MINUTES OF THE meeting
of the
ASSEMBLY Committee on Judiciary
Seventy-Second Session
March 25, 2003
The Committee on Judiciarywas called to order at 8:14 a.m., on Tuesday, March 25, 2003. Chairman Bernie Anderson presided in Room 3138 of the Legislative Building, Carson City, Nevada, and, via simultaneous videoconference, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
Note: These minutes are compiled in the modified verbatim style. Bracketed material indicates language used to clarify and further describe testimony. Actions of the Committee are presented in the traditional legislative style.
COMMITTEE MEMBERS PRESENT:
Mr. Bernie Anderson, Chairman
Mr. John Oceguera, Vice Chairman
Mrs. Sharron Angle
Mr. David Brown
Ms. Barbara Buckley
Mr. John C. Carpenter
Mr. Jerry D. Claborn
Mr. Marcus Conklin
Mr. Jason Geddes
Mr. Don Gustavson
Mr. William Horne
Mr. Garn Mabey
Mr. Harry Mortenson
Ms. Genie Ohrenschall
Mr. Rod Sherer
STAFF MEMBERS PRESENT:
Allison Combs, Committee Policy Analyst
Risa B. Lang, Committee Counsel
Sabina Bye, Recording Committee Secretary
OTHERS PRESENT:
Judge Deborah E. Schumacher, Family Division, Department 5, Second Judicial District Court
Judge Gerald W. Hardcastle, Family Division, Department D, Eighth Judicial District Court
Michael Capello, Director, Washoe County Department of Social Services
Cynthia Lu, Chief Deputy Public Defender, Washoe County Public Defender’s Office
Liz Breshears, Family Programs Officer, Division of Child and Family Services, Nevada Department of Human Resources
Dara Goldsmith, Attorney, Clark County, Nevada
Jennifer Henry, Commissioner, Guardianship Division, Eighth Judicial District Court
Ernie Nielsen, representing the Washoe County Senior Law Project
Kim Spoon, Private Fiduciary Guardian, Guardianship Services of Nevada
Mark Solomon, representing Lionel, Sawyer, and Collins, and the Probate and Trust Section of the State Bar of Nevada
James Jackson, representing the Law Offices of Kermitt L. Waters
Dona Amy Tucker, Citizen
Kevin Keefe, Realtor
Brian Padgett, Law Offices of Kermitt L. Waters
Laura Fitzsimmons, Attorney
Lucille Lusk, Cochairman, Nevada Concerned Citizens
Mike Alonso, representing the Airport Authority of Washoe County
Michael G. Chapman, Attorney, representing Clark County Public Works
Madelyn Shipman, Deputy District Attorney, Civil Division, Washoe County District Attorney’s Office
Heidi Mireles, Chief Right-of-Way Agent, Nevada Department of Transportation
Brian Hutchins, Chief Deputy Attorney General, Transportation and Public Safety Division, Office of the Attorney General; and Chief Counsel, Nevada Department of Transportation
Steven Graybar, Ph.D., President, Nevada Board of Psychological Examiners
Fred Hillerby, representing the Nevada State Board of Nursing, the Board of Dental Examiners of Nevada, and the State Board of Pharmacy
Buzz Harris, representing the State Contractors’ Board
Chairman Anderson:
The Assembly Committee on Judiciary will please come to order. [Roll called.] There are 13 members present, Mr. Sherer is in the Assembly Committee on Government Affairs on a bill and should be marked present when he arrives. Mr. Brown will be attending in Las Vegas. There is a quorum present. [The Chair reminded the Committee members and those present in the audience of the Standing Rules and appropriate meeting etiquette.]
Finally, please note the sign on the witness table concerning the legality of misrepresenting facts before the Legislature, either in a committee or at any other time on a bill pending before us.
[The Chair recognized Judge Bunch who was listening via the Internet from Battle Mountain, Nevada.]
Two bills lend themselves to be heard together and they are A.B. 273 and A.B. 365. Let’s turn our attention to A.B. 273.
Assembly Bill 273: Establishes procedures for permanently placing an abused or neglected child with a guardian. (BDR 38-688)
Chairman Anderson:
On behalf of the Legislative Committee on Children, Youth, and Families, we have Ms. Buckley.
Assemblywoman Barbara Buckley, District No. 8, Clark County:
[Introduced herself.] I was the Chair of the Legislative Committee on Children, Youth, and Families, and that [interim] committee recommended A.B. 273.
Nevada has a system for guardianships located in Nevada Revised Statutes (NRS)Chapter 159. Someone may file a petition when a person either does not have the capacity to understand sufficiently to manage his or her own affairs, or when a person is a child and there is no longer a parent able to care for the child. We also have a system of adjudication when a parent is guilty of abuse and neglect.
[Assemblywoman Buckley continued.] We have what are called “432B Proceedings,” where procedures are set forth to have a hearing, to adjudicate whether abuse and neglect have occurred, and to produce what is now required—a “plan for permanency.” In 1997 the federal government passed the Adoption and Safe Families Act (ASFA), which is one of the best bills to come out of the federal government, in my opinion.
That ASFA sends a statement that children simply cannot languish in foster care. The system must either figure out what services the parents need and return that child to its parents or find a permanent home for the child. The law elevated the child’s interests above those of anyone else. The state then heard those issues and adopted Nevada’s version of the Adoption and Safe Families Act in 1999.
The legislative interim committee, in continuing to review the abuse and neglect system for children, studied any improvements that could be made in the system as it deals with abused and neglected children.
Currently, if a child is removed from the home and ultimately cannot be returned to the parents because they refuse to quit their drug abuse or other issues and there is someone willing to be a guardian for the child, perhaps a foster parent or distant relative, they are required to leave that judge/court, which gets us away from our “one judge/one family” model, and file a new lawsuit in the guardianship court. They would then go through all of the proceedings again. You will hear in testimony on A.B. 365 that those proceedings can be very complicated because the guardianship court deals with a number of assets as well. Most abused and neglected children do not have a large amount of money involved in the estate, but in the guardianship court the client is often an elderly person who may have many assets. As you do a full, in-depth review of the NRS 432B, that is a complicated procedure.
Assembly Bill 273 would provide that when someone is already in the court system with an action pending and it involves an abused child, instead of making that guardian file a totally new action, the bill would establish a new proceeding within the chapter dealing with abused children under NRS 432B when a lawsuit has already been filed [in one court.]
That’s the concept and the interim committee felt it made sense. Why make someone file yet another lawsuit when it could be handled within that same action?
[Assemblywoman Buckley continued.] When the interim committee heard the ideas and the concepts, and once the bill draft was complete, there is a philosophical decision that the Assembly Committee on Judiciary has to make. The bill on page 2, Section 3, would set up a system whereby, at line 10, the agency that adopted the plan may petition the court for the appointment of the guardian. Judge Deborah Schumacher, a very experienced and knowledgeable Washoe County judge, generated the original concept and is here to testify. The policy decision before the Committee is whether it should be limited to the agency or whether the actual proposed guardian would have the ability to file inside the original action.
I personally think it makes sense to allow the guardian that opportunity, otherwise, Nevada would have a bifurcated system where only the agency could file in a simpler and faster process. The goal was to make it quicker for the guardian as well. I am sure Judge Deborah Schumacher or others, including Judge Gerald Hardcastle in Las Vegas, will talk in more detail about the concept.
One other “thorny” issue exists that causes me some concern and will become a policy issue for the Committee; it is complex. We want a permanency plan for children, and the legislation would allow permanent guardianship to become the “permanent plan,” but that is somewhat inherently contradictory because guardianships are never permanent. The natural parent could file a petition to terminate guardianship at any time.
One of the things that occasionally happens, and in my opinion must be stopped now, is that if an abused child is taken away from their parents and placed in a permanent guardianship, that is the permanency plan. Many times the case is then closed from CPS (Child Protective Services), from DCFS (Division of Child and Family Services), and from the system’s point of view. The abuser then files a petition to terminate the guardianship. In many cases there is a new judge, who has no idea how bad the abuse and neglect was. There is no one from the state or the county to testify because their case is closed and they do not even know a petition to terminate the guardianship has been filed.
I have many inquiries out to Judge Gerald Hardcastle and others for suggestions on how to address those two concerns, so that I can make a recommendation in the work session. Other than those two issues that are left outstanding, the interim committee felt A.B. 273 was a good step forward and a method to further simplify the process for the benefit of abused children.
With the Chair’s permission I would like to invite Judge Deborah Schumacher and Judge Gerald Hardcastle to expand further on the possibilities presented in the bill.
Judge Deborah E. Schumacher, Family Division, Department 5, Second Judicial District Court:
[Introduced herself.] The text of the bill is largely mine. Assemblywoman Buckley did a wonderful job of explaining why I feel this provision makes sense. It is a more efficient way for the system to operate. It is also a part of the model court project that I am also participating in within Washoe County. The project seeks court betterment and that is what would be accomplished through A.B. 273. I very much appreciate you considering this legislation.
There were a number of minor concerns that were expressed to me from Clark County too late for me to provide the Committee with conceptual amendments. I believe the Committee may already have language for changes that were communicated to me a few weeks ago, which would clarify language (Exhibit C).
For example, in Section 3, line 7, the language should not state, “a child we want to adopt,” it is, “a plan we want to adopt.” You will see the word “adopt” simply needs to be moved within the sentence.
The important issues, such as the one Assemblywoman Buckley just mentioned, with respect to why the bill was drafted to allow only the agencies to petition the court, need clarification. For me, when such cases come before me, the structure of the bill contemplates that the permanency plan, in the [NRS] 432B cases, is guardianship. That means the agency is in favor of guardianship in almost every case I see; thus I do not, in a practical manner, see cases where the agency desires guardianship and someone else is not in favor because that is the “permanency plan” for the child.
I appreciate the point, but it doesn’t resonate with how cases come forward. What I did not want to have happen is to have the structure of the bill allow a third party, a very interested and well-meaning relative, to come forward seeking guardianship very early in a case before it is clear whether a family can be reunified. That’s why the structure of bill would make guardianships easier at the point at which the court that is supervising the case has found that permanency cannot be with the birth family and needs to be somewhere else.
I would never want us to provide for an easy “end run” around that reunification system by allowing relatives to “pop up” two or three weeks into the case and try to truncate the process. That is the reasoning behind the bill structure that provides for the permanency plan within the dependency case before the guardianship can be considered.
[Judge Deborah Schumacher continued.] In those circumstances I do not see cases where I have private individuals and agencies in competition regarding the guardianship of a child. It has not happened in that manner in my court, but the experience may be different in Clark County.
The fight in a [NRS] 432B case is over the permanency plan at that point. If the relatives disagree about what should happen to the child, they will be litigating the permanency plan itself. Once, the permanency plan establishes guardianship, then this statute should come into play.
Regarding the tension between the permanency plan being a guardianship, but the real and true fact that guardianships are not necessarily permanent because they are not a termination of parental rights and they can be undone.
Legislation was introduced in the previous session that would have created a “super guardianship,” one that could not be undone. It carried some of the standards of termination of parental rights. At that point we were concerned that the ordinary Nevada guardianship would not “pass muster” under the Adoption and Safe Families Act. We have learned from our sister states that that fear is unfounded. Those states have not been taken to task in their federal funding reviews when they have used an ordinary guardianship similar to Nevada’s current process as an option.
Guardianship is one of the specifically defined and acceptable permanency outcomes for children under the Adoption and Safe Families Act. Apparently, the Nevada plan, which is commonly used throughout the country, where if parents some day rehabilitate themselves the guardianship can be undone, still satisfies the Act. Thus, I stopped pursuing a “super guardianship” when it became plain that it was not necessary. It is true that Nevada guardianship is not meant to terminate parental rights any more than a “159 Guardianship.” Mr. Cotton of the Division of Child and Family Services stated to me that he was happy with that suggestion.
It is clear to me that the intent of ASFA is that adoption is the preferred method of child protection and other permanency measures are not likely or practical to expect adoption to occur. Under Section 4, subsection 2, line 38, the text would be, “adoption of the child is not appropriate or is not likely to occur; and that termination of parental rights would not be in the best interests of a child.”
