MINUTES OF THE SENATE COMMITTEE ON JUDICIARY Sixty-eighth Session June 15, 1995 The Senate Committee on Judiciary was called to order by Chairman Mark A. James, at 8:30 a.m., on Thursday, June 15, 1995, in Room 224 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Mark A. James, Chairman Senator Jon C. Porter, Vice Chairman Senator Maurice Washington Senator Mike McGinness Senator Ernest E. Adler Senator Dina Titus Senator O. C. Lee GUEST LEGISLATORS PRESENT: Assemblyman Michael A. Schneider, Clark County Assembly District No. 42 Assemblywoman Genie Ohrenschall, Clark County Assembly District No. 12 Assemblyman Brian E. Sandoval, Washoe County Assembly District No. 25 STAFF MEMBERS PRESENT: Allison Combs, Senior Research Analyst Judy Jacobs, Committee Secretary OTHERS PRESENT: Ron Coury, Concerned Citizen C. Edwin Fend, State Legislative Committee, American Association of Retired Persons Ben Graham, Lobbyist, Nevada District Attorneys Association William H. Cavagnaro, Lieutenant, Legislative Liaison, Las Vegas Metropolitan Police Department Kevin G. Higgins, Senior Deputy Attorney General, Workers' Compensation Fraud Unit, Office of the Attorney General Dean Heller, Secretary of State, Office of the Secretary of State Janice Ayres, Executive Director, Retired Senior Volunteer Program Phil Galeoto, Lieutenant, Reno Police Department Lucille K. Lusk, Lobbyist, Nevada Concerned Citizens I.R. (Renny) Ashleman, Lobbyist, Southern Nevada Home Builders Association James L. Wadhams, Lobbyist, Southern Nevada Home Builders Association Senator James asked that the committee approve a request for a senate concurrent resolution to support a study on mental illness, insanity and the treatment of the mentally ill in the criminal justice system. He brought to mind an earlier bill dealing with sexual predators in which the section on treatment for people who are deviant was amended out because testimony indicated little is known about their treatment. He said he would like to ask the Senate Committee on Legislative Affairs and Operations to consider such a study. SENATOR McGINNESS MOVED TO REQUEST A BILL DRAFT FOR A SENATE CONCURRENT RESOLUTION TO PROPOSE A STUDY ON MENTAL ILLNESS, INSANITY, AND THE TREATMENT OF THE MENTALLY ILL IN THE CRIMINAL JUSTICE SYSTEM. SENATOR ADLER SECONDED THE MOTION. Senator Adler recalled a case involving the Nevada Department of Prisons which set out federal guidelines regarding the treatment of prisoners with mental illness. He recollected it was Taylor v. Wolf [citation not provided], but he acknowledged he does not know if the opinion was written or verbal. Senator James requested a copy of the case be provided to Allison Combs, Senior Research Analyst. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator James opened the hearing on Assembly Bill (A.B.) 539. ASSEMBLY BILL 539: Authorizes state gaming control board and Nevada gaming commission to discipline gaming licensee who willfully fails to pay for parts specifically made for gaming devices. Assemblyman Michael A. Schneider, Clark County Assembly District No. 42, described the circumstances leading to the bill. He stated a constituent runs a business in Las Vegas that manufactures glass plates and other parts for slot machines, made specifically for a particular casino, which are sold to slot machine manufacturers. He said there are very few such manufacturers, some of which are outside of the continental United States, and when they fail to pay their bills there is no recourse for his constituents. Mr. Schneider pointed out the bill was drafted with assistance from the chairman of the State Gaming Control Board, William A. Bible, who is in full agreement with the bill's provisions. Mr. Schneider said A.B. 539 will force payment of bills for custom-made parts. Ron Coury, Concerned Citizen, testified the provisions of Nevada Revised Statutes (NRS) 463.0129 (b) were sufficient protection in the past, but now that casinos and manufacturers are found around the world, with customers for specialized items in what is still a very small industry, the statutes need augmentation. Manufacturers in the industry still have a small customer base, he said, and the potential for sales is limited. If he sues someone in the industry for nonpayment, he asserted, he is sure he will receive payment, but he probably will never receive another order from that customer, and replacement customers are limited. Mr. Coury declared the customer has an advantage over the supplier in his industry. He said, "By dragging their feet, and manipulating their cash flow to their best advantage, they pretty much have a hammer over our industry, which employs about 1,000 people in southern Nevada." Mr. Coury suggested the statutes should be clarified and expanded in order for his industry to place notification on invoices that a specific statute requires payment within the agreed-upon terms. He pointed out most of the companies with which he has difficulty are gaming licensees, and as such they will be very careful not to violate any law or jeopardize their licenses due to the power of the State Gaming Control Board. Mr. Coury reported there was a casino in Atlantic City that failed to pay its bill for over a year, yet each time Mr. Coury requested payment, the casino agreed to pay, but without doing so. He declared the industry is at the mercy of its customers, since there are only about 50 customers for the entire industry base. Mr. Coury reported the State Gaming Control Board has expressed interest in knowing when bills are not being paid, because the board views nonpayment of bills as a precursor to possible other problems within the financial structure of that gaming licensee. He said it will be in the best interest of public policy to make the board aware of such problems. Senator McGinness noted Mr. Coury is reluctant to take the customers to court because it may result in a loss of business. He wondered if the same result would come from reporting them to the State Gaming Control Board. Mr. Coury replied: We believe that if this clarification exists, and there