MINUTES OF THE
SENATE COMMITTEE ON JUDICIARY
Sixty-seventh Session
April 12, 1993
The Senate Committee on Judiciary was called to order by Chairman Mark A. James, at 2:00 p.m., on Monday, April 12, 1993, in Room 224 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Mark A. James, Chairman
Senator R. Hal Smith, Vice Chairman
Senator Lawrence E. Jacobsen
Senator Mike McGinness
Senator Dina Titus *
Senator Raymond C. Shaffer
Senator Ernest E. Adler
* Committee member only present for a portion of the meeting. This is noted in the body of the minutes.
GUEST LEGISLATORS PRESENT:
Senator Thomas J. Hickey
STAFF MEMBERS PRESENT:
Dennis Neilander, Senior Research Analyst
Sherry Nesbitt, Committee Secretary
OTHERS PRESENT:
Judy Jacoboni, Lobbyist, Mothers Against Drunk Driving, Member,
Victims of Crime
F. DeArmond Sharp, Attorney, Member, State Bar of Nevada,
Business Law Section
Sharen Weaver, Employee, State of Nevada, Department of Insurance
Franki Sue Del Papa, Attorney General, State of Nevada
Paul Yohey, Deputy Attorney General, State of Nevada, Office of
the Attorney General
Marie H. Soldo, Lobbyist, Sierra Health Services
John Sande, Lobbyist, Harrah's, Nevada Bankers Association
Ben Graham, Lobbyist, Nevada District Attorney's Association
Brian R. Hutchins, Chief Deputy Attorney General, State of Nevada, Office of the Attorney General, Transportation Division
Don Coppa, Assistant District Attorney, Washoe County Office of the District Attorney
Senator James advised the Senate Committee on Judiciary had a request for introduction of Bill Draft Request (BDR) 5-1504.
SENATOR ADLER MOVED FOR COMMITTEE INTRODUCTION OF BDR 5-1504.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR TITUS WAS ABSENT FOR THE VOTE.)
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Senator James advised the Senate Committee on Judiciary had a request for introduction of Bill Draft Request (BDR) 41-799.
SENATOR ADLER MOVED FOR COMMITTEE INTRODUCTION OF BDR 41-799.
SENATOR MCGINNESS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR TITUS WAS ABSENT FOR THE VOTE.)
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Senator James opened the hearing on Senate Bill (S.B.) 353.
SENATE BILL 353: Increases amount of homestead exemption. (BDR 10-129)
Senator Thomas J. Hickey provided oral testimony. He advised S.B. 353 is a bill introduced by all senators of the 1993 legislative session in honor of the late Senator Nick Horn. Senator Hickey requested, upon Senator Horn's death, that the bill drafters choose the bills in which Senator Horn had always been active. He recalled that Senator Horn was noted for homestead bills, and had introduced these types of bills for a number of years. Senator Horn stated the exemption requested in S.B. 353 was a reasonable figure, and approximately the worth of the average home.
Senator James asked if Senator Hickey knew when this issue was last raised.
Senator Hickey believed it was raised in the 1991 legislative session. He advised that a homestead exemption bill is normally introduced each session, to meet the inflation factor.
Senator James asked the previous exemption amount.
Senator Hickey stated he did not recall the specific amount.
Senator James confirmed there was no further testimony on S.B. 353 and closed the hearing.
Senator James opened the hearing on Senate Bill (S.B.) 352.
SENATE BILL 352: Creates lien upon earnings and property of offender for costs of incarceration. (BDR 16-802)
Frankie Sue Del Papa, Attorney General, State of Nevada, provided testimony in support of S.B. 352, which she advised is referred to as the prisoner's responsibility act. She stated the intent of the act is to make adult inmates in state correctional institutions responsible for their own support and maintenance. She stated S.B. 352 will permit the state of Nevada to have a lien against the property and income of inmates effective from the date of incarceration to 6 years after release. She advised the bill will also allow the state to obtain civil judgments against prisoners for the total cost of their care and maintenance. She believed, in view of the state's limited budget and expanding prison population, the bill will go a long way toward making inmates bear the same financial responsibility for their clothing, shelter, food and medical care that most other citizens bear on their own. She stated realistically the state will be unable to recoup the costs associated with inmates, because most inmates are indigent. She advised, however, there are inmates who are not indigent and receive income, own real property, or have substantial personal assets. She advised some inmates have benefitted from what has been characterized as a windfall, such as an inheritance or an award of damages in a tort action. She stated that S.B. 352 will require inmates with such assets to pay for their support and maintenance while in prison.
Senator Jacobsen asked if this bill is constitutional.
Ms. Del Papa stated she believed it is constitutional. She advised two states have passed this measure, and other states have the measure under consideration. She advised that current federal sentencing guidelines allow for non-indigent inmates to be assessed the costs of trial and incarceration.
Senator Adler expressed concerned about S.B. 352 putting a lien on real property when other entities are more deserving of the money. He cited, as examples, victims of crime and children with support needs. He believed if S.B. 352 is enacted a priority needs to be established.