[Judge Deborah Schumacher continued.] Mr. Cotton suggested, and I concur, that if termination of parental rights had occurred, but there was still a court finding that adoption for whatever reason was not likely—perhaps with a seriously mentally ill child—language would be added to include cases in which parental rights were terminated, but it still appears adoption is not going to occur. I had not meant to exclude that category of cases in the language.
At page 2, line 32, it is my understanding that my Clark County colleagues would like “10 days” changed to 20, and I concur. Their comments indicate that 20 days mirrors more closely the [NRS Chapter] 159 and more closely the [NRS] 432B notice requirements.
I am interested in the heart of the bill, and whatever details need to be changed without “gutting” the bill would have my approval.
One further substantive change suggested by my Clark County counterparts is that they want the bill to state clearly, which it apparently does not currently, that once the guardianship is established the ordinary reviews required by NRS Chapter 159 would require the guardian to complete a form annually regarding the child’s schooling and welfare concerns. I agree the intent was that once guardianship in permanency was established, guardians be required to comply with the same standards. There should not be two classes of guardianships.
Assemblywoman Buckley mentioned the issue of assets. In Washoe County if the person has no assets they can be designated a summary guardianship and then assets are not required. It is still necessary to have communication regarding the welfare of the child and their school attendance.
Assemblyman Carpenter:
On page 3, lines 25, 26, and 27, please explain how that language would be interpreted.
Judge Deborah Schumacher:
Good question. It might be possible for a person to read the language as written more broadly than intended. The intent of that language was to clarify than when a guardianship is granted, the county or the Division of Child and Family Services, who had been the legal and physical custodian of the child while they were in foster care, would no longer have those custodial rights. Those rights would be transferred to the guardian.
The section following clarified that a parent’s rights were not terminated. This proceeding does not have the kinds of standards of proof or due process provisions that could, in any way, result in termination of parental rights.
Assemblyman Carpenter:
I understand. I concur in that context.
Judge Deborah Schumacher:
If the language is troublesome, the idea is to clarify that whoever had rights in the foster care context do not under guardianship. If you would be more comfortable to reword the statement, that could be done.
Assemblyman Carpenter:
It is satisfactory as written.
Judge Gerald W. Hardcastle, Family Division, Department D, Eighth Judicial District Court:
Assembly Bill 273 is a good concept. We often see cases in the juvenile court where children have been abused and neglected. The parents are simply unable to “get their act together” and then the child is required to be sent to the guardianship court for a whole new proceeding. Those proceedings are expensive. They are not done for free and are time-consuming. The procedural requirements are more difficult in the sense of fundamental jurisdiction and notice requirements. Because all of the requirements are already met in juvenile court, it seems more efficient for guardianship to be established in that court as well.
I agree with Judge Schumacher and Assemblywoman Buckley that the heart of the bill is what matters. While we could argue over some of the precise language, the reality is that the legislation will be very good for the people who come before my court.
Fundamentally, the bill authorizes the juvenile court to establish its guardianships for those children for whom the permanency plan is guardianship.
I do have two concerns. I hope we don’t get caught up in the concept of a permanent or “super” guardianship. It really is a separate issue. The first step is to allow the juvenile court to establish a guardianship, as they are traditionally understood. It is a more difficult process to establish what the permanency or “super” guardianship is.
There is a need to define what steps or protections should be placed in the NRS. It is important for it to be defined, but I would hope we could complete this legislative session and worry about that at another date.
My second concern is relative to whether or not the agency alone should be able to file a petition. My experience differs from that of Judge Schumacher. While I trust the agency to make this decision—and in most cases the agency will make the decision—the purpose of the court system is to decide among occasionally conflicting claims as to who should get custody of a child and what the plan ought to be.
For instance, perhaps the children’s attorney disagrees with the efforts made by the agency and asserts the court should proceed to guardianship rather than continuing to work with the parents. Perhaps the family or a relative wants to step in and assume those obligations. Why should those people not be allowed to come before a court and allow the court to decide the issue under the standards that are set forth in the statutes?
It seems to make absolute sense to me, that we expand the group of people who can make that application to any person who has an interest in the child such as the guardian, the children’s attorney, any member of the family, or the proposed guardian. Let them all come in and let the courts separate it out. If it is too early, the court can simply explain that there is an obligation under the statute to work with the parents for a specified length of time.
To leave that decision solely up to the agency means that not only can they make the determination as to who the guardian ought to be among competing claims, but also that they can delay permanency. To suggest that the agency is always completely on top of such cases would be inconsistent with my experience.
I am reluctant to use an analogy I have in mind, but I am going to use it anyway. The reason A.B. 273 makes sense is because the “one judge-one family” concept is like racing in the Indianapolis 500 and in the last mile, requiring that the driver get out of the car, call someone down from the grand stands, make sure they have a driver’s license, teach them how to run the car, and then let them drive the car to the finish line. That is how antiquated current procedures are.
Michael Capello, Director, Washoe County Department of Social Services:
[Introduced himself.] Assemblywoman Buckley summarized all the important reasons why A.B. 273 is necessary. The Adoption and Safe Families Act of 1999 placed a very high standard upon child welfare agencies, moving the need to achieve permanency for children to 12 months.
One of the ongoing difficulties in achieving children’s permanent placement finalized with family members is often their inability to complete a filing of a guardianship due to numerous reasons. Those include financial reasons, lack of understanding of the process, and sometimes, frankly, those family members must file a petition and indicate all of the negative aspects of the parent who is often a close relative of the petitioning relative. Oftentimes they are hesitant to do that, which results in the child remaining in foster care for a longer period of time.
As a result of A.B. 273 the agency will be allowed to file for that guardianship within the context of the [NRS] 432B hearing. That will, for all intent and purposes, eliminate much of the delay and perhaps some personal frustration or concern for family members having to articulate those negative aspects of another family member.
As to the “thorny” policy questions mentioned earlier, I do not believe we have an objection regarding expansion of who is authorized to file a guardianship petition. Judge Schumacher made a good point, that we do not want to short-circuit the child welfare agency’s responsibility to provide the biological parents with the full range of services and afford them the best opportunity to reunify with their children. As long as the guardianship proceeding through [NRS] 432B is tied to an approved permanent plan that represents guardianship, I don’t see an issue as to who may file for the guardianship within that proceeding. I would be hesitant if that were not connected within the [NRS] 432B proceeding.
Keep in mind that anyone could still proceed under NRS Chapter 159 in filing for a guardianship independent of [NRS] 432B. Granted, in our court system it would still come before the same judge. However, if there is a reason that the child welfare agency should not continue to be involved in that guardianship, this does not preclude someone from filing a guardianship [request] under the existing guardianship statute. It just facilitates the process in a [NRS] 432B proceeding where the guardianship plan is the permanent plan for the child.
Also, from the perspective of Washoe County, I do not have any objection to being involved in conducting some type of assessment of a guardianship “gone bad,” so that if there are issues with a guardian, those reports would go back to the child welfare agency as a potential new abuse and neglect report anyway. And if the biological parent petitions to have the guardianship set aside and the court wishes to obtain information from the agency at the time, I would have no issue or objection with that. It makes sense. It relates to the ongoing hope that we are providing a safe and permanent placement for these children.
The intent here is not to circumvent the normal child welfare proceedings.
Cynthia Lu, Chief Deputy Public Defender, Washoe County Public Defender’s Office:
[Introduced herself.] I believe the Committee members are well aware that I represent parents in [NRS] 432B cases.
My office supports the concept of A.B. 273. We work with many families that want to file guardianships and find it very difficult to navigate and meet the requirements of NRS Chapter 159. I agree that the bill would also provide permanency for the children and for the family. Many times our clients are in support of relatives obtaining guardianship because they understand they need more time to get their lives together and know that their children will be safe with their extended family. They typically want the process to be easy for the family.
Being a practitioner in these cases, I read these bills with an eye to how my office and its attorneys will need to litigate the issues and what information would need to be addressed with our clients regarding the statutes and how it applies to them. In that regard, I do have a few questions for clarification.
In Section 4, on page 2, line 37, it states that the guardianship petition requires a finding that the child is in need of protection. That is a finding that is normally found in a [NRS] 432B case for purposes of removal. I was not quite sure why that type of finding is necessary in a guardianship petition that wouldn’t be needed in a NRS Chapter 159 guardianship petition.
The other issue is that it is my understanding that the petition will be filed as part of a [NRS] 432B hearing and the evidence standard being utilized under the draft language is “all relevant and material evidence,” as compared to an NRS Chapter 159 standard that is “best interest of the child.” If the purpose of the bill is to grant a guardianship, should the evidence standard be better aligned with that of NRS Chapter 159 evidence standard rather than [NRS] 432B standards?
I understand that part of the issue before the Committee is creating a hybrid between the two sections, but NRS Chapter 159 evidence standards follow the Nevada Rules of Civil Procedure while [NRS] 432B standards are much more lax and give more discretion to the court.
Also, if the case remains a [NRS] 432B case, would the case number remain under those of that statute or would they be changed to those of [NRS Chapter] 159 guardianship and be given a different case number?
I ask these questions to clarify advice we will provide to our clients about what they must do in the future and their rights regarding these cases, where they file potential future motions if they do get their lives together and want to file a motion to have custody returned to them.
[Cynthia Lu continued.] One other concern I have with A.B. 273 as well as with A.B. 365 is that [NRS] 432B hearings in Washoe County have been used in a more flexible manner regarding the qualifications of a guardian. Nevada Revised Statutes Chapter 159 hearings have stricter rules about what would disqualify a person as a guardian. Under NRS 432B, where the county has tried to provide custodianships, which are similar to guardianships, we were not hindered by a number of restrictions regarding the qualifications of a guardian. I believe A.B. 365 does respond to one issue, that of a person making guardianship application who is a convicted felon. It does give some discretionary language on the issue; however, in other aspects of qualifications, that same language could also be used to not be so restrictive with [NRS] 432B families.
Mainly a problem would arise because the parents we represent do not always have relatives with a spotless history. My concern for the families would be that if the statute requires them to comply with all the strict requirements of NRS Chapter 159 without some discretion by the court, it could still restrict certain family members who perhaps made a mistake 10 years earlier and who would be perfectly good caretakers for the children at the present time. The court might not consider them as guardians because there is still some disqualifying language under NRS Chapter 159.
I agree with Assemblyman Carpenter’s concern regarding the language on page 3, line 26 of A.B. 273. I think specifically, the words “terminates the rights of all other persons to legal and physical custody.” I understand the concept, but I wonder if there might be some language missing prior to the word “terminates” because it is typically used in such a final judgment kind of term regarding rights. I wouldn’t want that to create any confusion for any practitioners.
As the bill currently reads, I believe there will be a fiscal impact to either the District Attorney’s Offices in Clark and Washoe Counties who are completely assuming all [NRS] 432B cases for filing of petitions. There would also be a potential impact to the Office of the Attorney General for the rural counties who still represent the Division of Child and Family Services and a slight fiscal impact to social services if they were to conduct home studies that are requested by the court in deciding whether or not to end a guardianship case.
The current draft would create only a slight fiscal impact to the Office of the Public Defender or that of any defense attorneys. We are only looking at one additional hearing. However, if there are amendments—and I believe one has been proposed that would allow a guardian to file a petition as opposed to making that allowance only for the agency—I believe if that were to happen there is a potential for a bit more litigation because we would be dealing with a third-party litigator who might or might not hire another private attorney.
Relatives come forward all the time in [NRS] 432B hearings indicating to the court that they wish to be a guardian or want to be a caretaker for the child. I think Judge Hardcastle’s concerns about the relative not having the opportunity to do that is alleviated in that manner without allowing the guardian to also file a guardianship petition because the court will hear from them through the [NRS] 432B hearing and the court can adopt a permanency plan of a guardianship with that relative.
Assemblywoman Buckley:
Because three other large bills are scheduled during this hearing, I wish to extend an offer to work with all the interested parties on some consensus amendments. Ms. Lu had not shared her concerns with me once the bill was drafted, otherwise I could have already done that, but I am happy to do so now.