is a specific statute number related to this ... much like the tobacco ... industry, when I take a shipment of tobacco for one of my small casinos, it is stamped on there in red, "Nevada law requires" you've got to pay this bill within 15 days or you're in violation of NRS number such and such. I believe that, with the clarification of NRS [chapter] 463, such as is recommended in this bill, we will be able to provide that same type of notice on our bills, and it becomes a nonissue. We're not turning one in, we're not suing them, and we're not dropping the hammer, so to speak. It just becomes incumbent on them to do business in the agreed-on manner because no one wants to be put in a position of appearing, as a licensee, to violate the law. Senator Porter inquired if the establishments who are slow in paying bills represent a mix of the industry. Mr. Coury replied that for the most part it is the larger properties and larger manufacturers of machines who give him the most problems. He declared mostly they are customers who have the resources to pay, even though they are slow, but their form of cash-management points to more income for them if they can hold off paying suppliers for 6 to 9 months. He noted they are aware the small suppliers will not take them to court because the small suppliers are looking for another order. Mr. Coury explained his industry deals with custom products that either have the name of the location on it, or the proprietary right by the manufacturer, because it is their design. He refused to name any design or company, but said the product often has a trademark on it, so his company cannot go recover the product and sell it to another customer. Mr. Coury stated his company employs between 50 and 75 people, depending upon the work load. He said similar companies in both southern and northern Nevada suffer the same "abuse." He noted he calculates 10 to 15 percent of the price as profit, and declared his cash flow is "strangled" when he has to pay out 90 percent of the sale to his employees and for other overhead expenses while he waits for 3 to 6 months for payment, thus reducing his calculated profit. In response to a query by Senator Porter, Mr. Coury stated no association has been formed among similar manufacturers. He said the industry has just come about in the past couple of years with the expansion of gaming. He acknowledged he and his partner decided to "step to the plate here, and take the criticism or the hits to try to resolve this in a way that would make it right for everyone." Mr. Coury confirmed a question by Senator Porter that he has spoken with the companies involved in an attempt to resolve the problem. He recited several experiences in which he tried in vain for months to reach the right person to sign a check for the product before he finally was forced to withhold delivery of a new order until payment was received on the old order. Mr. Schneider interjected much of the problem arises with foreign slot manufacturers. He added the original bill was amended to reflect wording proposed by Mr. Bible and it has the endorsement of most of the slot manufacturers. Senator Porter closed the hearing on A.B. 539, and opened the hearing on A.B. 570. ASSEMBLY BILL 570: Revises provisions regarding habitual criminals. Assemblywoman Genie Ohrenschall, Clark County Assembly District No. 12, asserted A.B. 570 is a bill that is aimed at fraud upon seniors. She explained the basic provisions provide that a person found guilty three times of a crime involving fraud upon a senior or person of limited capacity will be treated as a habitual criminal, and, if convicted a third time, will be subject to a minimum 20-year sentence. Ms. Ohrenschall recited several cases in which seniors have been defrauded through well thought-out schemes. She noted they often advertise on television with promises of high returns based upon deeds of trust secured by prime Nevada real estate. She declared: And yes, it would be secured by prime Nevada real estate. What they wouldn't tell you is that the deeds of trust were usually third or fourth deeds of trust that had been bought at great discount, and were nothing but something parallel to penny stocks. Ms. Ohrenschall stated she personally has had contact with between 430 and 460 people who were defrauded in one particular case, many of whom lost not only most of their assets, but also their homes because they unwisely refinanced their homes in order to invest more in the scheme. Ms. Ohrenschall asserted, "The reason this bill has no fiscal note is that the type of crime we're talking about is a very organized crime. Usually it's committed by people who are well-skilled in knowledge of human psychology." She averred the perpetrators are careful to involve only a small number of people in order to preclude the possibility that somebody might testify against them, and they very carefully aim their schemes at a particular market. Ms. Ohrenschall pointed out most advertisements either mention "golden years," or are printed in publications specifically for senior citizens. She opined senior citizens are more vulnerable than other people for two reasons, which she cited: A lot of them are facing a retirement in a period where inflation is growing so rampant that they may not be sure that they have, in fact, enough money put aside to see them through their golden years. Another reason, too, is that seniors basically tend to live by the high moral standards that were inculcated into everyone as recently as 20 years ago. They follow the Ten Commandments verbatim, so they assume that anyone they come in contact with does, too. This makes them more trusting and more vulnerable. Ms. Ohrenschall continued: This year the emphasis has been on violent crimes, but it's my opinion that you can have as much harm inflicted upon a victim, as great a catastrophe, by depriving him of all of his assets and his home. To me this is a crime of latent violence that's aimed at particular groups of people who are very, very vulnerable. Ms. Ohrenschall reiterated her belief such crimes