MINUTES OF THE ASSEMBLY COMMITTEE ON JUDICIARY Sixty-eighth Session June 23, 1995 The Committee on Judiciary was called to order at 8:12 a.m., on Friday, June 23, 1995, Chairman Anderson presiding in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Bernie Anderson, Chairman Mr. David E. Humke, Chairman Ms. Barbara E. Buckley, Vice Chairman Mr. Thomas Batten Mr. John C. Carpenter Mr. David Goldwater Mr. Mark Manendo Mrs. Jan Monaghan Ms. Genie Ohrenschall Mr. Richard Perkins Mr. Michael A. (Mike) Schneider Ms. Dianne Steel Ms. Jeannine Stroth COMMITTEE MEMBERS EXCUSED: Mr. Brian Sandoval, Vice Chairman GUEST LEGISLATORS PRESENT: Assemblywoman Gene Segerblom STAFF MEMBERS PRESENT: Dennis Neilander, Research Analyst Joi Davis, Committee Secretary OTHERS PRESENT: I.R. "Renny" Ashelman, Southern Nevada Home Builders Ann Cathcart, Deputy Attorney General Mark Ghan, Deputy Attorney General Bill Bradley, Nevada Trial Lawyers Association Valerie Cooney, Nevada Trial Lawyers Association Jim Wadhams, Southern Nevada Home Builders Chairman Anderson commenced the meeting as a subcommittee. ASSEMBLY BILL 714 - Reduces period during which cause of action to recover damages for personal injury or wrongful death may be commenced against State of Nevada or any of its officers or employees. Chairman Anderson announced this bill was heard partially on Monday, June 19, 1995, but due to time constraints testimony was not concluded. Mark Ghan, Deputy Attorney General, testifying in support of A.B. 714, continued his previous testimony. Mr. Ghan provided a letter dated June 21, 1995 including a graph pertaining to the amount of tort cases and claims, attached hereto as (Exhibit C). Mr. Ghan stated the graph illustrates the number of non-inmate civil rights cases and inmate civil rights cases pending in the Attorney General's (AG) office on June 21, 1995. In addition, a relationship is shown between those cases and tort cases and claims open in the AG office. There are 452 inmate civil rights cases pending, 71 non-inmate civil rights cases pending, 67 tort cases, and 80 tort claims pending. Mr. Ghan stressed the point of the chart shows there is a negligible effect on the tort cases filed against the state. Mr. Ghan addressed the constitutionality of A.B. 714 stating they believe it is unclear what the Supreme Court would conclude due to two cases. In Turner v. Staggs, 89 Nev. 230, 510 P.2d 879 (1973) a notice of claims provision was involved so there was a statute of limitation plus a six-month notice of claims provision. Therefore, Mr. Ghan continued, if someone was suing a state or public entity and the notice of claim provision was not satisfied, the claim could be barred. The Supreme Court stated that was arbitrary and violated the equal protection guarantees of the United States Constitution. However, Mr. Ghan stated, the AG does not believe that case will have any particular effect on A.B. 714. The other case is Jiminez v. State Department of Prisons, 98 Nev. 204, 644 P.2d 1023 (1982). In that case, the state sought to have the Supreme Court apply a one year statute of limitation against the state and also referred to a six- month notice of claims provision. However, that issue had been invalidated with the Turner decision so the court stated the remaining provision would effectively propose a shorter statute. The Supreme Court referred to the one year statute without the notice of claims provision as a "constitutionally unobjectionable portion of the statute." Mrs. Monaghan stated her understanding of A.B. 714 was to address the 452 inmate cases. In that regard, Mrs. Monaghan commented legislation has already passed this session whereby good time credits would affect the filing of frivolous lawsuits so would that not reduce the 452 cases A.B. 714 is addressing? Ann Cathcart, Deputy Attorney General, stated that was correct however they will not know the results of that law and how it may affect the frivolous lawsuits filed by inmates against the state. Mr. Carpenter asked if there were any inmate claims included in the tort cases. Ms. Cathcart stated a very small percentage was possible, adding the civil rights lawsuits can be filed by the inmate without a filing fee. However, if an inmate brings a straight tort action, they would have to pay the filing fee or find an attorney willing to take the case. Mr. Carpenter asked if A.B. 714 means any case filed against the state of Nevada would be reduced to a one year statute of limitations. Ms. Cathcart stated that was correct and they believe that will greatly aid the state of Nevada financially. Mr. Carpenter noted this issue would undoubtedly be challenged and Ms. Cathcart concurred. Mr. Ghan noted if it is challenged, the Supreme Court would likely apply the two year statute. Ms. Cathcart expounded in 1965 the state waived its immunity for public policy reasons to permit persons who had been damaged by the acts of state employees to allow for the means of recovery. She added it is only necessary for a state to enact a law based on rational basis in order to be withheld constitutionally. In that regard, the AG believes there is a strong rational basis to reduce the statute of limitations from two years to one year against state acts or state defendants so the constitutionality issue should be met. A quorum was present at 8:26 a.m. Bill Bradley, Nevada Trial Lawyers Association, stated they have a concern with A.B. 714 as it attempts to create a separate class of defendants by allowing a one year statute only against the state and applying a two year statute against all remaining defendants. Mr. Bradley stated they are sympathetic to the civil rights lawsuits the state is required to defend with prison inmates. However, acts against state employees would include acts of negligent care at University Medical Center, every county hospital in the state, etc., which includes more defendants than what we traditionally see as state actors. Mr. Bradley suggested there would be a severe constitutional problem because of the 1973 Turner case. Mr. Bradley concluded there does not appear to be a rational basis for changing to a one year statute of limitations. Further, whether the statute of limitations is one year or one week, prisoners are going to file lawsuits. He stated A.B. 714 should be defeated and the legislation pertaining to good time credits will most likely deal with the frivolous lawsuits filed by inmates. ASSEMBLY BILL 715 - Revises provisions governing appeals from final judgments in actions for age discrimination in employment. Assemblywoman Gene Segerblom, District 22, the primary sponsor of A.B. 715 stated the bill concerns aged people. She relayed she knew of two cases where persons received jury verdicts in favor of an age discrimination case but due to lengthy appeals one of the plaintiffs passed away and one is still awaiting a decision by the Supreme Court. Ms. Segerblom stated there are no limits of time allotted after the filing of an appeal in Supreme Court so it could take over two years to get a hearing on the case. A person in their 60's or 70's who has lost their job because of their age has nowhere to turn. Ms. Segerblom asserted the bill would provide that within sixty days from the conclusion of the brief process, absent good cause, the Supreme Court would be required to set a date for the appeal hearing. Chairman Anderson asked if any other statutes provide for this shortened time frame. Ms. Segerblom deferred reply to Ms. Buckley, co-author of A.B. 715. Assemblywoman Barbara Buckley, District 8, stated the 60 days is after the expiration of filing of the briefs and went on to outline the briefing schedule. Ms. Buckley recalled some death penalty cases are expedited but could not recall any particular civil cases as such. Upon Mrs. Monaghan's inquiry, Ms. Buckley stated the bill would not unduly clog the court and she would see theses as relatively rare cases. In addition, the purpose of the bill is so the plaintiff does not fall victim twice; once upon original discrimination and once because the process takes two years to get a decision, not including the briefing and hearing time. Mrs. Monaghan asked if this would cause reverse age discrimination. Ms. Buckley responded certainly someone by virtue of their age would get priority; however, she did not see it as causing a reverse age discrimination situation but rather accommodating a person who may die before a decision is rendered. Further discussion ensued. SENATE BILL 395 - Regulates recovery for defects in residential construction. At the request of the testifier and the concurrence of Chairman Anderson, the following testimony has been transcribed verbatim. I.R. "Renny" Ashelman, Southern Home Builders, testified in favor of S.B. 395 and provided a revised version of the bill attached hereto