                                                                    
     builders, so  if we need  to ... clarify that,  I don't                                                                    
     have  a problem  with doing  that.   This is  all about                                                                    
     making sure that our good builders stay in business.                                                                       
                                                                                                                                
     I'm a  23-year insured of  State Farm - never,  not one                                                                    
     claim  in  23 years;  every  contractor  in the  United                                                                    
     States has been canceled by State  Farm ....  It was no                                                                    
     longer a profitable  line for them. ...  And that's not                                                                    
     the  only  one.    Lots  of  insurance  companies  have                                                                    
     realized that.   Because there  is no cap on  the upper                                                                    
     risks, they have canceled and  gone out of markets.  So                                                                    
     ...  right now,  even affordability  isn't our  biggest                                                                    
     question  - accessibility  is.   We  have  to create  a                                                                    
     market they  will come back  to, and this is  the first                                                                    
     step, is to make it  a little more friendly environment                                                                    
     for them  to work  in - then  we can  start negotiating                                                                    
     some rates.                                                                                                                
                                                                                                                                
Number 1857                                                                                                                     
                                                                                                                                
MS. WARD continued:                                                                                                             
                                                                                                                                
     So this  is what  we're trying to  do, in  concert with                                                                    
     the  rest of  the  United States,  to  create a  better                                                                    
     market for  our whole  entire industry.   We  [also] do                                                                    
     not ...  have a problem  - again, with the  support and                                                                    
     approval of our sponsor -  [with] taking out the cap on                                                                    
     the top  limit of the  house.  If  you were to  go down                                                                    
     today  and   ...  replace  your  vehicle   through  the                                                                    
     [National  Automotive  Parts  Association]  NAPA  parts                                                                    
     department, it would  cost you three or  four times the                                                                    
     cost of the  original vehicle.  That's just  the way it                                                                    
     is.   So if  it exceeds  that, as  long as  it's actual                                                                    
     damages and  reasonable costs, we don't  have a problem                                                                    
     with that.   So, hopefully, that will take  [care of] a                                                                    
     couple of concerns.                                                                                                        
                                                                                                                                
     And then  finally I  just want  to address  the bonding                                                                    
     [HB 289].  We are not  in favor of that for exactly the                                                                    
     same  reasons you  are. ...  We had  a concern  four or                                                                    
     five years ago about people  being able to get into the                                                                    
     business  with almost  no  capital  and no  experience.                                                                    
     And we've  worked hard  [on] our  continuing education.                                                                    
     A  general  contractor  today can  go  build  a  school                                                                    
     without  any education,  but a  residential endorsement                                                                    
     requires,  to  build a  house,  that  we have  to  have                                                                    
     continuing   [education]   and    certain   levels   of                                                                    
     education, so we've worked very  hard at that.  But the                                                                    
     threshold now for a young  person to get into business,                                                                    
     with  the insurance  situation, is  so high  that we're                                                                    
     not attracting people in any more.   And once all of us                                                                    
     retire, ...  there's going  to be no  one to  take over                                                                    
     for us, and then the cost will ...                                                                                         
                                                                                                                                
CHAIR   McGUIRE   interjected   to  ask   why   the   residential                                                               
requirements are different with respect to continuing education.                                                                
                                                                                                                                
MS.  WARD  replied that  general  contractors  have no  education                                                               
requirements.   [Residential  contractors],  on  the other  hand,                                                               
must  not  only  attend  a "homebuilding  and  artic  engineering                                                               
homebuilding  workshop" in  order to  obtain their  license, they                                                               
must  also attend  16  hours of  continuing  education every  two                                                               
years in  order to renew their  license.  She suggested  that the                                                               
requirements differ  because people  live in homes,  whereas they                                                               
don't live in commercial buildings.                                                                                             
                                                                                                                                
Number 1772                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE  remarked, however,  that  schools  are also  very                                                               
important, ranking right up there with homes.                                                                                   
                                                                                                                                
MS. WARD continued relaying the ASHBA's concerns with HB 289:                                                                   
                                                                                                                                
     We  had two  concerns with  the  bonding.   One is  the                                                                    
     threshold  to get  into business.   And  the other  is,                                                                    
     it's  a very  litigious  society, and  we were  afraid,                                                                    
     with the  $100,000 bond, they'd  go right  directly [at                                                                    
     that]; I might as well paint  a big target on my shirt.                                                                    
     So, we were concerned for those two reasons.                                                                               
                                                                                                                                
REPRESENTATIVE OGG, noting that HB  340 has been described as the                                                               
second   "piece"  of   a  "full   package,"  asked   whether  the                                                               
legislature could expect to see more "pieces."                                                                                  
                                                                                                                                
MS. WARD indicated  that HB 340 is the final  piece.  In response                                                               
to  a question,  she said  that  according to  the Department  of                                                               
Labor  &  Workforce  Development (DLWD),  [operating]  without  a                                                               
license is  a misdemeanor.   If  one advertises  his/her services                                                               
without proper licensing  and bonding, then there  might be other                                                               
penalties  involved,  she  suggested.    She  added  that  rising                                                               
insurance premiums "are driving many  of our people underground -                                                               
to use handyman licenses."                                                                                                      
                                                                                                                                
CHAIR   McGUIRE,  in   response   to  a   concern  expressed   by                                                               
Representative Holm,  explained that  the language  in subsection                                                               
(c) of proposed AS 09.45.895 is  not being changed - it currently                                                               
exists as AS 09.45.895.                                                                                                         
                                                                                                                                
MS. WARD noted  that any compensation paid to  the homeowner from                                                               
what she referred to as  the "national warranty program" that she                                                               
provides   will  not   affect   the  homeowner's   policy.     If                                                               
compensation  is paid  by the  homeowner's policy,  however, then                                                               
there is the potential that his/her policy premiums might go up.                                                                
                                                                                                                                
REPRESENTATIVE GARA  said it is  absolutely inconceivable  to him                                                               
that insurance  rates which went  from $8,000 to $80,000  will be                                                               
at  all impacted  by "a  bill that  only addresses  non personal-                                                               
injury cases and  that only addresses a minor  portion of damages                                                               
that we've  never even  heard, ... from  any testimony,  ever get                                                               
awarded  in those  non  personal-injury cases."    He asked  what                                                               
assurances  can be  given that  HB 340  will have  any impact  on                                                               
insurance rates.                                                                                                                
                                                                                                                                
Number 1599                                                                                                                     
                                                                                                                                
MS. WARD, in reply, offered:                                                                                                    
                                                                                                                                
     This does come  from a national perspective.   As we do                                                                    
     this  as  a  group,  we  have  met  with  the  national                                                                    
     insurers,  and this  is what  they're telling  us.   So                                                                    
     we're responding to what they're  telling us.  And they                                                                    
     may not  go down,  but maybe they  won't rise  as fast,                                                                    
     and  maybe we'll  create more  competition.   And right                                                                    
     now  that's what  we're looking  for,  frankly, is  the                                                                    
     competition.                                                                                                               
                                                                                                                                
REPRESENTATIVE  GARA  asked  for  examples of  abuses  under  the                                                               
current law  - examples  of people  who have  non personal-injury                                                               
cases who recovered full damages.                                                                                               
                                                                                                                                
MS. WARD  replied that people  have been awarded huge  claims for                                                               
personal  damages  such  as  emotional  distress:    trauma,  for                                                               
example.   She noted that  someone tried  to sue her  for trauma,                                                               
most of the claim being for  stress, but did not recover anything                                                               
because she  fought that case.   Her insurance  company, however,                                                               
wanted to just write the person a check; she wouldn't let them.                                                                 
                                                                                                                                
CHAIR McGUIRE suggested  that part of the problem  is perhaps the                                                               
perceived exposure to such claims.                                                                                              
                                                                                                                                
REPRESENTATIVE GARA  opined that  HB 340 falls  in that  class of                                                               
bills that in order to protect  one group of Alaskans, the rights                                                               
of another group  of Alaskans are being taken away.   "The rights                                                               
that  we're  taking  away  are  the rights  of  people  who  have                                                               
legitimate claims for personal injury,  for emotional injury, and                                                               
we're  telling them  ...  that  we're going  to  take away  those                                                               
rights to  protect people on  the other  side," he remarked.   He                                                               
offered an  example of  a homeowner  being willing  to live  in a                                                               
garage for  three months while work  is being done on  the house,                                                               
but having  to live in  the garage  for nine months  instead just                                                               
because the  builder decided, at the  end of three months,  to go                                                               
work on  "a more profitable  job."   He asked why  that homeowner                                                               
should  not be  compensated for  the inconvenience  of having  to                                                               
live in the garage for an extra six months.                                                                                     
                                                                                                                                
MS.  WARD  pointed  out,  however,   that  [the  bill]  addresses                                                               
situations in which the homeowner  is in the house, everything is                                                               
fine, and then a defect  in the construction forces the homeowner                                                               
to  live in  "good"  temporary housing  while  repairs are  made;                                                               
proposed AS 09.45.895(a)(2) provides  that the homeowner shall be                                                               
compensated for the reasonable cost of that temporary housing.                                                                  
                                                                                                                                
Number 1423                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  noted, however that even  in that situation,                                                               
if the builder leaves  the repair job early to go  work on a more                                                               
profitable job  and the  homeowner has to  live in  the temporary                                                               
housing for  a much longer period  of time, he/she will  only get                                                               
compensated for the cost of that  housing after he/she sues.  Why                                                               
should the  homeowner not get  compensated for  the inconvenience                                                               
as well, especially when the builder "has blown them off."                                                                      
                                                                                                                                
MS. WARD replied that for  every one person that might reasonably                                                               
deserve that  compensation, there  will be  five people  that sue                                                               
for it and really don't deserve it.                                                                                             
                                                                                                                                