must be stopped. She related the experience of a couple who saved several hundred thousand dollars and lived somewhat frugally in order to leave a "meaningful inheritance" for their children. After the death of the wife, the gentleman was befriended by "an individual of high intelligence" who caused the gentleman to lose not only his savings, but also his home, and through machinations by the "con artist," a criminal complaint was filed against the gentleman for writing bad checks. According to Ms. Ohrenschall, the witnesses against the gentlemen were the businesses who received the bad checks, and the "con artist" testified that the gentleman knew what he was doing. Fortunately, she said, the judge in the justice court looked at the records and the gentleman was not convicted. She explained at that point in time the "con artist" had two prior felony convictions for similar types of crimes. Ms. Ohrenschall indicated she became aware of the situation when a personal friend fell prey to the same individual. She said: Each time that he was convicted, because he looked clean-cut, all- American, was able to participate in community activities, and so on, he drew parole. I don't know where he is now, but the last time I saw him he had drawn parole and he was still out on the streets. Ms. Ohrenschall asserted the State of Nevada has an obligation to stop such crimes because it allows advertising which lures people to retire in the state. She said, "We're advertising and saying, `Come to places like Sun City in Las Vegas; Summerlin. This'll give you your golden years in a beautiful climate. You'll be safe.'" She urged passage of A.B. 570. C. Edwin Fend, State Legislative Committee, American Association of Retired Persons (AARP), offered support for A.B. 570. He noted the elderly population of the state, particularly in southern Nevada, is increasing more than in any other state. Therefore, he declared, a bill such as A.B. 570 is essential. Mr. Fend agreed Nevada has been invaded by perpetrators of scams. He said the combination of the two things, an influx of elderly and the opportunity for schemers, require the state to look very hard at crimes against senior citizens. He pointed out seniors do not have time to recover from losses at the late stage in their lives. He urged a strong message be sent to those perpetrating the frauds that the state will not allow them to continue, and if they are classified as habitual criminals they will be sent to prison where they can no longer prey on seniors. Mr. Fend averred people become more susceptible to frauds as they grow older and concerned with their ability to continue to live comfortably for the rest of their lives. He acknowledged judgement is slightly less accurate in declining years. Senator Adler noted one ploy comes about through estate and trust seminars in which seniors are asked to fill in a sheet indicating their assets, after which the seniors are sold "phony" stock. He declared the people who set up such seminars are not licensed attorneys or estate planners, and they often come from out-of- state. He conjectured they may be practicing law without a license. He suggested control of such seminars poses another problem. Mr. Fend recalled a bill was enacted during the last legislative session to regulate financial planners, which has tightened control over seminars, but has not eliminated them entirely. He pointed out such people advertise in many small publications from various agencies which are sent to seniors, and therefore the seniors believe they are legitimate. Senator Adler remarked that often the fees charged by those who present seminars to set up trusts are double or more what they would be if the seniors used the services of an attorney. Ms. Ohrenschall agreed that was another problem which will be addressed by the passage of A.B. 570. Senator Adler recollected a man who had bilked a group of senior citizens in Carson City of over $1.5 million had received a sentence of just 1 1/2 years in the state prison. Even though that is viewed as a white collar crime, Ms. Ohrenschall asserted when it is perpetrated against a senior, it should be considered "latent violence." Senator James concurred A.B. 570 is a good bill and described it as a narrow habitual offender statute that applies to crimes against seniors. He noted the bill provides for a 20-year sentence on a third conviction with proof of two prior convictions on a victim aged 65 years or older. He pointed out under current law, one-third of that is approximately 6.67 years, which can be reduced by good-time credits. He noted the actual time in prison for a 20-year sentence under current law will be approximately 4 to 4 1/2 years. He said: I'd like to get on the record what kind of a sentence under ... S.B. 416 ... you're trying to have ... for this crime, so that when we have to do a conflict amendment we'll be able to look at the record and have your support for [it]. SENATE BILL 416: Makes various changes regarding sentencing of persons convicted of felonies. Ms. Ohrenschall responded: Mr. Chairman, I think that this would definitely qualify under your category B crime. Senator James concurred. He stated; Under category B, a ... 1 to 10 [year conviction] gives you the same ...maximum-minimum you have here. If you went to 1 to 15 [year sentence] then it goes up substantially, more like about 8 years. If you go to 1 to 20, or 2 to 20, then you're looking at ... 