as (Exhibit D). Mr. Ashelman: "What I have done is taken the last set of amendments which is the First Reprint and made some further technical amendments that we advised the Senate we would need to make on this side and put them in there. I will go through and explain the additional amendments as well in traditional LCB style as you know, the italics is new and the brackets are out. We have added some further brackets which we have distinguished by using a different type style for the brackets and we have underlined the amendments to the amendments so you will be able to follow what we have done. This bill is a result of several months of work compromising the trial lawyers and local governments who support the bill and have been very helpful in working with us on the amendments to provide a bill that everybody believes will address a very serious problem in our society. As you know, probably from constituent complaints, there are various kinds of problems with construction defects and Nevada has no law currently codifying how you deal with a construction defect. There are no procedures for them so the situation for the public, the home builders, and the lawyers involved has become fairly chaotic. We are hoping to bring some structure to that and a bring Alternative Dispute Resolution to bear and we'll solve problems from both sides. Page one are definitions and cover the kinds of facilities involved. Page two is definitional and talks about what a claimant is. A claimant is an owner or his representative for the purpose of this bill. Construction defects include a defect in the design, construction, including physical damages to anything attached to the property that is caused by a constructional defect. It is important to note for the purpose of this discussion that this is a bill that essentially deals with a warranty type situation. We are not attempting to address negligence as I will amplify as we go forward. We are trying to discuss what you do to put a good product on the market irrespective of fault from that viewpoint as to these damages. A contractor covers licensed and unlicensed contractors. That is an issue that concerned many on the Senate side. Our reason for doing that is that this bill is in fact good for the consumer and even if he has to go after an unlicensed contractor, he needs tools to do that just as he needs tools to go after licensed contractors. There are certain limitations on what an unlicensed contractor can do in this bill. For instance, since he is unlicensed, he can't go fix his own problem. There are other provisions in other statutes and in bills in this session to chase unlicensed contractors." Mr. Carpenter: "It is my understanding you do not have to be a licensed contractor to do work on someone's home if they hire you to do it." Mr. Ashelman: "That is not true Mr. Carpenter. An individual may build his own home of course and not be licensed. But if you hire someone independent of you to do work, that person has to be licensed. That is not done by this bill but that is what Nevada law says." Mr. Carpenter: "I don't think that is right. I think that on your own personal residence you do not have to have a licensed contractor." Ms. Buckley: "I am a little concerned about creating another definition for `contractor' when we already have one in Chapter 624. Why couldn't you define in Section 6 the contractor by referencing the definition in Chapter 624 and then create another section to put under this ambit individuals who you think are not defined in Chapter 624 so as not to create a conflict in the statutes?" Mr. Ashelman: "We have checked with LCB and this is not considered a conflict in the statutes and we do believe this clearly states the situation we are trying to address by amplifying 624." Ms. Buckley: "Could you do it as I just suggested without harming your intent?" Mr. Ashelman: "I tell you we spent so many hours working on this thing, crafting and compromising, and I am very hesitant to change it in that regard. I have no ability to reach out and consult with the people who have been the primary co- crafters of this because they are not physically available to me. From the trial lawyers' viewpoint, Bob Lyle is their chief person and he is currently out of state. I don't believe this does any harm and I would really very much prefer to stick with it if we possibly could." Jim Wadhams, also on behalf of the Southern Nevada Home Builders: "In reviewing the issue that Ms. Buckley's question goes to, that was not a problem at the contractor's board. We had other issues to work through with the contractor's board but that did not appear to be a problem. I think in addition to the trial lawyers we also have some concurrence in the use of this particular definition for these purposes." Mr. Ashelman: "Although it is not a conclusive reason, this bill does try to track, in some major respects, the original act of this type which was from Texas. So, if we keep the language somewhat parallel, we might at least have some reference to case law. It is not the heaviest reason but that is one of the items involved. You will see down at the bottom of page two, the term includes a risk retention group registered under NRS 695E and we had bracketed out `or insurer who or the representative of a homeowner's warranty.' We are advised by counsel for the various insurance and warranty people involved in this kind of work that that is the correct reference and the one line we are taking out is to avoid some possible conflicts and confusion elsewhere in the statute. There is no controversy on behalf of any of the representatives of the industry that would be concerned with that language." Mr. Ashelman: "Section 7 and Section 8 are traditional definitions again just to give shape to the bill so we can understand what we are doing with it. Section 9 amplifies on a remark I made earlier. We make it clear in Section 9 at (a) that these apply to a claim or cause of action to recover damages resulting directly or indirectly from a constructional defect. We do not cover in this bill personal injury or wrongful death. This bill is not intended to get into that area of the law just as the Texas act we are modeling after did not. We are only talking about the construction defect itself in a sort of physical sense as to what it did to the property and what needs to be fixed as opposed to the personal injury consequences of it. There had been some concern raised by certain members of the defense bar that somehow we were getting strict liability which is a negligence concept or a personal injury, wrongful death type concept. In talking with Mr. Lyle it is very clear at least in his mind and those of others we have consulted with there is probably some 30 to 40 attorneys at this point that we have nothing to do with any change in strict liability or the personal injury, wrongful death here. Section (b) does not bar or limit any defense otherwise available except as otherwise provided in these sections. That again is the Texas approach. Another reason for doing that was to make sure we were not in fact altering existing law. There are all sorts of Nevada statutes that talk about your defenses, your warrantees, and limitations thereon and we want to make sure we aren't touching any of those. We have bracketed the former subsection 2 of 9 to take it out. That was simply left over in the drafting process from earlier problems we were addressing. It no longer has any meaning in this statute. There would be no damages or other action or activity of the claimant or the defendants that that would point to, so it is surplusage. There is some concern that if we left it in, it might lead to confusion and interpretation problems so we would ask that it be removed. Section 10 talks about what a contractor is liable for. He is liable for his acts or omissions or those of his agents, employees or subs and not liable for the acts or omissions of others who are not those persons. On page four, it goes on we are not liable for the failures of others who take reasonable actions to reduce damages or maintain the residence . . . normal wear, tear, or deterioration and these are from the Texas act. We did modify at 4, normal shrinkage, swelling, expansion or settlement from the Texas act as we were advised by engineers that worked for both sides that this language is the proper way to describe that situation so we made that modification. Finally, you are not liable for construction defects disclosed on owner if provided language that was understandable and written and underlined in bold-faced type with capital letters. This was added at the request of the trial lawyers. There are quite a number of cases where you know there is some sort of a problem with the residence, sometimes minor, sometimes not so minor, that