REPRESENTATIVE  GARA   countered:    "Then  why   don't  we  pass                                                               
something  that  would  just punish  people  who  file  frivolous                                                               
lawsuits,  instead  of  passing  something that  takes  away  the                                                               
rights of people who have legitimate claims?"                                                                                   
                                                                                                                                
CHAIR  McGUIRE  indicated  that  she  would  like  to  work  with                                                               
Representative Gara  on that issue  at a  later time -  perhaps a                                                               
bill that  would put some  teeth into  the Alaska Rules  of Court                                                               
addressing frivolous lawsuits.                                                                                                  
                                                                                                                                
REPRESENTATIVE GARA  added that it  torques him to take  away the                                                               
rights  of  people  with  legitimate claims  in  order  to  solve                                                               
somebody else's problem:                                                                                                        
                                                                                                                                
     If  the problem  really  is frivolous  claims, I  would                                                                    
     have no  problem coming  up with  significant penalties                                                                    
     ... [for]  people who file frivolous  claims; we should                                                                    
     do that.   But I  really hate  the idea of  taking away                                                                    
     the  rights of  people with  legitimate claims  because                                                                    
     somebody  on the  other end  gets what  I believe  is a                                                                    
     false promise  from an  insurance company  that they'll                                                                    
     lower  rates  if they  just  take  away these  people's                                                                    
     rights.                                                                                                                    
                                                                                                                                
CHAIR  McGUIRE suggested  that part  of the  problem is  that the                                                               
barrier to filing such lawsuits is  too low, and builders wind up                                                               
having to defend themselves at great cost.                                                                                      
                                                                                                                                
Number 1317                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG offered  some suggestions  as to  which                                                               
Alaska  Rules of  Court ought  to be  altered to  more adequately                                                               
address  frivolous  lawsuits.     He  then  turned  attention  to                                                               
proposed AS 09.45.895(c), and said:                                                                                             
                                                                                                                                
     The collateral  source rule  doesn't cover  a situation                                                                    
     where  the insurance  coverage that  may have  paid the                                                                    
     claimant  in the  first  place  contains a  subrogation                                                                    
     clause.   And  I'm wondering  if there  should be  some                                                                    
     change in  [CSHB 340(L&C)] to reflect  the circumstance                                                                    
     where the  insurance company would have  first claim on                                                                    
     the  money because  of  a subrogation  clause.   If  we                                                                    
     don't  put  that  in,  the  result  will  be  that  the                                                                    
     claimant is unfairly penalized  ... because their claim                                                                    
     is  reduced,  and  ...  then   ...  the  benefit  would                                                                    
     [actually] go  to the tort-feasor  - or the  person who                                                                    
     caused the damage here -  because they wouldn't have to                                                                    
     pay the amount they should  additionally have to pay to                                                                    
     compensate the  insurance company for the  money it has                                                                    
     paid out to the claimant.  Care to comment?                                                                                
                                                                                                                                
MS.  WARD  replied:    "I   think  I  understand,  Representative                                                               
Gruenberg, where you're  going; I guess I would have  to find the                                                               
technical path."                                                                                                                
                                                                                                                                
REPRESENTATIVE  GRUENBERG  said  that  this  issue  need  not  be                                                               
addressed right  now, but it should  be looked at, at  some point                                                               
because,  normally,  if  there  is a  subrogation  clause  in  an                                                               
insurance  policy, that  doesn't  let the  tort-feasor  - or  the                                                               
person who's  responsible - off  the hook; the  insurance company                                                               
gets first  claim on the money  in order to reimburse  itself for                                                               
any  money its  paid out.   Then  any additional  money that  the                                                               
claimant  claims for  deductible  or non-covered  costs would  go                                                               
directly to  the claimant.   But  it could  be a  significant and                                                               
unfair windfall  for the  person responsible  for the  damages if                                                               
the bill  doesn't include a  provision "like that."   So although                                                               
the language  in proposed  AS 09.45.895(c)  is not  being changed                                                               
via  HB  340,  perhaps  it  contains  a  defect  that  should  be                                                               
addressed at some point.                                                                                                        
                                                                                                                                
MS. WARD said she would research that issue.                                                                                    
                                                                                                                                
REPRESENTATIVE  ANDERSON,  offering  an  example  of  an  in-home                                                               
wedding  being  disrupted  because   of  a  construction  defect,                                                               
predicted that  the potential of  a claim for pain  and suffering                                                               
in such a situation could very  well drive some people out of the                                                               
homebuilding business.   He opined that in such an  example, as a                                                               
matter  of  public  policy, curing  the  defect  and  reimbursing                                                               
reasonable costs should be sufficient.                                                                                          
                                                                                                                                
Number 1099                                                                                                                     
                                                                                                                                
MS. WARD agreed,  adding that reasonable and  actual damages will                                                               
still have  to be determined by  the court system, which  may, in                                                               
fact,  decide to  award "a  little  something" for  any pain  and                                                               
suffering incurred as  a result of the construction  defect.  She                                                               
opined that the  language in HB 340 is broad  enough to give some                                                               
discretion regarding  actual damages  and is not  eliminating the                                                               
possibility of recovering some sort of punitive damages.                                                                        
                                                                                                                                
REPRESENTATIVE  ANDERSON remarked  that courtroom  debate on  the                                                               
issue of damages for pain and suffering can go on and on.                                                                       
                                                                                                                                
MS. WARD,  in conclusion,  said:  "The  majority of  these claims                                                               
are going  to be because of  gross negligence, fraud, and  so on.                                                               
We don't  want to protect those  people.  We want  to protect the                                                               
good builders; that's our aim here."                                                                                            
                                                                                                                                
REPRESENTATIVE GARA  predicted that  many more tort  reform bills                                                               
were going  to come before the  committee.  He asked  whether the                                                               
committee   is   considering   exempting  negligence   from   the                                                               
protections provided by HB 340.                                                                                                 
                                                                                                                                
CHAIR  McGUIRE  clarified  that a  suggestion  discussed  earlier                                                               
involved  exempting fraud  and gross  negligence from  the bill's                                                               
protections.                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA said  that changing the bill  in that fashion                                                               
would  satisfy his  concerns  quite a  bit.   He  added that  the                                                               
concept  that a  jury  will  award a  claimant  with "some  crazy                                                               
claim" a  lot of  money disregards  the fact  that, historically,                                                               
juries in Alaska have not done  that, and opined that such a fear                                                               
is  not justified  given the  way Alaskan  juries have  conducted                                                               
themselves.                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE  suggested  that  part  of  the  problem  is  that                                                               
insurance companies do not take  that fact into account; instead,                                                               
they  look to  circumstances  in the  Lower  48 when  determining                                                               
risk.                                                                                                                           
                                                                                                                                
Number 0859                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS  said  he  agrees  that  Alaskan  juries,                                                               
particularly  in  Anchorage,  are conservative.    He  suggested,                                                               
however, that part of the problem  is that when threatened with a                                                               
lawsuit, it is often cheaper to  settle [out of court] even if no                                                               
wrongdoing occurred; very few cases ever actually go to court.                                                                  
                                                                                                                                
REPRESENTATIVE GARA  remarked that the  idea that someone  with a                                                               
bogus claim will be awarded a  lot of money because the defendant                                                               
is afraid  of a jury verdict  ignores one reality:   the attorney                                                               
for the  defense is there and  he/she is not going  to advise the                                                               
client to pay a  lot of money on a bogus claim.   So what happens                                                               
in these cases,  he explained, is that the  defense attorney says                                                               
to the claimant, "You  have a bogus claim; I dare  you to spend a                                                               
ton of  money over these  next five years  and take me  to court,                                                               
because you're going  to spend money on your  attorney and you're                                                               
going to lose."   So to assume that someone  will give a claimant                                                               
money just for filing a bogus  claim ignores the reality that the                                                               
response will  be, "We  know you  have a  bogus claim;  we're not                                                               
going to pay  you money, because we know you're  not going to get                                                               
anywhere with it."  Logic  doesn't leave the judicial system just                                                               
because one side has a claim, he remarked.                                                                                      
                                                                                                                                
CHAIR  McGUIRE, after  ascertaining that  no one  else wished  to                                                               
testify, closed public testimony on HB 340.                                                                                     
                                                                                                                                
Number 0686                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE made  a motion  to  adopt Amendment  1, to  delete                                                               
subsection  (b)  from  page  2,  lines 28-30.    There  being  no                                                               
objection, Amendment 1 was adopted.                                                                                             
                                                                                                                                
Number 0651                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG  made a motion  to adopt  Conceptual Amendment                                                               
2, to  "conceptually create an  exemption, to  these limitations,                                                               
for [gross] negligence and fraud."                                                                                              
                                                                                                                                
Number 0610                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA objected  for the purpose of  discussion.  He                                                               
said  the  levels   of  bad  conduct  are:     negligence,  gross                                                               
negligence,  intentional  misconduct,  and  "recklessness."    He                                                               
recommended that  the committee  include, as exemptions  from the                                                               
protections  provided   by  HB  340,  conduct   that  is  grossly                                                               
negligent,  conduct that  is  fraudulent,  and conduct  involving                                                               
intentional  misconduct.   He  indicated  that conduct  involving                                                               
intentional  misconduct  would  address  situations  wherein  the                                                               
contractor decides, in the middle  of the project, that he/she is                                                               
just  going to  go  "somewhere else  for a  while."   That's  not                                                               
fraud,   it's  not   gross  negligence,   but  it's   intentional                                                               
misconduct, "and I  don't think that we should  reward people who                                                               
engage  in   intentional  misconduct,"   he  added,   but  unless                                                               
Conceptual  Amendment   2  is  amended  to   include  intentional                                                               
misconduct, that's exactly what will happen.                                                                                    
                                                                                                                                