Judge Deborah Schumacher:
I understand Assemblywoman Buckley’s statement that we need to get on with business and that is what we will do. I will share my responses with her unless the Chair wishes otherwise.
Chairman Anderson:
I think having the interested parties work with Ms. Buckley on amended language would be sufficient.
Are there questions for Mr. Capello or Ms. Lu? Seeing none, I will call Ms. Breshears to the witness table.
Liz Breshears, Family Programs Officer, Division of Child and Family Services (DCFS), Nevada Department of Human Resources:
I would like to let the Committee know that the DCFS is in favor of A.B. 273. I know you have a full agenda so I won’t reiterate the good points made by Assemblywoman Buckley. However, I would like to make a couple of statements.
Among the positive changes in the bill is that currently if adoption is not an option, the only other option for some of our youth is long-term foster care. So the bill provides an excellent alternative and there are times where the children themselves do not wish to be adopted.
The bill allows for a more stable custodial relationship for the child. The state or the county custody would be dropped so it would be cost-efficient. It allows the child, in theory, to have a strong familial relationship so that when they age out they still have ties to their family.
Ms. Lu testified to fiscal points of the bill. I also have a few fiscal comments. There would need to be extensive staff training of child welfare workers throughout the state. However, we estimate that cost to be approximately $5,800.
Secondly, on page 4, lines 16 through 19, of A.B. 273 it allows for judges to order DCFS and the counties to file a report and recommendations in response to a motion to enforce modified termination of the guardianship process. Those kinds of reviews are relatively expensive; however, we don’t know how frequently they might be requested. Until we have some experience, we really don’t know the impact of those particular costs.
We believe the bill is good for children and makes fiscal sense for the state and the counties, and we would encourage your support. I would be happy to answer any questions and to work with Ms. Buckley in refinement of the bill language.
Assemblyman Carpenter:
If these procedures work, wouldn’t there be a large savings in the end if the children can be placed in a proper guardianship and not have them cared for completely within state and county systems? It seems to me the fiscal impacts would be more than offsetting, even without the consideration of how much better it is for the child.
Liz Breshears:
That is indeed our hope. Under the bill, we would be able to close the child welfare case so that caseworkers will have on their caseloads the children who actually need that ongoing care, attention, and visitation.
We are hoping through A.B. 273 that the child would be in a stable home like other children and have no more involvement from the child welfare system.
[Ms. Breshears presented the Committee with written testimony (Exhibit D) from Edward E. Cotton, Administrator, Division of Child and Family Services, Nevada Department of Human Resources.]
Chairman Anderson:
Thank you very much, Ms. Breshears. We would ask that you or your office be available to work with Ms. Buckley on A.B. 273.
I hereby close the hearing on A.B. 273 and open the hearing on A.B. 365.
Assembly Bill 365: Makes various changes to provisions regarding guardianship. (BDR 13-953)
Chairman Anderson:
Ms. Buckley, this is another bill you have brought forward at request and is another piece of broad, sweeping legislation, but one I think we are all looking forward to. I know I was happy to sign on to it with other members of this Committee.
Assemblywoman Buckley:
I requested this bill at the urging of the Clark County Guardianship Commissioner, Jennifer Henry, who is present in Las Vegas along with Dara Goldsmith, who is with the State Bar of Nevada.
Commissioner Henry and Dara Goldsmith are probably two of the most knowledgeable people in this area. As they recounted to me several years ago, they were part of a committee to rewrite NRS Chapter 159, dealing with guardianships. It never seems to work very well for a committee to attempt to write a chapter of NRS. Thus, two years ago they rewrote NRS Chapter 159 themselves. That [concept] is what is contained within A.B. 365. There are a number of very good changes that will be brought about through the bill in terms of cleaning up language dealing with the Nevada Supreme Court decision that had expressed concern because they did not have procedures in place they could not rule on other parts of NRS. The bill would also allow a little more flexibility to ensure that guardians are protected.
Staff has provided an overview and a section-by-section analysis so that if something might strike you during testimony you can question them throughout the testimony (Exhibit E).
You will hear some proposed amendments that resulted from people calling and asking for clarification, including Ernie Nielsen, whom I also believe is present. Some of those suggestions are incorporated into the proposed amendment language (Exhibit F).
With that, I will have the Commissioner and Ms. Goldsmith hit the high points of the bill and then, if you want them to discuss specific sections they would be happy to do that.
Dara Goldsmith, Attorney:
[Introduced herself.] I am a former Clark County Bar President and am very involved in the area of guardianship law, and I presently sit on the Board of Governors for the State Bar of Nevada.
With regard to A.B. 365, we have experienced a number of instances that have arisen in the past couple of years where the Supreme Court has not been willing to hear appeals of matters that concern our wards. A ward is an incompetent individual who is unable to care for his or her self. We have a number of problems currently in NRS Chapter 159, and for many years attorneys in the community relied upon the probate code for clarification because that was where the guardianship code was derived. Based upon that it became apparent to attorneys in the area of guardianship, as well as guardians and possibly wards that, absent some changes being made here, there would be no recourse through the Nevada Supreme Court for any thoughts of wrongdoing or failure to agree with a decision of the district court. That is, unless the ward died or turned 18, which resulted in termination of the guardianship.
Many wards are considered incompetent as a result of a birth defect; they become an adult ward at the age of 18 but may have a life expectancy of 40 to 60 years. In that case, if they did not agree with something their guardian had done, they would possibly have no recourse for 60 years. That is a very disturbing concept.
Also, based upon the decision, as many on the Committee know, during the past two legislative sessions there have been many modifications to the probate code, the code we previously relied upon so strongly. When those revisions were made, they were not made applicable to the guardianship code, thus interested parties could no longer rely upon the probate code.
Also, the last major rewrite to the guardianship statutes was completed over 25 years ago. There are many different situations today than what they might have been 25 years ago. We have situations involving trusts. We have situations involving Medicaid.
Some definitions have been added into the statutes, which we believe make them a bit more user-friendly. We have tried to, along with the Legislative Counsel Bureau, become gender-neutral. We have worked, based upon the draft that Commissioner Henry and myself originally crafted, with attorneys throughout the state, including the rural areas, Washoe County, and other practitioners in Clark County, who have made constructive criticism and comments to the proposal. We are comfortable and confident that technical corrections and minor modifications can be made to the bill so that it can move through the legislative process.
Assembly Bill 365 is a substantial bill consisting of a major rewrite to an entire Chapter of the Nevada Revised Statutes, but we strongly believe that the changes are needed and that they will benefit the citizens of Nevada.
Jennifer Henry, Commissioner, Guardianship Division, Eighth Judicial District Court:
I share the sentiments of Ms. Goldsmith, and in fact, I designated her to be our spokesperson today.
I am here also to let the Committee know that I have received letters in support of A.B. 365 from Judge William O. Voy (Exhibit G). I have also received letters from Judges Scott T. Jordan of the Second Judicial District Court and from Hearing Master Carol A. Cooke of the Second Judicial District Court (Exhibit O). I also have a letter from Judge Robert W. Lueck, the current presiding Guardianship Judge (Exhibit H). I do the actual “in the trenches” hearings and he presides over any objections to my work product.
We also have a letter in support from Phil Dunleavy, Lincoln County District Attorney (Exhibit I) who is assigned to help the newly appointed Lincoln County Public Guardian.
The Clark County Public Guardian is present and in support of the revisions.
Chairman Anderson:
Did you want to take us through A.B. 365 section by section so the Committee has a clearer understanding of the bill?
Dara Goldsmith:
I would be happy to walk you through the major revisions.
Section 2 contains a provision with regard to inclusion of a definition of citation, which is presently omitted from the statutes. If someone looked at the word “citation” they might consider it an antiquated word without a definition.
Section 3 would mirror the provisions of the UCCJA (Uniform Child Custody Jurisdiction Act), which allows courts in different jurisdictions to share information with one another and determine the appropriate court to hear the matter. There are often situations where either seniors or children are removed inappropriately. Those issues need to be addressed between the different courts battling for jurisdiction.
Section 4 addresses appointment of a guardian ad litem. Such an individual who has the ability to report to the court what their ward’s wishes are, act as an advocate for the ward. Often to be distinguished from an attorney, a guardian ad litem would also represent what would be in the best interest of the ward, which may not be the desire of the ward.
One such example would be a child ward who might say they want a hot fudge sundae for lunch and the attorney would argue that the child should have a hot fudge sundae for lunch. If you are a guardian ad litemyou might say, “No, that’s a nice dessert, but as a child, and I am making a decision for you, you are going to have an egg salad sandwich, because that would be a more responsible meal.” Section 4 allows the court to appoint guardians ad litem for wards.
Section 5 has a proposed amendment. We want to make certain that all sections of the probate code we have removed and made specifically applicable to wards. Section 5 addresses the appraisal of a ward’s property. There were some issues raised in rural communities that sometimes it is difficult to obtain appraisals. Therefore, a de minimis value of $5,000 is included in Section 5 when representations are made solely by the guardian.
There was an additional issue that arose in the last few days that we wish to present. There are often situations where wards are not going to be selling their real property and it can be quite expensive to obtain an appraisal, especially in the rural areas.
One amendment that will be offered is to allow the assessor’s value to be utilized in its stead on an appraisal. That information is accessible to all through Web sites or looking at a tax bill. However, if the property is to be sold, an actual appraisal would need to be prepared.
In Section 6 language was imported from the probate code referring to the ward’s assets. Sections 6 through 9 are all incorporation of probate code provisions.
Section 10 incorporates language from the probate code; however, part 2 of Section 10 is of concern to the rural counties. Their courts do not have the capacity to accept monetary deposits to hold. Because of that the language has been modified to accommodate the rural communities by allowing the court to direct, thereby allowing the court to hold the funds or it could order that such funds be deposited with an escrow company.
Sections 11 through 35 merely incorporate provisions from the probate code and tailor them to accommodate guardianship.
Section 36 was incorporated to establish that persons who file in guardianships have some responsibility to the ward, that they cannot merely file petitions to create problems for the ward, which would then become a burden of the ward in terms of fees. The provisions were added to permit the reimbursement of the estate for any pecuniary loss it suffers when good cause was not present for filing of the petition by the guardian. That has become a problem in Clark County where sometimes personal preferences will become involved, and, rather than the court becoming a place for the family to do battle, it is necessary to show that there is some fiscal responsibility and that the ward’s resources are not to be inappropriately utilized.
I will have Commissioner Henry address the next few issues.
Commissioner Jennifer Henry:
Section 37 will allow the court, with sufficient cause, to suspend letters of guardianship during a period where an investigation is being conducted regarding as to whether a guardian has acted inappropriately with a ward of the state. It provides for a temporary 30-day suspension and at that point, we can compel the former guardian with the suspended letters to deposit the money to an escrow account within the Public Guardian’s Office or to a new temporary guardian that has been deemed appropriate during the period of an investigation.
Section 38 of A.B. 365 has been added so that if a guardian has been removed and that person fails to appear before the court when asked to be present to answer with regard to suspected losses that have occurred on behalf of a ward’s estate.
If they do not appear, Section 38 would allow that guardian to be held in contempt and a bench warrant issued for their arrest and appearance in court.
Section 39 addresses the resignation of a guardian. People cannot be held in involuntary positions, so if a guardian needs to resign for whatever reason, this section of the bill provides a process for the court in accepting the resignation and appointing a new guardian.
Section 41 addresses how to absolve a resigned guardian of liability and how the actual resignation and duties that remain a part of the guardianship without causing the ward to suffer undue consequences. That is termed a “filing of final accounting.”
Section 42 addresses temporary guardianships. These were actually revised in the Seventy-first Legislative Session. They were very intensive at that time, however; A.B. 365 solves a publication problem. If people who are entitled by law and cannot be found because their addresses are unknown—those are people within the second degree of consanguinity to a ward as well as the spouse of a ward—if we are unable to find an address for them and they are entitled to notice. We have a problem that if we grant a temporary guardianship with substantial and immediate harm and we cannot find the relative, we are required to do a public notice.
A temporary order is only valid for 40 days from beginning to end and a publication period extends for 48 days, so it creates an 8-day gap. It is necessary to extend the temporary for two terms to accomplish the publication requirement.