simply cannot be fixed so there is really nothing you can do about it in practical terms, so you have to tell people that and they can make their decision whether to buy a home based on that situation or not. Section 11 is sort of the operational part of the bill. Before you bring a cause of action in the courts you have to let the contractor know what is wrong by written notice by certified mail, return receipt requested, specifying in reasonable detail the defects or damages. The purpose of this is to prevent people from running to court before the contractor even has a chance to address the problem. Then during a 35 day period, the contractor is entitled to inspect the property . . . that has been one of the real problems in Nevada from a contractor's viewpoint. People will tell us there is something wrong but they won't let us look at it and it is kind of hard to fix it if you can't look at it. It is hard to do something sensible to avoid a court conflict if you can't look at it. Anyway, they get to make that inspection and take reasonable steps to establish the existence of the defect. If there is a warranty or contract of insurance, the claimant has to diligently pursue that claim, which is another problem we have had in the field at the present time. Going to page five, subsection 2, within 45 days after receiving the notice, you may make a written offer of settlement which may include a monetary offer to the claimant. The purpose of that is sometimes the parties' relationship has become poor and you know any further work will lead to further complaints. It is easier just to pay for the problem. Sometimes you have problems that are minor as far as affecting the value or utility of the residence, but are extremely large in terms of what you would have to do to correct the situation, so in fairness you are allowed to make a monetary offer to cure. The answer, like the offer, like the claim, has to be by certified mail, return receipt requested, at the last known address. The claim has to address in some considerable detail as (b) outlines the cause of defect, the nature and extent of it, the method, adequacy, and estimated cost of the repair, unless a monetary offer is made. There is a typo in (b) which needs to come out of the bill. In subsection (c) , it may include an agreement by the contractor to make the repairs or at the contractors expense, to cause the repairs be made by another contractor who is licensed, bonded, and insured. An unlicensed contractor shall not make his own repairs. This is to address concerns the contractor's board and members of the Senate committee had about unlicensed contractors being somehow given permission to go on being unlicensed by this bill. The repair must be made within 45 days after the contractor receives written notice unless completion is delayed by the claimant or by other events beyond the control of the contractor, the parties may of course agree to extend the period. Section 12 puts some teeth into the bill. If the claimant unreasonably rejects a reasonable written offer of settlement or does not permit the opportunity to inspect or repair, then files a cause of action, they can still do so, but there could be a denial of a claim for attorney's fees and costs and the court could, if it wished to, give attorney's fees and costs to the contractor so there would be at least the risk of some penalty if there was not reasonable cooperation in this process. We have found that works very well. You may recall I had some testimony on the court-annexed arbitration which I gave to this committee a few days ago which showed when one assumes partially because of the risk, if you appeal a trial de novo and you don't do better and you don't establish to the court that you had a reasonable ground for that appeal, you may end up paying attorney's fees. So, that appears to at least partially deter people not willing to cooperate in this process in a reasonable manner. Finally, any sums paid under a home owners warranty other than sums paid in satisfaction of claims that are collateral to any coverage issued to or by the contractor, in other words, insurance that the home owner himself might have for example, must be deducted from any recovery. But if the homeowner himself has a policy as true, traditional law today, that is not deducted from the recovery. In subsection 2 if the contractor fails to make a reasonable offer of settlement or fails to complete in a good and workmanlike manner the repairs specified on an accepted offer, the limitations on damages and defenses to liability do not apply. So there is penalties to the contractor if he does not make a reasonable offer. This helps with a very serious problem where quite often the contractor will get a complaint and the contractor will be willing to do something about that complaint but his insurance company, because they might have to ultimately reimburse, orders him to do nothing unless there is a trial. The contractor is stymied, the homeowner is stymied. With this language, they will not be able to do that or they will risk having to pay greater damages. If they are willing to take that risk, then they can control the suit as they ordinarily would under their insurance coverage. Again, we have had insurance people inspect this and they think it will be helpful." Ms. Buckley: "With regard to the issue where the warranty must be deducted from the recovery, who pays for that homeowner warranty?" Mr. Ashelman: "The only time you do deduct is coverage issued to or by the contractor. So it is when the contractor has bought the warranty or when the contractor himself has furnished the warranty." Ms. Buckley: "Where does it say that?" Mr. Ashelman: "It says that in (b) at the second and third lines of page six." Ms. Buckley: "Other than sums paid in satisfaction of claims that are collateral to any coverage issued to or by the contractor. . . that's where that says that?" Mr. Ashelman: "Right. The collateral would be a policy that was issued for the homeowner for example. In other words, when he paid for the insurance. Then we have a bad faith limitation of coverage under a warranty or contract of insurance is denied by an insurer in bad faith, the homeowner and the contractor have a right of action for the sums that would have been paid if coverage had been provided plus reasonable attorney's fees and costs. On Section 13, except as otherwise provided in Section 12, when a claim or cause of action governed by this act, the claimant may only recover the following damages to the extent proximately caused by a constructional defect: attorney's fees. This is a new feature in the law. Now, attorney's fees would only be available up to $20,000.00. This lets them go beyond that. We believe this to be a very significant extension of coverage to the homeowner. A substantial change in Nevada law and the homeowners favor. Number (b), of course, the reasonable costs of repairs and the reasonable expenses of temporary housing reasonably necessary during the repair. Number (c), the reduction in market value of the residence or accessory structure, if any, to the extent the reduction was caused by structural failure. That is in the Texas bill. That is probably in addition to Nevada law. We do not have Supreme Court cases, we've got some lower court cases so no one really knows that for certain. It is probably an additional benefit to the homeowner. The loss of the use of the residence during the time of the repair and the reasonable value of any other property damage by the constructional defect. I mean, if the ceiling falls in and wipes out the . . . " Mr. Carpenter: "In (b) you have the reasonable expense of temporary housing necessary during the repair . . . and then (d) the loss of the use of the residence during time of repair. What would be the two situations?" Mr. Ashelman: "Mr. Carpenter, we debated that among ourselves. As I say, we no longer have the ability to get back all the people involved in that original negotiation and ask them why there was a distinction. I have no particular objection if someone wishes to strike (d) as surplusage and if LCB or this committee makes that determination, I don't think it will cause anybody any harm. I didn't describe it because I wasn't able to track down the people that did that part of it and I did not want to be accused of somehow removing somebody's valued clause but I tend to think it is surplusage." Mr. Carpenter: "It seems to me we would have to have an example of . . . if you are going to pay for the rent at some other place, then what other loss would you have?" Mr. Ashelman: "I tend to agree with you. So we could take (d) out." Chairman Anderson: "Maybe we should remove (b) `the reasonable expense of temporary housing reasonably necessary during the repair' and leave in (d) `the