REPRESENTATIVE  OGG said  he did  not  have a  problem with  that                                                               
concept.                                                                                                                        
                                                                                                                                
REPRESENTATIVE HOLM  suggested that intentional  misconduct might                                                               
apply  to the  contractor who  delayed a  project because  he/she                                                               
could not  get materials  within a  certain timeframe  or because                                                               
the proper subcontractors weren't available.                                                                                    
                                                                                                                                
REPRESENTATIVE OGG remarked,  "I think the concept  is there, and                                                               
I  think that  the  sponsor can  craft it."    He suggested  that                                                               
Representative  Holm's  examples  would   fall  more  within  the                                                               
category of negligence or actually even  the realm of a bona fide                                                               
excuse,  and so  it wouldn't  qualify as  intentional misconduct.                                                               
He indicated  that he would  rather leave Conceptual  Amendment 2                                                               
as  is, and  work with  the  sponsor to  ensure that  intentional                                                               
misconduct is not protected.                                                                                                    
                                                                                                                                
CHAIR  McGUIRE  indicated  agreement that  Representative  Holm's                                                               
examples  would  not  qualify   as  intentional  misconduct,  and                                                               
expressed a willingness to allow  Representative Ogg to work with                                                               
the sponsor regarding what Conceptual  Amendment 2 would include.                                                               
She told Representative Meyer that  the committee did not wish to                                                               
gut  the  bill, and  suggested  to  Representative Gara  that  he                                                               
review the  bill in  its amended  form, before  it goes  to House                                                               
floor, in order to ensure that his concerns are addressed.                                                                      
                                                                                                                                
REPRESENTATIVE MEYER agreed to work  with Representatives Ogg and                                                               
Gara on the concepts discussed.                                                                                                 
                                                                                                                                
REPRESENTATIVE   GARA  withdrew   his  objection   to  Conceptual                                                               
Amendment 2.                                                                                                                    
                                                                                                                                
Number 0355                                                                                                                     
                                                                                                                                
CHAIR McGUIRE,  noting that there  were no further  objections to                                                               
Conceptual  Amendment 2,  announced that  Conceptual Amendment  2                                                               
was adopted.                                                                                                                    
                                                                                                                                
Number 0325                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ANDERSON  moved  to   report  CSHB  340(L&C),  as                                                               
amended,  out of  committee with  individual recommendations  and                                                               
the accompanying  zero fiscal  note.   There being  no objection,                                                               
CSHB  340(JUD) was  reported from  the  House Judiciary  Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
HB 397 - DEFENSE CONTACTS WITH VICTIMS & WITNESSES                                                                            
                                                                                                                                
Number 0270                                                                                                                     
                                                                                                                                
CHAIR McGUIRE announced that the  next order of business would be                                                               
HOUSE BILL  NO. 397,  "An Act relating  to defense  contacts with                                                               
and  recordings  of  statements  of  victims  or  witnesses;  and                                                               
amending Rule 16, Alaska Rules of Criminal Procedure."                                                                          
                                                                                                                                
Number 0246                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS moved  to  adopt  the proposed  committee                                                               
substitute  (CS)  for  HB 397,  Version  23-LS1510\I,  Luckhaupt,                                                               
2/9/04, as the  work draft.  There being no  objection, Version I                                                               
was before the committee.                                                                                                       
                                                                                                                                
CHAIR McGUIRE, as the sponsor of  HB 397, remarked that Version I                                                               
has engendered  new fiscal  notes that  will be  accompanying the                                                               
bill  as it  continues through  the  process.   She relayed  that                                                               
through  Version I,  the bill  has been  narrowed down  to ensure                                                               
that parental consent  is obtained before minors  who are victims                                                               
or  witnesses   provide  recorded  statements   regarding  sexual                                                               
offenses, and no longer contains an indirect court rule change.                                                                 
                                                                                                                                
The committee took an at-ease from 2:40 p.m. to 2:50 p.m.                                                                       
                                                                                                                                
REPRESENTATIVE SAMUELS  moved to  report the  proposed CS  for HB                                                               
397,  Version 23-LS1510\I,  Luckhaupt, 2/9/04,  out of  committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There  being no  objection, CSHB  397(JUD) was  reported                                                               
from the House Judiciary Standing Committee.                                                                                    
                                                                                                                                
HB 349 - ILLEGALLY OBTAINED EVIDENCE                                                                                          
                                                                                                                                
Number 0067                                                                                                                     
                                                                                                                                
CHAIR McGUIRE  announced that  the next  order of  business would                                                               
be, HOUSE BILL  NO. 349, "An Act amending Rule  412, Alaska Rules                                                               
of  Evidence."     House  Bill  349  has   four  prime  sponsors:                                                               
Representatives Stoltze, Dahlstrom, Samuels, and McGuire.                                                                       
                                                                                                                                
Number 0020                                                                                                                     
                                                                                                                                
REPRESENTATIVE HOLM moved to adopt  the committee substitute (CS)                                                               
for HB 349,  Version 23-LS1322\H, Luckhaupt, 2/6/04,  as the work                                                               
draft.   There  being  no  objection, Version  H  was before  the                                                               
committee.                                                                                                                      
                                                                                                                                
Number 0016                                                                                                                     
                                                                                                                                
SARA  NIELSEN,  Staff  to Representative  Ralph  Samuels,  Alaska                                                               
State  Legislature, spoke  on behalf  of Representative  Samuels,                                                               
one of the prime sponsors of  HB 349, regarding Version H and how                                                               
it differs from the original bill.                                                                                              
                                                                                                                                
TAPE 04-12, SIDE A                                                                                                            
                                                                                                                                
MS. NIELSEN pointed  out that in Version H, a  comma was inserted                                                               
on page 1, line 15, after "prosecution".   On page 2, line 7, the                                                           
word  "prosecution" was  changed to  "civil or  criminal action",                                                       
and this addresses one of Representative Gruenberg's concerns.                                                                  
                                                                                                                                
Number 0100                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS  moved that the committee  adopt Amendment                                                               
1, which read [original punctuation provided]:                                                                                  
                                                                                                                                
     Page 2, line 7                                                                                                             
          (B) any criminal action, to impeach the defendant                                                             
     if  the prosecution  shows that  the  evidence was  not                                                                    
     obtained  in substantial  violation  of  rights of  the                                                                    
     defendant.                                                                                                             
                                                                                                                                
CHAIR McGUIRE objected.                                                                                                         
                                                                                                                                
REPRESENTATIVE SAMUELS, speaking as one  of the prime sponsors of                                                               
HB  349,  recalled  that  during the  bill's  last  hearing,  the                                                               
committee spoke  with the  public defender,  and the  drafters of                                                               
the  legislation   [indicated]  the  need  to   ensure  that  the                                                               
legislation  isn't too  broad.   Therefore,  the legislation  has                                                               
been narrowed in an attempt to make everyone happy on the issue.                                                                
                                                                                                                                
MS. NIELSEN,  in response  to a question,  pointed out  that [the                                                               
language  in  Amendment  1]  only needs  to  refer  to  "criminal                                                           
action" due to the change from "witness" to "defendant".                                                            
                                                                                                                                
CHAIR McGUIRE removed her objection  and said that Amendment 1 is                                                               
a good amendment.                                                                                                               
                                                                                                                                
REPRESENTATIVE  GRUENBERG posed  a situation  in which  there are                                                               
co-conspirators and  one is  testifying against  the other.   The                                                               
one testifying  has already  concluded his  or her  criminal case                                                               
and thus  there is no  further taint from the  illegally obtained                                                               
evidence.   He questioned why  [the illegally  obtained evidence]                                                               
shouldn't be  used if  the witness has  no further  claim against                                                               
the evidence due to the conclusion of that witness's case.                                                                      
                                                                                                                                
REPRESENTATIVE  SAMUELS remarked  that he  tried to  walk a  fine                                                               
line  with  the  Office  of Victims'  Rights  (OVR),  the  Public                                                               
Defender's Office, and  the Department of Law in  order to ensure                                                               
that the  legislation wasn't so  broad that evidence  which isn't                                                               
desired is coming in all the time.                                                                                              
                                                                                                                                
Number 0446                                                                                                                     
                                                                                                                                
STEPHEN BRANCHFLOWER, Director, Office  of Victims' Rights (OVR),                                                               
Alaska State Legislature,  returned to Representative Gruenberg's                                                               
hypothetical situation regarding  impeachment of a co-conspirator                                                               
through a previous statement.   The aforementioned can be done in                                                               
spite of  Amendment 1, he said,  and opined that the  answer lies                                                               
on page 1, line 15 [of Version H].                                                                                              
                                                                                                                                
REPRESENTATIVE   GRUENBERG    acknowledged   that    this   isn't                                                               
[addressing] testimonial  evidence illegally obtained  but rather                                                               
non-testimonial  evidence  that  was obtained  in  a  technically                                                               
incorrect  manner, such  as through  a defective  search warrant,                                                               
and is being used to impeach a key witness.                                                                                     
                                                                                                                                
MR. BRANCHFLOWER  answered that he  thinks the solution  would be                                                               
to add the language "or  co-defendant" after the word "defendant"                                                           
in Amendment 1.                                                                                                                 
                                                                                                                                
REPRESENTATIVE GRUENBERG  posed a situation in  which the witness                                                               
isn't  technically a  co-defendant and  may have  had his  or her                                                               
case dismissed or  dealt with earlier.   Although he acknowledged                                                               
that adding  "co-defendant" is an  improvement, he  asked whether                                                               
it would be too narrow.                                                                                                         
                                                                                                                                