8 or 9 years. Senator Adler voiced the opinion the way the sentence is written in the bill may not be legal. He indicated it requires an upper range. Ms. Ohrenschall stated: It's supposed to read "not less than 20 and no more than life." Legislative counsel assured me that that will be taken care of in the trailer. Also, where it says "district attorney,'` they will change that to "prosecuting attorney." I asked them and they said that that would be taken care of automatically, and so it did not require amendment at this point. Senator Adler suggested Ms. Ohrenschall select a "B category" to be inserted in the bill. Senator James agreed the "B category" should be included. Ms. Ohrenschall deferred to the senators' opinions. She said, "Since I'm a freshman ... the only worry that I have is any delay this late in the session that might be caused by reprinting back and forth." Senator James proposed making the bill consistent with the existing "little habitual offender statute," which would provide for a sentence of from 5 to 20 years' imprisonment. He said: Because this is under [S.B.] 416 that's two times convicted of any felony, and then a third felony, or three prior fraud crimes. This would up it, if your victim was a senior citizen, to two priors and a third. Then you'd get the same sentence of the 5 to 20. Senator James acknowledged A.B. 570 includes mandatory sentencing, whereas the sentencing under S.B. 416 is discretionary. He asked if Ms. Ohrenschall would concur with category B sentencing for 5 to 20 years imprisonment. Ms. Ohrenschall replied, "Yes, Mr. Chairman, I would." Senator James stated it will be included as stated. Ben Graham, Lobbyist, Nevada District Attorneys Association, commented he had worked with Ms. Ohrenschall on A.B. 570. He recalled it was an issue that was addressed by some of the candidates for district attorney in Clark County. He concurred it is a necessary measure and offered support. He opined it will not have great fiscal impact. Mr. Graham noted such perpetrators are well-educated, and they often select areas where it is easy to prey on people. He suggested they will find another state where the penalty is not severe if Nevada demonstrates its intention to impose tough sentencing. Senator Adler inquired if the Las Vegas Metropolitan Police Department (METRO) sends investigators to seminars on trusts and investments. He suggested it would be advisable to do so. Mr. Graham said the only cases submitted for prosecution come from METRO at the behest of someone who had been victimized, after which METRO makes an investigation. William H. Cavagnaro, Lieutenant, Legislative Liaison, Las Vegas Metropolitan Police Department, responded that, to the best of his knowledge, METRO does not routinely send anyone to seminars. He noted the fraud detail may not have adequate personnel for such quests. Kevin G. Higgins, Senior Deputy Attorney General, Workers' Compensation Fraud Unit, Office of the Attorney General, indicated seniors comprise a "perfect set of victims for the kinds of crimes that are committed." Mr. Higgins pointed out seniors fall prey and then are often reluctant to testify, often out of "sheer embarrassment." He said: We can't get them here from out-of-state, when it happens out-of- state, because they don't want to leave their homes. And so this is the perfect crime for people that want to commit it, and Nevada, unfortunately, has become a mecca for some people that do this in telemarketing and securities fraud.... Mr. Higgins declared the Office of the Attorney General is completely behind the bill. He noted the attorney general's office has some slight concern over portions of the bill which may be covered by corrections already cited. Dean Heller, Secretary of State, Office of the Secretary of State, endorsed A.B. 570. He indicated his office sends investigators to some of the trust seminars to gather information. He iterated both he and the policy of the office support bills like A.B. 570. He agreed the proposed change from "district attorney" to "prosecuting attorney" will strengthen the bill, especially for his office, since it is the Office of the Attorney General that investigates securities problems. Mr. Graham voiced agreement with Mr. Heller. Janice Ayres, Executive Director, Retired Senior Volunteer Program (RSVP), noted she has been dealing with seniors in the rural areas for her 15 years of employment by the program. She indicated she has heard many "horror stories" about people who prey on seniors. She pointed out many seniors who lose their spouses become victims, especially those who are alone and without children. Ms. Ayres stated often young women prey on older men, and sometimes younger men woo older women. She added frequently these perpetrators are physically abusive to seniors. She agreed with Ms. Ohrenschall that members of the older generation have much pride and live by an "old-school philosophy" which sometimes makes them too proud to report the crime or prosecute the person. Ms. Ayres offered support for A.B. 570, and added the Carson City district attorney has reviewed it and called it "laudable," with very little fiscal impact. She reported he indicated it will cover much that is not addressed by other statutes. Ms. Ayres said RSVP supports the bill. She declared, "Any bill that comes along, that makes it tougher on criminals as it pertains to senior citizens, we certainly wish to support." Phil Galeoto, Lieutenant, Reno Police Department, offered strong support for A.B. 570. He noted he specialized in such investigations during the times when he worked as a detective and supervisor and then the chief of detectives. He asserted the measure is long overdue. He said he could provide "a laundry list of names" of hundreds of elderly victims of major fraud scams that have taken place since he originally became a detective in 1979. Lt. Galeoto acknowledged he is familiar with many of the cases cited by Ms. Ohrenschall. He singled out one case in which he served as chief investigator and which haunts him yet each time he sees the victim. Not only did the man become a victim, he said, but also a deed of trust obtained from him by a young perpetrator was used to "scam" hundreds of people through fraudulent stock documents. He noted the young perpetrator was never caught, while the older victim walks the streets, penniless. Lt. Galeoto said: That man ... reminds me, every time I see him, which, unfortunately is about every 3 or 4 or 5 days, in the downtown area, of the elderly victims that have really never been protected under the fraud statutes. And I don't mean just in Nevada, that's across the United States. Lt. Galeoto concurred fraud has never really been dealt with as a real crime