loss of use of the residence during the time of repair'." Mr. Ashelman: "Mr. Chairman, I would be happy to leave that to the discretion of the committee. I would simply point out that (b) is the more specific and probably the more generous of the two to the homeowner. The use I think is the less specific of the two." Chairman Anderson: "Could (d) conceivably be the convenience rather than the actual cost of having to find temporary housing from a farther distance in location from where you actually want to be so that would give you the opportunity to gain some costs associated thereto." Valerie Cooney, Nevada Trial Lawyers Association: "I have not personally been involved in the workings of this bill in trying to reach an agreement between the various parties. I do know that that has taken some substantial time. Simply reading these provisions, as an attorney, I do believe there is a distinction between the reasonable expenses of temporary housing and the loss of use of property. I think that is the concern perhaps of members of our association and if there were to be any change, I would suggest we retain section (d) and provide the loss of use of the residence during the time of repair, `including the reasonable expense of temporary housing.' That would be simply moving one section to another and I don't know if that is a difference without a distinction but I would prefer not to see section (d) deleted because I do believe there may be much use that is compensable due to a loss." Mr. Ashelman: "I have no problem with that or any of these versions, whichever one the committee desires." Chairman Anderson: "Very accommodating today, Mr. Ashelman, as always." Mr. Ashelman: "Thank you, Mr. Chairman, this has been a long hunt." Mrs. Monaghan: "Would this make any difference as far as whether you had temporary housing on your own or when moving in with a family member." Mr. Ashelman: "You know, Mrs. Monaghan, I think there is some things we probably better leave to the courts and later adjudication. If you are not out any money, you are not out any money but indeed you might be inconvenienced and you might be entitled to some compensation for that and we don't have any problem with that." Mr. Carpenter: "I think there will be a jillion things litigated in this bill anyway so it probably does not make any difference." Mr. Ashelman: "If we just leave it as it is, the worst thing we do is just create some surplusage and that has been known to happen before. Number (f), any additional costs incurred by the claimant, including any costs and fees incurred for hiring experts reasonably necessary to ascertain the nature and extent of the constructional defect. Finally, because this is a limitation bill in some respects and we don't intend to alter the present statutory interest scheme. The trial lawyers wanted it because it was more generous. The rest of us wanted it because we can barely figure out what we got now and we certainly don't want to mess with it anymore. Moving along, as used in this section, structural failure means physical damage to the load-bearing portion of a residence or appurtenance caused by a failure of the load-bearing portion of the residence or appurtenance. That is directly from the Texas bill. Section 14, if you send a clear and understandable statement telling a claimant what happens if he does not respond or otherwise accept or reject, the offer is deemed rejected within 25 days so that the contractor knows where he is on that situation and can furnish an affidavit to that effect if it does indeed go forward to court. Section 15 is simply an expansion on methods of settling a claim. In addition to everything else you do, if you have an agreement with the claimant, you may settle a claim by repurchasing the residence and the real property upon which it is located. The agreement may include limitation provisions which reimburse the claimant for the value of the improvements made to the property, reasonable attorney's fees, and fees for experts and any costs, including costs and expenses for moving . . . and so on. Those are merely examples, they are not limitations. The purpose of this section is to try to give guidance to a court as to what the ultimate reasonable offer would be. `I'll buy it back, and I'll pay you for your time and trouble and I'll pay you for your expenses involved with this and so on and so forth, including your moving costs.' The Texas statute makes that an absolute limitation on damages and in fact is less generous to the claimants than this provision. We did not make it an absolute limitation but we do believe it to be useful as giving some guidance to the court that there is sort of an upper limit on what you have to pay for constructional defect. Section 16 states that if the defect creates an imminent threat to health or safety of the inhabitants, the contractor should take reasonable steps to cure the defect as soon as practicable. If the contractor does not do that in a reasonable time, the owner may have the defect cured to get the costs of repairs, attorney's fees and costs, and any other damages. Once again, we see an unlicensed contractor shall not make his own repairs. Section 17, the contractor who makes or provides for repair may take reasonable steps to prove the repairs have been made and have them inspected. The provisions of that inspection are additional to rates of inspection provided by common law or by another statute." Mr. Carpenter: "I have a question as to Section 16 as to who makes the decision whether this is imminent threat to the health and safety of the inhabitants. That looks to me to be an open-ended . . . you may not really be able to defend against." Mr. Ashelman: "The ultimate answer is that if the parties couldn't figure it out among themselves one thing that would happen is the judge would figure it out for them. The homeowner can certainly, if he thinks he is in danger, go ahead and have it repaired and stick to his guns and try to get the recovery. In addition, later in the statute at the very end, Mr. Carpenter, we allow the state contractor's board to intervene in any case where they think there is a threat to health or safety if the contractor is proceeding rapidly enough. We believe that would be another assistance to the homeowner. I think this is as fair as you can get. You are always going to have some disputes over what is reasonable time and what is or isn't a threat. But if the homeowner truly believes he has that situation, he can go ahead and repair and then go after the costs of repairs and so on. I would suggest, if he goes ahead and repairs, he certainly is going to get his reasonable costs of repair back in any event. The only questions would be whether or not he might get attorney's fees and costs for having been hasty when he need not have been. That is really the risk he would run in it. After many hours of discussion, none of us have arrived at anything better." Mr. Carpenter: "It just seems to me that this is an onerous situation to the contractor. I don't think it is fair." Mr. Ashelman: "Well, if he thinks it's imminent, he can go ahead and have it cured and if he doesn't, he'll have to wait and like a lot of things in the law, eventually you just have to say reasonable and have the parties sort it out and if they can't they'll have to go to court to sort it out. The point is, it doesn't put the guy out of court just because he goes ahead and fixes the thing. On the other hand, the contractor would be free to argue it was an imminent threat and could have repaired it cheaper and they could have a further battle with that when they get there. In addition, the contractor's board has jurisdiction over this and they should be able to assist in some of these cases. Section 18, before a complaint is filed, and here we depart from the Texas act and we add some alternative dispute resolution, the matter must be submitted to mediation unless the parties waive mediation. The claimant and the contractor must select a mediator by agreement. If they fail to agree upon a mediator within 45 days, either party may petition the American Arbitration Association, the Nevada Arbitration Association, the Nevada Dispute Resolution Services, or any other mediation service acceptable to the parties for the appointment of a mediator. The mediator so appointed may discover only those documents or records necessary to conduct mediation. The mediator shall convene the mediation within 60 days unless the parties agree to extend the time. The contractor shall deposit with the mediator before the mediation begins, the entire amount estimated by the mediator necessary to pay the salary and expenses of the mediator and shall deposit additional amounts demanded by the mediator incurred for that purpose. Total fees for each day of mediation must not exceed $750 per day. I have spoken to each of those named services. They do have mediation panels. They have mediators who are conversant with construction problems. They assure me, and I know from my own service as a mediator, that that sum is adequate to retain competent mediators for the purpose so we believe this section will work. If, after undergoing mediation, the parties don't reach an agreement, national studies repeatedly show about 85% of the time the parties will reach an agreement, but if they don't, they can file a complaint. Then the reasonable costs and fees of mediation are reparable as costs of the action. That puts a little bit of pressure on the claimant to try to work with the mediator to solve the problem because he is going to go to court. If he doesn't convince the court that he had been reasonable, the court can allow the cost of mediation against him. The claimant may petition the court in which the complaint is filed for the appointment of a special master. Attorneys who have done a great many of these cases, tell us in the bigger cases they can be very complex and there is a great advantage to the use of a master in terms of the court's time. The special master can review the pleadings, papers, or documents. The special master can coordinate discovery, including the disclosure of witnesses and the taking of depositions of each party. That is very much the way we work with the court- annexed arbitration act. One of the huge expenses of these cases is the parties' tendencies to vastly over-discover. The attorneys, very much like the doctors do with their tests, tend to over-discover to protect themselves from later malpractice claims. If they are under the guidance and coordination of the special master, it gives the trial attorney some protection. He can order inspections on the site by a party and any consultants or experts of a party. He can order settlement conferences and attendance by any representative of an insurer of a party. He can require any attorney representing a party to provide statements of legal and factual issues. He can refer to the judge for any matter where he needs assistance from the court. A special master shall not personally conduct any settlement conferences or engage in any ex parte meetings regarding the action. People who try these cases, particularly in California, tell us there has been a danger there for the special masters to sort of abuse their positions as a member of the court and hold endless settlement conferences. Also, they get involved in ex parte meetings which can be extremely touchy in court matters. That was at their request that they put that language in. Upon application by any party to the court on a decision by a special master, they can get a trial de novo. Nevada law is pretty hostile to master's report. Generally speaking, you really can't have one that isn't available for trial de novo in any event so we simply put that in to avoid litigation. The mediator or the special master may report to the court that either party failed to appear, that they didn't mediate in good faith, but a statement or admission made by either party in the course of mediation is not admissible. That is in keeping with customary mediation and law rules of procedures. Some mediators, laws, and rules, restrict the use of exhibits and expert testimony. Again, we are trying to cut down the costs of litigation. Section 19 deals with waivers. After a contractor has corrected or otherwise repaired a constructional defect, a waiver or settlement agreement does not bar a cause of action if it is determined the contractor failed to correct or repair the defect properly. However, you are not going to get that opportunity unless the claimant has obtained the opinion of an expert concerning the constructional defect. In other words, he has somebody willing to testify that it was not repaired properly and he has given notice of a defect, a copy of the expert's opinion, and another opportunity to repair and fix it properly. Finally, if a claimant doesn't prevail in a cause of action which is not barred pursuant to this section . . . in other words, if he loses in his claim that it wasn't fixed accurately, they can deny his fees for expert witnesses and costs, and can award attorney's fees and costs to the contractor. Section 20 we have tolled statutes of limitation or repose from the time of the notice of claim, defect, or injury until 30 days after the mediation is concluded or waived in writing so parties have an opportunity to go to court and do not lose their cause of action because of the existence of this bill. As the one who has had to amend the statute of repose three times, problems with our Supreme Court in the tolling of statutes of limitations, I believe this section is essential to protect the rights of the consumer and to avoid additional litigation of Supreme Court appeals by undertaking this time limitation. Finally, causes of action against third parties, including a governmental agency or political subdivision of government, during the period of time in which this is being settled, mediators are stayed so the parties don't create all sorts of collateral litigation that completely defeat the purpose of the statute by driving up the costs of litigation and by embroiling everybody in battles all over the map. The settlement if such a claim or cause of action does not affect the rights . . . and there was a drafting error and we're asking you to add in . . . or obligations of any parties who is not a party to the settlement and that failure to reach such a settlement does not affect the rights or obligations of the claimant or contractor in any action brought by the claimant or contractor against a third party. So that goes forward. I think we may wish to consult with your experts and with the people at LCB to make sure that the Section 20 tolling covers subsection 2. As I read that, I am not absolutely certain that it does and of course it should. You shouldn't stop suits by, for, or against third parties and preserve their rights and allow statutes to run on them so we may have to do some further amending to make sure subsection 1 covers the subsection 2 situation or we'll be back on the constitutional problem. Finally, we add to the causes of action or the disciplinary actions that are available to the contractor's board their ability to go after the failure to respond to a claim. So, a contractor can be fined, disciplined, and presumably ultimately lose his license if he doesn't respond to these claims . . . besides which he is going to be in litigation and have all those other problems. The bracketing is because that reference at that point was inappropriate language. It created a circular situation. The bracketing would have had us saying, failure to respond is a cause of discipline, but you can't take any action for failing to respond and that is obviously a blunder in the draftsmanship so we are taking that out with the brackets. Finally, we defer the board taking disciplinary action on a constructional defect during the time while the claim is being settled, mediated, or otherwise resolved. Again, unless the disciplinary action is necessary to protect the public health and safety. The effective date is July 1, 1995. That is the bill as it stands today with the proposed additional amendments. I would be happy to take any additional questions." Chairman Anderson: "Section 22 asks this act become effective July 1, 1995. Is the contractor's board able to establish these rules by then? Is there someone here from the contractor's board?" Mr. Ashelman: "It doesn't call for any rules or regulations, Mr. Chairman. The act itself simply states these are things you can act on and basically, except for failing to respond, it defers their action until the completion of this so they will have plenty of time to deal with that. The process itself takes approximately six months. So, that would give them six months to deal with any rules they would have to do for punishment or so on." Chairman Anderson: "To your dismay, Mr. Ashelman, I have reviewed the text of the statutes for the last six years because I have an interest relative to home inspectors that are unlicensed in this state. As you well know, the Texas statute has major provisions in terms of trying to protect consumers in homes and contractors who represent themselves to have done something to a home and the nature of home inspectors in this particular state. We have a bill pending in another committee looking at that particular piece of legislation. How would this piece of legislation be able to operate without home inspectors, people who would be willing to go in without being involved either as an agent of the contractor, yet knowledgeable to make sure these kinds of problems are