MR. BRANCHFLOWER  suggested adding the language  "co-defendant or                                                               
former co-defendant" [to page 2], lines 7 and 9, [of the bill].                                                                 
                                                                                                                                
REPRESENTATIVE  GRUENBERG mentioned  that  he  would support  Mr.                                                               
Branchflower's suggestion as an amendment.                                                                                      
                                                                                                                                
REPRESENTATIVE GARA suggested that on  page 1, line 15 of Version                                                               
H, the  word "person"  should be changed  to "defendant"  if this                                                           
right is being limited to defendants whom one wants to impeach.                                                                 
                                                                                                                                
REPRESENTATIVE  GRUENBERG  recommended that  Representative  Gara                                                               
expand  his suggestion  to include  "defendant, co-defendant,  or                                                               
former defendant".                                                                                                              
                                                                                                                                
Number 0740                                                                                                                     
                                                                                                                                
CHAIR McGUIRE, upon determining  there were no further objections                                                               
to Amendment 1, announced that Amendment 1 was adopted.                                                                         
                                                                                                                                
REPRESENTATIVE GARA  moved that the committee  adopt Amendment 2,                                                               
as follows:                                                                                                                     
                                                                                                                                
     Page 1, line 15,                                                                                                           
          Delete "person"                                                                                                   
       Insert   "defendant,   co-defendant,   or   former                                                                       
     defendant"                                                                                                                 
                                                                                                                                
      Page 2, line 7, after "defendant" [the new language                                                                   
     per the adoption of Amendment 1],                                                                                          
       Insert   "defendant,   co-defendant,   or   former                                                                       
     defendant"                                                                                                                 
                                                                                                                                
      Page 2, line 9, after "defendant" [the new language                                                                   
     per the adoption of Amendment 1],                                                                                          
       Insert   "defendant,   co-defendant,   or   former                                                                       
     defendant"                                                                                                                 
                                                                                                                                
CHAIR McGUIRE specified  a conceptual caveat to  Amendment 2 that                                                               
wherever "defendant"  appears in [proposed paragraphs  (1)(B) and                                                           
(2)(B)], the language "co-defendant,  or former defendant" should                                                               
follow.                                                                                                                         
                                                                                                                                
CHAIR McGUIRE, upon determining that  there were no objections to                                                               
Amendment  2  [as  amended],  announced   that  Amendment  2  [as                                                               
amended] was adopted.                                                                                                           
                                                                                                                                
Number 0891                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  moved that the committee  adopt Amendment 3,                                                               
a   handwritten  amendment   which  read   [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Insert @ p. 2 line 2 after "voluntary",                                                                                    
          ", recorded if required by law,"                                                                                      
                                                                                                                                
REPRESENTATIVE GARA indicated  that his fear is  that there could                                                               
be a  circumstance in which a  tape was thrown away,  and a claim                                                               
is later  made in court  that the  tape said something  for which                                                               
there is  no longer any evidence.   He said he  wanted to exclude                                                               
from this legislation  cases in which law  enforcement discards a                                                               
tape  that is  required by  law.   He said  he didn't  believe [a                                                               
discarded  tape]  should  be  used against  a  defendant.    This                                                               
protects due process, he said.                                                                                                  
                                                                                                                                
MR.  BRANCHFLOWER informed  the committee  that this  legislation                                                               
would raise the  bar higher than the Alaska  Supreme Court stated                                                               
in the [Stephan v. State  of Alaska] opinion.  The aforementioned                                                             
case provided  for exceptions when recordings  are not available.                                                               
The exceptions  are when there  has been a  mechanical difficulty                                                               
that results in no recording  or when the defendant requests that                                                               
no recording be made.  Mr.  Branchflower said that he believes it                                                               
would be  difficult to codify  circumstances in which  the police                                                               
have not engaged  in any intentional misconduct and  yet the tape                                                               
is  no   longer  available.    Mr.   Branchflower  surmised  that                                                               
Representative Gara is  trying to focus on  the unusual situation                                                               
in which  a police officer is  guilty of a crime,  destruction of                                                               
evidence.   The  aforementioned  would prevent  a statement  from                                                               
being  used to  impeach a  defendant  who commits  perjury.   Mr.                                                               
Branchflower said it is difficult  to imagine a circumstance in a                                                               
trial context  where the aforementioned  would be the  history of                                                               
the case.                                                                                                                       
                                                                                                                                
REPRESENTATIVE SAMUELS  expressed concern about slowing  down the                                                               
bill's progress.                                                                                                                
                                                                                                                                
REPRESENTATIVE GARA  agreed with  Mr. Branchflower that  there is                                                               
no  desire to  create an  exemption  each time  the police  don't                                                               
retain a  recording because some recordings  wouldn't be required                                                               
by law.  Amendment 3  merely addresses those circumstances when a                                                               
recording is required by law.                                                                                                   
                                                                                                                                
MR. BRANCHFLOWER inquired as to  how the exceptions under the law                                                               
would be  handled in instances  where there could be  a statement                                                               
that  is  required  to  be   recorded  but  the  recording  isn't                                                               
available due to one of the exceptions.                                                                                         
                                                                                                                                
REPRESENTATIVE GARA  pointed out that  if there is  an exception,                                                               
then [the recording] isn't required by law.                                                                                     
                                                                                                                                
CHAIR McGUIRE  asked about changing  the language  being inserted                                                               
in Amendment  3 to read ",  recorded if required by  law, and not                                                               
governed by one of the recognized exceptions".                                                                                  
                                                                                                                                
REPRESENTATIVE   GARA  agreed   to  Chair   McGuire's  conceptual                                                               
suggestion.                                                                                                                     
                                                                                                                                
MR. BRANCHFLOWER  said such language would  address the exemption                                                               
issue.                                                                                                                          
                                                                                                                                
Number 1166                                                                                                                     
                                                                                                                                
CHAIR McGUIRE removed her objection.                                                                                            
                                                                                                                                
The committee took an at-ease from 3:12 p.m. to 3:14 p.m.                                                                       
                                                                                                                                
REPRESENTATIVE GARA  clarified that [Conceptual] Amendment  3 [as                                                               
amended] would  be:  "the  statement shall  not be allowed  if it                                                               
was required  to be recorded  by law, recognizing that  there are                                                               
some  exceptions  to  the recording  requirement  that  would  be                                                               
retained".                                                                                                                      
                                                                                                                                
CHAIR  McGUIRE,  upon  determining  that there  were  no  further                                                               
objections  to Conceptual  Amendment  3  [as amended],  announced                                                               
that Conceptual Amendment 3 [as amended] was adopted.                                                                           
                                                                                                                                
Number 1241                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HOLM  moved  to  report  CSHB  349,  Version  23-                                                               
LS1322\H, Luckhaupt,  2/6/04, as  amended, out of  committee with                                                               
individual recommendations  [and the accompanying  fiscal notes].                                                               
There being  no objection,  CSHB 349(JUD)  was reported  from the                                                               
House Judiciary Standing Committee.                                                                                             
                                                                                                                                
HB 357 - RESTITUTION                                                                                                          
                                                                                                                                
Number 1270                                                                                                                     
                                                                                                                                
CHAIR McGUIRE announced that the  next order of business would be                                                               
HOUSE  BILL  NO.  357,  "An  Act  relating  to  restitution;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
Number 1285                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS  moved  that the  committee  rescind  its                                                               
action  in reporting  CSHB 357,  Version 23-LS1384\H,  Luckhaupt,                                                               
1/29/04, as amended,  from committee.  There  being no objection,                                                               
it was so ordered.                                                                                                              
                                                                                                                                
REPRESENTATIVE SAMUELS  moved to  adopt a new  proposed committee                                                               
substitute (CS),  Version 23-LS1384\I,  as the  working document.                                                               
There being no objection, Version I was before the committee.                                                                   
                                                                                                                                
Number 1327                                                                                                                     
                                                                                                                                
SARA  NIELSEN,  Staff  to Representative  Ralph  Samuels,  Alaska                                                               
State  Legislature, spoke  on behalf  of Representative  Samuels,                                                               
one of the prime sponsors of  HB 357.  She reminded the committee                                                               
that  at the  last hearing  on HB  357, the  committee passed  an                                                               
amendment that  inserted "when presented with  evidence," on page                                                           
1,  line 4.    The  drafters have  said  that the  aforementioned                                                               
language is  unnecessary and  actually complicates  the situation                                                               
because it would require that  other statutes be changed in order                                                               
to ensure that  the statutes [use parallel language].   She noted                                                               
that this  language was also  inserted on page  1, line 10.   Ms.                                                               
Nielsen then turned  attention to the insertion of  a new Section                                                               
6 on page 3,  beginning on line 2.  This  new Section 6 addresses                                                               
[the ability of the] juvenile  court to take into consideration a                                                               
defendant's ability to pay past the  age of 19.  She relayed that                                                               
the  committee  has  possession   of  two  amendments  that  will                                                               
eliminate both of the insertions discussed.                                                                                     
                                                                                                                                
Number 1402                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS  moved that the committee  adopt Amendment                                                               
1, which read [original punctuation provided]:                                                                                  
                                                                                                                                
     Page 1, line 4                                                                                                             
                                                                                                                                
     Delete "when presented with evidence,"                                                                                     
                                                                                                                                
     Page 1, line 10                                                                                                            
                                                                                                                                
     Delete "when presented with evidence,"                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  objected and  asked why  there is  a problem                                                               
[with the language adopted at the prior hearing].                                                                               
                                                                                                                                