Mr. Nielsen also has a concern, which you will hear from him later, where he wishes to have the ability to grant two extensions even if the publication is not being accomplished. Perhaps the issue is that of other procedural problems being experienced by the attorney working on the case as well as the temporary guardian.
Section 43 also addresses temporary guardians and my explanation applies there as well.
Section 44 addresses publication and would allow the court, with good cause, to require fewer publications within the publication period subscribed, as well as shortening the actual number of publications that are required.
Section 45 allows the court to accept a facsimile of a petition, a notice, an objection, consent, or a waiver as long as a true and correct copy is filed within a reasonable period of time. The provision was added to accommodate people who live out of state. There is a 10-day notice period on many provisions within the chapter, which is a shorter notice period than in any other chapter of the law, and many times we cannot get all interested parties in front of the court within that 10-day window.
Chairman Anderson:
It is not necessary to present the bill section by section. Please just hit the highlights that it would be most helpful to the Committee. We do have an overview summary that has been presented (Exhibit E).
I was hopeful you would review those areas of the bill that need particular attention so that everyone will have an opportunity to be heard.
Commissioner Jennifer Henry:
Ms. Goldsmith and I apparently misunderstood. She can address one of the more important issues we have been discussing recently.
Dara Goldsmith:
Section 57 was added to provide information to the court that the court deems as essential. Based upon some revisions being drafted by the Legislative Counsel Bureau (LCB), this information, as opposed to the draft before the Committee, is to be provided in a confidential manner.
Currently, NRS Chapter 125 requires that every court in the state is to have the procedures in place, so the change will not be a burden upon the courts to utilize the same system they currently use under NRS 125.130.
However, we are also requesting that the court may otherwise determine some other mechanism. To ensure we have necessary information regarding a ward including a social security number, which is to only be provided to the court. That will be held in a confidential manner under NRS Chapter 159 as is done under NRS 125.130.
This information is also essential with regard to the proposed guardian. Many times individuals apply as guardians who may be felons. There is currently provision in NRS that is a companion to A.B. 273 that would give the court discretion in allowing a felon to serve as a guardian. The ability for the court to obtain a social security number will allow them to examine the gravity or depth of the felonious acts to ensure the petitioner and the ward before the court are actually the true and correct people.
There are also situations where someone has been abducted, perhaps a missing individual, and having that information will facilitate in locating the individual.
Also, the guardian is charged with gathering all the assets of a ward and ensuring that the information is made available. They may file appropriate forms with the Internal Revenue Service to obtain copies of tax returns to help trace the records of the ward. They can also contact banks or other entities to determine if assets exist. Since guardians are charged with that responsibility, we felt it was important to assist them to achieve their goals and objectives appropriately.
Assemblywoman Buckley:
I want to comment on the need to give the court more discretion regarding felons because sometimes an older person is in need of a guardian and there will be an adult son or daughter who has a 20-year-old DUI charge. Then the court is faced with placing the ward in a nursing home when there is a good family member willing to take responsibility for the ward. Allowing the court that discretion is a very good thing for families.
Dara Goldsmith:
I concur with Ms. Buckley’s comments.
Chairman Anderson:
Ms. Goldsmith, do you wish to summarize, then?
Dara Goldsmith:
Summarize the entire bill?
Chairman Anderson:
Yes.
Dara Goldsmith:
I would like to take the Committee to NRS 159.113. That is an important area as well if, I may.
Presently under NRS 159.113 and the current code, there are some concerns about what a guardian may do without having court authority. This statute now makes it clear what sort of provisions and actions the guardian must request court authority to perform and those actions they may take without court authority. We feel this provision will make guardians accountable to both the wards and the court, and that they will better serve everyone involved.
Mark Solomon is present and will be discussing the section further. He will be discussing Sections L through R, but we are amenable to his suggestions.
In summary of the bill, I would not characterize it as an “exciting” bill. It is primarily a major overhaul to correct errors and procedural problems that exist in the code. Much of it is important to those of us who practice in the area.
The high points are probably not as intriguing as some of the other bills you have introduced to you.
Chairman Anderson:
Ms. Goldsmith, we consider this to be among the most important pieces of legislation we can possibly hear. As I had indicated we have been provided the written summary (Exhibit E) and we were hopeful you would pick those particular points you felt needed to be highlighted.
I don’t want to leave you with the impression that this is not an absolutely important piece of legislation and one over which we have great concern. I think there are few things as important than that of placing guardianships for the elderly or people in need of this kind of service, children or adults.
Are there questions for Ms. Goldsmith or Commissioner Henry from the Committee?
Assemblywoman Angle:
I would like clarification on Section 57. It says that one of the forms of identification is the social security number. I was under the impression that social security numbers were not considered “legal identification.” Is it now considered legal?
Commissioner Jennifer Henry:
Our goal in Section 57 is to find some kind of identification for both the ward and the guardian. It serves many purposes and it does not have to be a social security number if a person chooses not to provide it or if they do not have a social security number. Our purpose in the language is that we experience many wards and guardians who disappear. Many assets disappear as well and there needs to be a method to identify these people, find the assets more quickly, and bring them back to the court before damage can be done.
We are also checking for exploitation and sometimes, unfortunately, social security numbers are used and collected in databases that the courts have access to when they evaluate the appropriateness of a person to be a guardian.
We also use social security numbers in dealing with child wards under the office of due diligence to assist people in location of missing children. Since the office is already in place, ability to track a social security number would assist in locating our missing children.
Chairman Anderson:
I would presume that is why the language states, “taxpayer identification, valid driver’s license, valid identification card, or a valid passport number, in addition to the social security card.” All of those are just common places or points of reference.
Commissioner Jennifer Henry:
This is correct, we are looking for something that is a common point of reference to be able to locate people and assets as needed.
Assemblywoman Angle:
In Section 93, where it refers to NRS 159.113, I notice that it states, “They might petition the court to make a change in the last will and testament of the ward or make a change in the designation in the beneficiary of the will.” Could you clarify that language for me? You also say they can establish revocable trusts for those assets.
Dara Goldsmith:
There have been some modifications to the section that will be presented to LCB later than the draft you are looking at. Let me read what the new subsection T would include, which was drafted by Mark Solomon.
The court shall not enter an order granting the guardian the right and power to take the action set forth above in subsections L, M, O, R, and/or S unless the guardian makes a showing by clear and convincing evidence that the ward, if competent, would actually, or as a reasonably prudent person, have taken the proposed action.
We are not trying to mandate or give the guardian the ability to change the ward’s estate plan just because they don’t like it. But we have had situations in Clark County where there were some individuals who were determined—court‑adjudicated—to be exploiters. A judgment was entered against them. They were not family members. They were friends that were met in a casino. Those individuals then became ingrained in those individuals’ lives and they took well over $100,000 of the ward’s money. The court entered a judgment against them for over a quarter of a million dollars. Those individuals were named as contingent remainder beneficiaries to the estate plan. The court had no authority to correct that, even though there was clear and convincing evidence that had those individuals known they had been exploited and taken advantage of by these non-family members, it is our opinion that they would not have chosen to maintain the estate plan in the same manner.
This is an area that has been discussed with Lora Myles, Hank Cavallero, Ernie Nielsen, Judge Jordan, and others throughout the state.
Also, in light of the present Medicaid laws under which we operate, to continue a ward’s benefits we need to sometimes establish appropriate trusts approved by the court. Those types of issues did not exist years ago when the guardianship statutes were last reviewed.
The bill provides the court the ability to take necessary actions but sets a high standard. We feel that with the abilities provided by A.B. 365 we will be able to help the wards do what they would want to do and not be open to exploitation.
Assemblywoman Angle:
In Section 97 it refers to the making of a gift, payment, or contribution that will cause the ward to become eligible for Medicaid. Could you please clarify that section?
Commissioner Jennifer Henry:
Pursuant to current Medicaid qualification standards, if an individual makes gifts within a 36-month period of asking to be made eligible for Medicaid, they can be disqualified. If someone makes a transfer of an asset hoping to maintain it for their children or heirs after their death and they have done this fraudulently, the Medicaid disqualification requirements would apply. The Medicaid program might not pay for nursing home care for that individual and in those cases there would have to be either a private payment and if the assets are not available, then the county—you and I as taxpayers—have to pick up the bill for the individual in a nursing facility until the federal government ineligibility period has ended. At that point, Medicaid will begin and the federal government will reimburse the state for the cost of that person’s care.
Assemblywoman Buckley:
I would like to offer to shepherd all of the proposed amendments to A.B. 365 to shorten the hearing if there is anyone with concerns. Specifically, I also have concern regarding the language involving wills and we must be very careful that it would be written to target abuse situations.
Chairman Anderson:
I only have one observation relative to the amendments. I am sure you are familiar with the opening section and general provisions of NRS 0.030, which specifies that language in the masculine gender include the female gender and neuter gender, that a single number includes plural numbers, and plural numbers include singular and all other kinds of drafting specifics. The NRS is not intended to give a particular power to one gender or the other.
Ernie Nielsen, representing the Washoe County Senior Law Project:
[Introduced himself.] Based on Assemblywoman Buckley’s offer to shepherd the amendments, we wouldn’t have anything to place before the Committee at this time. There was a general consensus across the state on the amendments that are being put forward.
Chairman Anderson:
You might want to provide an overview of the suggested amendments for the Committee. While we appreciate Ms. Buckley’s offer, we want to ensure that the Committee does not need address the bill again in the next 2 weeks when we are under an ever-tighter deadline.
Ernie Nielsen:
I am present in support of A.B. 365. Our office represents wards so that is the perspective we bring to the forum. We definitely appreciate all the cooperation that people have afforded everyone throughout the state. I would like to highlight a few amendments for the Committee.
In Section 54, remove the standard from paragraph 6 because there might be disagreement about what the proper standard should be.
In Sections 65 and 66 we wanted to replace the proposed paragraph 8 with a simple sentence. “A temporary guardianship may be extended for up to two additional 30-day periods for good cause shown.” The reason for that is that often the assessment of the proposed ward cannot be accomplished within the first 30-day period. However, in many cases the assessment will determine whether a guardianship is actually needed and, if so, to what extent. For example, whether or not a special guardianship is appropriate rather than a full plenary guardianship.
There are some changes in Section 62. One item our office is very concerned about is the ability of the guardian to provide for proper care of the ward once they have been appointed as guardian. Thus, we are very concerned about what is charged against the ward’s estate. I believe there is an agreement that at the beginning of paragraph 2, Section 62, the words would begin, “subject to approval of the court.”
Chairman Anderson:
Are these the amendments you have already shared previously with Ms. Goldsmith and Commissioner Henry and that are in the document submitted by them (Exhibit F)? Are there any other particular amendments or concerns that need to be brought to the Committee for their review?
Ernie Nielsen:
I believe Ms. Goldsmith and Commissioner Henry have covered most of the issues, especially with respect to Section 93.
The only other item I would bring to your attention is Section 107. There is an agreement to include new language at the beginning of paragraph 1, “subject to the court’s discretion.” Those are the high points.
Chairman Anderson:
Mr. Nielsen, both Ms. Goldsmith and Commissioner Henry seemed terribly concerned that your ideas should be incorporated here. The Committee shares that concern.
Commissioner Jennifer Henry:
I wish to advise the Committee that Mr. Nielsen and I were exchanging e-mails last evening and I don’t know that he got my last e-mail. However, we agree with his concerns and I feel there are some definite changes that will be made as a result of the last e-mail I sent him.
Assemblywoman Buckley has agreed to assemble those changes and I have no problem making changes that are in everyone’s best interest as part of A.B. 365.
Chairman Anderson:
I had that impression also. Thank you very much. I see no questions. Is there anyone else who feels a need to be heard on an issue that has not been raised?
Kim Spoon, Private Fiduciary Guardian, Guardianship Services of Nevada:
[Introduced herself.] I am not an attorney. I was working for 6 years with the Washoe County Public Guardian’s Office as a deputy public administrator and guardian case manager, and I have been working privately as a private guardian for the past 4 years.