clearly identified. Don't you need that in order to have these pieces of legislation go forward, that partial third person who . . . not just the legal side of this which I realize of course has its own applications, but what the contractor needs to protect themselves and what the homeowner and the consumer needs to protect himself if somebody is an agent of either one. Can we move on this legislation without that?" Mr. Ashelman: "Let me put it this way. I don't believe we are currently having difficulty getting appropriate experts to do these inspections. From the standpoint of a homeowner as opposed to the home builder or indeed after the attorneys get involved in the process, if there were a category of persons certified and properly set up to do this sort of thing in Nevada law, it probably would assist the homeowner that wanted to proceed on his own. But, as far as getting construction experts and architects and engineers or whoever might be available for testimony, the bill could function . . . it might assist the individual homeowner who simply had to go to the yellow pages or some licensing board, he could go to to try and find himself some experts." Mr. Goldwater: "I think this is an excellent, excellent bill but it leaves one crucial element out that is a major problem and I wonder if you addressed it or if it can be addressed. As a person that does rehabs, particularly in the poor neighborhoods and in the run down neighborhood like the one I come from, the guy buys the house, and because he is the owner of the house he would not be subject to this because he does his own repairs, supposedly, but he is only doing them to rehabilitate the house so he can sell it a month or two later. Is there any way we can address that? Is it addressed here and I'm not seeing it? Because this is a major problem. People buy these houses and they don't rely on these kinds of statutes. They have to rely on the disclosure statutes and those are very difficult to maneuver. Is that addressed, Mr. Ashelman, or can we address that?" Mr. Ashelman: "Well, I think it is at least partially addressed. The person who is the owner/buyer of the house . . . a current owner hires a contractor and then he turns around and `spins' the house as they say in real estate. That buyer is a claimant. He is an eligible claimant under our statutes. He has a claim against the contractor. It would be a matter of interpretation by the court as to whether that intermediary buyer was himself a contractor. My suggestion is he probably was not if he had somebody else do the rehab work. If he did it himself, he might be a contractor for this purpose and indeed might have been in many cases an unlicensed contractor because he was working on a home he bought himself and there would be recourse against that individual." Mr. Goldwater: "With this, or is that current in the statute? We need this bill for that act?" Mr. Ashelman: "I think this bill would assist that situation. I am not sure we will cover all the permutations about what you are talking about but it is going to be helpful in many of those cases." Mr. Wadhams: "I will be very brief but in an additional answer to that, it really is similar to the question Assemblyman Carpenter asked earlier of what constitutes a contract, licensed or unlicensed but to the extent this bill may reach your situation and have some relief for those buyers." Chairman Anderson: "It has been my experience, Mr. Goldwater, generally the home buyer is left without much protection if it has been a kind of `do-it-yourself' kind of project of which you are describing that somebody comes in and turns the house around and picks it up at a relatively low rate and does it himself, you know puts in paneling and covers blemishes. Although oftentimes serious constructional errors are overlooked and then a subsequent buyer doesn't recognize it and turns it over himself and then the next buyer has a home inspector come in and identify the problems. Then they are stuck having enormous repairs and this is a major, growing problem in our state unfortunately." Mr. Schneider: "Mr. Ashelman, I think this is excellent and I just wanted to make a statement for the committee. My partner and I were building a custom home on a contract and there was a problem, we felt, in the design of the stairway that went up and we were in the framing stages. So, we called the architect and homeowner together to make the correction. We thought it wasn't quite high enough when it hit under the hallway. It was a simple change when you are in framing. Of course, the people went ballistic, shut down the entire project, and we wound up in court over a year later and many thousands of dollars were spent. They hired some sort of home inspector that came out that said there was a lot of bracing missing in the building. Well, when we were ordered off the job . . . when you are ordered off a job right in the middle of framing, of course there is going to be some bracing missing because it was in the middle of the day and you just put some walls up and everything wasn't there yet. These things have to be checked off according to the county and city inspectors. Anyhow, this is the type of thing that hits the small homebuilders real hard. We have had these problems before because the public doesn't understand construction. They just don't understand it. I think with this, you can get right into mediation or arbitration and resolve all your problems within 90 days and this just saves the courts a lot of time and actually saves some home builders from going under and saves . . . I'll tell you what, I've seen people lose their houses during construction that . . . this is just an excellent piece of legislation that will solve a lot of problems out there." Chairman Anderson: "Mr. Ashelman, let me make sure we have the amendments correctly. First of all, on page two we are going to delete `or insurer or the representatives . . .' and insert registered under NRS 695E." On page three of Section 9 of the bill, we would be deleting the number one leaving in the information that follows and the (a) and (b) and deleting number two in its entirety. No changes to sections 10 or 11 on page four. Section 11 on page five at two we are going to be adding new language which may include a monetary offer. In (b) unless a monetary offer is made. In (c) an unlicensed contractor shall not make his own repair. Further, in Section 13 on page six, the addition of the hand written word, `only' eliminating factor and on page eight, Section 16, again the `unlicensed contractor shall not make his own repair' and there are no additions on page nine, ten, and eleven. On page 12, Section 20, `or obligations' is added in two places. Then the deletion, in Section 21 of the bill, in part (b) you are going to delete `the board shall not take any disciplinary action pursuant to this paragraph during the period the claim is being settled' and then on page 13, we are following a numbered section that reads down and you want that to say five?" Mr. Ashelman: "No, that two should be out in the corner. The two would be a 2 following the 1 of that section--a flush 2." Chairman Anderson: "This language here that is underlined is new then I presume is from what bill? Is this borrowed language from another statute . . .?" Mr. Ashelman: "It is new creation. It ought to look similar because it is similar to what we came up with above but we added some words to it so it would make sense." Chairman Anderson: "And then we would be striking two and noting it as three? Those are the only noted changes?" Mr. Ashelman: "Yes, those are all correct. If I may, Mr. Chairman, I would remind you that we want to ask bill drafting and work with them to make sure that we stay the statute of limitations and repose as to the third party situation." Chairman Anderson: "Okay. That is at subsection two of Section 20 of the bill is tolled relative to Section 1 of the bill." Mr. Ashelman: "That is correct." Mr. Carpenter: "I have a couple questions. On Section 16, I would like a resident agent, like Mr. Schneider, to read that because to me I'm not on a level playing field there. Then, I am wondering in the situation on the mediation, why the contractor is the one who has to make the entire deposit. To me, it is kind of reading like the contractor is always the bad guy here and you know there are some of these homes, especially custom homes, where the owner of the home can probably buy and sell the contractor over four or five times so I just have those two questions." Mr. Ashelman: "Well on Section 16, Mr. Carpenter, we were concerned with that provision. The Senate Judiciary was concerned with that provision. This is our best effort to resolve what would be an unusual but difficult situation. Certainly, I think between the trial lawyers