MS.  NIELSEN  referred  members   to  a  memorandum  from  Gerald                                                               
Luckhaupt,  Attorney, Legislative  Legal  and Research  Services,                                                               
dated February 2, 2004, which  said in part [original punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     The  committee added  the  words  "when presented  with                                                                    
     evidence" in two places.   Apparently, the committee is                                                                    
     limiting  a criminal  court  from ordering  restitution                                                                    
     except  when   evidence  is  presented.     I   do  not                                                                    
     understand the reason for the  amendment, as a criminal                                                                    
     court (or  even a civil  court for that  matter) cannot                                                                    
     deprive  a person  of property  arbitrarily or  without                                                                    
     evidence  to support  the judgment.    It seems  beyond                                                                    
     question to me that a  court cannot enter a restitution                                                                    
     order  without  evidence to  support  the  order and  I                                                                    
     therefore  do  not  see the  need  for  the  amendment.                                                                    
     Beyond  this   concern,  the  amendment   is  troubling                                                                    
     because  the  legislature  requires a  court  to  order                                                                    
     restitution in AS 12.55.045(e)  and allows the awarding                                                                    
     of  restitution  under AS  12.55.045(d).    In each  of                                                                    
     these  provisions   there  is   no  mention   of  "when                                                                    
     presented with  evidence."  Because of  the differences                                                                    
     in these  restitution statutes,  the courts  may choose                                                                    
     to  interpret  these  provisions differently.    It  is                                                                    
     possible that  a court could interpret  AS 12.55.045(a)                                                                    
     to require  a restitution  order to  be supported  by a                                                                    
      different level, quantity, or type of evidence than                                                                       
     restitution orders under AS 12.55.045(d) or (e).                                                                           
                                                                                                                                
REPRESENTATIVE SAMUELS, speaking as one  of the prime sponsors of                                                               
HB 357, explained that by  [inserting language] only in the areas                                                               
specified by  this legislation,  it appears  to have  muddied the                                                               
waters.                                                                                                                         
                                                                                                                                
MS. NIELSEN informed the committee  that she had spoken with Anne                                                               
Carpeneti, Assistant  Attorney General, Department of  Law (DOL),                                                               
who had attended the hearing  at which the language was inserted.                                                               
Ms. Nielsen relayed  that Ms. Carpeneti said she  was troubled by                                                               
the insertion of the language,  but that day didn't feel strongly                                                               
one  way  or  another;  however,   upon  being  informed  of  the                                                               
memorandum  from Legislative  Legal  and  Research Services,  Ms.                                                               
Carpeneti agreed with the drafters.                                                                                             
                                                                                                                                
Number 1546                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA remarked that  if the [legislation] tells the                                                               
court that it has to order restitution,  then it will do so.  "If                                                               
the victim doesn't  present any evidence, the court  still has to                                                               
order restitution,"  he said.   He recalled that the  concern was                                                               
that  the  court shouldn't  have  to  spend scarce  resources  or                                                               
[order]  restitution   when  no  evidence  has   been  presented.                                                               
Representative  Gara  said  that   he  believes  Mr.  Luckhaupt's                                                               
opinion is possibly  correct and possibly incorrect.   Unless the                                                               
legislation  requires  that  the prosecution  and/or  the  victim                                                               
comes in  with evidence, then  the legislation will  require that                                                               
the courts  speculate, spend  time coming  up with  evidence that                                                               
the prosecution doesn't  have.  Therefore, he  disagreed with the                                                               
argument that "we should just see what the courts do with this."                                                                
                                                                                                                                
REPRESENTATIVE  SAMUELS pointed  out that  currently, there  is a                                                               
constitutional  right to  [restitution].   Therefore, the  courts                                                               
should order  restitution every  time.  He  said that  the courts                                                               
aren't  going to  order restitution  unless there  is some  proof                                                               
that a loss was suffered.                                                                                                       
                                                                                                                                
REPRESENTATIVE GRUENBERG  said that he  has a concern  similar to                                                               
that of Representative  Gara in that he didn't know  what a judge                                                               
might do.   He  agreed that  there needs to  be some  evidence to                                                               
support an award.                                                                                                               
                                                                                                                                
CHAIR McGUIRE, speaking  as one of the prime sponsors  of HB 357,                                                               
agreed.   However,  if  a term  in  one part  of  the statute  is                                                               
defined  in a  different way  [than  in other  parts of  existing                                                               
statute], then  it might  give an  unintended meaning  or implied                                                               
meaning to the term in those other sections of statute.                                                                         
                                                                                                                                
REPRESENTATIVE  GRUENBERG  expressed the  need  to  be sure  that                                                               
something indicates the intent.                                                                                                 
                                                                                                                                
CHAIR McGUIRE remarked that she  believes a sufficient record has                                                               
been created specifying that there  is no intention for judges to                                                               
waste time trying  to uncover evidence that  simply doesn't exist                                                               
because of  a mandate  in the  constitution or  this legislation.                                                               
She said she  is supportive of removing the  "when presented with                                                               
evidence,"  language.   She  suggested  that Representative  Gara                                                               
could contact Mr. Luckhaupt on  this matter and if Representative                                                               
Gara  continues  to   believe  there  is  a   problem,  then  the                                                               
legislation can be revisited or amended  on the House floor.  She                                                               
noted her hesitation with holding the legislation further.                                                                      
                                                                                                                                
Number 1771                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS  pointed  out that  currently  the  judge                                                               
operates  under  the  constitutional [mandate]  that  restitution                                                               
shall be ordered.  Therefore,  this legislation makes the statute                                                               
follow  the  constitution,  which   doesn't  say  anything  about                                                               
needing evidence.   He  related his  belief that  if there  is no                                                               
evidence, then no restitution would be awarded.                                                                                 
                                                                                                                                
REPRESENTATIVE  GARA commented,  "The only  reason that  this odd                                                               
wording is  needed is because we're  doing a very odd  thing with                                                               
the bill."  This legislation  specifies that restitution shall be                                                               
awarded; the only  circumstance in which the  court isn't allowed                                                               
to  award restitution  is when  the victim  expressly denies  the                                                               
need   for  restitution.     The   legislation  creates   an  odd                                                               
circumstance by saying that the award  should be made even if the                                                               
person the  money is going to  go to doesn't ask  for it, doesn't                                                               
present  any evidence  for it,  doesn't do  anything to  help the                                                               
court  decide the  amount of  money.   He  characterized this  as                                                               
almost unprecedented,  which is  why he supports  this additional                                                               
language.  In  response to Mr. Luckhaupt's  statement saying that                                                               
the  language   in  the  legislation  doesn't   appear  in  other                                                               
provisions, Representative Gara surmised  that that is because in                                                               
other areas  of law the  victim presents evidence to  support the                                                               
claim.  Representative Gara said,  "This is a unique circumstance                                                               
and that's what justifies the unique language."                                                                                 
                                                                                                                                
REPRESENTATIVE SAMUELS  reiterated that the  constitution already                                                               
specifies that the courts shall  award restitution.  He said that                                                               
he would give the court some leeway for common sense.                                                                           
                                                                                                                                
REPRESENTATIVE  GARA maintained  his objection.   He  pointed out                                                               
that the legislation changes [the  statute] from "may" to "shall"                                                           
and specifies  that there  is only  one circumstance  under which                                                               
the court can't  follow this mandate.  Therefore,  the court will                                                               
be left in a situation wherein  there is no evidence but there is                                                               
a mandate to order restitution.                                                                                                 
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked if  Doug Wooliver could  speak to                                                               
this matter.                                                                                                                    
                                                                                                                                
Number 1942                                                                                                                     
                                                                                                                                
DOUG  WOOLIVER,  Administrative Attorney,  Administrative  Staff,                                                               
Office  of  the  Administrative  Director,  Alaska  Court  System                                                               
(ACS), said  that he didn't  know what  a court would  do either.                                                               
However, judges are  famous for finding ambiguities  where no one                                                               
else thinks they exist.   Furthermore, judges sometimes interpret                                                               
a  statute  in   a  way  that  the   legislature  didn't  intend.                                                               
Therefore,  Mr. Wooliver  said  that if  the  committee sees  any                                                               
ambiguity, then it  would be best to clarify it  now, rather than                                                               
later.   Mr. Wooliver pointed out  that the court, if  there is a                                                               
mandate  to  order restitution  and  there's  no evidence,  could                                                               
direct the district attorney or prosecutor to find the evidence.                                                                
                                                                                                                                
REPRESENTATIVE SAMUELS  asked, "Wouldn't the constitution  be the                                                               
mandate?"                                                                                                                       
                                                                                                                                
MR.  WOOLIVER said  that he  didn't  have any  more insight  than                                                               
anyone else  with regard to  how the court would  interpret this.                                                               
However,  he reiterated  that if  there is  ambiguity, the  court                                                               
will find it.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GRUENBERG  urged  the   committee  to  leave  the                                                               
language and then there would be no question.                                                                                   
                                                                                                                                
The committee took an at-ease from 3:32 p.m. to 3:40 p.m.                                                                       
                                                                                                                                
REPRESENTATIVE  GARA   explained  that   with  the   adoption  of                                                               
Amendment  1,  the legislation  specifies  that  the court  shall                                                               
award  restitution.     He  posed   a  situation  in   which  the                                                               
prosecution has  no evidence from  the victim because  the victim                                                               
has decided he or she doesn't  care.  However, [with the adoption                                                               
of Amendment 1, the court would  have to order the prosecution to                                                               
go out  and do  something that  the victim  doesn't want  and for                                                               
which  the   prosecution  doesn't  have  time.     Including  the                                                               
language, "when  presented with evidence,"  tells the  court that                                                               
if  the prosecution  doesn't  come in  with  evidence, the  court                                                               
won't   make   the   prosecution  undergo   a   second   hearing.                                                               
Representative Gara said, "Let's not  tell the courts to tell the                                                               
prosecution to go  do more work than the  prosecution has thought                                                               
is justified  when a  victim doesn't give  you the  evidence that                                                               
you want."  Representative Gara recalled  that this was more of a                                                               
fiscal concern than an evidence concern.                                                                                        
                                                                                                                                