Ms. Del Papa agreed that some discretion would be needed. She stated an example of a windfall which an inmate at the Northern Nevada Correctional (NNC) facility had received, inheriting between $1 million and $1-1/2 million. She believed with that type of inheritance there would be enough money to go around. She has also been advised of other inmates who have received substantial inheritances. Ms. Del Papa agreed it would not be worthwhile to put a family on welfare to collect a judgment for incarceration. However, she advised there are inmates currently incarcerated who have no family, and who are collecting either pension or disability checks.
Senator Adler voiced concern regarding victims of crime. He believed the state should be certain these people and others, entitled to restitution, are paid first.
Ms. Del Papa stated section 6 of S.B. 352 provides for appropriation of all monies collected, including 10 percent to the victims of crime fund.
Senator Adler agreed with this, but would want to see a certain amount to go to the victim.
Ms. Del Papa agreed to consider any amendment proposed in this regard. In the alternative, she stated her agency would be willing to address this concern.
Senator Jacobsen asked if more than one lien could be in place at the same time.
Ms. Del Papa replied this could be done. She advised there are priorities given to certain liens. She stated the prioritizing language in S.B. 352 is found at lines 9 and 10 of section 2. This would give this lien priority over all others, except an encumbrance filed and recorded before the notice of the lien for incarceration expenses is first filed.
Senator James agreed with Senator Adler's concerns. He stated three pieces of legislation dealing with liens relating to criminal offenders had been passed out of the Senate Committee on Judiciary. The committee believed the state's concern regarding reimbursement is legitimate, but Senator James advised that court ordered dependant support, reimbursement to the victim of the crime, and others, would come before this lien.
Ms. Del Papa agreed this was a public policy decision. Her concern as attorney general, and as one who served on the prison board for a number of years, was the $85 to 90 million dollars cost to incarcerate the 6,000 inmates currently in Nevada facilities. She believed when an individual comes into a windfall and there is an opportunity to collect the costs of incarceration, the state has an obligation to the taxpayers to attempt to collect some of that money.
Senator James agreed with this policy. He stated, however, he believed the person directly impacted by the crime should be reimbursed before the treasury is reimbursed. He stated a priority list would address this concern.
He sated he believed it would be good public policy to reimburse the state for costs of incarceration. He asked if it was fair to institute a lien in every case. His concern was that someone who had been incarcerated had not been able to earn any money, and that person needs a chance to make a fair start. He was concerned the lien would mitigate against the rehabilitation factor.
Ms. Del Papa did not believe this would be a problem. She stated S.B. 352 would give discretion to the attorney general's office. The lien would not be pursued in every instance, but authority is needed in the event funds are available. She explained the provisions of the current inmate work program, under Administrative Regulation 258, which has been passed by the parole board. She stated inmates are encouraged to work and are also encouraged, through prison regulations, to allocate a portion of their earnings to the victims' compensation fund, and another portion to a fund to provide the inmate with a nest egg when they leave. She advised it would be very difficult to craft legislation which would work for every inmate. She stated, however, that there is a loophole in the current law which has allowed some inmates with tremendously substantial resources to escape any responsibility for the cost of their incarceration. She stated these situations are what S.B. 352 is intended to address.
Ms. Del Papa advised Administrative Regulation 258 provides a mandatory savings for all inmates who earn $18 or more weekly, with the exceptions of the forestry and camp construction crews. The savings required is 20 percent for income over $18, and the regular savings is the remainder of the inmate's net income. She advised inmates currently assigned to restitution centers pay $14 per day for room, board and transportation.
Senator Adler asked for and received confirmation that, under S.B. 352, these provisions would be extended to 6 years after the inmates leaves the prison. He asked if the department would automatically have a lien or would the inmate be sued to obtain a judgment.
Ms. Del Papa replied S.B. 352 would provide the ability to pursue civil judgments, and also would provide for a lien which the department would be responsible for filing.
Senator Adler asked for and received confirmation that the wages would then be garnisheed the same as anyone else's wages. He asked, regarding real estate, if a civil judgment would have to be obtained.
Paul Yohey, Deputy Attorney General, State of Nevada, Office of the Attorney General, replied to Senator Adler's question. He advised that S.B. 352 has no procedural aspects. However, the procedural aspects under Nevada Revised Statutes (NRS) Chapter 108 could be used. He stated under this statute, real estate could be liened without a civil judgment.
Senator James asked if the liening of an inmate's resources and property under S.B. 352 would come after payment of a fine imposed as part of a sentence.
Ms. Del Papa advised the fine would be part of the original judgment. She stated the law enforcement agency which originally incarcerated the offender would collect the fine. She said the lien provided by S.B. 352 is separate and distinct from everything else.
Senator James' concern was the prisoner trying to pay the fine out of the same assets which would be sought under S.B. 352. He stated the bill's priority provision gives the state's lien priority over all other liens. He asked if the lien would also have priority over the prisoner having the ability to pay off the fine.
Ms. Del Papa reiterated that an amendment would need to be drafted to prioritize payment in conjunction with other bills which had been passed this session.
Senator James believed that possibly the fine should be part of that prioritizing. He did not believe it was fair to take the money to pay the costs of incarceration if this would take away the ability to pay the fine.
Judy Jacaoboni, Lobbyist, Mothers Against Drunk Drivers, Member, Victims of Crime, provided oral testimony in opposition to S.B. 352. She advised that her concerns have been addressed with the proposal of prioritizing liens. Her concern was victims of crime being required to obtain a priority lien over others.
Senator James confirmed there was no further testimony on S.B. 352. He advised the bill would be held pending input from the Attorney General's Office.
The hearing was opened on Assembly Bill (A.B.) 60.
ASSEMBLY BILL 60: Provides consequences of environmental impairment of real collateral. (BDR 3-480)
F. DeArmond Sharp, Attorney, Member, Nevada State Bar, Business Law Section, presented oral testimony in support of A.B. 60. Mr. Sharp provided to the committee a statement on A.B. 60, written by Jeffrey P. Zucker, Chairman, Nevada State Bar, Business Law Section. Mr. Zucker advised the attachment referred to in the statement is not attached, as the concerns have been addressed in the first reprint of A.B. 60. A copy of this statement is attached as Exhibit C. He briefly explained the statement written by Mr. Zucker. He stated, simply put, the problem involves a conflict between the existing Nevada single action rules and numerous environmental statutes, primarily federal. The Nevada rules require the holder of a loan secured by real property to first foreclose on the real property before action may be pursued on the debt. The environmental statutes impose strict liability on owners of real property upon which is hazardous waste.
Mr. Zucker's memorandum states that if a lender forecloses and becomes the owner of the property, even though the lender is unaware of the hazardous waste, it can still, without fault, become responsible for cleaning up the hazardous waste. He advised that, in areas other than Nevada, the lender often receives a bill for cleanup which is larger than the amount of the debt which secured the property. Lenders have become very sensitive to the issue and have, in preparing documents, required the borrower to agree to take care of any hazardous waste problems and to not conduct business on the property in any form which would permit hazardous waste to become a problem. He advised a lender cannot compel a borrower to clean up the hazardous waste, as a separate action cannot be instituted on the agreements. This could be viewed as an action, subjecting the lenders to the One Action Rule, resulting in forfeiture of the collateral. He advised this results in the lender's inability to collect the debt. He stated this increases costs for lenders, which they pass on to the borrowers, and makes the lenders very hesitant about granting loans. He advised several states, including California, are considering legislative solutions which do, in effect, the same thing as A.B. 60.
Mr. Sharp advised A.B. 60 would accomplish two things. First, it would give the lender the right to have a receiver appointed to go onto the property and accomplish necessary testing to determine whether a hazardous waste problem exits, and the extent thereof. He explained this is a problem when invasive testing is needed. He advised, as the law currently stands, the receiver has no clear right to go on the property. He advised A.B. 60 also would give the lender the right to proceed directly to enforce an environmental guarantee to compel cleanup. He stated that thirdly, A.B. 60 gives the lender the right to waive the environmental collateral if they choose to do so, and simply proceed on the debt. He gave an example of a loan secured by several pieces of property, one of which is environmentally impaired. He stated, in this case, the lender could waive that property, foreclose on the remainder of the property, and proceed under the statutes with respect to deficiency judgments. He gave other examples of problems arising from the current provisions.
He advised his organization's view of A.B. 60 is that it brings some certainty to this portion of the real estate lending field, making the lenders more comfortable in making loans, which in turn will make Nevada a more attractive place in which to make loans.
Senator James asked for and received confirmation that the Business Law Committee requested the bill draft for A.B. 60.
Senator Adler asked for confirmation of the various aspects of A.B. 60.
Mr. Sharp reiterated previous testimony and added that if the documents, either the second deed of trust or a separate guarantee, contain an environmental warranty, that warranty can be directly enforced. This would allow the costs of the clean-up to be recovered, or the cleanup could be compelled.
Senator Titus entered the meeting at 2:50 p.m.
Senator Adler asked if the contamination would have to occur after the sale of the property.
Mr. Sharp replied if the contamination was pre-existing before the lien, and discovered after the lien was placed, the cleanup would still be the owner's obligation. He stated if the condition was in violation of the environmental warranty given to the lender by the owner, the cleanup could still be compelled.
Senator Adler asked if this would apply if the owner had no way of knowing the hazardous material was present.
Mr. Sharp stated that fault is not an issue in the federal statutes. He advised A.B. 60 puts the responsibility on the owner, who has contractually obligated himself to the lender to cleanup the hazardous material. He stated the bill states the lender can enforce this environmental warranty which is the same contractual obligation to the lender which the owner has to the federal government under the applicable statutes.
Senator Adler asked what the result would be if the cost of the cleanup exceeds the value of the property. He asked if the lender could still sue to force the owner to accomplish the cleanup.
Mr. Sharp advised the lender could do this. The property owner would have the option of doing the cleanup or paying the debt. If the debt is paid, the obligation to the lender disappears.
Senator James referred to section 13 of the bill. He asked for and received confirmation that the lender can go upon the property whether or not there is an environmental concern.
Mr. Sharp advised the rationale for section 13 is that the lender could become responsible, whether or not there exists an environmental warranty.
Senator James referred to the change at line 21 on page 3, which adds "with interest from the date of sale" regarding the deficiency judgment rule. He asked if this was an oversight in prior law.
Mr. Sharp believed this was a previous oversight.
Senator James asked for and received confirmation that the One Action Rule was not being changed substantively, other than to allow the receiver to be appointed and to obtain the cleanup damages.
Senator James asked for and received confirmation that recovery for damages is only possible if an environmental provision exists in the documents.
Senator James referred to the language in A.B. 60 which states an environmental provision is not needed to have this law apply. He asked if a receiver could be appointed without an environmental provision being in place.
Mr. Sharp replied a receiver could be appointed without such a provision. He advised the language in section 18 provides a means of enforcement for documents already having environmental warranties.
Senator James asked if there was a concern regarding the ability to obtain the receiver with no representation of the owner regarding hazardous substances on the property.
Mr. Sharp did not believe this was a problem. He stated that even if no environmental warranties exist, the lender is still entitled to know whether there is an environmental hazard. He advised even without a warranty, a careful lender will not attempt to foreclose until an attempt is made to determine if environmental problems exist. He stated the problem is how to get to the foreclosure when possession is needed before testing, but possession is not possible until foreclosure occurs. He advised the existing receivership law has no clear provision which states the court can authorize the receiver to physically go onto the property, to do anything other than collect the rents, or other ordinary management functions.
Senator James advised this provision, if enacted, would set a precedent. He stated in limited circumstances this is the only time where there has been no default, where action for appointment for a receiver can be instituted.
Mr. Sharp replied that when A.B. 60 was first drafted, the receivership provision was tied in with the statute as it currently exists. He agreed that, unless there is a default that would trigger the court to entertain a petition for receivership, the suspicion of a lender, in and of itself, should not trigger the right to obtain a receivership. He did not believe this was the intent.
Senator James read from section 1, subsection 1:
In addition to the cases enumerated in [Nevada Revised Statutes] NRS 32.010, a court or judge may appoint a receiver in an action brought by a secured lender to enforce the right provided in section 13 . . .
Senator James advised section 13 does not require an environmental provision. He continued reading from section 1, subsection 1:
. . .or a similar right . . .to enter and inspect real collateral . . . to determine . . .hazardous substance . . .
Mr. Sharp stated this was intended to be a subsection under NRS Chapter 32.010. He believed this chapter states that in the event of a default, a receiver may be appointed.
Senator James pointed out that the language in A.B. 60 states "in addition to the cases enumerated in [NRS] 32.010." He wondered if this was intended to cover a situation where, if the condition was just suspected and a performing loan was in place, a receiver could still be appointed to perform the tests.
Mr. Sharp read section 13 of A.B. 60, which limits the entering and inspecting of the property. He advised NRS Chapter 32.010 must be complied with, using the provisions in A.B. 60, section 13.
Senator Adler agreed with Senator James' reading of the bill, and advised it further states that 24 hours is reasonable notice. He asked for confirmation that the essential intent of the bill was for a lender to be allowed to enter property, with 24 hours notice, and test for potential hazardous material.
Mr. Sharp stated this would be correct, within normal business hours.
Senator Adler asked for and received confirmation that due to federal provisions currently in effect, the warranty provisions will automatically go into effect if A.B. 60 is passed.
Senator Jacobsen asked how the lender's right of entry is originated, under current law.
Mr. Sharp replied there is currently no provision for right of entry, unless provided for in the documents, or granted by the court.
Senator Jacobsen asked if there is not a government provision for right of entry. He advised this was a negotiated matter.
Mr. Sharp replied in negotiated matters, a problem is not present. He gave several examples.
Senator Jacobsen asked if an appraisal would fall under a right of entry provision.
Mr. Sharp replied the owner's permission would have to be obtained, unless the property is a public area.
John Sande, Lobbyist, Nevada Bankers Association, provided oral testimony in support of A.B. 60. Mr. Sande believed there would be very few instances in which a lender would seek to obtain a receiver unless there had been a default. He stated that possibly if the owner was polluting the property and the lender felt it needed to protect the security, the lender would seek remedy in court. He advised generally the tenor of A.B. 60 is very important. He said the banks in Nevada, as well as other states, are having great difficulty in foreclosure situations with hazardous property. He stated if the property is evaluated and if there is no guarantee that the potential cleanup will be less than the amount of the debt, lenders are forced to simply walk away from the property. He gave examples of this problem, which are currently in process. He believed A.B. 60 would lessen the need to have as extensive environmental assessments on certain loans, especially the smaller ones.
Senator James confirmed there was no further testimony on A.B. 60, and closed the hearing.
Senator James opened the work session to hear bills previously heard in committee.
The hearing was opened on Senate Bill (S.B.) 164.
SENATE BILL 164: Provides additional remedy to enforce order of court requiring parent to obtain health insurance for his child. (BDR 3-748)
Marie H. Soldo, Lobbyist, Sierra Health Services, provided oral testimony. Ms. Soldo provided members of the committee her suggestions for proposed amendments, which she explained. Ms. Soldo advised that the agency sponsoring S.B. 164 has agreed with the proposed amendments.
John Sande, Lobbyist, Harrah's, and Nevada Bankers Association, explained the logic of the amendments. He gave the example of an employer who receives an order of the court requiring them to enroll a child in the insurance plan. He advised S.B. 164 was silent as to any obligation for the employer to provide notification that the child is not eligible for coverage. The proposed amendment clarifies the bill's language to show the employer has an obligation to notify the enforcing authority if a child is not eligible for coverage.
Ms. Soldo added that the child may not be eligible because the custodial parent did not have insurance. She advised in that case, the child would not be insured as a result of the court order. She stated that if dependent coverage was available on the parent's policy, the parent would then be required to cover the child.
Senator James asked for and received confirmation that the intent was to make it incumbent on the employer to provide that notice. He confirmed that it would not be the intent of the bill that if the employer did not make notification, they would become liable in some way to insure the person.
Mr. Sande stated that merely not giving notice would not create a liability to the employer. He stated he believed if nothing specific was in the statute, and the employer failed to do this, it would fall under a negligence standard. He stated possibly this did not need to be in the statute, but should be in the record.
Senator James stated he believed it was clear that there is no liability if there is no coverage, and that the employer should send the notice.
Senator Adler agreed with Mr. Sande. He would like to see the employer be required to send the notice so that everyone is clear as to who is and is not covered.
Senator McGinness referred to the second page of the amendment, and read, "If the parent's wages are not sufficient to pay for the premiums, the employer or labor organization shall notify the enforcing authority." He stated he believed the concern voiced by Mr. Sande could be included in this provision.
Senator McGinness was concerned about the portion of the amendment which reads: "The notice must include (b) a statement that the parent has been required by an order of the court to obtain and maintain health insurance for his child." He wondered why the employer was being put through so much when the court has already told the parent they have to obtain the insurance. He asked if this attempts to make the employer the enforcing agency.
Senator James advised this is proposed as a way to enforce an order which includes subsection b.
Senator McGinness stated that it seemed the employer was being made to enforce the order, rather than the parent having to go back to the court to prove they obtained the insurance.
Mr. Sande stated he believed the intent was to cover an event where the court orders the employee to obtain insurance and the employee refuses. In that event, the court would require the employer to enroll the child.
Senator McGinness asked if the court did not have the authority over the individual rather than extending that authority to the employer.
Mr. Sande stated the court does have authority over the individual, but if the individual refuses, there is not much they can do. He stated he believed this was the problem which prompted the child support enforcement agency to originate the bill.
Senator McGinness asked for and received confirmation that if the responsible parent does not comply with the order, the court will now order the employer to enroll the child.
Senator James confirmed there were no further questions as to the amendment or the changes to the amendment.
SENATOR SMITH MOVED TO AMEND AND DO PASS S.B. 164.
SENATOR ADLER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Senator James opened the hearing on Senate Bill (S.B.) 170.
SENATE BILL 170: Limits physical evidence that becomes public record as result of consideration by grand jury. (BDR 14-588)
Ben Graham, Lobbyist, Nevada District Attorney's Association, provided oral testimony in support of S.B. 170. He advised a grand jury and a preliminary hearing have the same function in many ways. He stated a probable cause determination is the purpose of both. He advised a preliminary hearing is generally open to the public, and evidence is discussed, presented and admitted into evidence. The court may take the matter under advisement or hold the person to answer to district court. He advised at that time the evidence is returned back to the person providing the evidence, and is placed in secure custody. He stated that in these cases, the public has seen the proceedings, but has no access to the evidence. He explained that a grand jury hearing is secret. Testimony is taken, and at the conclusion of the proceeding if there is an indictment, the evidence is given back to the person providing it, and a transcript is filed. He advised that at that stage the public can look at the transcript, and see what evidence was introduced or examined by the grand jury. He advised that the public can, under current law, go and examine that evidence. He questioned why that evidence should be treated any differently than that presented at a preliminary hearing. He referred to the statement of Mr. Don Coppa, which had previously been submitted to the committee. Mr. Graham stated the request of the proponents of S.B. 170 is that the evidence of a preliminary hearing and a grand jury be treated the same.
Donald Coppa, Assistant District Attorney, Washoe County Office of the District Attorney, provided oral testimony in support of S.B. 170. He stated a burden is created under the statute, as currently written. He advised that the purpose of evidence is either to prove or disprove a point. He stated his office not only assists in an investigation, but to protect the community by proceeding with the filing of cases. He advised that his office is also responsible for protecting the defendant's rights. He stated this is accomplished by showing that evidence which may be prejudicial is not divulged. He advised these matters are controlled by Supreme Court Rules. He stated the problem which S.B. 170 addresses creates a burden which his office does not know how to meet. He advised under the current law, in order for him to preclude the public from seeing an evidence exhibit, he must petition the court. He has no problem with the public seeing the item, except for the fact that the item is a piece of evidence in a criminal case which later may be judged to be inadmissible, or prejudicial because of review of the public. He advised this can result in a defendent not receiving a fair trial. He stated that this forces him to anticipate in advance that this might happen. He reiterated Mr. Graham's testimony regarding grand jury proceedings. He advised a large problem arises when he must set up a system to insure that, if the public is allowed to view evidence, that the evidence is not tampered with. He gave an example of a current case in Washoe County, in which the exhibits are voluminous.
Senator Jacobsen stated it seemed to him that evidence is evidence. He was aware that different procedures are followed in grand jury proceedings. He stated he understood the need to secure evidence until the matter comes to trial.
Mr. Coppa stated he believed there was a problem with the connotation of the term "grand jury," its use, and the method by which it came into being. He reiterated previous testimony in conjunction with the proceedings being secret and the procedures regarding evidence. He pointed out that no defense counsel organizations are opposing S.B. 170. He stated this is because those organizations are in the same position as the district attorney's office where this problem is concerned.
Senator Jacobsen stated the system appeared backward. He pointed out that ordinarily a person is cited for a crime, but in the case of the grand jury the person is not cited until the hearing takes place.
Mr. Coppa advised that if it is anticipated a person will be indicted, his office is obligated to notify that person of that fact. He stated that person has the right to appear before the grand jury, with counsel, if he or she chooses. He advised that the person is privy to everything that happens.
Senator Shaffer asked where S.B. 170 originated.
Mr. Graham replied this bill was submitted through Clark County on behalf of the district attorney's association. He advised that Mr. Coppa has had the most background in the situation.
Senator Jacobsen asked if evidence is classified in different segments, for example physical and historical. Mr. Coppa replied there is no distinction. He stated S.B. 170 addresses the exhibits, such as a document or a picture, which are marked and shown in the hearing.
Senator Smith referred to page 2, paragraph 6. He asked what line 7 and those lines following address.
Mr. Coppa stated that wherever this language is found in the bill, it is a clarification of what may or may not be a matter of public record. He advised this could be something actually attached to the transcript. He stated "physical exhibits" are returned to the custodian who presented them. The exhibits do not follow the transcript, and would therefore not be a matter of public record.
Senator Smith asked how this fits into the statute.
Mr. Coppa stated he believed it was intended as a clarification in the event there was a dispute as to what constitutes an item being a matter of public record.
Dennis Neilander, Senior Research Analyst, explained the "flush rule" in bill drafting, as it applied to the section in question.
Senator James asked for and received confirmation that the original version of the bill is the one desired.
Senator James advised that preliminary hearings and grand juries are already treated differently because of the grand jury being inherently secret. Therefore, the procedure has been set up whereby some of the proceedings become a matter of public record. He suggested that because of the secrecy, this dichotomy in the law exists. The statutes allow a motion to be made to sequester evidence. He stated he was concerned with something which could be the basis of a grand jury finding never being accessible to the public.
Mr. Coppa stated this would be true regardless of the context upon which the case proceeded to trial. He did not want to lose sight of the fact that the collection of the evidence is for purposes of prosecution.
Senator James stated that much of the testimony in the transcript would be inadmissible. He asked why the evidence is different from anything in the transcript. He could not imagine evidence being allowed to be out of the clerk's possession, which would result in a break of the chain of custody.
Mr. Coppa advised part of the current law states that a system must be set up whereby the examination of anything in the evidence vault, which had been presented to a grand jury, would require that an evidence custodian stand by to assure there was no tampering. He does not understand why his department should have to go through this procedure. He stated the problem with making a motion to suppress evidence is that he often does not know at that time if he has the grounds to suppress that evidence.
Senator James advised the same standard would apply, as the law is silent on the issue. He stated that whoever wishes to view for example a video, needs only to make a motion to the court.
Mr. Coppa advised this is the problem. The person wishing to view the video does not have to make the motion. They simply have to make the request. He advised that to withdraw the evidence, he is forced to argue against the public record exception which has been passed by the Nevada legislature. He related several hypothetical instances in which allowing the viewing of evidence could preclude the use of that evidence at trial.
Senator James asked if anyone had ever alleged that evidence from a grand jury was tampered with and was therefore inadmissable.
Mr. Coppa answered this had not happened, but believed that it would eventually. He stated his office has risked notifying the public of the problem by asking for the statute to be amended.
Senator James asked for and received confirmation that the rules of testimonial evidence in the grand jury are limited by the hearesay rule, and that all of the regular rules of evidence apply. Mr. Coppa stated, however, if a person testifies at a grand jury proceeding and is not available at trial, that testimony cannot be used. This is not the case in a preliminary hearing. He stated that his department has the further burden of putting on exculpatory evidence to a grand jury. He advised the grand jury must review the evidence, and any evidence received from the defendant by way of letter, or anything developed in the investigation, must be presented to the grand jury. He again stated that this is not required in a preliminary hearing.
Senator James asked if a tape was served as a basis for an indictment in an alleged beating case, and the tape was ruled inadmissable at trial, would the press never have the ability to have a copy of the tape.
Mr. Coppa advised a decision from the Nevada Supreme Court identifies the right of the press to obtain that information following the completion of the prosecution, when the tape is no longer a matter of evidence.
Senator James asked if S.B. 170 would change this rule.
Mr. Coppa stated it would not. He advised in the supreme court case he referred to, the evidence was obtained in a criminal prosecution. The criminal prosecution was completed, a release of the information was requested, and was obtained. He stated the information was never a matter of public record to begin with, and the press was still able to obtain the evidence.
Senator James asked if they would not have to obtain it in contravention of the statute if S.B. 170 is enacted.
Mr. Coppa stated they would not.
Senator James read from the bill:
...something used in a grand jury and exhibit to a grand jury to serve as a basis for an indictment does not become a matter of public record and is not ever admitted into evidence at trial.
Mr. Coppa replied that any evidence gathered pursuant to that investigation, whether presented or not, is available to the press after the completion of the case.
Mr. Graham stated it is not the intent to circumvent that aspect.
Mr. Coppa stated the bill does not circumvent this aspect. He
stated it was "any evidence presented or otherwise gathered."
Senator James replied this is what S.B. 170 says.
Mr. Coppa stated he was arguing with the language, which is identifying what is considered a matter of public record. He stated in the case he related, it was never a matter of public record, and was still available. He stated this evidence was never under the context of this statute.
Senator James stated S.B. 170 says just the opposite:
Physical evidence which is returned to the person whose duty it is to control the custody of that evidence does not become a public record unless and until it is admitted into evidence by a court during a trial.
He advised that his question is, does that then limit the ability of the press or anyone else to get to evidence that is never admitted into evidence at trial?
Mr. Coppa replied, because of the supreme court case, it does not. He stated whatever material is gained by way of an investigation, in the form of an exhibit which may not be used in a prosecution, is available to the press at the conclusion of the action. He advised that something which was at one point not a public record item is now a public record item because of its activity. He stated whether or not it is ever considered to be a matter of public record, the public would have access, pursuant to the supreme court decision, at the close of the proceeding.
Mr. Graham suggested adding the wording "evidence by the court during the trial or at the conclusion of the matter." He advised the request is that this evidence be treated as any other evidence, and to be as available and accessible as any other evidence presented in a preliminary hearing or any other matter.
Mr. Coppa stated if the current wording is confusing, he wished to attempt to work to eliminate the problem because of the import of the intent of the bill. He stated the intention was not to prohibit the public from receiving material following the close of any prosecution or investigation.
Senator James stated that a distinction still exists between evidence appended to the public record and that which is not appended.
Senator James confirmed that there was no further testimony on S.B. 170.
SENATOR SMITH MOVED TO INDEFINITELY POSTPONE S.B. 170.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS TITUS AND SHAFFER WERE ABSENT FOR THE VOTE.)
* * * * *
Senator James opened the hearing on Senate Bill (S.B.) 271.
SENATE BILL 271: Revises qualifications for justices of peace in certain townships. (BDR 1-1101)
Senator James briefly described the bill.
SENATOR ADLER MOVED TO INDEFINITELY POSTPONE S.B. 271.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS SHAFFER AND TITUS WERE ABSENT FOR THE VOTE.)
* * * * *
Senator James opened the hearing on Assembly Bill (A.B.) 80.
ASSEMBLY BILL 80:Revises definition of value as it relates to eminent domain. (BDR 3-455)
Senator James briefly described the bill. He referred to a memorandum distributed to the committee by Brian R. Hutchins, Chief Deputy Attorney General, State of Nevada, Office of the Attorney General, Transportation Division, relating to A.B. 80. A copy of the memorandum is attached as Exhibit D. Senator James confirmed that the committee's questions centered around section 2 of the bill, regarding the statute's definition of value. He advised Mr. Hutchins' memorandum attempts to provide background on fair market value. Senator James advised that the Nevada Supreme Court has adopted the definition of fair market value as being the highest price that a willing seller might negotiate for the property. He stated that the Real Estate Appraisers Institute and other experts have settled on "most probable price," which they perceive as being different than highest price. He recalled that, in the case cited in the previous hearing, highest price and most probable price were synonymous. He believed the highest price someone could get for their property would be the most probable price at which a real estate appraiser could arrive.
Senator James advised the definition in the Code of Federal Regulations (CFR) articulates various factors for arriving at market value. These factors have been adopted by the Real Estate Appraisers Institute. He stated that nothing prevents a court from instructing on the factors, or qualifying a witness on the factors, when attempting to reach a decision on fair market value. He was, however, concerned about adopting a statutory definition of market value in an area where the courts have defined value for many years. He again referred to Mr. Hutchins' memorandum, which contains a digest of court decision regarding market value. He recalled that Senator Adler pointed out in the previous hearing that adopting a CFR would be to adopt something which could be a fluid definition, as it could be changed and amended to something different. He suggested that if a definition is adopted for Nevada, that the date of adoption be specified. The alternative would be to allow the courts to articulate the definition of market value through jurisprudence, as they have done previously.
Senator Smith stated concern regarding section 2, paragraph 5 of the bill. He stated he believed Senator James had covered this issue in his discussion.