against persons, because it is a white-collar crime. He asserted A.B. 570 will help bring the crime up to the level of other crimes, and he urged strong support. Lucille K. Lusk, Lobbyist, Nevada Concerned Citizens (NCC), endorsed A.B. 570. She offered the opinion anyone who commits such a crime three times is in a pattern that will not easily be changed. She explained the crime seems similar to her to burglary, although it may appear to be more genteel on the surface. The effect, she asserted, is essentially the same. She acknowledged she has come to understand senior citizens better as her mother has grown older and, although her mother remains an intelligent and insightful person, she is less able to evaluate the kind of thing that she would have set aside 5 or 10 years ago. Ms. Lusk stated: "Now she's less able to do that, and I understand the vulnerability of the senior citizen more, and request your favorable consideration of A.B. 570." Senator James commended Ms. Ohrenschall for the bill and said, "I particularly appreciate ... how you define mentally disabled person, because I think that broadens the effect of the bill, makes it better." He noted the committee will be able to act on the bill soon with the suggested changes. In the absence of further testimony, Senator James closed the hearing on A.B. 570 and opened the hearing on A.B. 604. ASSEMBLY BILL 604: Revises provisions governing recoupment of expenses of defense of indigents. Assemblyman Brian E. Sandoval, Washoe County Assembly District No. 25, addressed the committee as the prime sponsor of A.B. 604. He stated it will provide for community service by an individual who receives the services of a public defender. Mr. Sandoval explained several bills have been introduced to expand residential confinement, many of which also provide for counseling, but efforts to include provisions to allow an offender to perform community service to offset costs of treatment have not been successful. He recalled testimony in which public defenders have frequently been unable to recover costs associated with defense of those persons, with a suggestion that the offender could perform public service to defray the costs of the public defender. Mr. Sandoval declared that was the original intent of S.B. 604. He said after researching the matter it was determined that it would be unconstitutional for a court to order an indigent person to perform community service. As a result, the bill has been amended to permit a court to allow a defendant to perform community service to defray the costs of a public defender if the offender makes that request. He added it also will allow a defendant who has some savings and is ordered by the court to help pay for the cost of the public defender to request community service in lieu of making payments. Senator James briefed Senator Titus on what had transpired in the hearing. Senator Titus wondered why no public defenders were present to support the bill. Mr. Sandoval responded the bill had been prompted by a public defender. In the absence of further testimony, Senator James closed the hearing on A.B. 604 and opened the work session. He asked the committee to consider S.B. 129. SENATE BILL 129: Requires cause of action for dental malpractice to be submitted to screening panel before it may be filed in district court. Senator James pointed out the bill will provide for a review panel for dentists just as was established for doctors. He recalled testimony that dental malpractice should be treated the same, since it involves medical procedures, for purposes of malpractice liability. He noted the review panel has worked well as an additional means of screening claims, while it does not prejudice anyone's right to go to trial or to assert a claim. SENATOR TITUS MOVED TO DO PASS S.B. 129. SENATOR PORTER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 234: Prohibits act of assisting suicide. Senator James noted S.B. 234 has evoked much controversy. He explained originally it would have created a crime by making a person who deliberately assists or solicits another to commit suicide guilty of a felony. He recalled many committee members were uncomfortable with that provision, and it was pointed out that there is an existing statute dealing with euthanasia and mercy killing, which differs in that there is no consent by the person. Senator James read NRS 449.670 which states, "Actions contrary to reasonable medical standards not required; mercy-killing or euthanasia not authorized." He said that statutes from NRS 449.535 to NRS 449.690 give a person the right to refuse additional medical treatment and provides for living wills, and do not require a physician or other health-care provider to take action contrary to reasonable medical standards, nor do those sections "condone, authorize or approve mercy killing or euthanasia." He pointed out the statutes do not make those a crime. Senator James stated a suggestion was made to simply add, "Do not condone, authorize or approve mercy killing, assisted suicide or euthanasia," in order to be consistent with the existing statutes. He voiced a willingness to support that type of amendment on the basis it seems to be reasonable. Senator Adler asked if the amendment will place the bill into the section of the statutes that deals with directives to physicians and will not make the practice a felony crime. Senator James confirmed his query, and added it will handle the issue and address the concerns of proponents without putting someone in the position of participating in a new crime. He noted the section of the statutes is entitled, "Withholding or Withdrawal of Life-Sustaining Treatment." He suggested the bill be added to that section. SENATOR WASHINGTON MOVED TO AMEND AND DO PASS SENATE BILL 234. SENATOR LEE SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * ASSEMBLY BILL 476: Requires seller of certain residential property to disclose condition of property. Senator James noted that A.B. 476 was voted upon earlier, but recalled Senator Adler had voiced concern regarding the language in section 