CHAIR McGUIRE  suggested that if a  defense attorney representing                                                               
a client  found a situation [in  which the victim didn't  come in                                                               
with  evidence],  it would  assist  in  obtaining a  decline  [of                                                               
restitution].                                                                                                                   
                                                                                                                                
Number 2157                                                                                                                     
                                                                                                                                
MR. BRANCHFLOWER  explained that when  a person is  convicted, it                                                               
comes about  by the person entering  a guilty or no  contest plea                                                               
or there is a conviction following  a trial.  In the latter case,                                                               
there  will  always  be  evidence  in the  record  to  support  a                                                               
conviction,  especially with  regard  to financial  crimes.   The                                                               
state  will have  had  to  put on  some  evidence concerning  the                                                               
degree of  the crime.   However, most convictions follow  a plea,                                                               
and in that  situation the court requires a  factual basis, which                                                               
is found  in the charging document  before the court.   So, there                                                               
is always  evidence before the court  and upon which it  can rely                                                               
to enter a restitution award.   The complaint or information is a                                                               
sworn document  supported by  an affidavit that  is filed  by the                                                               
prosecutor or  police officer.   Because of the structure  of the                                                               
defense statute,  there is a  requirement that a  specific dollar                                                               
loss be  alleged.   He reiterated  that it  isn't possible  for a                                                               
conviction to  be obtained without  some evidence on  the record.                                                               
Therefore, Mr.  Branchflower said  that he  didn't see  a problem                                                               
that  needs  to  be  fixed  because there  will  always  be  some                                                               
evidence.                                                                                                                       
                                                                                                                                
REPRESENTATIVE SAMUELS surmised  from Mr. Branchflower's comments                                                               
that it  doesn't matter whether the  language is left in  or not.                                                               
Therefore,  if the  language "when  presented  with evidence"  is                                                           
left in  the CS to  alleviate Representative Gara's  concerns, it                                                               
wouldn't matter because the evidence  is always going to be there                                                               
anyway.                                                                                                                         
                                                                                                                                
MR. BRANCHFLOWER  reiterated that  the evidence would  be present                                                               
in the form of a sworn  document or some oral representation that                                                               
is made by the prosecutor, which  would form the basis for taking                                                               
the plea.                                                                                                                       
                                                                                                                                
REPRESENTATIVE SAMUELS  relayed his understanding, then,  that if                                                               
the language  is included, the  prosecution wouldn't  be impacted                                                               
one way or another.                                                                                                             
                                                                                                                                
MR. BRANCHFLOWER responded that he  didn't believe so unless it's                                                               
a particularly complicated case.                                                                                                
                                                                                                                                
CHAIR  McGUIRE  asked  if  Mr.  Branchflower  has  concerns  that                                                               
including the  language would impact  how restitution  is awarded                                                               
in other places in the statute.                                                                                                 
                                                                                                                                
MR. BRANCHFLOWER replied no.                                                                                                    
                                                                                                                                
Number 2269                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS withdrew Amendment 1.                                                                                    
                                                                                                                                
Number 2287                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS  moved that the committee  adopt Amendment                                                               
2, which read [original punctuation provided]:                                                                                  
                                                                                                                                
     Page 3, line 2                                                                                                             
                                                                                                                                
     Delete all of Section 6                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG said he  didn't understand why Section 6                                                               
is being deleted.                                                                                                               
                                                                                                                                
MS.  NIELSEN  explained that  [Section  6]  attempted to  clarify                                                               
something that the courts can already  do.  In doing so, it seems                                                               
that [Section  6] has "mucked it  up."  Therefore, it  seems best                                                               
to leave Section 6 out.                                                                                                         
                                                                                                                                
REPRESENTATIVE  GRUENBERG  asked if  the  court  already has  the                                                               
ability to take into account the minor's ability to pay.                                                                        
                                                                                                                                
MS. NIELSEN  replied yes.   The concern,  she explained,  is that                                                               
the  language on  page  3, line  31, could  limit  the amount  of                                                               
restitution now.                                                                                                                
                                                                                                                                
REPRESENTATIVE GRUENBERG emphasized the need  to be sure that the                                                               
court can  already do this.   Therefore, Representative Gruenberg                                                               
said he would  withdraw his objection [to Amendment 2]  if he was                                                               
assured that the court already has this authority.                                                                              
                                                                                                                                
Number 2390                                                                                                                     
                                                                                                                                
CHAIR McGUIRE  asked if there  was any objection to  Amendment 2.                                                               
There being no objection, Amendment 2 was adopted.                                                                              
                                                                                                                                
TAPE 04-12, SIDE B                                                                                                            
Number 2386                                                                                                                     
                                                                                                                                
REPRESENTATIVE HOLM moved  to report the proposed CS  for HB 357,                                                               
Version   23-LS1384\I,  as   amended,  out   of  committee   with                                                               
individual recommendations and the accompanying fiscal notes.                                                                   
                                                                                                                                
REPRESENTATIVE  GARA objected.    He explained  that although  he                                                               
will vote to  move this legislation from committee,  he still has                                                               
some real concerns with it.  He then removed his objection.                                                                     
                                                                                                                                
CHAIR  McGUIRE,  upon  determining  that there  were  no  further                                                               
objections, announced  that CSHB  357(JUD) was reported  from the                                                               
House Judiciary Standing Committee.                                                                                             
                                                                                                                                
The committee took an at-ease from 3:50 p.m. to 3:53 p.m.                                                                       
                                                                                                                                
HB 227 - DISTRICT COURTS & SMALL CLAIMS                                                                                       
                                                                                                                                
Number 2330                                                                                                                     
                                                                                                                                
CHAIR McGUIRE  announced that the  final order of  business would                                                               
be  HOUSE BILL  NO. 227,  "An Act  increasing the  jurisdictional                                                               
limit  for  small  claims  and for  magistrates  from  $7,500  to                                                               
$10,000; increasing  the jurisdictional limit of  district courts                                                               
in  certain civil  cases from  $50,000 to  $75,000; and  amending                                                               
Rule 11(a)(4),  Alaska District Court  Rules of  Civil Procedure,                                                               
relating to  service of process for  small claims."  [HB  227 was                                                               
sponsored by House Judiciary Standing Committee.]                                                                               
                                                                                                                                
REPRESENTATIVE GRUENBERG  noted that the committee  should have a                                                               
title amendment to accompany this legislation.                                                                                  
                                                                                                                                
Number 2290                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS moved  to  adopt  the proposed  committee                                                               
substitute  (CS)  for  HB 227,  Version  23-LS0896\I,  Luckhaupt,                                                               
2/4/04, as the  work draft.  There being no  objection, Version I                                                               
was before the committee.                                                                                                       
                                                                                                                                
REPRESENTATIVE  GRUENBERG reminded  the committee  that upon  his                                                               
request,  the committee  introduced  this  legislation late  last                                                               
session.   He  pointed  out  that originally,  Section  1 of  the                                                               
legislation  increased  the   district  court  jurisdiction  from                                                               
$50,000 to $75,000.   However, a number of  superior court judges                                                               
and  [other people]  suggested  increasing  the district  court's                                                               
jurisdiction   to  $100,000,   which  is   one  of   the  changes                                                               
encompassed in Version  I.  Section 2 remains the  same as in the                                                               
original version.   Section 3 is a new section  [that deletes the                                                               
following  language]  "action   for  false  imprisonment,  libel,                                                               
slander, malicious prosecution"  because Representative Gruenberg                                                               
said  he  believes that  district  court  judges and  juries  are                                                               
capable of hearing cases for  false imprisonment, libel, slander,                                                               
and malicious prosecution.  Section 4  remains the same as in the                                                               
original version.                                                                                                               
                                                                                                                                
REPRESENTATIVE GRUENBERG  pointed out  that Sections  5 and  6 go                                                               
together.    He  explained  that   under  small  claims  law,  an                                                               
individual that  is out  of state  can't be  sued unless  it's an                                                               
action  falling under  the Landlord-Tenant  Act or  service on  a                                                               
nonresident owner of a motor vehicle.   He said that he wanted to                                                               
increase  the  ability  to  sue  someone who  is  out  of  state.                                                               
Therefore,  language  saying  "if the  defendant  was  physically                                                               
present in the state when  the accident, contract, or whatever it                                                               
was  occurred" was  added.   The aforementioned  is difficult  to                                                               
determine in some cases, however,  especially with regard to when                                                               
a corporation  is physically  present in the  state.   He pointed                                                               
out  that most  small claims  cases are  heard by  district court                                                               
judges who  are fully capable of  hearing these cases.   The only                                                               
situation in  which there  would be  a problem is  if there  is a                                                               
magistrate, some of  which have law degrees and some  do not.  If                                                               
the magistrate is qualified, the  presiding judge can appoint the                                                               
magistrate as  a district court  judge pro  tem in order  to hear                                                               
the  small claims  case.   Therefore, paragraphs  (5) and  (6) of                                                               
Section 4  specify that any case  can go to small  claims, for up                                                               
to  $10,000, as  long as  it  is a  district court  judge who  is                                                               
hearing the case.  He noted that  if the judge feels that a small                                                               
claims  case  will take  more  time,  for  example, if  there  is                                                               
telephonic testimony  involved, the  judge can calendar  the case                                                               
when there is more time to hear it.                                                                                             
                                                                                                                                