I rise in support of A.B. 365. I think a tremendous amount of work has been put into the bill from Clark County. There are also many individuals in the north through our committee and I wish to commend all of those who have put their efforts into the bill.
In my review of Section 72, which is one of the few places where the bill does make reference to a private fiduciary, paragraph 4 states, “if the court finds there is no suitable person to appoint as guardian who is related by blood and so forth.” Subparagraph (a) specifies a public guardian, and subparagraph (b) specifies “a private fiduciary who may obtain a bond in this state and who is located in the county where the ward resides.” After that are three conditions as to how a private fiduciary can be appointed as a guardian.
A private fiduciary should be able to obtain a bond. I agree with that, but many times private fiduciaries are called upon when a person in another county is not able to find a guardianship through their public guardian. One of the benefits of a private fiduciary is that they have been able to provide guardianship for individuals throughout the state. I do not feel we should be delegated to those only in the county in which we reside. The issues had been discussed in some of the ad hoc committees, but I am not sure that change was added to amendments.
Chairman Anderson:
Are you currently able to represent individuals outside your own county?
Kim Spoon:
Yes we are. We have had wards in several outlying counties from the Washoe County services. It has been imperative for us to have that ability.
Also, I am not sure why we would be appointed only if the conditions are that there is no public guardian, the proposed ward does not qualify for a public guardian, or the court finds that the interest of the ward will not be served appropriately by the appointment of a public guardian. If the family or the petitioner are the ones asking for the appointment of a private fiduciary, then that should be the criteria for appointment—not whether there is a public guardian. I believe NRS Chapter 253 describes the public guardian’s office, that they are the guardians of last resort.
Dara Goldsmith:
I would be happy to respond to that and have a suggestion.
Chairman Anderson:
Assemblywoman Buckley has indicated that she has suggestions for clarification and perhaps the two of you will be able to communicate and arrive at a solution. [Ms. Goldsmith and Ms. Spoon each indicated their agreement.]
Cynthia Lu:
I alluded to this issue briefly when I spoke about A.B. 273. I read through A.B. 365 on which much commendable effort was put forth. I agree with Assemblywoman Buckley about the need to make NRS Chapter 159 guardianships more flexible.
My only concern is in Section 71 of A.B. 365 on pages 31 and 32, regarding the qualifications of a guardian. There is some discretionary language regarding proposed guardians who may have a felony conviction that is several years old. Nevada Revised Statutes Chapter 159 would still hold that against them. I commend that change, but I believe that change could potentially refer to three other disqualifiers. Specifically, on page 32, lines 1 through 6, as well as a third issue regarding the appointment of a co-guardian, and I did speak with Judge Schumacher about it.
There are sometimes proposed guardians or relatives who reside out of state. As this Committee knows, Nevada has a very transient population and many times the parents in these cases are the only family members residing in the state but with extended family members residing in other states, primarily in California and other neighboring states. Requiring some of these proposed guardians who may have the ability to care for the children and the children are placed there to obtain a co-guardian in Nevada might be somewhat prohibitive. One solution is that we often request those family members to apply for guardianship in their own state. However, that does not alleviate issues of the potentially difficult guardianship statutes and requirements in the other state.
I can e-mail the remainder of concerns and suggestions to Assemblywoman Buckley if that is the pleasure of the Chair.
Chairman Anderson:
Thank you, Ms. Lu, and thank you for making yourself available on both these pieces of legislation.
Mark Solomon, representing Lionel, Sawyer, and Collins, and the Probate and Trust Section of the State Bar of Nevada:
[Introduced himself.] I have provided the Committee with proposed amendment language (Exhibit K). Since drafting the amendments, I have met with Commissioner Henry and Ms. Goldsmith and have reviewed all 11 of the suggested changes requested in the proposed amendments, and we have largely agreed how those should be made.
Chairman Anderson:
We will make the proposed amendments (Exhibit K) part of the record and we appreciate your courtesy and work on the amendments. I presume you will be available to work with Assemblywoman Buckley on this particular piece of legislation?
Mark Solomon:
Absolutely, Mr. Chairman.
Chairman Anderson:
Let me mention that we have a letter from Carrie Onorato, a professional guardian (Exhibit L); a letter from Gerri Tussing, Director, TussCorp (Exhibit M); a letter from Diane Clough, CPA and professional guardian (Exhibit N); a letter from Kathleen Buchanan, a public guardian (Exhibit J); and a letter from Family Court Master Carol A. Cooke and District Judge Scott T. Jordan (Exhibit O), all to be entered into the record. I believe there may be some others as well and we will leave the record open pending their arrival.
Seeing no further individuals wishing to testify, I hereby close the hearing on A.B. 365 and open the hearing on A.B. 397.
Assembly Bill 397: Makes various changes concerning proceedings in actions concerning eminent domain. (BDR 3-1082)
Assemblyman William Horne, District No. 34, Clark County:
[Introduced himself.] This bill provides discontinuation for Offers of Judgment in eminent domain actions. For example, when the government exercises its authority and takes a property owner’s property for public use, that property owner’s constitutional right is to receive just compensation for the property. Sometimes the landowner and the government have differing assessments of value for the property and are unable to reach an agreement on the true value of the property. That scenario results in litigation.
Under current law, if a landowner fails to meet an Offer of Judgment or vice versa, the government can demand attorney’s costs and fees be reimbursed. This is a punitive measure that should not exist simply because a property owner has chosen to exercise his or her constitutional rights. This potential penalty can be so costly to a landowner as to be prohibitive in choosing to fight against what the person believes to be an unjust offer. There will be testimonies today to address the issue and more detail to answer questions more accurately than I can.
Please welcome James Jackson, Jim Leavitt, Brian Padgett, and Dona Tucker, who can give the Committee a first-hand perspective of the chilling an Offer of Judgment can have on exercise of constitutional rights.
The bill contains language addressing a “person” on page 1 in regards to rejecting an Offer of Judgment and that should read “parties.” Assembly Bill 397 should provide recourse for both the government and private parties to not be subject to Offer of Judgment penalties.
James Jackson, representing the Law Offices of Kermitt L. Waters:
[Introduced himself and submitted Exhibit P.] To my immediate left are James Leavitt and Brian Padgett of the same law firm.
I do not practice law in the realm of eminent domain. Ms. Tucker will provide personal testimony of her experience with eminent domain law. I also understand that Kevin Keith is present in Las Vegas to testify. Laura Fitzsimmons, a practitioner in this area of the law, may also provide testimony.
James J. Leavitt, representing the Law Offices of Kermitt L. Watters:
[Introduced himself.] I am present in support of A.B. 397. The bill attempts to accomplish the removal of penalties imposed upon landowners for not accepting Offers of Judgment in eminent domain proceedings. Under the bill, landowners could not be forced to pay the government’s fees and costs at the end of litigation.
Current Nevada law could allow the government to take a landowner’s parcel of property and then after it takes the property, make an offer for a sum certain to that landowner and tell the landowner, “If you don’t accept our offer, you could be held liable for all of our attorney’s fees and costs at the end of litigation.”
If that occurs, at the end of litigation, the landowner receives a just compensation award minus the costs of the government’s attorney fees and litigation costs. In some cases, the government entities have been willing to reach out of state or out of town to hire counsel instead of using city/county attorneys. In some cases the litigation costs and attorney fees become very excessive and in some cases exceed the eminent domain award entirely.
The end result is that the landowner’s property is taken and the landowner receives no money for the property taken, and in the end receives a bill from the government to pay the government’s fees and costs in the action. That clearly violates the Fifth Amendment to the United States Constitution, which says that if the government takes private property from an individual, it must pay just compensation.
Current Nevada law also violates the definition of just compensation as provided by the Nevada Supreme Court. Nevada has stated that, “Just compensation is that amount of compensation which is full, ample, and substantial and puts the landowner back in the same position monetarily as he or she would have been in had the property not been taken.” A landowner is not put back in that position monetarily if the property is taken and they have to pay litigation costs in eminent domain proceedings.
Probably the most important reason A.B. 397 should be adopted by the Legislature is that it gives the government an unfair advantage in eminent domain proceedings. Let me explain how.
The government has significant resources, much more than landowners, we all know that. The government can afford to hire the attorneys and incur the litigation costs and then, after they have incurred these litigation costs and hired the attorneys, they approach the landowner and tell the landowner, “Here is the sum certain we are offering you. If you do not accept it, you will have to incur the attorney’s fees and costs if you don’t get more money at trial.” The landowner is put in a position where they can either go forward and exercise their constitutional right to be paid just compensation, and have a jury or a judge determine the amount they are entitled to be paid. Or, they can accept the offer. If they do not accept the offer and go to court, then they are faced with economic travesty in the end if their award doesn’t exceed the Offer of Judgment.
A landowner put in that position will, most of the time, decide they cannot risk the possibility of going bankrupt. They feel they must take the offer rather than risking the possibility of having to pay the government $50,000, $100,000 and still forego the constitutional right to be paid just compensation. I have personally seen this occur with clients from our law firm. The government is not faced with the same economic travesty at the end of litigation if they lose.
Assembly Bill 397 attempts to put all parties on a level playing field. It would allow the rules to apply equally to both sides by not imposing these penalties regarding Offers of Judgment on landowners or upon the government.
The landowners come to our law firm and state, “The government took my property and now it is dictating how much they are going to pay for my property and telling me that if I don’t accept that offer, then I may have to pay their attorney’s fees and costs at the end of litigation.” The only response I can possibly provide them is that I personally believe it is unconstitutional, inequitable, and unjust. The intent of A.B. 397 is to remove the injustice and the unbalanced advantage held by the government in such proceedings, which puts the landowners at a gross disadvantage.
I have heard two concerns regarding the bill. The first was, “Won’t the bill prohibit settlements?” It will not. Landowners can still make offers and the government can still make counteroffers. They can still arrive at amicable settlements. I have settled a significant number of such cases and I can only think of a couple of situations where Offers of Judgments operated to facilitate that settlement.
The bill will also not prohibit settlements in other non-civil eminent domain civil actions. They can still make their Offers of Judgments in non-civil eminent domain actions and that brings us to another concern that has been raised.
It was asked why the penalties should only be removed from eminent domain actions and I have two responses to that. First, eminent domain actions involve constitutional rights. When a landowner’s property is taken, the Fifth Amendment to the United States Constitution and Article 1, Section 8 of the Constitution of the State of Nevada clearly state that the landowner is constitutionally entitled to receive payment of just compensation. That constitutional right cannot be abridged or infringed upon in any way by a statute or rule of civil procedure that threatens the landowner with the government’s fees and costs.
Secondly, a landowner in an eminent domain action is unwillingly brought into court. He is only in court because the government wants something he has. It is not like a normal civil litigation where a tort or some type of wrong has been committed or a contract has been violated. Because the landowner is unwillingly brought into court and has done nothing wrong to be there, current law violates all notions of fairness and equity to tell that landowner at the end of a proceeding that they must now pay the government’s fees and costs.
I will turn the time over to Dona Tucker, who was one of our clients and has experienced this type of situation. Following her, Kevin Keith will also testify and explain how he ended up, after the government took his property, with the potential of having to pay the government $450,000, in addition to his just compensation award.
Dona Amy Tucker, Citizen:
[Introduced herself.] I have a two-and-a-half year-old daughter, Amanda. I own property, which was taken by the government, at the corner of Simmons Street and Red Coach Avenue in Las Vegas. The government took part of my property and paid me only $12,600 for it. I felt this offer was under the actual value so I proceeded to trial and pursued my rights to just compensation.
Just prior to trial, the government tendered an offer, a judgment to me, for $34,000. My MAI (Member, Appraiser Institute) appraiser determined that the value of the taking was greater than $200,000 for the property value. However, the government told me that if I did not accept their offer and got less at trial that I would have to pay the government attorney fees and cost of their pricey outside counsel in the amount of greater than $50,000.
My family lives on a fixed income and I cannot risk being a debtor in an amount as large as $50,000 or greater. The government would have taken my land, but I would have been in debt because of the Offer of Judgment, which had been paid only to a portion of the government fees and cost; therefore, I had no choice but to settle this case for less than I believed was just compensation.