4, subsection 2(d), so proposed wording for the bill will include removal of "never before occupied" and replacement of the language with "has not been occupied for a period longer than 120 days" which will allow the property to close escrow in a timely manner. Senator Adler said contractors agree that properties that have had long-term leases should be considered new buildings. Senator Titus said she is concerned as to when the warranty will start under the provisions. She reported she has been advised the warranty will start on the day the buyer takes title to the property. Senator James reported the accepted amendment includes the 120 days proposed by Senator Adler, and the addition of "or reasonably should have discovered, whichever occurs later" on page 3, section 6, subsection 4 at lines 31 through 33. The words "or his agent" will have to be removed throughout the bill, he said. ASSEMBLY BILL 256: Increases penalty for abuse, neglect or endangerment of child where substantial bodily or mental harm results. Senator James asked the committee to review Amendment No. 720 to A.B. 256 as approved earlier by the committee. Senator Adler explained the amendment will prevent the court from returning a child over whom it has custody or control to a parent who has been convicted of child abuse unless there is clear and convincing evidence that there will be no physical or psychological harm to the child by the return. SENATE BILL 395: Regulates recovery for defects in residential construction. Senator James called for a review of Amendment No. 805 to S.B. 395. I.R. (Renny) Ashleman, Lobbyist, Southern Nevada Home Builders Association, responded the amendment (Exhibit C) clears up some confusion in the use of the words "cause" and "claim," incorporated in the original bill. He stated: We went through there and made those changes. We made a change for the State Contractors' Board. They, unfortunately, are still a little misguided, I must say, as politely as I can put it. The current reference to the State Contractors' Board keeps them from undertaking any action ordering the correction of construction defect while this process, that is, discussing the correction of construction defects, is under way. Mr. Ashleman claimed: The State Contractors' Board is having a little problem reading, if you look at the amendment, which is the last section of the bill. It says expressly in paragraph 3, as I recall, that action under this paragraph is stayed. That's the paragraph that talks about remedying construction defects. The State Contractors' Board's attorney called me. He said, `Gee, we have some concerns that that stays all other enforcement action.' It does not.... I don't know how it could be more plainly written. They are simply misguided, and I think that it's easy for the committee to see the destructive effect of having an enforcement proceeding under way on the same subject matter that you're trying to offer settlements and counter-settlements and to mediate. It seems to me it would be a totally inappropriate use of public funds for them to undertake such activity. Mr. Ashleman pointed out the attorney for the State Contractors' Board, David Reese, told him in several conversations that the board was in agreement with the proposed amendment. Yet, calling attention to a letter from the board (Exhibit D), Mr. Ashleman said: I told Mr. Reese that if he could somehow explain to me how that stayed in the other action, I would be more than happy, once we get to the Assembly side, to make any corrections he needs. He told me yesterday that that was quite satisfactory with him, so we've got this letter [Exhibit D], and I don't know what more I can tell the committee about it. Senator James noted the letter asks for the removal of section 21 of the amendment, which reads, "The board shall not take any disciplinary action pursuant to this paragraph during the period in which the claim is being settled, mediated or otherwise resolved pursuant to sections 2 through 20 inclusive, unless the disciplinary action is necessary to protect the public health or safety." Senator James asked if the attorney for the State Contractors' Board is really in opposition to that section. Mr. Ashleman replied he is, and said, "He's wrong to oppose that. It's contradictory to what their policy statement is, that they shouldn't be undertaking corrective action while parties are trying to reach a settlement and compromise over the very same issue." In response to a query by Senator Adler, Mr. Ashleman said currently the board does not have explicit power to respond to a construction defect and the board is concerned over its power, which will be provided through S.B. 395. Mr. Ashleman pointed out there are two other amendments which should be added, and he suggested those be made by the members of the Assembly. The Nevada Trial Lawyers Association and others involved are in agreement, he said. He explained: The bill, by its plain context, does require that if this process is followed, then your sole remedy [is] the things that are in this process. However, the word that used, either `only' or `sole,' I've forgotten which, in the draft that was before the original committee, was dropped in the bill drafting process by the trial lawyers. I'm told by their secretary that did it they had no particular reason to have made that drop, and we want to reinstate it. Senator James asked where he could find the referenced wording. Mr. Ashleman replied the word "only" should be inserted in section 13 on page 6 of the amendment at the second line either after the word "may" or after the word "recover." Mr. Ashleman returned to the continuation of section 20, subsection 2, line 6 on page 12 where he indicated the words "or obligations" should be inserted after the word "rights," and, again, "or obligations" should be inserted after "rights" on the eighth line. He explained the changes allow the settlement to be neutral regarding third parties, and it will not prevent third parties from pursuing the claimant or contractor in a countersuit. He reiterated those