Number 2051                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GARA  informed  the   committee  that  those  who                                                               
practice in  the personal  injury and tort  bar on  the plaintiff                                                               
and defense  side use an  expedited process  that makes it  a lot                                                               
easier  and  cheaper  to bring  superior-court  type  cases  with                                                               
damages of  less than  $100,000 to  district court.   He  said he                                                               
wanted to be sure that  this legislation does not unintentionally                                                               
interfere with this expedited process.                                                                                          
                                                                                                                                
REPRESENTATIVE GRUENBERG recalled that  process to be governed by                                                               
Civil  Rule 26.    He said  that there  were  discussions with  a                                                               
superior court  judge on  that matter.   Therefore,  the district                                                               
court  jurisdiction  was increased  to  $100,000  so that  [small                                                               
claims cases]  would be under  the same expedited  procedures now                                                               
used in superior court.                                                                                                         
                                                                                                                                
REPRESENTATIVE  GARA asked  if Representative  Gruenberg had  run                                                               
this by  any of  the practitioners  who use  [Civil Rule  26], in                                                               
order to determine whether it interferes with that option.                                                                      
                                                                                                                                
REPRESENTATIVE GRUENBERG replied  no.  He said he  didn't see any                                                               
problem because  the bill simply allows  practitioners to proceed                                                               
in  district court,  where those  expedited proceedings  could be                                                               
used.                                                                                                                           
                                                                                                                                
Number 1988                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG turned  to the $10,000 limit  for small claims                                                               
court and said that  it seems a little low for  this day and age.                                                               
For  example, if  a  person  has $1,000  a  month  rent, and  the                                                               
[landlord] gives  notice of  eviction but isn't  able to  get the                                                               
renter  out  of the  apartment  for  a  year.   Furthermore,  the                                                               
landlord would have  to hire an attorney and go  to regular court                                                               
because he/she  wouldn't be able  to go through the  small claims                                                               
procedure.  Therefore,  he inquired as to why  the [threshold] is                                                               
being set at $10,000.                                                                                                           
                                                                                                                                
REPRESENTATIVE GRUENBERG said that  with this legislation, Alaska                                                               
is going to  have just about the highest  small claim [threshold]                                                               
in the country, and noted that  some of the judges were concerned                                                               
with going up to even $10,000.   He indicated that he didn't have                                                               
a  problem   with  raising  it,   but  would  prefer  to   do  it                                                               
incrementally.                                                                                                                  
                                                                                                                                
REPRESENTATIVE OGG posed another situation  in which the owner of                                                               
an  expensive  automobile  had  an  accident  with  an  uninsured                                                               
motorist.   In such  a situation, in  order to  recover anything,                                                               
the  [automobile owner]  has  to  hire an  attorney  and go  into                                                               
regular court wherein the legal fee, at minimum, will be $5,000.                                                                
                                                                                                                                
REPRESENTATIVE GRUENBERG said he  sympathized, but he didn't want                                                               
to  jeopardize  the legislation  [by  raising  the threshold  too                                                               
much].                                                                                                                          
                                                                                                                                
REPRESENTATIVE OGG  expressed the need  to keep in  mind possible                                                               
real situations.                                                                                                                
                                                                                                                                
CHAIR  McGUIRE   inquired  as  to   when  the  statute   for  the                                                               
jurisdictional limit on small claims was raised to $7,500.                                                                      
                                                                                                                                
REPRESENTATIVE GRUENBERG  recalled that the last  increase to the                                                               
jurisdictional limit on  small claims to $7,500 was  two to three                                                               
years ago.                                                                                                                      
                                                                                                                                
Number 1852                                                                                                                     
                                                                                                                                
VANESSA  TONDINI, Staff  to Representative  Lesil McGuire,  House                                                               
Judiciary  Standing  Committee,   Alaska  State  Legislature,  on                                                               
behalf  of  the  House  Judiciary  Standing  Committee,  sponsor,                                                               
offered her  recollection that the jurisdictional  limit on small                                                               
claims  was last  raised  in  1997 from  $5,000  to  $7,500.   In                                                               
response  to Representative  Ogg, Ms.  Tondini noted  that as  of                                                               
2001,  the jurisdictional  limit of  five other  states is  above                                                               
$7,500;  that two  states have  a limit  of $7,500;  and that  42                                                               
states have a limit of between $2,000 to $5,000.                                                                                
                                                                                                                                
MS. TONDINI told the committee  that although the House Labor and                                                               
Commerce  Standing   Committee  didn't  amend   the  legislation,                                                               
Section  5  of  Version  I  was [added]  in  order  to  alleviate                                                               
concerns  by Representative  Rokeberg  and other  members of  the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
Number 1785                                                                                                                     
                                                                                                                                
DOUG  WOOLIVER,  Administrative Attorney,  Administrative  Staff,                                                               
Office  of  the  Administrative  Director,  Alaska  Court  System                                                               
(ACS),  said that  although the  ACS doesn't  have a  position on                                                               
this legislation, some  of the judges do have  some concerns with                                                               
this  legislation.   The court  has no  objection to  raising the                                                               
district  court  jurisdictional  limit to  $100,000,  which  most                                                               
judges view  as a  fairly common  sense amendment.   Furthermore,                                                               
it's  consistent with  Civil  Rule 26(g),  which  is the  limited                                                               
discovery rules for  superior court cases.   However, some judges                                                               
have concerns  with raising the jurisdictional  limit to $10,000.                                                               
Some judges  don't believe many  people will come in  with claims                                                               
in excess of $7,500 simply  because that's not considered a small                                                               
claim for most people.   When the jurisdictional limit was raised                                                               
from $5,000 to  $7,500, there wasn't an increase  in small claims                                                               
cases.  Therefore,  there is some evidence to  support the notion                                                               
that those  aren't the  bulk of  the cases  coming in.   However,                                                               
other  judges were  concerned that  cases of  [$10,000 in]  value                                                               
don't belong in  small claims, which is designed  to move quickly                                                               
through  a large  number  of cases  that are  of  a small  dollar                                                               
amount.   These judges  are concerned that  in these  cases, more                                                               
and  more  people will  bring  in  attorneys, and  therefore  the                                                               
process will  turn into a  mini district  court and it  will take                                                               
longer to  process cases.   Furthermore,  the process  will cause                                                               
more arguments because more and more money is at stake.                                                                         
                                                                                                                                
MR.  WOOLIVER turned  to the  matter of  out-of-state defendants,                                                               
who  will invariably  be teleconferenced.    In a  teleconference                                                               
situation, particularly when  it's a pro se  situation, the party                                                               
on  teleconference won't  have all  the information.   The  other                                                               
issue is that often the individual  can't be reached on the phone                                                               
right  away  or  he/she  will  call  on  a  cell  phone  and  the                                                               
connection  might  be  lost.   Furthermore,  it's  difficult  for                                                               
judges to assess  the credibility of witnesses over  the phone as                                                               
opposed  to one  in front  of them.   He  specified that  this is                                                               
another frustration  regarding what  is supposed  to be  a quick-                                                               
moving process.  Therefore, some  judges believe that there could                                                               
be  cases brought  forth that  aren't really  small claims  cases                                                               
anymore.                                                                                                                        
                                                                                                                                
MR.  WOOLIVER  explained  that  the  court  doesn't  oppose  this                                                               
legislation because there are people  who wouldn't go to court if                                                               
there wasn't  a small claims  court, which is "pro  se" friendly.                                                               
In Alaska as  well as nationwide, there are more  and more pro se                                                               
litigants.   This legislation is  consistent with  the philosophy                                                               
of better adapting to the needs of pro se litigants.                                                                            
                                                                                                                                
Number 1569                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GARA  asked   if  there  is  a   way  to  address                                                               
Representative Ogg's  concern.  He  asked if other states  have a                                                               
small claims exception above $10,000 for car repair cases.                                                                      
                                                                                                                                
MR.  WOOLIVER said  that he  didn't know  of any.   In  trying to                                                               
compare Alaska to  other states, he found a breakdown  of all the                                                               
jurisdictional limits of all courts  from the National Center for                                                               
State  Courts.   However, that  information doesn't  go into  the                                                               
detail [of exceptions].                                                                                                         
                                                                                                                                
REPRESENTATIVE  GARA posed  a  situation in  which  there was  an                                                               
$80,000 claim  arising from  an accident  with an  expensive car.                                                               
In such  a situation, if  both sides  agreed, a $100,000  case or                                                               
less should be allowed to go to  small claims court.  He asked if                                                               
that could be done now.                                                                                                         
                                                                                                                                
MR. WOOLIVER  answered, "Only up  to the jurisdictional  limit of                                                               
the court  itself."  However, he  highlighted that Representative                                                               
Gara is  correct in that both  parties always have to  consent to                                                               
be in small claims court.   In further response to Representative                                                               
Gara, Mr. Wooliver  said that a case couldn't go  to small claims                                                               
court even if both parties in  a $100,000 or less case consent to                                                               
be in  small claims court.   Currently,  $7,500 is the  most that                                                               
one can collect or allege in order to be in small claims court.                                                                 
                                                                                                                                
REPRESENTATIVE HOLM asked if an  individual's insurance covers an                                                               
uninsured motorist,  wouldn't the insurance company  take care of                                                               
[recovering  damages from  the  accident].   He  assumed that  he                                                               
wouldn't  have to  go  into  small claims  court  and this  would                                                               
preclude having to worry about suing someone for damages.                                                                       
                                                                                                                                
MR. WOOLIVER said that he  wasn't sure how often insurance claims                                                               
come through small claims court or how they are handled.                                                                        
                                                                                                                                
REPRESENTATIVE GRUENBERG  explained that  usually, if one  is hit                                                               
and the insurance pays it off,  the individual would be given the                                                               
right  of  subrogation  so  that the  individual  could  sue  the                                                               
defendant in small claims court and  recover.  He noted that such                                                               
a case could go into district court.                                                                                            
                                                                                                                                
Number 1367                                                                                                                     
                                                                                                                                
EILEEN   McVEY   testified   in  support   of   increasing   [the                                                               
jurisdictional limit for small claims]  from $7,500 to $10,000 or                                                               
greater.   She  related her  personal experience  when she  had a                                                               
metal roof  installed.  After  discovering that a metal  roof was                                                               
inappropriate for  her house, she  retained an attorney  who felt                                                               
that she had  a 95 percent chance of winning  the case.  However,                                                               
if she  lost, it would  cost her  $10,000.  Ms.  McVey reiterated                                                               
support for passing [this legislation].                                                                                         
                                                                                                                                
CHAIR  McGUIRE,  upon determining  that  no  one else  wished  to                                                               
testify, closed public testimony on HB 227.                                                                                     
                                                                                                                                
REPRESENTATIVE   GRUENBERG  informed   the  committee   that  the                                                               
addition of Section 5 on page 4 requires a title amendment.                                                                     
                                                                                                                                
Number 1048                                                                                                                     
                                                                                                                                
CHAIR McGUIRE  made a  motion to adopt  Amendment 1,  labeled 23-                                                               
LS0896\I.1, Luckhaupt, 2/9/04, which read:                                                                                      
                                                                                                                                
     Page 1, line 3, following "courts;":                                                                                     
          Insert "limiting magistrates from hearing certain                                                                   
     small claims cases;"                                                                                                     
                                                                                                                                
There being no objection, Amendment 1 was adopted.                                                                              
                                                                                                                                
Number 1029                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  made a motion to  adopt Conceptual Amendment                                                               
2 [to increase the small claims  limit to $50,000].  He suggested                                                               
that this increase would assist  people in situations such as the                                                               
one encountered by Ms. McVey.   He also mentioned that if one has                                                               
a case against an insurance  company, the insurance company isn't                                                               
going to let the individual go to small claims court.                                                                           
                                                                                                                                
REPRESENTATIVE SAMUELS,  in response, highlighted  Mr. Wooliver's                                                               
testimony  that some  of  the  judges didn't  want  to turn  what                                                               
should be  high volume,  low dollar cases  into cases  with full-                                                               
blown trials.   He further recalled that some of  the judges even                                                               
had  difficulties with  increasing  the  jurisdictional limit  to                                                               
$10,000.    [To increase  the  jurisdictional  limit to  $50,000]                                                               
would seem to  get to the upper  limit where people view  it as a                                                               
"real" case.                                                                                                                    
                                                                                                                                
MR. WOOLIVER agreed  that this is the concern,  adding that there                                                               
is a fiscal  concern as well.  The fiscal  concern would arise if                                                               
the  number of  small claims  cases increased  as opposed  to the                                                               
number of  cases going to  district court.  Mr.  Wooliver pointed                                                               
out that  in small claims court  there is no motion  practice and                                                               
no pre-hearings.   Furthermore, at the small  claims level, court                                                               
clerks  rather than  the parties  perform all  of the  service of                                                               
process and the  court clerks are directed by rule  to assist the                                                               
pro se  litigants through  the process.   The small  claims court                                                               
process is  a fast and easy  way for litigants to  go through the                                                               
system, although  it isn't a cheap  way for the courts  to handle                                                               
cases.  The cheapest way for  courts to handle cases is to accept                                                               
the filing  and settle in  a few months.   Mr. Wooliver  was sure                                                               
that for many  judges a $50,000 claim would be  disruptive of the                                                               
process, particularly if there were a great number of them.                                                                     
                                                                                                                                
REPRESENTATIVE GARA acknowledged that it  might cost more if more                                                               
people  bring  cases  to  court.   However,  he  said  he  wasn't                                                               
comfortable  that savings  would  be realized  by telling  people                                                               
that  they  shouldn't pursue  their  rights  because their  cases                                                               
don't   involve   enough   money    to   attract   an   attorney.                                                               
Representative Gara  surmised that in  some cases there  would be                                                               
savings  because   small  claims  cases  are   quicker  and  less                                                               
intensive than the full-blown discovery cases.                                                                                  
                                                                                                                                
MR. WOOLIVER agreed that there  may be some savings in individual                                                               
cases.  Mr. Wooliver said that  he didn't know where the point is                                                               
at  which it  becomes  worthwhile for  attorneys  to take  cases.                                                               
Although  attorneys  aren't  necessary in  district  court  cases                                                               
either,  most  people  do  retain  an  attorney  because  it's  a                                                               
complicated process.  However, throughout  the court system, more                                                               
and  more people  are  taking  their cases  all  the  way to  the                                                               
supreme court without  an attorney.  Mr.  Wooliver explained that                                                               
the purpose  of small claims  court is  that small claims  can be                                                               
handled  quickly and  the hearing  doesn't have  to be  scheduled                                                               
months in advance.   He said that he hadn't  polled the judges on                                                               
their views on a $50,000 claim,  but given the number of concerns                                                               
the judges expressed  regarding a $10,000 [limit],  he was fairly                                                               
confident that there  would be very little support  for a $50,000                                                               
limit.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  GRUENBERG  requested   that  Representative  Gara                                                               
withdraw Conceptual Amendment 2,  adding that he wouldn't support                                                               
it  because it  would change  the nature  of small  claims cases.                                                               
[With a limit  of $50,000], he predicted that  small claims cases                                                               
would subsume the district court jurisdiction.                                                                                  
                                                                                                                                
Number 0740                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG  inquired as to  the possibility of  having an                                                               
exception for  personal property  claims or residential  rents up                                                               
to $20,000.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG  said  that  such  an  exception  would                                                               
create a serious  burden on small claims court,  and therefore he                                                               
expressed the need to know the  court system's position on such a                                                               
change before  doing it.   He  urged the  committee not  to adopt                                                               
such a change.                                                                                                                  
                                                                                                                                
MR. WOOLIVER said he wasn't  sure what percentage of small claims                                                               
cases fall  under the category  specified by  Representative Ogg.                                                               
However, he  said he might be  able to determine whether  such an                                                               
exception covers  the majority of  cases or just a  small amount.                                                               
He  offered his  guess that  there are  a lot  of auto  claims in                                                               
small claims  court, and therefore  raising the limit  to $20,000                                                               
would create a significant impact on the court.                                                                                 
                                                                                                                                
REPRESENTATIVE  GARA  requested  that Mr.  Wooliver  discuss  the                                                               
aforementioned  issues  with  judges because  the  $20,000  limit                                                               
makes  more sense  than his  original  proposal of  $50,000.   He                                                               
surmised  that   attorneys  tell   individuals  with   a  $20,000                                                               
construction  or automobile  claim that  they would  be happy  to                                                               
take the case.   However, even if  a low fee is  charged, it will                                                               
cost  more than  the damages  being sought.   Therefore,  he felt                                                               
that there should be a  small claims remedy for such individuals.                                                               
He asked about extending the  jurisdictional limit to $20,000 for                                                               
real and personal property claims  as well as Landlord-Tenant Act                                                               
claims.   Representative Gara asked  Mr. Wooliver if he  would be                                                               
able  to bring  back information  before the  legislation reaches                                                               
the House floor.                                                                                                                
                                                                                                                                
MR.  WOOLIVER  inquired as  to  what  claims wouldn't,  in  small                                                               
claims  court,  fall under  the  category  of real  and  personal                                                               
property and the Landlord-Tenant Act.                                                                                           
                                                                                                                                
REPRESENTATIVE GARA  countered by  questioning why  wouldn't "we"                                                               
want to  offer a remedy for  those individuals who can't  find an                                                               
attorney to take cases such as these.                                                                                           
                                                                                                                                
MR.   WOOLIVER  surmised,   then,   that  Representative   Gara's                                                               
amendment  would be  to amend  the [small  claims] jurisdictional                                                               
limit to $20,000.                                                                                                               
                                                                                                                                
REPRESENTATIVE  GARA  said  that  he  was  trying  to  limit  the                                                               
categories  because medical  evidence  would be  too complex  [to                                                               
address in small claims court].                                                                                                 
                                                                                                                                
REPRESENTATIVE SAMUELS  pointed out that  all the cases  in small                                                               
claims court are real property cases.                                                                                           
                                                                                                                                
Number 0397                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG commented that  he understands what both                                                               
Representative  Gara and  Representative Ogg  are attempting  and                                                               
believes that their  hearts are in the right place.   However, he                                                               
didn't want to jeopardize the legislation.   He said he could see                                                               
such changes creating a lot of controversy.                                                                                     
                                                                                                                                
REPRESENTATIVE GARA agreed  that if such a change  would kill the                                                               
legislation, he didn't want to do  it.  However, he said he would                                                               
like to hear  a response from the chief justice  or the presiding                                                               
judge  in the  trail courts  regarding the  issue of  raising the                                                               
limit to $20,000.                                                                                                               
                                                                                                                                
REPRESENTATIVE GRUENBERG requested that  Mr. Wooliver obtain such                                                               
a response  [to raising  the limit  to] $15,000  or $20,000.   He                                                               
requested that response in writing.                                                                                             
                                                                                                                                
MR. WOOLIVER agreed to do so.                                                                                                   
                                                                                                                                
Number 0240                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS  moved to  report the  proposed CS  for HB                                                               
227, Version  23-LS0896\I, Luckhaupt, 2/4/04, as  amended, out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  227(JUD)  was                                                               
reported from the House Judiciary Standing Committee.                                                                           
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
Number 0214                                                                                                                     
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Judiciary Standing Committee meeting was adjourned at 4:35 p.m.