Senator Jacobsen referred to page 1, section 1, line 9, which states, " . . .must be disregarded when assessing the value." He did not believe anything should be disregarded. He believed all factors should be considered, because in most cases determination is made by an appraisal. In that case, even though the owner is aware that something may be wrong with the property, this could not be communicated to the appraiser.
Senator James believed the intent of this portion of the bill was not to allow a higher price for property because a work of improvement is pending. He gave an example to illustrate this portion of the bill, and stated that he believed this is already covered in the law.
Senator James referred to the value definition and stated his belief that a jury should consider the factors listed in 12 CFR. He believed the question was whether to revise the statute to make the definition of market value a statutory question and remove it from the bailiwick of the courts.
Mr. Hutchins reminded the committee that A.B. 80 was requested by Clark County, and is not a transportation bill. He stated that Clark County was going to be affected by the beltway currently proposed and will have a lot of money at stake in the issue.
Senator Adler asked if "most probable" does not equate to "highest."
Mr. Hutchins replied that he does not read it the same way. He believed "most probable" is a more reasonable estimation of market value. He stated it would be a lot cleaner for a jury or fact-finder to make a determination of market value. He advised the definition "market value" was what all court cases attempted to define. The idea is to make the owner whole.
Senator Adler asked if Mr. Hutchins was not saying the owners would receive less money under the new definition.
Mr. Hutchins believed it would be speculative. He stated that owners in pre-condemnations negotiation stages see the definition as "highest." If someone offers a very high price, it may not be the most reasonable or probable the owner would get upon selling their property, but it is the highest. He stated this would obviously be what the owner would want. He advised "highest" got mixed up with "highest and best use" which is always considered, the determination of most probable price is made, and that is market value. He believed the Nevada Supreme Court had followed the California Supreme Court, and the definition of fair market value is not a good one. He gave an example of a case in which other considerations were not viewed. Referring to CFR, he pointed out that the courts are not the only entities defining fair market value.
Mr. Hutchins, referring to page 4 of his memorandum, pointed out that the 1991 Nevada Legislature codified the most probable price in NRS Chapter 361. He stated this chapter states full cash value, which means the most probable price that the property would bring in a competitive and open market, when establishing how to tax property. He advised this is all that is requested in A.B. 80, to clarify the status of the case law, and revise this definition in NRS Chapter 37.
Senator Adler asked how long the Nevada Supreme Court had defined market value as "highest price."
Mr. Hutchins stated the court has followed this for a number of years, and quoted a 1984 Nevada case and a 1968 California appellate court case.
Senator James referred to this being a substantively different value, and asked whether Mr. Hutchins believed this was an attempt to streamline litigation. He recalled Mr. Hutchins testified in the previous hearing that this would be the case. He then referred to Mr. Hutchins' testimony at this hearing that the bill would impact Clark County. He stated if the legislation would truly change the definition of fair market value to pay people less for their property, he did not believe it would be correct for the legislature to change the definition just before a big road project, resulting in the owners receiving less for their property. He did not believe this would be good public policy, nor was what A.B. 80 attempted to do.
Mr. Hutchins stated he had not testified to the fact that A.B. 80 would lower property values. He further stated that he rarely becomes involved in pre-condemnation issues, and therefore did not know what the effect would be.
Senator Adler asked if "highest value" could be substituted in and keep the five factors used in the definition.
Mr. Hutchins did not believe this would help. He believed the factors should be identified, but did not understand what "highest price" means. He further disagreed that the Nevada Supreme Court case equalized "highest" and "most probable" price.
Senator Adler agreed that there would be advantages to having a common definition. He stated, however, the legislature has a policy to attempt not to overturn long existing supreme court standards.
Senator James stated he was going to limit the testimony. He stated that the case to which he referred was affirmed, stating the "most probable" price was the "highest price."
Mr. Hutchins stated in that case the appraiser was able to say he was really talking about something else, and showed how he arrived at the price. He said, therefore, there was no ground for reversal.
Senator James advised that he and the committee would review Mr. Hutchins' memorandum before voting on A.B. 80. He closed the hearing.
Mr. Hutchins distributed to the committee two letters to Senator James; an April 12, 1993 letter from Stephen R. Johnson, Appraiser, and an April 15, 1993 letter from Mr. Hutchins. Mr. Hutchins asked that these letters be included in the record. The letters are attached as Exhibit E and Exhibit F, respectively.
Senator James opened the hearing on Assembly Bill (A.B.) 307.
ASSEMBLY BILL 307: Reduces amount of time in which person must pay dishonored check or draft to avoid presumption of intent to defraud. (BDR 15-791)
Senator James briefly explained the bill.
SENATOR SMITH MOVED TO DO PASS A.B. 307.
SENATOR ADLER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator James confirmed there was no further business to come before the committee, and adjourned the meeting at 4:15 p.m.
RESPECTFULLY SUBMITTED:
Sherry Nesbitt,
Committee Secretary
APPROVED BY:
Senator Mark A. James, Chairman
DATE:
??
Senate Committee on Judiciary
April 12, 1993
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