amendments are already being drafted for addition to S.B. 395 by the Assembly. Senator James declared he will accede to Mr. Ashleman's request that the bill be amended by the Assembly only due to the late date of the session. Senator Porter asked what problems may be created by the new definition of "contractor." Mr. Ashleman replied the definition differs through the addition of the language "with or without a license." He explained the addition will allow a consumer to use the statute against an unlicensed as well as a licensed contractor. Mr. Ashleman added the kinds of things that will be covered by the contractor will be set forth in detail. He stated: We made sure that the term included a res pretension group, or insurer, or the representative of a home owner's warranty. And that's specific to this bill, because, otherwise, you'd have to repeat that language. Every time you said `contractor,' you'd also have to say `res pretension group, insurer, representative of a homeowner's warranty,' which is simply poor drafting. Senator Porter inquired if the provision will apply to subcontractors, which Mr. Ashleman confirmed. Mr. Ashleman explained the principal contractor will have to deal with complaints by the home owner, which will protect the home owner from having to be involved in any disputes between the contractor and the subcontractors. Senator Porter asked if a real estate agent will be considered a contractor under the language "sells a residence." Mr. Ashleman denied it will do so, and read from page 2 of the amendment to the bill, "Sells a residence ... any part of which the person ... or by himself or through his agents ... has constructed, altered, repaired, improved ...." He pointed out it is not the seller, unless he is the builder or the improver of the residence, in which case he will be considered the contractor whether he is licensed or not. Senator Porter wondered if the contractor is part of the res pretension group or the insurer representing the home warranty. Mr. Ashleman replied he is, because he must respond to complaints of defective construction under the terms of the bill. He declared one problem arises when the contractor wants to make repairs or settle, but his insurer will not allow him to do so. He said: And they can control that. Under this language we force them to participate in that settlement process, hopefully initially and quickly, just like the contractor has to do it. So that's the reason why we include them in the definition. Senator Porter acknowledged there is a problem with some of the home owner warranty companies, often with their financial stability. However, he said, there are times when the warranty company steps in to fulfill some of the contractor's responsibilities. He wanted to know how the amendment ties into such a situation. Mr. Ashleman replied: This does tie them in. This makes them respond to that complaint of defective construction, just like the contractor does. So what'll happen, of course, is somebody will notify the contractor, and then he'll notify the res pretension group or insurer or the warranty representative of the situation. Senator Porter asked if that will eliminate the contractor as a possibility. Mr. Ashleman replied it will not. He said, "It simply includes, it doesn't substitute." Senator James noted section 13 includes the addition of attorneys' fees and asked if that came about as the result of an omission. Mr. Ashleman responded: The attorneys' fees in all cases were added on a balance basis. If the contractor doesn't respond with a reasonable offer ... either to pay or to repair, as determined later by a court, he can become liable for attorneys' fees. On the other hand, if the individual doesn't responsibly respond to a reasonable offer of settlement or repair, he can become liable for attorneys' fees. Senator James inquired if the provision under section 14 which allows the contractor to repurchase a defective structure has been removed from the bill under the proposed amendment. Mr. Ashleman replied it has been incorporated into the bill under section 15. James L. Wadhams, Lobbyist, Southern Nevada Home Builders Association, interjected one of the key points of the legislation is an attempt to expedite the process of settlement between the claimant and the contractor. He noted under current law it is not necessarily the case that the contractor fails to respond, but there are occasions where it happens in an untimely fashion. He asserted S.B. 395 will place specific responsibility on the home owner to make a claim within a time frame and to bring the process to a quicker closure. The bill is designed to facilitate and expedite the process on both sides, he said. Expressing concern that the bill is unspecific and could lead to disputes, Senator Washington wondered if it would be appropriate to include a time limit rather than leave the wording "as soon as practicable" in section 16 of the proposed amendment. Mr. Ashleman responded it would be difficult to include a specific time limit because there is no way to anticipate what problem may arise, because one problem may be cured in a few minutes, while another will require several weeks. He pointed out the home owner has the capability to go ahead and make repairs if he feels the response is not sufficiently expeditious. Senator Titus voiced concern any negotiations with unlicensed contractors will lend credibility to their status. Mr. Ashleman called attention to the provision in section 2. (c) on page 5 which provides that repairs must be made by a licensed, bonded and insured contractor if the original contractor fails to perform. Mr. Wadhams declared the amendment is written so that unlicensed contractors will not be exempt from responsibility just because they are not licensed, but it does not authorize them to perform work. Senator Porter inquired if material defects should be included under the definition of contractor liability in section 10 on page 3 along with construction defects. Mr. Ashleman responded, "The items listing the things that are accepted are exceptions to the responsibility." Senator Porter noted the previous provision, which was found under section 8 in the original bill, appears to be substantially different from the provisions of section 10 in the amendment. Mr. Ashleman replied: There are substantial differences between the original section 8. Now there's not that much difference between the ... first set of amendments we brought you and what we have now.... We took out the reliance on government records, and we took out the use of the language of "negligence" because, in fact, these are warranty items, rather than negligence items. You're responsible for a construction defect whether, in fact, it was negligently done or not. Mr. Wadhams interjected that was one of the points worked out through consensus with home owners and attorneys on both sides of the issue prior to the first hearing on the matter. He stated the definition was changed to a definition which seems to be more consistent with the policy approved by the Senate Committee on Judiciary . Mr. Wadhams opined the new definition is broader and more precise. He said the first definition seems to apply to items which were caused by the builder's negligence, and negligence is a tort theory, while warranty is a contract theory which has nothing to do with negligence. He reiterated there is an obligation to repair a construction defect if the home owner notifies the contractor. Mr. Ashleman stated the substantive changes in Exhibit C came about as a result of discussions by the committee when they were presented with it on May 10, 1995. He indicated descriptions of normal wear, tear, deterioration, shrinkage and settlement were provided by engineers and were substituted for the original language. SENATOR LEE MOVED TO AMEND AND DO PASS S.B. 395 WITH AMENDMENT NO. 805. SENATOR TITUS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator James asked the committee to consider action on the bills heard earlier in the day. SENATOR McGINNESS MOVED TO DO PASS A.B. 604. SENATOR WASHINGTON SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR ADLER MOVED TO AMEND AND DO PASS A.B. 570 WITH A PENALTY OF 5 TO 20 YEARS, AND WITH REPLACEMENT OF THE WORDS "DISTRICT ATTORNEY" BY THE WORDS "PROSECUTING ATTORNEY." SENATOR LEE SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator James announced he will take up the other bill after more information is received. He asked Mr. Graham to come forward regarding A.B. 109. ASSEMBLY BILL 109: Authorizes issuance of protective order for victim of person charged with crime of harassme nt or stalking who is acquitted by reason of insanity. Mr. Graham explained the purpose is to clear up a situation in which stalking protective orders did not apply to persons found not guilty by reason of insanity. He stated, A.B. 109 will bring the matter into compliance with the law. If the bill is not processed, he said, "It would simply say `as found guilty at trial.'" He suggested the committee may want to change the wording to "guilty, but mentally ill." Senator James described the change is as follows: If a defendant charged with a crime involved in harassment or stalking ... is released from custody before trial, or is found guilty at the trial ... and [then is ordered] acquitted by reason of insanity at the trial... Mr. Graham concurred. Senator James wondered if acquittal by reason of insanity will be removed by virtue of the bill. Mr. Graham proposed the wording could be "guilty, but mentally ill," which will have a different meaning than "is found guilty at trial." Senator James indicated he will hold the bill for a later hearing. He passed around copies of a proposed amendment to S.B. 498 (Exhibit E). SENATE BILL 498: Creates cause of action for sale of liquor to intoxicated person or minor. The committee agreed to retain paragraphs 2 and 3 of the proposed amendment and strike the remainder. SENATOR TITUS MOVED TO AMEND AND DO PASS S.B. 498 WITH THE PROPOSED AMENDMENT TO INCLUDE ONLY SUBSECTIONS 2 AND 3 OF SECTION 1, AND TO LEAVE OUT SECTION 1, SUBSECTION 1, AND TO LEAVE OUT SECTION 2, AND WITH THE DELETION OF THE WORDS IN SUBSECTION 2, "CAUSE OF ACTION MAY BE BROUGHT AGAINST ANY PERSON," AND WITH THE INSERTION AFTER "PERSON" OF "SHALL BE LIABLE IN A CIVIL ACTION." SENATOR WASHINGTON SECONDED THE MOTION. Senator Adler announced he would abstain from the vote because he represents a bar that was recently cited for serving minors. Senator McGinness requested an explanation of the changes proposed by Senator Titus. She responded: It just seems like point 1 is a statement of purpose that you don't need to put in statute when you're enacting this legislation. Obviously that's our purpose ... or we wouldn't have enacted sections 2 and 3. And then the big section 2, where I just don't think you usually put in statute that this is intended to codify certain court decisions. I just don't ever see that in statute. I think that's just something that's unnecessary to put in there. So I think the key that we need are subsections 2 and 3 and then passage and approval. Senator Washington concurred. Senator Titus pointed out the provision refers to both minors and adults. Senator James disclosed he does not know whether his firm represents anyone who owns what could be considered a dram shop, however he said his firm represents one or two restaurants. He opined that is probably not a conflict which would prevent him from voting on the measure. Senator Porter interjected he, too, is unaware if his firm is involved in any such type of business. Senator James pointed out the bill states, "no person," which could place liability on any person, even a social host. However, he said, most people should be able to vote on the bill. THE MOTION CARRIED. (SENATOR ADLER ABSTAINED FROM THE VOTE.) * * * * * Senator James noted the committee is awaiting amendments for 16 bills. In the absence of further business, he adjourned the meeting at 10:22 a.m. RESPECTFULLY SUBMITTED: Judy Jacobs, Committee Secretary APPROVED BY: Senator Mark A. James, Chairman DATE: Senate Committee on Judiciary June 15, 1995 Page