Kevin Keefe, Realtor:
[Introduced himself.] My case was very simple, but at the same time financially devastating. It began in 1995 when the Clark County Public Works Department made a public announcement of its intention to condemn a portion of a property that I owned at the corner of Valle Verde and Paseo Verde in Henderson.
That particular property was a “for sale” residential housing development that had been physically underway and in development for well over 12 months at the time. It had been through another 12 to 18 months of public hearings prior to that point.
The “for sale” housing project that was under construction was primarily geared toward senior citizens. As you can imagine, once the government made their intentions publicly known, sales in the housing project died completely. In fact, it triggered another statute within the Nevada Revised Statutes that required us, as a licensed real estate broker, to disclose to potential homebuyers who were senior citizens that the intended off-ramp at Valle Verde could potentially traverse through their living rooms or kitchens or their bedrooms.
Obviously, we went from a situation where our subdivision was going to be completely sold out in less than 12 months to a project that took well over 4 years to complete.
The government’s monetary offer upon filing their Action of Condemnation was a meager $8,000. Clearly, it was not even close to putting in any kind of financial position prior to the taking. In fact, prior to trial, the government made an Offer of Judgment to us in the amount of $400,000. We proceeded to trial because we still felt that was not fair and just compensation. In fact, our MAI appraisals came through at numbers that were between $1.5 million and well over $2 million.
Our own internal controls estimated our loss at well over $3.5 million. You can see the difference from their original offer was approximately 5,000 percent. We made several unsuccessful attempts through the course of trial and afterwards to settle the proceeding, but we still felt that our just compensation had not been given an opportunity to succeed.
Through the course of the trial the jury awarded us a verdict of only $104,000. Then we were potentially subject to some $600,000 in attorney’s fees on the part of Clark County. The lower court denied that and it is on appeal to the [Nevada] Supreme Court. However, we came very close to dropping the whole case because we could not afford to be in a position to pay $600,000 or $700,000 in attorney’s fees in an effort to receive just compensation.
Current law is totally and completely unfair and puts us in a position where we have almost no chance to fight our case against the government.
Brian Padgett, with the Law Offices of Kermitt L. Waters:
I am here with others from my law office and I have no further comments at this time.
Chairman Anderson:
Mr. Jackson, is there anyone else you planned to present to provide testimony in favor of A.B. 397?
James Jackson:
No, sir. We will wait and listen to the other testimony that will be offered.
Laura Fitzsimmons, Attorney:
I have researched this issue nationally in depth and I am aware of no state that permits the kinds of punitive action against landowners in the first instance, when they seek a determination from a neutral party for just compensation in the taking of their property.
Secondly, in my experience, the effect of the Offer of Judgment is discriminatory on clients. In a number of instances, lawyers for landowners and I will assist individuals who are homeowners or people similar to Ms. Tucker who do not have the unlimited means to undertake such a risk. The effect of Offers of Judgment on their rights is much more chilling than many of our other clients, to whom the punitive potential from the Offers of Judgment is not such a sufficient deterrent. We have many clients who have the funds and are willing to take the risk.
It is just not fair to say the people who can’t afford to take the risk are caused more often to give up their constitutional rights.
Lucille Lusk, Cochairman, Nevada Concerned Citizens:
[Introduced herself.] I am here in support of A.B. 397. We have followed eminent domain issues for a long time and have often been concerned about the impact and implication of current law and policy on citizens attempting to exercise their constitutional rights.
The points have been well-made by others and I will not repeat them, except to indicate that we also feel these potential penalties create a tremendous chilling effect on the right of the citizen to fight for constitutional rights to just compensation for their property and that we hope you will entertain the bill positively.
Chairman Anderson:
Is there anyone else in support of A.B. 397? Seeing none, we will move to those in opposition to the bill.
Mike Alonso, representing the Airport Authority of Washoe County:
[Introduced himself.] We are in opposition to A.B. 397 and in the interest of time, I am going to defer to Mr. Chapman to present testimony. He has more experience in eminent domain cases than I do.
Michael G. Chapman, Attorney, representing Clark County Public Works:
I have been a lawyer for over 18 years. I spent 10 years with the Nevada Department of Transportation under Attorneys General Brian McKay and Frankie Sue Del Papa, primarily trying eminent domain cases. In private practice, I have represented private property owners as well as government agencies, so I have a certain perspective from both sides of how the Offer of Judgment system works.
I am opposing the “Waters” bill because it is a bill that is basically directed to correcting a problem, which they have encountered in one lawsuit, the lawsuit I tried against them, which Mr. Keefe, who testified earlier was the representative of a company called Monument Point.
I do not think it is good public policy for the Legislature to enact bills to attempt to correct lawsuits because that would “change the rules after the game has been played.” The issue is on appeal to the Nevada Supreme Court and that is the proper procedure. I want to demonstrate some of the facts of the Monument Point case to illustrate how I use Offers of Judgment, whether I represent a property owner or a condemning agency.
[Mr. Chapman goes on to discuss charts shown to the Committee but not provided as an exhibit to this record.]
You can see at the top of the picture the I-215 beltway in Las Vegas. The cross street is Valle Verde on the southern beltway in Henderson. Outlined in red is the Monument Point subdivision. It is a 14-acre subdivision that Mr. Keefe had under construction. The acquisition was less than 1/1000th of the entire land area; in other words, it was 549 square feet out of the entire subdivision. Right on the corner 500 square feet was taken. [He estimated the Committee hearing room was approximately 1,000 square feet.] Thus, the taking, in the words of their own expert appraiser represented a sliver of the project. Our appraiser appraised the value of the property at $8,600. The landowner counterclaimed with a claim for pre-condemnation damages, which means that the government announced earlier than the time of taking of the property, in 1997, that the property would be taken and therefore, they suffered other damages to their subdivision, which are above and beyond the land value.
The jury disagreed that there was an [earlier] taking and found that the taking occurred in 1997. The landowner tried to convince the jury that when the county held a meeting to explore different designs for the interchange in 1995, that [meeting] constituted the taking of the property. What happened to the project was that the interchange ultimately was a much smaller design than originally being considered and the taking was actually very minor.
Rather than trying to lower their demands when the actual acquisition was for a smaller taking than thought to be the case in earlier discussions, they still attempted to receive a great deal of money for the property. The landowner testified at trial to $4.6 million for a 550-square foot [property] taking. If the supposed monetary value is applied just to the square footage, that [compensation] is over $6,000 per square foot, which is 100 times more than any land has ever sold for in the area—even on the Las Vegas Strip. The highest sale on the Las Vegas Strip was $497 per square foot.
The county, however, at our recommendation, knows that these cases are extremely difficult to defend because the landowners, and the Waters office in particular, are aggressive lawyers. We therefore offered far more than it was felt the property was worth—$407,100. The reason for that is we knew we would incur litigation expenses. The jury agreed with the county’s position and awarded $104,000 on the case.
I feel Offers of Judgment are good for both sides because of the effect it had on the Water’s case. For the county to make an offer, we had to depart from the $8,600 appraisal by a very large amount. The Offer of Judgment process encouraged us to increase our offer in an attempt to compromise. However, the landowner did not reciprocate. He insisted on the higher value and upon a trial. What any person should do in an Offer of Judgment situation is to make a counteroffer. They didn’t even respond to our offer until just before the trial date, and the offer was made 10 months before trial and before anyone had incurred any fees and costs. The Offer of Judgment process is supposed to encourage people to discuss settlement early on.
When I have been involved on a property-owner side of a case, I have also used Offers of Judgment. I have found it very useful in encouraging the condemning agency, no matter who they are, and I have tried cases against Nevada Department of Transportation (NDOT) and other agencies to increase their initial offer of compensation and take a hard look at the offer. Without the incentives in an Offer of Judgment—you will not recover your own costs and that you may have to pay the costs of the condemning agency or the attorney fees of the condemning agency—the landowner has less of an incentive to settle a case.
In eminent domain, when a condemning agency starts the case they typically need occupancy of the property to build a freeway or something similar. They deposit the appraisal amount for the use and benefit of the landowner. Generally that is a large sum. In the cases being discussed today, they are smaller amounts however. It is not completely a one-sided issue. I feel it is useful for both sides.
The Nevada Supreme Court has never held, in any of the cases it has considered, that they support the landowner’s position. We want to get a published opinion from the Supreme Court in this case, which is why we have appealed the issue.
The review in district courts as to whether a landowner will pay attorney fees is very strict. Under the Beatty case, a Nevada Supreme Court case, the condemning agency is required to show that the landowner was grossly unreasonable in rejecting the offer. Not just “unreasonable” or not just that “the offer is rejected.” The attorney’s fees are not an automatic award and even in the case of Monument Point, which I feel was grossly unreasonable for them to reject the kind of offer they did and with the minuscule taking in the case, the district judge did not award attorney’s fees against Monument Point.
Assemblyman Horne:
Mr. Chapman, your presentation, while it may be effective at an appellate proceeding, was inappropriate here, I feel. The issue here is on A.B. 397.
Chairman Anderson:
Mr. Horne, that is my prerogative, and I am trying to hear all concerns to the bill.
Assemblyman Horne:
The only portion of the bill dealing with proceedings that are not at a final termination is the effective date of the legislation.
Chairman Anderson:
It is not an ex post facto.
Mike Chapman:
That is what I was talking about, Assemblyman Horne, because I believe that the bill states it will apply in Section 3 of A.B. 397 to any action pending on or after October 1, 2003, whether or not the action was commenced before, on, or after October 1, 2003. Clearly the Waters firm understands that a vast amount of legislation follows the general rule, which is that legislation is prospective and not retroactive. What they are trying to do is preempt the Supreme Court’s review of the case and to correct the problem they have, and that is my point: that the bill is retroactive legislation to focus on correcting a problem of the Waters firm, not correcting a problem of the taxpayers or citizens of the state.
The effect, because the judge would not allow Monument Point to collect its costs from the county—they billed us for over $130,000 for their appraisal fees and everything, even after attempting to receive the large monetary award in court. The bill would be an immediate exposure to the taxpayers of Clark County in excess of $130,000 in just that one case.
Assemblyman Horne:
For clarification, I do not see Mr. Waters’ name at the top of the bill. I see my name and I did not bring the legislation just for Mr. Waters’ firm. I brought it for people such as Ms. Tucker and the rest of the people of Nevada.
Chairman Anderson:
Please keep your comments to the bill.
Assemblyman Horne:
I would like to ask Mr. Chapman, who stated he has been on both sides of the issue regarding Offers of Judgment have you at any time had anyone who felt compelled because of an Offer of Judgment that made them take an offer they did not feel comfortable taking?
Mike Chapman:
Those times when offers were served against my clients, there was in one case a developer who rejected the offer. When an Offer of Judgment is made, the landowner has 10 days to accept the offer, and NDOT served an Offer of Judgment for $16.5 million on my client who was a large landowner. The case was settled within the 10 days at a larger amount so no actual decision to accept or reject the offer was made. We probably would have accepted it in that case.
The other times that I recall, were when I served as an attorney for NDOT, Mr. Water’s firm served an Offer of Judgment upon the state, which we did not accept to our great sorrow, because we had a larger verdict against us at the time of trial. In that case the judge applied the Beatty standard regarding grossly unreasonable rejection of an offer and found that the rejection was not grossly unreasonable and thus we did not pay attorney’s fees in that case.
Assemblyman Mortenson:
What happens if the party does not accept an offer within the 10 days?
Mike Chapman:
Under the terms of the Offer of Judgment rules, the offer will expire if it is not accepted within 10 days. The purpose of the 10 days is to give the offeree at least 10 days to consider the offer in which the offer cannot be withdrawn.
Assemblyman Mortenson:
In the case of Ms. Tucker—I agree the second example we heard was perhaps not valid—but the first example, that seems a very bad thing that the government did to her. Do you have any justification for that?
Mike Chapman:
I did not try that case, but I can comment generally on the scenario if that is helpful. The Offer of Judgment process forces the condemning agency to go up in value and if I am remembering her testimony correctly, they went form $10,000 to $34,000. It also forces the property owner, the property owner’s lawyers and their expert consultants to take a hard look during the 10-day period at what they believe the actual jury verdict would be and whether it would be “grossly unreasonable” to reject the offer. If the offer as set forth in the Offer of Judgment is something they feel they will have a hard time defending against in trial, then they should accept the Offer of Judgment and be done with the case.