and the home builders there was no effort to slant it one way or the other. We simply tried to deal with it the best way we knew how. I don't know anything else I could do that would be better and if I did, I would be happy to do it and if I heard it I would be happy to agree with it. There is no pride of authorship but we hammered and hammered and worked on it and maybe we just failed but we thought it was the best we could do with it." Chairman Anderson: "I would point out to Mr. Carpenter that Mr. Ashelman here represents the Southern Nevada Homebuilders in this particular instance and we have the Nevada Trial Lawyers here, represented by Ms. Cooney, and Mr. Wadhams representing Southern Nevada Homebuilders. This language we see is a compromise that all of you have reached and agreed to in substance and in part and would feel comfortable if we moved forward with this?" Mr. Ashelman: "That is true and, Mr. Carpenter, we agreed to pay for the mediation for two reasons: 1) we had a gun at our head; and 2) we rather strongly believe in the principle of mediation. This bill encompasses huge claims, little claims, and in fairness to the home builder with the small claims at least could be considerably burdensome to him to restrict his right to court by saying you got to put the cost of mediation up. We are comfortable with it. We may come back in two years screaming and say we've been abused, or we may come back and say it is wonderful and we're glad we did it that way. Time will tell. We are happy with it. We think it is a balanced bill and where we gave some things up we got some things and we would like to go forward with it." Mrs. Monaghan: "Thank you Mr. Chairman. My question has to do with the amendments you have gone through and it wasn't touched on but it was discussed in committee as far as on page six, Section 15 either (b) or (d), are we going to add that to our amendments." Mr. Ashelman: "We'll leave it the way it is. The trial lawyers were comfortable with that and I know some committee members had some concerns about it so let's just keep it as it is. At worst, we create some surplusage, perhaps we preserve some additional rights for the home buyer and we're comfortable with that." Mr. Schneider: "Thank you Mr. Chairman, to you and through you to Mr. Carpenter. 16 looks pretty good to me. My question I guess to the trial lawyers is `reasonable time' and in the construction industry `reasonable time' could get out start taking care of something could be like 30 days and then some professions that may not be reasonable but 30-45 day. If there is a major defect, I mean you really have to go look at it and study it before you just take a hammer and start knocking things apart. Is `reasonable' to you mean 30-45 days?" Ms. Cooney: "Reasonableness to me would depend upon the nature of the imminent harm or threat that existed. I think it is very, very difficult to express time in certain terms when cases vary greatly on a case by case basis. I think reasonableness would depend upon the totality of the circumstances." Mr. Ashelman: "I do want to point out to both Mr. Carpenter and Mr. Schneider the home builder, the contractor, has to take reasonable steps to cure the defect as soon as practicable and then the reasonable time is the time to complete those so we tried to put them both in. The `practicable' I think makes it clear there is urgency in it. You got to get in there as quickly as you can with that kind of a situation. Whether you can fix it quickly or not depends on what the problem is as you say." Ms. Cooney: "This is an act which creates a legislative expression of the rights and obligations of individuals who contract to build homes and to purchase them. It also creates the procedures to enforce those rights and obligations. The association is very grateful to Mr. Ashelman and his willingness to participate and allow us to help in the amendment of this bill. It is a good bill and we do hope it will serve everyone well in Nevada." Mr. Jay Parmer, Nevada State Contractor's Board: "Thank you Mr. Chairman. We have no concerns with the bill as written. We have had a chance to review it and have had some consultations with Mr. Ashelman on the bill." Chairman Anderson: "Are you familiar with the Texas statute from which it is drawn?" Mr. Parmer: "Mr. Chairman, one of the members of our professional staff did extensive research on the Texas statutes in evaluating this bill." Chairman Anderson: "And has she agreed that it is in large part in compliance with this area?" Mr. Parmer: "I think the best way to answer that question Mr. Chairman, in her absence, is to say that the board feels the language of the bill is workable from the standpoint of the job that the contractor's board is to pursue complaints." Ms. Buckley: "Did the board vote on this?" Mr. Parmer: "I am going to have to . . . to my knowledge the board did not vote on this in a public hearing, no." Ms. Buckley: "Thank you." Chairman Anderson: "We will hold this bill for a work session tomorrow and I will leave the record open on this in addition, there may be additional information that has been indicated may be coming forward. I will close the hearing on this for today only. The record is still open on the bill." ASSEMBLY BILL 363 - Revises provisions governing number of justices of the peace in townships. Chairman Anderson announced the committee took action on A.B. 363 last week wherein he had crafted a workable document relative to the bill and the committee passed out the bill with an Amend & Do Pass. In working out the amendments, it would appear the bill, even with the amendments, would create a problem for the townships of Henderson and North Las Vegas which would preclude them from building a justice court since they would not meet the population threshold. Therefore, it would be the co-chairmens' recommendation to rescind the previous action and pass the bill in its original form if the committee so chooses. ASSEMBLYMAN BUCKLEY MOVED TO RESCIND THE PREVIOUS ACTION ON A.B. 363. ASSEMBLYMAN PERKINS SECONDED THE MOTION. THE MOTION CARRIED. ASSEMBLYMEN HUMKE AND GOLDWATER WERE NOT PRESENT FOR THE VOTE. * * * * * ASSEMBLYMAN BUCKLEY MOVED DO PASS A.B. 363. ASSEMBLYMAN OHRENSCHALL SECONDED THE MOTION. Ms. Steel commented the committee should hold off on action on the bill altogether or perhaps indefinitely postpone it entirely. The reason being, the limits on justice courts would be potentially raised and the testimony as she recalls indicated they would be overworked. It would be premature to take away a justice of the peace they may need now that the limit is raised. Chairman Anderson reminded there was a writing from the justice courts in Clark County detailing the issue further. Ms. Buckley stated all the original bill does is if the justice court does not need a new justice they can write to the Legislature indicating as such which in turn helps the taxpayer from having to pay for an additional judge, clerk, etc., simply because of the population threshold. Ms. Steel pointed out according to the Nevada Constitution we are not supposed to be making any special law regarding justices of the peace; rather, we are supposed to be making general law. A.B. 363 would be special only to Clark County whereby they can write a letter stating they don't want another justice of the peace. Ms. Buckley disagreed. Chairman Anderson noted Dennis Neilander, Principal Research Analyst, informed it is a constitutional requirement that the Legislature set the size and seats of the justice courts within the state. The construction of that statute took place in 1991 to set a new threshold of population. If there is a deviation, it is based upon the population criteria. Further, if A.B. 363 proceeds in its original form, it would require all justices of the peace to appeal to the Legislature for the needs of their particular county. Ms. Steel announced she would still be voting against the bill. Chairman Anderson brought the motion back to the floor. THE MOTION CARRIED. ASSEMBLYMAN STEEL VOTED NO. ASSEMBLYMAN HUMKE WAS NOT PRESENT FOR THE VOTE. ASSEMBLY BILL 288 (FIRST REPRINT) - Makes various changes affecting state board of parole commissioners. Dennis Neilander provided the committee with the proposed amendments to the bill, attached hereto as (Exhibit E). Chairman Anderson asked Lieutenant Phil Galeoto, Reno Police Department, and Ann Andreini from the Governor's Office, to come forward to speak to the amendments. Ann Andreini stated page three of the amendments (Exhibit E) indicates Sections 2 and 3 of the bill will be deleted in their entirety. So, moving to page two of the bill, Section 5, Ms. Andreini mentioned line 47 was a technical correction. Page three, lines 16, the word "two" has been replaced with "four" regarding the numbers necessary for concurrence, assuming there is a 7-member board. Ms. Andreini reiterated the Governor's office is pushing for a 9-member board sitting in panels of three. Ms. Andreini discussed Section 3 of the bill dealing with a personnel committee regarding removal of board members. That section of the bill resulted in much discussion. After consultation with the Attorney General's office (AG), they came up with new language for subsections 8 and 9 of Section 5 of the bill. That allows the AG investigators conduct an investigation into the performance [of a board member] to determine if that person had committed misfeasance or had neglected his duty. If so, then the Governor would have the discretion to dismiss. Section 5, line 41 is a technical amendment. Mr. Carpenter inquired into the new language requiring the AG to conduct investigations. What if there is a situation wherein the AG and the Governor are not too friendly? Why can't the Governor just do this on his own? He concluded this may not solve what they are trying to do. Mr. Humke commented this issue has been the topic of much discussion. Mr. Humke stated he feels very strongly about the issue in that currently each board member serves a term of four years and they cannot be removed before their terms expires. He stated that is for a good reason in that it is not the most popular job in government. If you make a wrong decision and there is rape or murder by a parolee, it is natural for the parole board members to be attacked. Therefore, they could be removed very easily and then we would be constantly having to refill these positions on the parole board and persons would not be willing to serve. The language proposed in the amendment sets forth a middle ground to build in due process, give the parole board member notice and a hearing. Mr. Humke concluded, in his opinion, there should be this intermediate step whereby a group of persons hears the complaint, rules on it, then makes a recommendation to the Governor. Then, based on that recommendation the Governor can decide. Mr. Carpenter stated he still disagrees because the AG and the Governor may be at odds. Lt. Galeoto stated he designed the original two proposals and he, too, feels very strongly about the issue. He stated the concept of an Oversight Committee will most likely be addressed in the interim by the blue ribbon task force and there will be some recommendations from that interim committee to fine-tune those areas so he was willing to forego the Oversight Committee concept to allow the interim study to proceed. Ms. Andreini concurred. Mr. Humke stressed removal power was needed during this session because there will be at least three new board members and if there is expansion there would be a fourth new member. He concluded the method of removal needs to be done right. Ms. Steel commented the Governor appoints the member and he should be able to remove them. Ms. Andreini clarified the AG investigators would just make a recommendation pursuant to investigation of the complaint and the Governor can accept the recommendation or decide otherwise. Further discussion ensued pertaining to the removal provision of a parole board member contained in the bill. Ms. Andreini continued Section 7 of the bill deals with the ability of the parole board to delegate its board authority to panels. The current practice has been a panel consisting of a parole board member and a hearing representative. The hearing representative is equal in stature to the parole board member. There has been much concern in the Governor's office regarding the equal stature afforded the hearing representative. In that regard, the proposed language would allow the parole board to delegate its authority to either a panel consisting of one board member supported by a hearing representative, or establish a panel of two or more members. The Governor's office still disagrees with this section, however, because they feel the parole board should be meeting at a minimum as panels of three with at least one person at the site and two linked by way of teleconferencing. Ms. Andreini recited Section 7 also addresses how the board deals with various types of cases. All of the cases enumerated at the bottom of page four have remained and they have added the repeat offenders so the parole board can establish specific regulations since these offenders have not previously been included. The other change is contained in the new subsection (d) and (e) of the amendments which sets forth the habitual felons so the language comports with the two crime bills of this legislation, Assembly Bill 317 and Senate Bill 416. Ms. Andreini went on to state Section 8 deals with the selection and hiring of the case representatives. The amendment thereto deletes the old subsections one and two and establishes minimum qualifications for the hearing representatives. The issue was the case representatives, whether acting in equal status as a parole board member or in a support capacity to the parole board member, need to have the same training and background as the parole board members because they are making the same types of recommendations. Lt. Galeoto stated through discussion they discovered there are currently 18 case representatives and only 6 board members. When you look at the workload the case representatives are handling, a vast majority of the work is being done be persons who have not been held to the standards of background, experience, education, and ability as the board members. Ms. Andreini stated the new subsection three is clarifying language allowing the chairman of the board to designate people from the established list to serve as case hearing representatives in certain matters but does not allow them to serve as referees or as full members of the panel which is now the current statute. The new Section 2 deals with bail and bail holds. She added one of the things the Cameron case illustrated is someone currently on parole or probation can be picked up and arrested on a felony and unless a parole officer is contacted and indicates he wants the person held, if the felony to which the individual has been arrested is a bailable offense, the parole or probationer will bail out. The new provision indicates a person arrested on a felony who is currently on probation or parole status, will not be allowed to bail out unless a court order specifically directing such, a parole board decision, or an affirmative action on behalf of the parole and probation department. Lt. Galeoto pointed out this would not pose a problem to law enforcement due to the provision in subsection (c) thereto. Section 6, Ms. Andreini continued, deals with whether the parole board members ought to serve a limited number of terms. She stated the discussions in this regard were that the parole board tends to get isolated and insulated in their functions so rotating persons through the board would insure there are not members on the board for 20 to 25 years. This would insure the persons on the board had recent experience. Ms. Andreini proposed grammatical changes to that section. Ms. Andreini remarked subsection 2 of Section 7 deals with the criteria the board needs to establish in determining whether or not a person is eligible for release. This includes objective criteria and specific areas of concern. Lt. Galeoto added he believes one of the most important elements in establishing the criteria should be the offenders background, including repeat offenders and habitual criminals. Mr. Humke suggested a sunset of the removal provisions so it will be revisited in two years. This would allow the blue ribbon task force and the other interim studies to complete their very valuable work which would likely assist in fine-tuning the removal provisions. These provisions are difficult to specify presently since many of the sections will be renumbered due to the proposed amendments. Mr. Neilander stated he knew what sections were applicable and bill drafting could figure it out. Chairman Anderson clarified the amendments for the entire bill. Mr. Goldwater asked if the terminology "misfeasance" and "neglect of duty" works both ways. Ms. Andreini answered that was true. ASSEMBLYMAN HUMKE MOVED TO AMEND & DO PASS A.B. 288. ASSEMBLYMAN OHRENSCHALL SECONDED THE MOTION. THE MOTION CARRIED. ASSEMBLYMAN STROTH VOTED NO. ASSEMBLYMEN PERKINS AND CARPENTER WERE NOT PRESENT FOR THE VOTE. Ms. Stroth stated she voted no because no victim advocate was included in the bill. Mr. Humke asked her to discuss it with him at a later time. There being no further business before the committee, the meeting was adjourned at 11:05 a.m. RESPECTFULLY SUBMITTED: Joi Davis, Committee Secretary APPROVED BY: Assemblyman Bernie Anderson, Chairman Assemblyman David E. Humke, Chairman Assembly Committee on Judiciary June 23, 1995 Page