There is a savings to them in terms of additional payment to the appraisers who testify at trial and if the lawyer is working on a contingency fee, a common practice when property owners are represented. If the property owner takes less in settlement, there is less for the lawyer. So the net effect to the property owner may be less stark than was characterized. It is their decision to decide whether to accept an offer or not.
Chairman Anderson:
Ms. Shipman and Ms. Dempsey have signed in opposition to A.B. 397. Ms. Dempsey, you have changed your mind?
Madelyn Shipman, Deputy District Attorney, Civil Division, Washoe County District Attorney’s Office:
I believe I had a question mark on the guest list (Exhibit B) because I simply wanted to see what testimony was heard. I had understood in the halls that there had been a few proposed amendments by the sponsor of the bill to eliminate the repealer of NRS 37.190, and I am unsure whether that was addressed in testimony.
Chairman Anderson:
Mr. Jackson suggested in an e-mail sent to members of the Committee that the Offer of Judgment would apply to both government agencies and entities seeking to acquire property through the exercise of eminent domain and that it was not the intention of the this bill to eliminate the provisions of a person to go before the court and request damages for their costs. The NRS would not be repealed if this measure were approved. The prevailing party at trial would still be allowed to recover costs as allowed under the statute, whether the prevailing party is the property owner or an agency entitlement.
Madelyn Shipman:
Washoe County has very little eminent domain litigation. There are perhaps two small eminent domain utility easement condemnations being pursued. However, I was concerned about what I will also term the “retroactive” effect because it would kind of change the rules of the game while cases are continuing. We would prefer to have any bill become effective for any cases filed subsequent to the effective date of the bill, but not to apply to cases currently in the system under a different set of rules.
Secondly, the comments you are hearing are that the Offer of Judgment process does promote settlement. I am not here to stress that further; however, I think the most important function of Offers of Judgment is that it stresses the analysis of a case early in the process. Obviously, the earlier an Offer of Judgment is made in the process of a piece of litigation, the more potential benefit there may be to the condemning party if the other party does not accept. The rule is there for the purpose of requiring an intense analysis of the case early in the process, which does not happen.
Fifty-five percent of Washoe County District Attorney’s litigation relates to alleged violations of constitutional rights. Eminent domain is not the only type of constitutional rights litigation. Offers of Judgment are used successfully in all types of constitutional rights cases. The most important use it has for Washoe County is that it requires the attorneys in the district attorney’s office to thoroughly analyze their case in advance and determine whether there is a potential for settlement or whether the case will go to trial.
Heidi Mireles, Chief Right-of-Way Agent, Nevada Department of Transportation:
[Introduced herself.] We do share and echo Ms. Shipman’s comments regarding the retroactive concept of the bill and also Mr. Chapman’s comments.
For many years, Nevada courts, the Nevada Legislature, and the State Bar have promoted different methods of dispute resolution and other alternatives to litigation through the courts. The clear trend across the country is also toward reducing court congestion and encouraging settlement of disputes.
For many years, parties to a lawsuit have had the ability to make Offers of Judgment to the opposing party, which if that party does not do better at trial would result in the party not taking the offer being precluded from recovering costs and attorney’s fees. That party may also be subject to payment of the attorney’s fees and costs of the party making the offer.
Assembly Bill 397 creates a path that is completely contrary to the trend and efforts I just described. I, as a Chief Right-of-Way agent, have to convey my concerns because we are very proud of NDOT’s success rate in acquiring property through negotiation rather than litigation. I am concerned that this bill would discourage landowners from accepting offers to purchase their property from my staff and would encourage landowners to litigate.
A quick review of the provisions of A.B. 397 shows the burden it will place on public agencies and on the court system. In Section 1, the bill will eliminate any penalty for any person not accepting an Offer of Judgment that is not subsequently beaten at trial. If the person does not accept the offer and does not do better than the offer at trial, the person will have to pay reasonable costs of litigation for the landowner occurring after the offer was made. The point here is that the Offer of Judgment mechanism would not be available to the parties in an eminent domain action and we do agree it is a beneficial tool.
Section 3 of the bill, with regard to the retroactive provision, concerns us due to the fact that the bill makes its provisions retroactive to any cases pending on that date, whether the case is ready to go to trial, whether it has just been filed, or even whether the case is already in the Supreme Court. Typically, legislation is not retroactive, but starts on a particular date and applies only to cases filed on or after that date. This could, and possibly would, complicate or not totally change how a case was or is to be handled including whether Offers of Judgment are made or accepted.
The costs to public agencies resulting from this bill would be very large, in spite of the [fiscal note] at the beginning of the bill stating there is no impact to local or state governments.
The NDOT is in the process of preparing a fiscal note to the bill. I apologize that we do not have it with us today, but we were also hearing in the halls that some changes were being made to the bill.
The Nevada Department of Transportation would urge an approach that would be consistent with the effort to reduce litigation and encourage settlement of disputes. The NDOT supports the continued availability of Offers of Judgment and the incentives for settling to all parties. Any legislation should not be retroactive to pending cases.
Brian Hutchins, Chief Deputy Attorney General, Transportation and Public Safety Division, Office of the Attorney General; and Chief Counsel, Nevada Department of Transportation:
[Introduced himself.] I have been in my position 14 years. I have been with the Office of the Attorney General for nearly 23 years. I am here to answer any questions that Committee might have regarding the position of NDOT.
Chairman Anderson:
If Section 3 were amended to be effective upon passage and approval, that would probably lessen some of the levels of concern. I suspect the Committee is somewhat concerned that while we recognize the state has a vested interest in attempting to acquire property and ensuring that people recognize the state’s need and use of eminent domain, at the same time we are concerned that they not be intimidated into not being able to utilize the due process provisions of the law. If the Offer of Judgment is a tool to disquiet people from following due process, I would have some concern. Would that be consistent with the thoughts of the state?
Brian Hutchins:
Certainly, we would all agree that the constitutions of this country and this state guarantee that no property will be taken without just compensation being paid. The other part of this is that we are all trying to strive to reduce congestion in courts and to encourage settlements. There needs to be a balance of that interest as well.
The Office of the Attorney General and the Nevada Department of Transportation do not believe we utilize the Offer of Judgment as a device to gut constitutional rights through any method. However, as you have heard from Ms. Shipman and Mr. Chapman, it is a legitimate tool to attempt to get the parties to come together and thoroughly analyze their cases and settle the cases. In that instance it is legitimate.
In the final instance, we all need to understand that when a landowner does exercise their constitutional right to a jury, it is the jury who will decide what the fair market value is. It is not what the landowner initially thought it should be, which could be an extremely large amount, or it may not be what the government thinks it is, which may be a much smaller amount. The jury will decide. That is the main safeguard of the current system. The other safeguard that you heard from Mr. Chapman is that the analysis the court must go through in even deciding whether or not to grant attorney’s fees or costs to the party that was made the offer and beat the offer. Again, under the Beatty case law Mr. Chapman told you about, that is another safeguard as well.
Assemblyman Horne:
Could you address the issue Mr. Leavitt spoke to about how the eminent domain litigation is different that other civil litigation such as tort claims, wherein the landowner is forced into an action and in a tort claim the person makes a choice?
Brian Hutchins:
We believe there is a constitutional right for just compensation in the situation of eminent domain. It is not necessarily true those individuals in tort cases are not brought in willingly. Sometimes they are sued. People can sue for any reason. I would say that is different. It doesn’t involve constitutional rights in the usual personal injury case.
Constitutional violations can be asserted in a civil rights action in a Section 1983 violation. They also have a constitutional right to due process, not to have their life, liberty, or property taken.
Chairman Anderson:
If we proceed as Mr. Jackson has suggested, that is the reaffirmation that NRS Chapter 37 would not be repealed if the measure states that the prevailing party at a trial would still have the ability to recover costs as allowed under the statute. That would clear up some of the ambiguity. In and of itself it is not a stop to a litigious society, but at least it puts it on the same field of play as other kinds of lawsuits.
Brian Hutchins:
Costs are generally awarded in litigation to what is called the prevailing party. Eminent domain litigation is somewhat different from other kinds of litigation because I would suggest that the landowner would be the prevailing party in nearly all cases that get to trial. Why is that? It is because the public agency, as Mr. Chapman told you, does make a deposit to the court of the amount representing the value of the property as appraised by the public agency.
Please consider we are setting aside any Offers of Judgment and simply talking about the trial. The party that prevails at trial would receive their costs paid, and generally the value present in court by the public agency is going to be the value of its deposit. To become the prevailing party, the landowner need only obtain a jury verdict above that appraised value. At the same time, the landowner is going to be arguing that the value of the land is much more than the amount appraised by the public agency. Then the jury is instructed that it must return a verdict within the range of testimony between the public agency’s appraisal and the request of the landowner. I would suggest it is a rare case when the jury finds the value to be exactly as the public agency stated, rather then between the two values. As a result, the landowner is typically the prevailing party. If you leave the law as it is currently, the landowner would still have that opportunity to recover costs in most cases.
Assemblyman Carpenter:
I didn’t understand exactly what Mr. Hutchins was saying in his last response. Under current law, can the landowner make an Offer of Judgment to the public agency?
Brian Hutchins:
Yes, that has happened in my experience with NDOT.
Assemblyman Carpenter:
If the public entity does not accept the offer and the landowner makes the decision to go to trial and if the landowner wins and his Offer of Judgment is confirmed then does the public entity pay the landowner’s attorney’s fees?
Brian Hutchins:
That gets into a situation such as Mr. Chapman described. The landowner is eligible to receive attorney’s fees and costs, if in the discretion of the judge, he believes you should be awarded those costs and fees. We assume under your example, that the landowner got a better offer at trial than was originally proposed by him/them in the Offer of Judgment.
That goes into the situation described by Mr. Chapman where the courts need to analyze whether the landowner can be eligible for those costs—under the Nevada Supreme Court we call it the Beatty case—there are several factors that must be satisfied before a judge can award fees and costs.
Assemblyman Carpenter:
What is the percentage of the cases NDOT is involved in where the entities make an Offer of Judgment when property is being taken?
Brian Hutchins:
I am sorry, Mr. Carpenter, I don’t understand your question.
Assemblyman Carpenter:
Under eminent domain cases filed by the entities—by NDOT, the cities, the counties or whomever—what percentage of those are where the entities make the Offer of Judgment rather than the people from whom property is being taken?
Brian Hutchins:
I can only speak for NDOT, not the other governmental agencies. Even for NDOT, I do not keep track of any percentages. We like to use Offers of Judgment when we can and like Ms. Shipman testified, it does force us as well as the other side, we hope, to analyze our cases and see if there is some common ground that can be reached. We like to use Offers of Judgment and consider them to be a very effective tool, but I cannot give you a percentage.
Assemblyman Carpenter:
What is of concern to me is the resources that the governmental entities have at their disposal. Government staff will be paid no matter what their duties consist of. I am concerned that anyone who goes up against a governmental entity is at a disadvantage because in reality, the private citizen’s assets are being used to fight against themselves. I would appreciate if you could review NDOT records and determine how many Offers of Judgment were initiated by the governmental entity.
Brian Hutchins:
I will see what I can do, Mr. Carpenter.
Chairman Anderson:
That would be most helpful. Mr. Mortenson, I am not going to take another question for Mr. Hutchins. We have one more bill yet to be heard.
I hereby close the hearing on A.B. 397 and open the hearing on A.B. 347. Mr. Hutchins, I would indicate the Committee will probably try to move the bill at the next scheduled work session.
Assembly Bill 347: Makes various changes concerning civil liability of occupational licensing boards and of persons who provide information to, assist or file complaints with such boards. (BDR 3-1152)
Assemblyman Jason Geddes, District No. 24, Washoe County:
I bring A.B. 347 because I was appointed to serve on the Nevada Board of Psychological Examiners in 1999, and as a public member of the Board and after going through the full process of filling out ethics paperwork and definitions of what the Board does and specifications from the Nevada Revised Statutes and the Nevada Administrative Code, I got to my first meeting and all the members informed me that I could be sued regardless of what I had signed or read.
The entire time I served on the Board, we always had the thought and the advice from the Office of the Attorney General that any actions taken by the Board regarding licensure, certification, or revocation could lead to lawsuits against us personally. Dr. Steven Graybar has been under litigation for the last six and a half years. In the time I was on the Board, we lost one exceptional member of the Board. Dr. Graybar had resigned at one point and he was strongly encouraged to return, and it has been difficult to fill positions on other boards as well.
I have a list of all the Boards that have specific language beyond NRS Chapter 41 (Exhibit Q). Those in italics have the specific language. There is language in the NRS concerning general coverage of liability and immunity specific to each board and it still does not do the job.
Steven Graybar, Ph.D., President, Nevada Board of Psychological Examiners:
I divide my professional time between my work at the University of Nevada, Reno, my private practice in northern Nevada, and I am currently President of the Nevada Board of Psychological Examiners.
At the risk of redundancy, I would like to underscore the importance of the Board. We oversee the education, training, and licensure of practicing psychologists in the state. As such we oversee the provision of psychological services to children, adolescents, and adults as well as seniors.
People present for psychological testing if they participate in psychological research, or individual, marital, or family psychotherapy. In those conditions people are at their most vulnerable. They are exposed into taking a bold step to ask a professional who is not a relative for assistance. I believe and it has been my experience that the overwhelming majority of psychologists in our state are practicing well within our professional standards and at a very high ethical standard. When a psychologist breaches these standards it can be devastating. That is the nature of our profession.
The nature of our work on the Board is to oversee this practice and to deal with transgressions. Assemblyman Geddes has offered A.B. 347 that is simple and yet profound. The current law under which we are operating has crippled our Board. We lose good Board members. They leave because service on the Board is essentially a volunteer position. Speaking for myself, it was a way to give back to the state of Nevada that has been very good to me. It has been an honor to serve on this Board. It is a very important task that we are charged with. I have been on the Board for six and a half years and I resigned. I have been personally sued over the past six years. The current statute states a Board member must be operating under “good faith.”
I was so new to the Board that I could not be operating under anything but good faith, and I was still trying to figure out what my responsibilities were; I was simply listening. I did resign, but I was asked to return simply because we could not replace my position, which leads to my second concern.
We lose a colleague who said it simply made no sense for him to put himself or his family at risk. As a result I did agree to a second term because we could not find a replacement. People are no longer interested in serving on the Board. Those who are may not be desirable candidates for the Board. We want to send the best and brightest of whom we have to offer to the Governor. Under the current set of circumstances people are simply not willing to serve. Because of this, the Board operated at 20 percent fewer members for a period of six to eight months.
Third, the Board cannot do its job because our witnesses are now being sued and prosecuted. We cannot get investigators to investigate cases for us because they are being sued. One former member is currently being sued who was contacted by the Board to serve because of his outstanding reputation and experience. I can’t imagine why he would serve the Board in that capacity again.
Finally, we get tied up because of the insinuation of a lack of good faith on the Board, thus placing us in district court. As everyone involved in government knows, money doesn’t talk—it swears. Our Board has been depleted, rendering it unable to work proactively because of our resources. We are completely dependent on the licensing fees, and fees charged by the Office of the Attorney General have absolutely drained the Board.
In closing, we cannot be proactive; we are not even being responsive to the needs and concerns that are brought before us, in my opinion.
Assemblyman Geddes:
Assembly Bill 347 changes the burden of proof from acting in good faith to proving that Board members are acting in bad faith, and it extends the coverage out to the witnesses and the complainants, which is not currently in the NRS.
I do need to disclose that my wife is a member of a state board, but this bill would not affect her any differently than other board or commission member.
Chairman Anderson:
I have one concern over the extension of the immunity to witnesses because a presenter could easily soil a professional reputation, and for them to be given that kind of immunity would not allow a professional to defend himself.
Assemblyman Geddes:
It could be perceived that way and you might be correct on that point. The current problem is that someone can attack it from the other way. When people are acting in bad faith, no one can be found to file a complaint against them for fear that if they file a complaint they will be sued and placed in the responsibility of explaining why they brought the complaint forward.
When we are talking about boards and commissions that are acting on behalf of the state of Nevada and enforcing the NRS and NAC in good faith to ensure psychological examiners, doctors, and architecture boards are acting on behalf of the citizens of Nevada, the issue needs to be made that if they are bringing an existing problem forward that they are not opening themselves up to liability.
We need to get the complaints out and forward and we want them to be good solid complaints. Any frivolous complaints should be dealt with accordingly. Currently, people are afraid to bring their complaints forward because they are put in the position of having to explain “good faith” as opposed to the other way around.
Assemblywoman Buckley:
Generally speaking, is the current standard that immunity exists if the person acted in good faith and without malicious intent? I also understand there is not uniformity throughout the licensing chapters. You want to change the language to state “bad faith” rather than “good faith”?
I guess I am trying to understand how in practical terms that would change the burden of proof. Someone’s license is taken away and they will probably sue because you have taken away their livelihood. That is why the Attorney General is available to represent the boards, to ensure if a complaint is frivolous, the board members are represented. One has to expect lawsuits when someone’s livelihood is taken away.
If people are expected to sue, tough members within a profession need to be found to serve on the board and to say, “Hey, I am going to operate the way I should and whatever happens, happens for the good of profession.” How will the bill change that scenario?
Assemblyman Geddes:
What it changes is that those people whom a board wronged if their license was cancelled and they sue, they must demonstrate that the members of the board were acting in bad faith. If taking of a license was beyond the authority of the board or it was done maliciously, they would have the burden to demonstrate why it was beyond the authority of a board to remove that license. The boards have the ability to suspend or revoke a license per the NRS and NAC. When they do so, they can be sued, but the person who sues should have to demonstrate why they thought the board members were not acting in good faith.
At this point, if a board revokes a license and the person sues stating the board member did not act in good faith, the board member receives the burden of proving the action was in good faith. The plaintiff does not have to demonstrate in any way that the member was not acting in good faith.
In the case against Dr. Graybar, several deputy attorneys general and judges have said the case does not have merit. However, in the good faith clause, the burden of proof of their faith is on the board member. It is very hard to prove that in such lawsuits. The proof should be on the side of the plaintiff. I hope that answers your question.
Assemblywoman Buckley:
It doesn’t because the plaintiff still has the prima facieduty to prove their case, but I’ll ponder it.
Assemblyman Horne:
The bill causes the burden to be shifted as you noted, but in paragraph 2, page 2, of A.B. 347, a penalty is provided for reasonable attorney costs and fees if the plaintiff does not prove their case. That seems overly punitive. It is like we are saying, “Come to court and you have to prove it. If you don’t, you have to pay for it.” Shouldn’t they have the right to make the challenge?
Assemblyman Geddes:
I wouldn’t disagree with that argument at all. The intent of the bill was to provide a little more protection to the board members acting in good faith. The specifics of it and what came out in bill drafting I cannot speak to. I have no legal background. The general idea in this case was where the board and the licensees are paying monthly legal fees as long as a case is pending and the person filing the case has never been able to prove bad faith. However, in stating that it was bad faith they have been able to keep the action moving forward. I am not certain what changes would be necessary to the issue.
Dr. Steven Graybar:
I don’t think A.B. 347 is about toughness; it is about common sense—if judges could be sued for their judgments personally or police officers for their actions. Any board is only as good as their deputy attorney general, but the issue is whether or not a board can do their work. Our board cannot hire investigators. They will no longer investigate cases of psychologists investigating psychological practices.
Assemblyman Geddes:
I also wanted to mention that Keith Marcher from the Office of the Attorney General is present to answer any further questions.
Chairman Anderson:
There are a few more people who have indicated a desire to speak on the bill.
Fred Hillerby, representing the Nevada State Board of Nursing, the Board of Dental Examiners of Nevada, and the State Board of Pharmacy:
[Introduced himself.] We appear in support of A.B. 347. The bill makes good sense to me regarding the burden of proof. The boards I represent also have issues in this regard.
In one particular case, the State Board of Pharmacy, the Executive Director and the legal counsel have been sued in federal court for doing their jobs. The State Board of Pharmacy, in particular, has some incredibly complex issues of drug diversion, gray market drugs, and artificial drugs. These are very serious and endanger the public health and safety. Those companies are making large sums of money in such practices and will use whatever means they can to slow down the Board and its activities. The bill is a good step in the right direction in providing additional protections for the boards.
Buzz Harris, representing the State Contractors’ Board:
[Introduced himself.] We are also in support of A.B. 347. I have submitted a proposed amendment (Exhibit R) to include occupational licensing boards in the scope of the bill. The change would come at Section 3, paragraph 1. We support the remainder of the bill.
Chairman Anderson:
Did you talk to Assemblyman Geddes regarding your proposed amendment prior to submitting it here?
Buzz Harris:
Yes, I did.
Chairman Anderson:
It would appear that your proposed amendment is already included by the definitions in the language according to bill drafting.
Risa Lang, Committee Counsel:
The section would be added under the sovereign immunity statutes, and the definition of an employee as applied to that subheading includes an employee of a part-time or full-time board or commission or similar body of the state or political subdivision of the state, which is created by law. The intent of that language was to include those individuals.
Laura Fitzsimmons:
I appear in opposition to A.B. 347. Having listened to the testimony of the proponents of the bill, it is clear that there is a strong perception that is probably justified that something needs to be done.
I believe the bill, which is in skeleton form, needs further work. I had e-mailed Assemblyman Geddes and he did respond. Mr. Segerblom was also here waiting to testify in opposition, but had to leave prior to the bill being heard.
The bill is very profound in some ways and in other ways it is very limited and may suggest assurances to the participants on occupational boards that in fact do not exist. In my experience, most of such issues are similar to Assemblywoman Buckley’s concerns.
People have a constitutionally protected right to their profession. They have a right to due process before the licensing boards, and if they believe those rights have been violated they would normally file a civil rights action and the case would be heard in federal court. In that circumstance, the ability for the state to legislate that kind of protection would be very limited, if not nonexistent.
Respectfully, I am not quite certain that the proponents of the bill are familiar with the very strong case law in both the Nevada Supreme Court and in the Ninth Circuit Court of Appeals that provides a presumption that people acting within the scope of their authority when serving on a board are acting in good faith and already provides immunity to them. They view most of these acts as quasi-judicial acts. The analogy to judges being sued does also protect the members of these boards.
In my experience, most occupational boards operate for the greater good and in good faith. Unfortunately I have witnessed incidents that are so profoundly troubling in insular professions where charges are brought against people vindictively and those people have lost their reputation and their business. They have spent tens of thousands of dollars defending themselves and there is already limited redress under the law for such situations. I would be very happy if there was any interest in working with anyone on the bill to search for a “middle ground” so that the people who are operating in good faith are protected, but also so that those who are victimized by people operating in bad faith have some redress.
Chairman Anderson:
We will now show Assemblyman Brown present for A.B. 347 in the Las Vegas location.
We have a new calendar for the Committee. Given the fact that the Committee did not pick up the anticipated very large workload, it appears that we will accomplish what needs to be done if the Committee changes to a 7:30 a.m. starting time beginning on April 1, 2003. The Committee will start on Mondays at 8 a.m. beginning on March 31, 2003. It would appear that we will be able to move our workload without any evening or Saturday meetings. Anything is possible, however.
Please note that the deadline for First House Committee Passage is April 11, 2003.
Assemblywoman Buckley has indicated her desire to work on two of the bills heard this morning. Assemblyman Horne, I would suggest we try to work out some amendments relative to your bill that you think might be acceptable to the Committee. Assemblyman Geddes, I would suggest the same to you.
It would be necessary for any proposals to be completed and submitted to the Committee before the end of the month. That will allow the bills to be placed into work session as those meetings are scheduled.
With no further business before the Committee, the meeting is adjourned [at 11:32 a.m.]
RESPECTFULLY SUBMITTED:
Cindy Clampitt
Transcribing Secretary
APPROVED BY:
Assemblyman Bernie Anderson, Chairman
DATE: