MINUTES OF THE meeting

of the

ASSEMBLY Committee on Judiciary

 

Seventy-Second Session

May 15, 2003

 

 

The Committee on Judiciarywas called to order at 7:47 a.m., on Thursday, May 15, 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 describes 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

 

 

GUEST LEGISLATORS PRESENT:

 

Senator Michael A. Schneider, District No. 11, Clark County

STAFF MEMBERS PRESENT:

 

Allison Combs, Committee Policy Analyst

Risa B. Lang, Committee Counsel

Sabina Bye, Committee Secretary

Carrie Lee, Committee Secretary

 

 

OTHERS PRESENT:

 

Andrew List, Policy and Research Coordinator, Nevada Association of Counties (NACO)

Ron Lynn, Building Official, Building Division, Clark County Department of Development Services, and Nevada Organization of Building Officials

Tom Gallagher, Summit Engineering Corporation

Bob Maddox, representing the Nevada Trial Lawyers Association

Dave Duritsa, Safe Homes Nevada

Robert Crowell, representing the Nevada Trial Lawyers Association

Jim Wadhams, on behalf of the Coalition for Fairness in Construction

 

 

Chairman Anderson:

[The Chair reminded the Committee members and those present in the audience of the Standing Rules and appropriate meeting etiquette.  Roll called.]  Ten members being present, eight needed for a quorum; a quorum is present.  Anyone arriving late should be marked present.

 

We have two bills on the agenda today.  Let me try to set the parameters before we begin.  It’s important that we get through the first two bills relatively quickly so we can get to our work session and try to move some bills along.

 

 

Senate Bill 134:  Repeals prohibition on assignment of right to periodic payments of winnings from gaming. (BDR 41-1105)

 

Chairman Anderson:

One of the bills that we took up earlier is S.B. 134.  This bill was presented to the Committee dealing with the prohibition on assignment of rights to periodic payment of gaming winnings.  I indicated that I was holding the bill because I was trying to verify some information relative to whether there were potential complications with tax questions; there appears to be none.  The Chair believes it’s a good piece of legislation and would entertain a motion.

 

ASSEMBLYWOMAN OHRENSCHALL MOVED TO DO PASS S.B. 134.

 

ASSEMBLYMAN OCEGUERA SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Mr. Brown and Ms. Buckley were not present for the vote.)

 

Let’s start with S.B. 162 and see if we can get through it quickly.

 

 

Senate Bill 162:  Makes various changes regarding fees charged and collected by county clerks. (BDR 2-171)

 

Andrew List, Policy and Research Coordinator, Nevada Association of Counties (NACO):

[Introduced himself.]  Senate Bill 162 is a bill with three components.  The first component, Section 2, subsection 1, raises eight standard civil filing fees listed in Nevada Revised Statutes (NRS) 19.013.  Most of these fees are collected by the county clerk to fund the court system and have not been increased since A.B. 92 of the Sixty-seventh Legislative Session.  

 

These eight fees include the fee paid when a civil action is commenced, which would be raised from $56 to $65.  A fee paid by a defendant answering a complaint would be raised from $44 to $52.  The Nevada Association of Counties estimates the fees raised in Section 2, subsection 1, of this bill would generate approximately $555,000 in fiscal year (FY) 2004.  That is an increase of 11 percent over FY2002.  Again, this money is redirected to fund the county court systems.

 

Section 3 of S.B. 162 would raise the fee charged in NRS 13.0315, which is used to fund programs of arbitration established in certain counties pursuant to NRS 38.250.  This fee is paid upon the commencement or answer of an action, and is in addition to the fees listed pursuant to NRS 19.013.  The arbitration fee would be increased from $5 to $10.  The Nevada Association of Counties estimates this would generate an additional $289,000 in FY2004 for arbitration programs throughout the state. 

 

A large portion of this money would be collected in Clark County— approximately $233,000 for Clark County’s arbitration program that is currently underfunded.

 

Section 2, subsection 2, in conjunction with Section 1, creates a fund for technology purposes and upgrades for the offices of county clerks.  This is accomplished through an additional $5 fee collected for the filing and recording of a bond for notary public.  This is not a new fee; this is just raising the fee an additional $5.  This was requested by Clark and Washoe Counties.  The Nevada Association of Counties estimates this additional fee would generate approximately $38,000 for county clerk technology funds in FY2004.

 

An important distinction needs to be made.  In all counties except Washoe County, the county clerk is an ex-officio clerk of the court.  The county clerk in all counties except Washoe County could use that money for court technology or county clerk technology.  It is my understanding that, in Clark County, the money raised through this technology fee would be used to automate the Clark County Marriage License Bureau.  There are thousands of marriage licenses issued annually in Clark County and the money generated in Clark County through that fund would be approximately $27,000 in FY2004.

 

Some of you may be worried about the cumulative impact of these particular fees.  When you read the filing fee in NRS 19.013, it is not the filing fee that you pay.  Those are only the components of the filing fee.  As an example, in Clark County, the current fee paid upon filing a civil complaint is actually $133.  This fee would be increased by $14 from $133 to $147.  The fee charged upon the appearance of a defendant would increase by $13 from $86 to $99.  On the other end of the scale, since some of the smaller counties don’t have an arbitration program, they don’t pay that additional fee component.  The fee for filing a civil complaint is $116.  This would increase by $9 from $116 to $125.  For filing an answer, it would increase by $9 from $69 to $78. 

 

You have my written testimony (Exhibit C).  This is an important bill for the counties to offset the rising costs of the court system.

 

Chairman Anderson:

One of the criticisms we heard earlier from the Nevada Supreme Court was the increased number of fees and fines that have been coming in and causing the Court some level of distress.  The question is why this methodology?  Why can’t these funds for technology, for example, come from the county general fund since that is part of what we pay for with our taxes?

 

Andrew List:

Right now the money is coming from the county general fund.  These fees have always been charged by the county to offset the cost of using the court system.  The same system is also used in the recorder’s office; when you record documents, you pay a fee, which includes a technology fee.  There is an overwhelming cost to automate the court system, to automate the recorder’s office through A.B. 94 of the Seventy-first Legislative Session, and to upgrade and maintain that particular system. 

 

The Nevada Association of Counties has supported S.B. 106, the Nevada Supreme Court’s bill, which would provide technology to the court system, but the money would be used by the state, the Supreme Court, and the Administrative Office of the Courts.  This bill is slightly different in that the money goes to the county for technology.

 

Chairman Anderson:

Would the court be using court fees?  Would the clerks outside the court be utilizing these court fees?  These fees are not going to be spent entirely on the court?

 

Andrew List:

It’s my understanding that the county clerk is the ex-officio clerk of the court except in Washoe County.  In Clark County, that particular county clerk would use the money in the Marriage License Bureau.  Interestingly enough, they did not want to put the $5 on a court-related fee.  Instead, they put the additional $5 on the fee paid for the notary public bond.  It’s the people that file to get a notary public bond who upgrade the court system.

 

Chairman Anderson:

But Section 2 does the other on commencement of action and appeals. 

 

Andrew List:

Section 2 authorizes an additional $5 for filing and recording of a bond for notary public.  The additional $5 would not apply to the other filing fees, only for that one particular fee that is collected by the county clerk.

 

Chairman Anderson:

Commencement of action, appeal, filing of a petition for letters testamentary.

 

Andrew List:

I’m looking at Section 2, subsection 2, of S.B. 162.  In Section 2, subsection 2, the additional $5 for the technology fund only applies to the notary public fee.

 

Chairman Anderson:

But the increase in fees from $56 to $65 and from $42 to $49, what is going to be coming from those increases?

Andrew List:

That money goes into the county general fund and the counties hold that money to fund the court system.

 

Assemblywoman Angle:

In Section 1, subsection 1, says:  “Any interest earned on money in the account, after deducting any applicable charges, must be credited to the account.  Money that remains in the account at the end of a fiscal year does not revert to the county general fund.”  Basically what we’re saying is that, and correct me if I’m wrong, we’re setting up an account for technology and if the funds are not all used, the funds go into a savings account and can never be used within the county general fund, since we set it aside for no other use.  Is that what we’re saying, that we’re setting up savings accounts in county government?

 

Andrew List:

That is correct.  The reason we’ve done that is because, in some of the smaller counties, such as Carson City, this technology fund would accumulate only approximately $500 in FY2004.  That’s not a lot of money for technology in the county clerk’s office.  If you hold it for three or four years, you might actually be able to buy a computer or invest in some software.  That’s why it’s held over from year to year.  The same system is used for the recorder’s office and their technology fund.  That money also accumulates in that account until there is enough to invest in technology.

 

Assemblywoman Angle:

In Section 2, I see that you’re increasing these fees all the way down the line.  Does the clerk get only the increase or the full amount?

 

Andrew List:

They only get the $5 on the notary bond.  Currently that fee is $15.  If they decide to establish the technology fund, they would charge $20 and only the additional $5 would go into the fund.  These fees have not been raised since 1993.   If indexed to the consumer price index, they’re about keeping pace.

 

Assemblywoman Angle:

So the $56, that goes to $65; that $9 increase or the entire $65 goes into the account?

 

Andrew List:

The only fee that goes into the technology account is the fee associated with the notary public.  That is on page 3, line 15, of S.B. 162.  As an example, on the commencement of an action the entire $65 goes into the county general fund and is normally held by the counties in an account to fund the court system.  The only amount that would go into the special technology fund is the additional $5 on the notary public filing on line 16 of page 3.

 

Assemblywoman Angle:

Do you know how much is in those accounts for the courts now?  It’s carrying over, it’s collecting, it’s saving; what is the balance?  Are they in the negative?  Are they in the positive?  Where are we?

 

Andrew List:

I could not tell you, county to county, how much money is in their accounts to fund the court system.  I do know that if you look at the average amount spent out of the county general fund, in FY1996 each county spent an average of 13.2 percent of their general fund expenditures on the court system.  That has increased in FY2002 to 16 percent.  I know the counties are spending more of their county general fund, of their discretionary money, for the court system; that is increasing.  Based on that simple piece of data, the court fees that are collected are not enough to keep pace with their expenditures.

 

Chairman Anderson:

Are there other questions from members of the Committee?  In the document you’ve provided (Exhibit C), in the cumulative impact statement on page 2, why the differentiation between what happens in Clark County as compared to Carson City or Pershing County—the three examples you have here?  I realize it’s because the base amount is different, but why those gigantic increases?  An appearance of a defendant would increase from $86 to $99 in Clark County.  The same guy appearing in Carson City would cost $112, and $78 in Pershing County.  Am I going to start shopping?

 

Andrew List:

It’s not legally possible to shop, of course.  You need to file your complaint in the district court where the action or occurrence took place.  To explain the difference, there are a number of fees in NRS Chapter 19, but not every county charges every fee.  For example, not every county has an arbitration program, so they might not charge that additional $5, the fee that we’re going to raise to $10.  Not every county has a legal services program, so there is an additional $25 there that a county might not charge.  It depends on which fee structure they choose and which programs they have in that particular county.

 

Chairman Anderson:

Is there anyone else testifying on S.B. 162?  Anybody in the south testifying on S.B. 162?  I’ll close the hearing on S.B. 162 and open the hearing on S.B. 371.

 

 

 

Senate Bill 371 (1st Reprint):  Creates Constructional Defect Commission and revises various provisions governing actions resulting from constructional defects. (BDR 54-251)

 

Senator Michael A. Schneider, District No. 11, Clark County:

Good morning, Mr. Chairman.  I would defer if there is anybody in opposition to S.B. 371 if they wanted to go first.

 

Chairman Anderson:

This is something of a contentious issue, but I wanted to make sure that you had the opportunity to have a hearing.

 

Senator Schneider:

[Introduced himself.]  Construction defects has been a very contentious issue for six years now.  Six years ago the homebuilders came to me and wanted me to carry a construction defect bill for them, which I did.  I knew there was some problem, but I didn’t know the depth of the problem with construction defects until a bill arrived which I hadn’t even read before it was introduced.  It went nowhere and maybe it shouldn’t have.  Last session I introduced another bill on my own, but no construction defect bills moved forward last session either.

 

I come to you today with a bill that is totally different than anything you’ve seen before on construction defects.  I’ve probably talked to a couple thousand homeowners over the last four years about construction defects.  I’ve talked with association managers, property managers, and builders.  I’ve talked with everyone on construction defects.  I’ve come to the conclusion that NRS Chapter 40 does not work.  If it did work, we wouldn’t be here with construction defect bills.

 

Something I hear over and over from every homeowner in a construction defect case, and even the homeowners in the yellow T-shirts, is, “I didn’t want to go to court.  I just wanted my home fixed.”  I agree with them; they shouldn’t have to go to court to get their home fixed. 

 

What I bring to you today is a bill [S.B. 371] that enables them to do that.  You hear the homebuilders say they want a right to repair, but they get locked out of homeowners associations that are being sued, and I’ve seen that.  As soon as the suit is filed, the home builder cannot go back in, he is locked off the job.  That’s part of the whole legal game.  My bill is not a “right to repair,” it’s a “requirement to repair.” 

 

[Senator Schneider continued.]   I’ve set up a Constructional Defect Commission to be appointed by the Governor and under direct control of the Governor.  As of late yesterday afternoon, I spoke with the Governor’s Office and was informed that the Governor’s Office would approve this Commission.  There has been some question that the Governor doesn’t like commissions anymore; that’s not the case with this piece of legislation.

 

This legislation says that the Commission would be made up of seven people who would be appointed to four-year terms.  There would be three experts from the industry, contractors who are knowledgeable, have no less than five years’ experience in the industry, and have lived in the state no less than five years.  Then there would be four citizens.  I’ve stacked it in favor of the consumer so that the consumer can look at these cases from a totally objective area.  Maybe the Governor would appoint homeowners who have been through a construction defect, they would have seen what it is, they can look at a defect and tell if it is a defect or not.  I think it is very important to structure the Commission so the consumers know that we’re working in their best interests. 

 

I did not consult the construction industry on this, but I have spoken with them because this is a self-funded bill.  We will not go to the General Fund to get money for this Commission.  The money to fund this Commission will come from the licensing fees of contractors.  The contractors are the ones who have created the problem of construction defects and they should be the ones to correct it.  Any fees incurred should, in my opinion, be borne by the contractors.  Right now their licensing fees are quite low.  The State Contractors’ Board will set their new licensing fees to fully fund this Commission.

 

We will set this up under Assemblywoman Buckley’s Recovery Fund, which has been very successful.  We are borrowing it and we will pay interest.  We’re using the fund as a depository for the funds coming in from the contractors’ licenses.  The Recovery Fund will still grow at its natural progression.  We will not use that money.  We will just use that fund as the vehicle to put the contractors’ licensing fees into.  Since the Recovery Fund has worked so well, is so aboveboard, and is so rich with funds right now, I thought that would be a good vehicle.

 

When a homeowner, or in most cases a homeowners association, has a defect, they would go through a very simple process.  What I’ve heard from homeowners, and I know you’ve heard the same thing here, is that a homeowner has worked with a builder for years and has had no response.  Shame on the builders who have done that.  The homeowner is finally forced to find an attorney and go to court.

 

[Senator Schneider continued.]  Under this proposal the homeowners would send a registered, return-receipt letter.  If the builder does not respond within 30 days, the homeowners would send another letter.  Fifteen days after that, if there is still no response, the homeowners can file with the Commission.  It’s that easy.  The homeowners have a paper trail, which you need in the business world today.  The Commission would set the guidelines and would produce a form that any homeowner could easily use.

 

When the homeowner or the association went before the Commission, they would have to identify the defect to the best of their ability and present what they think needs to be done. 

 

I like bills that are about 1½ pages.  When I first requested this bill it was 100 pages.  We had it redrafted and it came out to 15 to 17 pages, but there is a mistake in the bill that exempted the Commission from the Open Meeting Law.  It’s a deletion in the back.  That was not the intent.  This would be a totally open meeting.  That could be fixed in bill drafting. 

 

My only possible amendment to this bill, and I think I can speak for the Senate Committee on Commerce and Labor because we are anxious to fix construction defects in some way, is if a homeowner or a homeowners association didn’t have an expert to look at their defects, the Commission would send an expert to see what the defects are and to state what the cure would be. 

 

Let’s say an individual had a leaky roof and the repair is to remove the tile, repaper it, put new flashings up, and put the tile back on.  The cost to repair is $5,000.  The contractor would have to pay the $5,000 or he would have to do the work.  I would expect the Commission to tell the builder, “You’re not going to do this in 90 days when your subcontractor can get back out there.  It will be done a week from Tuesday.  If you cannot do it, it will be done by Robert’s Roofing.”  It will be done immediately. 

 

In a very complex, worst-case scenario, houses are built on ground that is unstable, and the houses are sinking or heaving.  The expert says there are two streets of houses that cannot be saved and that there should be a park there.  You have 20 houses and they send an appraiser to appraise the houses as if they were in good condition.  The houses appraise at $200,000 each; that’s $4 million.  To remove the houses would cost $250,000 and $250,000 to relocate the people; we’re at $4.5 million.  And to build a park so everyone can be made absolutely whole would cost another $250,000 to $500,000.

 

[Senator Schneider continued.]   We’ve looked at construction defects and we’ve looked at medical malpractice for a couple of sessions.  I’ve listened to those medical malpractice hearings.  A person injured due to medical malpractice can never be made whole—absolutely never.  You go to court and the court decides how whole or partially whole we can make it.  We throw money at them until they feel better, but they can never be made whole.  If you lose a leg, if you lose an eye in surgery, or if someone dies, the family can never be made whole. 

 

But in construction defects you absolutely can be made 100 percent whole.  The way our system is set right now, you go to court, the builder says the repair will cost $1 million, and the plaintiff says the repair is $25 million.  Each side has its “hired liars,” and the court negotiates for five years to come up with some sort of solution.  That is no solution.  The public, the homeowner, and the consumer are left at the will of the court and the result may not make them whole; in most cases it doesn’t.  After they’ve gone through a protracted lawsuit, they’re never made whole. 

 

I’ve seen homeowners association after homeowners association come up short on money.  They can’t get all the repairs made and they are left to make the repairs on their own.  They have to hire their own contractor when all they wanted was their houses fixed and they don’t know how to hire their own contractor.  Under this Commission, the work can be done.  The Commission would supervise it and send out the proper experts to ensure the work is completed 100 percent and that it’s guaranteed 100 percent.  Everything is done and you’re never short of money.  That’s what this Commission does.  It is a 100 percent guarantee you can be made whole. 

 

We’ve all read about the cases in Las Vegas.  There was one recently where they asked for $24 million.  The builder said it was a $3 million fix; the court said $7.9 million.  I think the homeowners got hosed.  The homeowners didn’t get made whole.  Shame on us for letting that happen.  It’s very easy to make a house whole.  Even if you have to tear it down and do it again, it can be made whole.  That’s what I’m getting at here.  There’s a lot of wording our bill drafters put in to set up this Commission and to make it fair.  They even put in that an elected official can be on the Commission.  We could put you on the Commission, Mr. Chairman, when you weren’t teaching government or chairing this very complicated committee.  The big thing about the Commission is that it costs the consumer nothing.  There is nothing they have to pay out of their pockets.  It’s very simple. 

Chairman Anderson:

The State Contractors’ Board does not exactly have a great, stellar reputation currently.

 

Senator Schneider:

I agree with you.  That’s why this is not under the State Contractors’ Board.  The State Contractors’ Board will just help this Commission get on its feet.  It will deposit money into the Recovery Fund and collect money from the contractors on their licensing fees.  I would be open to an amendment to put this under the Governor’s Office.  I don’t have great faith in the State Contractors’ Board myself.

 

Chairman Anderson:

Questions from members of the Committee?

 

Assemblywoman Angle:

What is the difference between this Commission and the State Contractors’ Board and, if there is a difference, why do we need the State Contractors’ Board anymore?  Can we switch that funding over from the State Contractors’ Board to your Commission? 

 

Senator Schneider:

The State Contractors’ Board is a licensing board and this Commission is not.  This Commission deals with consumers who have construction defects.  As a matter of fact, it would be my hope that this Commission, if they saw a “jackass” contractor out there that didn’t take care of business the way it should, would take that license, light it on fire, send it over to the State Contractors’ Board, and tell them to revoke that license.

 

Also, there are some defects that I don’t feel are defects in construction.  For instance, if paper was not put on a roof or if firewalls were left out throughout a whole complex, that isn’t a construction defect, that’s fraud.  I would suggest to you that this Commission, if they see things like that happening, should turn that person over to the District Attorney’s Office for prosecution for fraud.  I can see leaving out a firewall in one building, but not a whole complex.  That is fraud; it’s not a defect.

 

Assemblywoman Angle:

Section 20 of S.B. 371 stipulates that there is a licensing fee being collected that will go to this Commission and those fees were previously going to the State Contractors’ Board.  Is that correct?  If they’re collecting licensing fees now, are they the licensors so they can pull that license?  Can they revoke that license?  I don’t see revocation of license in the bill.

 

Senator Schneider:

Right now the State Contractors’ Board collects the fees because it’s the licensing board.  There are a couple of different grades of licenses that contractors have.  One is a $100 fee for a smaller license, a sub-type license.  Another is a $500 fee for a bigger general license.  I may be off on that, but the fees are something like that.  What I’m suggesting, and what I told the Senate Committee on Finance and the Senate Committee on Commerce and Labor, is that whatever the cost is to run this Commission, it’s put right on those licenses.  If a license goes from $500 to $5,000, so be it.  It’s the contractors who have caused the problem of construction defects and they are the ones who are going to pay to correct it.

 

I have talked to subcontractors who have been up here for their events.  I’ve talked to general contractors, I told them about this, and that their fees would go up.  They said OK.  Everyone to a person has said, “Whatever it is, it is.  Let’s do it.  Let’s get in and get the places fixed.”

 

Assemblywoman Angle:

So the fees here are in addition to their licensing fees?  [Senator Schneider agreed.]  When you say the money in this Recovery Fund exceeds 150 percent, how did you arrive at that?  Would you explain that to me?

 

Senator Schneider:

I have no idea; the bill drafters put that in.  Our intent is not to harm the Recovery Fund.  The Recovery Fund should still grow.  We’re just using that as a depository for money.  If you can find a better vehicle, that’s fine.  We could put it in the Governor’s Office somewhere.  The Recovery Fund, in my opinion, has been very good, has a good reputation, and it’s gotten the consumer a lot of relief.  It has worked very well for the consumers who had the bad pools and where the pool contractors had abandoned them.

 

Assemblywoman Angle:

On page 6, there is a fee of $250.  Does the person who has the defect have to pay a fee?

 

Senator Schneider:

No, that’s the contractor.

 

Assemblywoman Angle:

He pays that $250?

Senator Schneider:

He pays the $250.  We can put the fee on anything.  The statement here is the contractor hasn’t acted in good faith, so we’re going to fine him walking through the door.  You can make it $1,000, whatever you want.  What I’m saying is, “Mr. Contractor, you haven’t lived up to your obligation and right now you’re paying just to walk through the door.”

 

Assemblywoman Angle:

So if I think I have a construction defect, I take it to the Commission, and they charge the contractor the fee?  [Senator Schneider agreed.]  Whether there is a construction defect or not, he has to pay the fee?

 

Senator Schneider:

It’s an incentive for him to be more responsive to his customer.

 

Assemblyman Carpenter:

Do you have any idea how the contractors insure themselves against construction defects?  Do you have any idea how that might work in your scenario with the Commission?

 

Senator Schneider:

The Commission has the authority of the court and, under this scenario as drafted, the appeal would be a judicial appeal to a judge.  With the power of the courts, when the Commission pulls the contractor in, they’re also going to pull their insurance company in on the complex cases that require millions of dollars.  That insurance company has to come in at the same time so the money is there to take care of the consumer and make them 100 percent whole. 

 

Insurance is a good question.  Right now, the insurance industry is hardly writing construction defect insurance.  Many contractors are going naked.  They’re out there building with no insurance and shame on us for letting that happen because where does that leave the consumer if there is a large mistake out there?  Another thing they’re doing is “wraps.”  They’re wrapping insurance.  The general contractor “wraps” these subcontractors under his insurance and they’re going out there with $1 million or $1.5 million of total insurance.  What about when you’re doing a large complex.  You get $1.5 million total insurance on a “wrap” and you wind up with a $10 million defect on a bad soils case.  The consumers get absolutely hosed.  That’s why I think it’s very necessary we step in, get some quick relief, and get the contractors’ insurance back in line.

Assemblyman Mabey:

I would like you to comment on Section 19 of S.B. 371 where, if there is no reasonable probability that a construction defect exists, the Commission shall dismiss the complaint filed.

 

Senator Schneider:

The experts on the Commission might look at a situation and come to the conclusion that, “This is just deferred maintenance.  You should have been painting the trim.  The trim on your building did not go bad.  It’s nine years old.  It needed to be painted two years ago.  You have not been maintaining your building.”  That stuff does happen.  People want to blame someone or just get some money to take care of deferred maintenance.  That’s where I can see that coming in.  Remember that the Commission has four consumers and three experts.  With a mix like that, those consumers, those homeowners on the Commission are going to know what deferred maintenance is and what a defect is. 

 

Chairman Anderson:

Then, if a homeowner goes directly to the State Contractors’ Board, he doesn’t go to the contractor to give him an opportunity to repair first?

 

Senator Schneider:

Under this bill, they don’t go to the State Contractors’ Board, they go to the Commission.  They’ve sent the two registered, return-receipt letters ahead of time to the contractor or the builder, 30 days apart, to give the builder an opportunity to respond and do the repairs.  We want the builder to be notified to do the repairs and I would suggest to you that, from the testimony we’ve heard the last three sessions, the homeowners have called the builders and tried to get a response.  This would be the absolute last resort when they send the registered letters.  The builder is then on notice that, if he doesn’t step forward, he’s going to the Commission.

 

Chairman Anderson:

Are there other questions for Senator Schneider?  [There were none.]  Is there anybody else speaking on behalf of S.B. 371?

 

Ron Lynn, Building Official, Building Division, Clark County Department of Development Services, and Nevada Organization of Building Officials:

[Introduced himself.]  We have an amendment to this bill (Exhibit D).  In Section 23, subsection 5, we propose to delete the requirements for continuing education for building inspectors. 

 

First and foremost, this is redundant.  There is already a continuing education requirement in NRS 278.577 that was established last session requiring 45 professional development hours per triennial of continuing education for inspectors, plans examiners, and building officials.  It is expensive to do additional education.  It costs thousands of dollars each year for building departments, and it’s beyond the scope of work of looking at the minimum requirements for the protection of life-safety to be dealing with construction defects. 

 

A number of construction defect items are simply not building code items.  They revolve around aesthetics.  They may be significant in so far as the homeowner is concerned from cabinets to carpentry and millwork to tile, but they are not under the purview of the building codes at this time.

 

Finally, for building departments to be held responsible and to be the “construction defect arbiters” would require us to be on the job for significantly more time, or to be defending ourselves in court cases where it would be inappropriate, adding additional and often unnecessary costs to the construction industry. 

 

Chairman Anderson:

Of course, I’m sure you’ve heard the criticism in the past that the job of the building inspector is to catch the obvious construction defects that might take place at the time of construction before the drywall goes up, and that we would eliminate a lot of these problems if the people who were doing the building inspections caught the problems early enough so they could be taken care of before the homeowner moved in.  Why would we not want to make sure that this was a regular part of the responsibility and the role of building inspectors?

 

Ron Lynn:

The building inspectors undoubtedly have a role of oversight.  Based upon the last session, they are currently required to complete this education, so there is already education in place.  There is no question that the building inspector has a role in the process.  This is another additional layer of education that we think is unnecessary.  Once we’ve given them the basic education, we need to get them out in the field. 

 

Currently in Clark County, we’re performing over 2,500 inspections a day.  I need to get my people out there, spending time in the field.  In addition, Clark County helps teach the State Contractors’ Board.  We set up classes for them.  I’m not sure it’s appropriate for them to set up classes for us.  We have dedicated trainers on staff helping throughout the state.  It’s not a question of being aggressive enforcers, rather it’s having this additional education put in place at this time. 

 

Assemblyman Carpenter:

In the continuing education that you have now, is there anything that deals specifically with construction defects?

 

Ron Lynn:

It does not specifically.  The problem with construction defects is the definition of it.  If it is related to building code issues, then the answer is undoubtedly yes.  We do electrical, plumbing, mechanical, and construction elements.  If, however, you’re dealing with some of the other elements such as carpet, tile, and certain architectural features, then the answer is no.

 

Assemblyman Carpenter:

Does soils come under your purview?

 

Ron Lynn:

Yes.  Soils is definitely a code requirement and this is an area where aggressive changes have been made.  There have been proposals in construction defect legislation before that have not passed that would have specifically addressed soils.  Unfortunately, soils is a very difficult challenge for local jurisdictions and, if properly administered, needs to go to a geotechnical engineer.  There needs to be greater standards.  This proposed education and construction defect bill would not address those soils issues.

 

Assemblyman Carpenter:

It seems to me that, in your continuing education, you should definitely be looking at what I call construction defects.  I don’t think I’m talking about the tile or the color of the tile, but to make sure that you get the wallboard in the proper place, and that the forms, the amount, and the depth of concrete that’s supposed to be there are there.  It seems to me that’s construction defect and I think that’s what you’re supposed to be looking at.  If you don’t want to have what’s in the bill relate specifically to construction defects, you should change continuing education now to make sure that they do cover those areas. 

 

Ron Lynn:

We believe that those areas which are germane to the protection of life, limb, and property are addressed in the continuing education.  Once again, the problem is, what is defined as a construction defect?  It has become an umbrella term.  You discussed the wallboard and the framing members.  Those building inspectors are required to take those 45 professional development hours in that specific building area.  Electrical inspectors would be in the electrical area.  Those people of multiple disciplines would have to complete more educational requirements throughout that period of time.

 

Chairman Anderson:

Thank you for the amendment (Exhibit D). 

 

Senator Schneider:

I included the provision about the inspectors in the bill because I think we need all of our entities to be up-to-speed and know what’s happening in their industry.  That’s why I called for continuing education.  If Mr. Lynn says they do that right now, that would be fine with me.  I would offer to the Chairman and the Committee that when a contractor gets his license, it’s a license for life.  There is no required continuing education.  I would be open to address in some way that key employees of a company or those who are on the license would be required to have continuing education going forward.  This is not about an incident right now; this is about the future also.  Just because you were issued a license in 1975 doesn’t mean you’re up-to-speed with what’s happening today.  Maybe we could look at that also.

 

Chairman Anderson:

Anybody else speaking in support of S.B. 371? 

 

Tom Gallagher, Summit Engineering Corporation:

[Introduced himself.]  I’ve previously testified before this Committee on the construction defect legislation.  I think that S.B. 371 deserves a shot.  We’re engineers.  When we get brought into one of these cases, it’s already been filed, everybody is suing everybody, and then we get a belated invitation.  If it is a defect caused by us, we should have the opportunity to address that defect, but by the time we even find out there’s a lawsuit going on, it’s so deep that you can’t get out of it, and so you have to set aside about six years to deal with the attorneys and everything else.  It seems simple and sometimes that’s best, but I’ve been through three sessions of this stuff and I agree; I don’t think NRS Chapter 40 is working.  It doesn’t work for us and I know it doesn’t work for the contractors. 

 

If you look at that recent $7 million-plus lawsuit in Las Vegas, testimony was presented that it was a soils case and that’s what it was settled on.  If you review who was named in that case, there were appliance suppliers—the list goes on and on—and all these people had to have attorneys, etcetera.  I can certainly supply the list to you if you’d like to see it, but I think this bill definitely deserves a shot.  I would urge you to consider it very seriously. 

Chairman Anderson:

Are there questions for Mr. Gallagher?  Anybody else speaking in support of S.B. 371? 

 

Bob Maddox, Nevada Trial Lawyers Association:

[Introduced himself.]  On Senate Bill 371, I prepared a position paper (Exhibit E) and I ask that you give it consideration.  Senate Bill 371 proposes that NRS Chapter 40 be thrown out with the trash and replaced with a blatantly unconstitutional proposal for denying Nevada homeowners the right to have a jury of their peers decide their claims.  This Legislature is powerless to do what S.B. 371 proposes. 

 

Sections 2 through 12 propose that this Commission would have exclusive jurisdiction to determine claims or causes of action for the recovery of damages based on construction defects.  That’s right out of Section 9 of S.B. 371.  The Commission would entirely replace the jury trial system for resolving such disputes in Nevada.  The attempt to deprive homeowners of a right to a jury trial and to force homeowners to submit their claims to the proposed Constructional Defect Commission is not permitted by the Constitution of the State of Nevada. 

 

Article 1, Section 3, [of the Constitution] states in part:  “The right of trial by jury shall be secured to all and remain inviolate forever.”  Forever hasn’t happened yet, so that constitutional right still applies and cannot be taken away from the citizens of Nevada as S.B. 371 proposes to do.  The constitutional infirmities or defects with this bill don’t stop there.

 

Article 3, Section 1, and Article 6, Section 1, of the Constitution of the State of Nevada require a separation of powers of the separate branches of government.  Section 9 of S.B. 371 creates more than a delegation of quasi-judicial functions that can sometimes be assigned to an administrative agency.  The bill proposes to entirely replace the civil justice system with this Commission.  Senate Bill 371 divests the courts of jurisdiction and confers jurisdiction on a legislatively created administrative agency, another blatantly constitutional violation of the sections I mentioned.

 

From the point of view of homeowners, the Commission is a very poor substitute for a jury of their peers.  The members of the Commission are appointed by the Governor.  Three of them must be licensed contractors and four of them don’t have to be licensed contractors.  None of them get paid and they serve four-year terms.  Now who is going to be willing to serve on this Commission for a four-year term dealing with highly contentious issues without pay?  I submit to you that it’s generally going to be people who are associated with the construction industry.

 

[Bob Maddox continued.]  Section 13 of the bill sets up unreasonable procedural requirements.  It isn’t just one notice to the builder, but this provision says that the homeowner must send by certified mail to the contractor two written notices and they must be mailed at least 30 days apart.  What is the justification for making a homeowner who simply wants his home fixed to have to do two separate certified mail notices and make sure that they are at least 30 days apart?  Just another procedural hurdle for homeowners to get over just to try to get a home fixed.  Then after going through this double certified mail notice at least 30 days apart, the homeowner can present a claim to the Commission. 

 

There are a number of other provisions in S.B. 371 that are not reasonable.  Section 14 requires that a contractor or his representative must be present at any inspection of the residence.  This provision clearly deprives the homeowner of a right to have somebody of his choosing come in to take a look and give him some confidential advice on what might be happening.  What if the contractor doesn’t want to be present?  This says he must be present.  It’s simply an unworkable provision.  It’s somewhat similar to what we dealt with about ten days ago with S.B. 373.

 

The Commission would be powerless to enforce any of its orders.  Section 18 of the bill says that if the Commission makes a finding in favor of the claimant, the Commission may order the contractor to make repairs at the contractor’s expense or cause the repairs to be made at the contractor’s expense.  If insured, his insurance company incurs the expense for the repairs by another contractor who is bonded, insured, and licensed to make the repairs.

 

The bill offers no suggestions as to how the Commission is going to cause the repairs to be made at the contractor’s expense.  Frankly, it is absurd to suggest that this Commission is going to make insurance companies pay for such repairs.  How is the Commission going to require an insurance company to pay for the builder’s obligation to make repairs?  Is the Commission going to sue the insurance company?  What standing would the Commission have to sue the insurance company for the builder?  Who is going to hire the contractor to make the repairs?  Is the contractor doing the repairs going to contract with the Commission to do the repairs?  In that instance, how is the homeowner going to be protected against mechanics liens?  With all due respect, it is not possible for the Commission to accomplish what S.B. 371 suggests the Commission could accomplish.

 

[Bob Maddox continued.]  Section 20 of the bill has shortened the statute of limitations to two years.  Presently the statute of limitations is a very complex issue.  There are statutes of repose that are six, eight, or ten years; in cases of willful misconduct or fraud to the consumer, there is no time limit.  Then there is another time period that runs from when a homeowner knew or should have known of a defect and generally that’s four years.

 

Two years is a very brief time and it refers to two years to bring a cause of action.  Now that we would have this Commission and not a right of a homeowner to file a lawsuit in court, what does that mean?  Reference is always to if the homeowner has a roof leak, but what about the complex cases?  What about the really difficult cases?  The soils cases?  Reference has been made to a trial that took place not long ago that took three and a half months.  There have been some misstatements about what took place there, but I won’t get into that right now. 

 

A trial involving serious soils issues in a subdivision, similar to the damage you saw last week in the videotape of Mr. Russo’s home, required the testimony of geotechnical engineers, structural engineers, and civil engineers on both sides at an enormous cost.  Now this Commission, out of the Recovery Fund, would have to hire these engineers to do the investigation, determine what the cost of the damage to those homes was, and reach some equitable resolution on behalf of the homeowners with regard to the contractors and other parties in the case.

 

Presently, in Clark County alone, we have three judges who work almost full time on construction defect cases.  The parties hire their experts, engineers, contractors, and architects to figure out all these problems.  Now all of this would be thrown into this Commission.  I submit to you that one commission would not be enough.  If we need three courts in Clark County to do this full time and they’re not the ones who hire the experts, how could one commission handle all this?  I submit to you we would have to have at least six commissions to deal with the construction defect issues in this state.

 

The Recovery Fund was not set up for this purpose and there’s been no analysis shown to you that the Recovery Fund would be adequate as it’s presently structured to deal with all the expenses that would be incurred by this Commission in trying to resolve all the construction defect cases in this state.

 

Senate Bill 371 is unconstitutional, is unworkable, and should be firmly rejected.  We have construction defect problems in Nevada and, as we have said to this Committee and to others in this Legislature repeatedly, the way to address the construction defect problems in Nevada is to address the construction defects and to deal with preventing construction defects from happening in the first place. 

 

[Bob Maddox continued.]  As Mr. Lynn mentioned, bills have been proposed over the last several legislative sessions that would have increased standards, particularly in the soils issues, which are the ones that end up with the most severe problems for the homeowners and the most complicated cases to deal with.  That’s where we should be going, not trying to create an unconstitutional commission to deprive a citizen of this state of their constitutional rights.

 

Assemblyman Mortenson:

Suppose the bill was just slightly modified so that the Commission didn’t have exclusive authority and people could go in both directions?  They could go through the Commission or they could go the way they’re doing today.  I think it would be a neat laboratory because then we could see which was most effective.  We’re having so many problems, I’m in favor of looking for some unique “out-of-the-box” solutions.  That would remove the unconstitutional provision, would it not?

 

Bob Maddox:

Are you suggesting a screening panel-type approach?

 

Assemblyman Mortenson:

No.  First of all, you were criticizing this because it took two letters 30 days apart, but the proposal was that the homeowner with the defect would call the contractor and try reasonably to get him to do the job and only then resort to the two letters, but that’s beside the point.  What I’m trying to say is would it not remove what you feel is an unconstitutional situation if the Commission did not have the ultimate authority or the total authority to do everything according to the bill?  In other words, a homeowner could choose to go to a lawyer or to the Commission.

 

Bob Maddox:

If it were strictly voluntary and the parties could stipulate to have the matter heard by the Commission just like they can now stipulate to have the matter arbitrated as opposed to a lawsuit and a trial, yes, of course, that would eliminate the constitutional issue.  Parties on both sides would have to agree.  If you made it binding on the contractor, the contractor would also have the objection that he or she would lose that person’s constitutional right to a jury trial.  If both sides stipulated to something, agreed that they would give up their rights to have the jury hear the case and they would go through the Commission, yes, that could be done.

 

Assemblyman Mortenson:

It wouldn’t have to be irrevocably giving it up.  They could go to one and if it was unsatisfactory, go back to the other.

 

Assemblyman Carpenter:

It would seem to me that the language could be modified or changed so that if you didn’t like the result that you got out of the Commission and the repairs weren’t made right, you would still have the opportunity to go to court.  Couldn’t you do that?

 

Bob Maddox:

Yes, I think so.  At least that wouldn’t be a violation of Article 1, Section 3, [of the Constitution of the State of Nevada] regarding the constitutional right to a jury trial.  It’s somewhat similar to the system we have now where there is the court-administered arbitration program for the smaller cases where the discovery commissioner can assign a case to arbitration.  Then if either side doesn’t like the arbitration award, they can proceed to a lawsuit.  That would get past the constitutional objection, yes.

 

Assemblyman Mabey:

I think Assemblyman Mortenson might have hit the sweet spot of the bat.  I really like that idea of giving them either an “A” or a “B” route, and if they didn’t like what happened on the “A” route, they could follow up with a lawsuit; I think there’s some merit in that. 

 

Bob Maddox:

I think Assemblyman Mortenson’s concept was that the homeowner could either elect to go through the Commission or go to the civil justice system, but then the defendant would also have to stipulate to have the matter heard by the Commission.

 

Assemblyman Claborn:

This bill is like a breath of fresh air and I’d like to hear more about it.  I think it’s on the right track.

 

Chairman Anderson:

Any other questions for Mr. Maddox?  [There were none.]  Let’s move to the south.

 

Dave Duritsa, Safe Homes Nevada:

[Introduced himself.]  I’m here to speak against this particular piece of legislation, S.B. 371.  We’ve already heard that it is fundamentally flawed.  It is unconstitutional.  I don’t think there’s a question about that.  Section 9 is clearly unconstitutional.

 

When I first read this bill, my first thought was once again we’re entering the roadblock era.  It’s been said over and over again that homeowners just want to get their homes fixed, and this is true.  I disagree with the Committee on their comments that this may be a way to go. 

 

For example, this bill calls for three members to be contractors and four members of the general public, supposedly with bias on the side of the homeowners.  However, later on we find out that a quorum consists of four of those members, which tells me that three can be builders and one could be a homeowner.  You can have the most honest, God-fearing contractors in the world sitting on that Commission but in that quorum you’re still going to give the appearance of bias. 

 

Maybe we should change it so that if you want to adopt something like this—let’s have this Commission set up with seven members, four of whom are homeowners who have been through construction defect lawsuits and three that haven’t, and see if the contractors would feel comfortable bringing their cases before a commission like that.  My point is our present jury system calls for both sides to come together and choose a jury.  They each have an opportunity to question those individuals that will eventually be asked to pass judgment on the claims being made.  That opportunity in the Commission is clearly taken away.

 

You spoke a little while ago that maybe this is the way to go.  Why do we have to have another system of “and/or.”  Why can’t we concentrate where the problem actually is—the bad builders that are building flawed homes?  That’s where we need to concentrate and yet we’re attempting to set up all these various ways to cure these problems.  Once again, the way to fix construction defect lawsuits, to get rid of them and get rid of the attorneys, is to build the homes correctly; if there is a problem, fix them correctly.  If they don’t, they should be punished accordingly through the courts.

 

Section 7 says the members of the Commission shall serve without compensation.  I don’t know how you’re going to find people to do that, but assuming you do, subsection 1(b) reads that they are entitled to receive a per diem allowance.  On page 3, the next sentence says, “A claim submitted pursuant to this paragraph must be paid from the account established by NRS 624.470.”  Am I to understand this to mean that a claim for a per diem allowance is to be paid out of that fund, or is this whole claim of a construction defect cause of action or complaint, however you want to put it, to be paid out of NRS 624.470?  There would need to be some clarification on that.

 

I will briefly mention Section 14 of S.B. 371, which says, “a contractor or his representative must be present” etcetera.  I’ve spoken on this before.  I carry the right to have in my home whomever I want to have when I want to have them for whatever reason I want to have them.  You can’t take that away.  The crafters of this bill have to understand that if we’re going to come to any consensus on this particular issue that it must be done without harming the constitutional rights of anybody.  This bill clearly does that.  That needs to be understood.

 

Let me finish on Section 19:  “If the Commission issues a finding that there is no reasonable probability that a constructional defect exists, the Commission shall dismiss the complaint filed in the action pursuant to Section 15 of this act.”  Does that mean that it’s done?  Does that mean that if you do try to exercise your constitutional rights and bring legal action this section can be used against you saying that you have no complaint? 

 

I know time is short, but once again I know we’re all trying to look for answers to the construction defect problem.  We’re all trying to get rid of lawsuits.  Number one, you would have to do some major amending to have anything like this even begin to work.  Number two, over the next two years, I suggest very strongly that those who are really involved in this issue try to come up with some type of solution so that buildings are built correctly whether that be through governmental agencies and their provisions of making stronger requirements for building or whether that be through committees, homeowner action groups, lawyers, builders, or what have you.  We need to have that happen or this issue will continue on from session to session.  I stand ready to answer questions if you have any.

 

Chairman Anderson:

I see no indication of questions.

 

Senator Schneider:

First of all, Mr. Maddox mentioned that Section 20 limits exposure to two years, and I couldn’t find that at all in Section 20.  If we have limited a time frame to two years in this bill, that is not the intent.  Also, like Mr. Maddox, I’m not a constitutional expert.  Let me tell you, this bill is not unconstitutional and it’s not because the state has said that on your home, you have a ten-year warranty.   What we’re going to court over right now is warranties.  A latent defect is covered for ten years; that is a warranty.  So going to a Commission to get a warranty item taken care of is not unconstitutional, in my opinion, and I don’t think the Legislative Counsel Bureau [LCB] would draft a bill that would be blatantly unconstitutional.

 

Things were mentioned about pay.  You want to pay the Commission, that’s fine with me; let’s pay them.  Contractors’ licensing fees will pay the bill, if that’s a problem.  For any little objection that was brought up here, I think we could work that out as a subcommittee. 

 

I appreciate Mr. Claborn’s comment about “a breath of fresh air.”  What I’m trying to bring here is something totally out of the box that will move us down the road.  Let me offer this, if you go to the Commission and you feel that your home didn’t get repaired, and then you could go on to court or appeal it to a judge, I guess that would be OK, wouldn’t it?  But I would think that if the Commission is doing its job, all the repairs are going to be done, and a judge would reject it if all the repairs were done. 

 

Thank you, Mr. Chairman.  I look forward to working with you and I appreciate the respect and time you’ve given everyone.  I watched most of the hearing yesterday from my office, and you ran an extremely good hearing, one of the best I’ve seen for the entire session.  Thank you for allowing the people to have as much time as they did yesterday.

 

Chairman Anderson:

Is there anybody else on S.B. 371 who feels that the issue has not been fully heard or has a piece of information that’s absolutely essential for the Committee to have?  [There were none.]  Let me close the hearing on S.B. 371.

 

[Chairman Anderson called for a recess at 9:20 a.m. and reconvened the meeting at 9:44 a.m.]

 

We’ve got a good news/bad news scenario.  The major piece of legislation dealing with construction defect is still hanging fire.  I’m still hopeful that we’re going to come up with a solution, but it’s not looking promising right this second.  I have an idea of what we should do.  If I can get your acquiescence to it, I think we’ll be OK, but I’m still hopeful that they’re going to work out some of their differences.

 

Our Work Session Document (Exhibit F) includes Senate Bill 100.  If we can take care of S.B. 100, I think we might be in pretty good shape.  So, let us take up S.B. 100 in the Work Session Document.

Let me indicate first of all that there is a quorum present, 13 members being present. 

 

Senate Bill 100 (1st Reprint):  Makes various changes to provisions governing common-interest communities. (BDR 10-29)

 

Allison Combs, Committee Policy Analyst:

Senate Bill 100 is the measure heard yesterday.  There were a number of amendments that were proposed and I’ve summarized them through the Work Session Document (Exhibit F) as numbers 1 through 11, but I have also attached for the Committee’s reference each of the exhibits that were submitted yesterday.

 

The first amendment, listed as number 1, would require rural agricultural residential common-interest communities to comply with the Open Meeting Law.  That was proposed by Assemblyman Carpenter.

 

The second amendment, and these are presented in the order in which they appear in the bill as far as the section numbers to be affected, is in Section 36, with regard to protecting an association from having to indemnify board members or officers who knowingly or willfully violate the law, was proposed by Mr. Michael Buckley.  The amendment language suggested is set forth in the Work Session Document (Exhibit F).  He also referenced Section 63 of existing law requiring an association to indemnify board members when they’re sued for actions taken in their role as a member, unless it’s proved that they acted with willful or wanton misfeasance or with gross negligence.

 

The third amendment is with regard to voting procedures, and it would be an amendment to Section 46.  There was some concern raised by individuals, including Terri Janison, with regard to voting through delegates.  The amendment was proposed by Senator Schneider to require the election of delegates or representatives by secret ballot.  He submitted language, on page 3 of the blue pages (Exhibit F), for the Committee to consider that specifies:

 

·        The election of any delegates or representatives must be conducted by secret or written ballot.

·        Mailing procedures.

·        Only written ballots returned to the association in the manner prescribed on the ballot could be counted to determine the outcome of the election.

·        The ballots must be opened and counted at a meeting called for that purpose of electing the delegates or representatives.

·        A quorum is not required to be present when the ballots are opened and counted.

·        The candidate for delegate or representative may not possess or participate in the opening or counting of the ballots that are returned to the association.

 

The fourth amendment would clarify which chapter or provisions of Nevada Revised Statutes would govern where there is a conflict.  It would be an amendment to Section 48 of the bill and would clarify that NRS Chapter 116 also governs when there are conflicts between that chapter, NRS Chapter 78, which pertains to private corporations, and NRS 81.010 to NRS 81.060, which pertains to nonprofit cooperative corporations.  That was proposed by former California Senator Briggs.

 

The fifth amendment was discussed in concept by Assemblywoman Buckley to clarify that an association could not act in violation of federal or state laws such as the Americans with Disabilities Act (ADA) with regard to restricting access or withholding approval for improvements to a unit.

 

Amendment number 6, to clarify the definition of the cost of collecting, is from Pamela Scott, Michael Schulman, and John Leach, who submitted their proposals in writing but weren’t available yesterday to testify.  Ms. Scott noted that the intent was to clarify that dollar amounts outside the outlined caps cannot be charged to the unit’s owner in the association’s attempt to collect fines.  The proposed change to that definition is also set forth at the bottom of page 2 of the Work Session Document (Exhibit F).

 

Amendment 7 is an issue raised in writing.  There was no formal testimony on this by Mr. Schulman and Mr. Leach regarding ensuring consistency between the provisions concerning fines and the inclusion of costs for collecting past due fines.  This amendment would be to Section 61 of the bill.  The intent set forth in their written document was to treat liens and the costs associated with the collection process consistently.  Nevada Revised Statutes 116.31162(4) makes a distinction between fines imposed for violations that threaten the health, safety, and welfare of the residents of the association and violations that do not threaten the health, safety and welfare.  The proposal is that this new language should be consistent with what is in existing law, so the proposal set forth would be that any past due fine would exclude the fine for a violation of the declaration of bylaws, rules, or regulations that would threaten the health, safety, or welfare of the residents. 

 

Amendment 8 is proposed by Michael Buckley, Mr. Schulman, and Mr. Leach to ensure that the homeowner has adequate time to return a written ballot by mail.  The language suggested by Mr. Buckley is at the bottom of page 3 (Exhibit F), which specifies permitting the ballot to be returned within no less than 15 days.

 

Amendment 9 is proposed by Betty Ravendo.  Her proposal, regarding the minutes from the meetings of the unit owners, would amend Section 65 of S.B. 100.  She proposed to delete the word “substance” and insert “summary” of the remarks made by unit owners as far as what must go into the minutes, and also to delete the requirement that prepared remarks be attached to those minutes.  She’s proposing a similar change to Section 66 to delete that requirement entirely.  She provided her intent on the amendment in writing (Exhibit F).  For example, in Section 66 she noted that meetings of boards of directors shall not be required to include comments or narratives of the owners because it is a meeting of the board of directors and should reflect their actions and the votes they take.  She also suggested that it was not appropriate to attach to the minutes copies of remarks submitted by owners because the remarks could be incorrect or irrelevant or defamatory.  For those reasons, she is suggesting that these changes be made.

 

The tenth suggested change pertains to attorney-client privilege.  Mr. Maddox testified yesterday that the bill as written causes some concerns with regard to attorney-client privilege.  He submitted language to try to correct that and protect contracts between the association and attorney. 

 

The final amendment was submitted by Mr. William Magrath to ensure the ability of a unit owner to review the association’s books, records, and other papers and ensure that this ability is not frustrated.  He noted that some executive boards refuse to disclose the number of hours worked by personnel employed by the association, and that unit owners should also be able to know how many hours people are working in exchange for the salaries they are paid.  The language suggested is on page 6 of the Work Session Document (Exhibit F) and would specify that the executive board must not require a unit owner to pay in excess of $10 an hour to review documents, books, records, or other papers of the association, and also included that personnel records of the employees, except for those records relating to hours worked, salaries, and benefits of the employees, would be accessible by the unit owners.

 

Chairman Anderson:

Ms. Lang, do we need to clarify the questions in number 10, the attorney-client privilege language of Mr. Maddox?

 

Risa B. Lang, Committee Counsel:

I think it’s OK the way it is.  The concern was if this was open and anybody could come, and the homeowners themselves may not have a contract individually with the attorney, and that what would otherwise be confidential could become open by waiving the privilege in that manner.

 

Assemblyman Geddes:

On number 7 on page 3 (Exhibit F), when we get into the language and it’s a question that if we set the cap at 18 percent, wouldn’t all the associations just put the interest rate at 18 percent?  Is that high for this sort of thing?  I’m not sure.  It just seems high to me.  I don’t know how others feel.  On page 4, amendment 9 (Exhibit F), I don’t like that proposed amendment.  Some of these homeowners associations are quite contentious and there is a lot of fighting going on.  I think it is somewhat disingenuous to allow somebody to cover up the fighting that’s going on in an association, and to let somebody move in and then find out what’s going on once they’re in there.  If there are a lot of these issues out there, and there is a lot of fighting going on, I don’t think we should allow them to cover that up, and I would not support that.

 

Chairman Anderson:

Let me come back to your point in number 7.  By no means do I want to put myself out as an expert on money, but isn’t it “not to exceed 18 percent”?  It’s the top end cap, so it could be considerably less.  I know that we didn’t hear any discussion on that.

 

Assemblyman Geddes:

I would agree.  I’m just not sure anybody would set it any less if they could charge 18 percent.  I don’t think anybody would come in with prime, or prime plus two, or 5 percent, if they could charge 18 percent in this punitive action.  Just an opinion, of course.

 

Chairman Anderson:

So you would prefer that it be prime.  Is that what you’re pushing?

 

Assemblyman Geddes:

Something—or a lower rate.

 

Assemblyman Brown:

I’m just wondering about the legal interest rate; I think it’s in NRS Chapter 99 point something or other, which is generally prime plus two.  If the Committee has the same concern that Assemblyman Geddes has, that number might be pushed towards the 18 percent since it’s set at a cap.

 

Chairman Anderson:

You’re suggesting that it would be “not to exceed prime plus 2 percent”?

Assemblyman Brown:

Or any enacted fine bears “interest at the legal rate.”  A lot of contracts state the lesser of the legal rate or 10 percent or something like that.  I do agree that 18 percent is pretty hefty, but the Chairman is correct, it doesn’t mandate 18 percent, it’s just not to exceed.  But if the Committee is concerned, I don’t want to say it’s quite standard, but in many instances the rates are set at the legal rate.

 

Chairman Anderson:

What you’re suggesting is that what we should put in there, if we were to move it in 7, any past due fines bear “interest at the rate established by the association not to exceed the legal rate”?

 

Assemblyman Brown:

That’s one way of saying it, or just stating “it shall accrue at the legal rate of interest.”  We could certainly give them the ability to set, but it wouldn’t exceed the legal rate, which at this point is quite low.  Some people may think it’s too low.

 

Chairman Anderson:

Let’s go back to the front.  Number 1, seems to me, is acceptable. 

 

Number 2 looks to me OK. 

 

I have no problems with numbers 3, 4, or 5.

 

There’s something about number 6 that causes me concern—“Costs of collecting includes, without limitation.” 

 

If we’re going to move with number 7, it seems to me we should use “not to exceed the legal rate” at line (a).

 

Number 8 looks OK.

 

Number 9 does not look OK.  I like the existing language.  I understand Ms. Ravendo’s concerns, but it seems to me that if somebody provides their written statement and wants it included, it should be included even if they are foolish enough to make inflammatory remarks.  To quote Mr. Goldwater, “You can’t stop people from doing dumb things.” 

 

Number 10 would be OK, and number 11 looked to be OK.  Other than that, does anybody else have any concerns?

 

Assemblyman Carpenter:

Going back to page 4 of the Work Session Document (Exhibit F) where it talks about the minutes, it says under subsection 8(c), “the substance of all matters proposed, discussed, or decided at the meeting and, at the request of any member of the executive board, a record of each member’s vote on any matter decided by vote at the meeting.”  I always thought that how members voted were part of the record, but it appears it’s not recorded unless somebody on the board asks for it.  It should be automatic that the voting of each member should be recorded.  I may be reading it wrong.

 

Chairman Anderson:

You’ve got us reaching for the book.  We’ll have to go back and reread the bill here.

 

Assemblyman Carpenter:

It’s on page 36, lines 21 and 22, and it says “and at the request of any member of the executive board, a record of each member’s vote on any matter.”  I thought it was a matter that how the members voted was always recorded, whether it was unanimous or somebody voted against it, because if that wasn’t recorded and anybody went back to find out how members voted, they wouldn’t have any idea.

 

Chairman Anderson:

Mr. Carpenter, it would appear that, at least in my reading, they would have to keep date, time, place, those members of the executive board who were present, and the substance of what was proposed including the record and substantive remarks.  In subsection 9, however, they can limit other materials, remarks, or other information to be included in the minutes.  In other words, on materials and remarks, but I don’t think that they can limit the vote.

 

Assemblyman Carpenter:

I guess I’m not expressing it.  The only time they would record how the members voted is if somebody requested that the vote be part of the minutes.  It seems to me that for any board like this, it should be part of the minutes whether it was unanimous, whoever voted against it, or whatever.

 

Chairman Anderson:

”Except as otherwise provided in subsection 9, the minutes of each meeting of the executive board must include . . . .”  So you’re suggesting that we remove the material of line 22 of Section 66, page 36 of S.B. 100?

Assemblyman Carpenter:

I think what you would do is where it says “discussed or decided at the meeting and,” take out “at the request of any member of the executive board” and then it would read “and a record of each member’s vote on any matter decided,” and not at the request of any member of the executive board.

 

Chairman Anderson:

I think this is a drafter kind of question, but Ms. Lang, if our intention is that we want to make sure that’s included in the recorded minutes, would we not put it into a category by itself along with the date, time, place of meeting, the members of the executive board who are present, those members who are absent, and the requested vote, and then renumber the other materials so that the board could request the substance of all materials proposed for discussion?

 

Risa Lang:

I think we could do it either way and we can work that out in drafting.  I think it would mean the same thing either way.  We take out the clause that Assemblyman Carpenter is referring to, so that it’s always included instead of just being included at the request of a member of the board, and if it makes it more clear, we can certainly put that as a separate paragraph.

 

Chairman Anderson:

We definitely want to make sure that a recorded part of any minutes kept would include the way people voted and that it wouldn’t be an option for them not to have that part.  Ms. Dennison and Ms. Scott, do you find any problems with that?  [Both indicated they did not.]  Are you OK, Assemblyman Carpenter?

 

Assemblyman Carpenter:

Yes, sir.

 

Assemblywoman Buckley:

The only thing I was concerned about was the fines.  It was explained to me why the health and safety was being adjusted, and I understand that now, but I still have some concerns about having an open cost of collecting.  I like the idea of capping that because, otherwise, it’s the $20 fine, then it’s the cost of collecting the $20, and before you know it, it’s this ridiculous amount.  I hope we have a cap in this and that this cost of collecting isn’t so broad that it allows them to charge any collection fee they want.

 

Chairman Anderson:

That would be [amendment] 6?

Assemblywoman Buckley:

Exactly.

 

Chairman Anderson:

Ms. Lang, can we clarify that a little bit better?

 

Risa Lang:

I think you’re looking at Section 61, considering the manner in which you’re going to charge these costs, and what you’re going to charge.  The current language of the section excludes health and welfare violations from the caps that are in this section currently, and which says that the fine can’t exceed $100 for each violation or a total of $500.  Currently that wouldn’t apply if the violation was one that threatened health or welfare, so by changing it to just a violation it would apply to any.  However, you’ll note in the suggestion on number 7 of the Work Session Document (Exhibit F), it seems to be placing those back in.

 

I’m not sure what Assemblywoman Buckley is asking.  I think she is addressing the language in lines 24 through 26 on page 27 of the bill.  [Assemblywoman Buckley answered in the affirmative.]  This says that the limitations on the amount of the fine don’t apply to these additional charges for collections including interest, charges, or costs if the fine becomes past due.  Basically, the limitations that are in Section 61, subsection 4, on the amount that can be charged for the fine don’t apply to any kind of charges that are incurred for a late payment of the fine.

 

Assemblywoman Buckley:

I’m very confused by all this language, and I apologize.  What would make me feel better is if all of these collection charges were also under this.  What I think page 27, line 41 attempts to do, it says that these charges can’t exceed 5 percent of the outstanding balance.  What if there was some overall cap so you can’t make up a $50 collection fee to just keep adding on?  That would make me feel better about all these language amendments.  If we had that language in somewhere, that would make me feel better.

 

Assemblyman Brown:

I know we spoke yesterday about health, safety, and welfare.  Is there someplace in the statute that defines those types of violations?  I’m wondering if your garbage can that has residual refuse in the bottom of it is deemed a health violation and what that would do?  I know we’re outside of our hearing, and perhaps that’s not affected by this particular provision.  Does anybody have information on that?

 

Chairman Anderson:

Well, I’m at a loss.

 

Assemblyman Brown:

I’m probably not going to get an answer to that one.

 

Risa Lang:

I’m actually not aware of anywhere in this chapter that would define that.  I would guess it would just be a factual thing.  I would also mention in Section 61, subsection 4, it does appear to place a limitation on the amount.  I think that’s what that subsection is for, for the amount that can be imposed for the past-due fines.

 

Assemblywoman Buckley:

But what confused me was on page 27, line 24, “the limitations on the amount of the fine do not apply to the interest, charges, or costs that may be collected.”

 

Risa Lang:

I think that’s referring back to the $100 per violation or $500 total.  Then Section 61, subsection 4, is limiting how much that can be.

 

Assemblywoman Buckley:

Yes.  In addition, Section 61, subsection 4(c), is pretty broad:  “may include any costs of collecting the past due fine at a rate established by the association.”  That could be a pretty high rate.

 

Risa Lang:

If you go to the next page, it has some caps on that as well.

 

Chairman Anderson:

We were suggesting that it would bear interest at the rate established by the association not to exceed legal rate.  Then we see the not to exceed $20, not withstanding the foregoing fine, and 5 percent on outstanding balance.

 

Assemblywoman Buckley:

So you get 18 percent interest, a late charge not to exceed 5 percent, and then a collection fee in accordance with that schedule.  Why do you get interest and a late payment?  Don’t they represent the same thing?  I’ll defer to Mr. Brown.

 

Assemblyman Brown:

This is a statute and usually it is one or the other.  I don’t have heartburn over limiting it to one or the other.  I would say that costs of collections are defined in Section 61, subsection 5.  At first I had some problems with this provision, but as I read it again, I feel like the caps that are imposed by Section 61, subsection 4(c) are pretty substantial.  Looking at the costs of collection, they may add up rather quickly.  So, if your typical fine is a $50 fine, that’s going to fall within the $20 cap.  They’re probably going to incur the costs far in excess of that rather rapidly.  I do think the cap is significant.  I think the only thing I would do on this is perhaps limit it to one or the other, the interest or the late charge.

 

Assemblyman Conklin:

I would support it if it were capped at the legal rate with no additional penalties.  If there‘s a cost to collecting, that should go in the evaluation of the original fine in the first place as far as I’m concerned.  I think we should take collection charges out.  There’s a fine, there’s a percentage, and that’s it.  That would be my suggestion for late fees.  I don’t think it costs the community if you leave your trash can out overnight. 

 

Chairman Anderson:

Let’s find a solution so we can move the bill.  What are we going to do here?

 

Assemblyman Brown:

Delete Section 61, subsection 4(b). 

 

Chairman Anderson:

In number 7 (Exhibit F)?

 

Assemblyman Brown:

That’s correct.  Either (a) or (b), but if you’re looking for one, we can do (b).

 

Chairman Anderson:

So, it would then read that it “Bears interest at the rate established by the association not to exceed the legal rate.”  Then we would have (b): “May include any costs of collecting the past due fine at a rate established by the association.”  That would take care of Assemblywoman Buckley’s concerns?

 

Assemblyman Brown:

Assemblywoman Buckley had heartburn over having both a legal rate and a late fee under the assumption that isn’t the interest rate . . .

 

Chairman Anderson:

I understand.  I misstated.  So we can either do (a) or (b), but you can’t do (a) and (b).  You get your choice between either (a) or (b), so the bill drafter is going to have a pleasant time trying to sort this out for us.

 

Assemblywoman Buckley:

At the risk of moving us along, how about we pick (a) at prime plus 2 [percent]?

 

Assemblyman Brown:

Which is the legal rate.

 

Assemblywoman Buckley:

Legal rate.  Right.

 

Chairman Anderson:

We already did that.

 

Assemblywoman Buckley:

So forget (b).

 

Chairman Anderson:

That’s what I suggested just a second ago.  So we don’t have to worry about number 6.  Are we accepting the changes in proposal 6 in the Work Session Document (Exhibit F), “costs of collecting”?  That’s where your original problem came from?  That’s now OK?  So, we’re going with proposed amendments 1, 2, 3, 4, 5, 6, and 7 with the elimination of subsection 4(b).

 

Risa Lang:

Are we going to add the language on number 7, subsection 4(c), that would make the distinction for health and safety violations just for the purpose of collecting past due fines?

 

Chairman Anderson:

Absolutely.  Yes.  We’re accepting number 8.  In number 9 we’re doing Assemblyman Carpenter’s change to reorganize that to ensure that they will record the vote.  We are doing suggestion numbers 10 and 11.  So we’re doing 1 through 11, and in 9 what we’re doing is clarifying that the change is not as in the Work Session Document (Exhibit F), but rather the suggestion being made by Assemblyman Carpenter.  In 7, we’re eliminating subsection 4(b).

 

Assemblyman Brown:

The only thing I don’t think I heard was amending it to the legal rate.  We stated delete subsection 4(b).

 

Chairman Anderson:

Absolutely.  You’re correct, Assemblyman Brown.  I didn’t say that and I should have.  In proposed amendment number 7 (Exhibit F), 4(a) will read:  “Bears interest at the rate established by the association, not to exceed the legal rate”; subsection 4(b) will be eliminated; and in 4(c) we will accept the “notwithstanding the foregoing, if the fine is for a violation of the declaration, bylaws. . .” and we’re going to clarify further “for health and safety.”

 

ASSEMBLYWOMAN BUCKLEY MOVED TO AMEND AND DO PASS S.B. 100 WITH THE AMENDMENTS AS DISCUSSED.

 

ASSEMBLYMAN GUSTAVSON SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Assemblyman Horne was not present for the vote.)

 

Chairman Anderson:

I’ll assign the bill to Assemblyman Brown.  Assemblyman Brown is doing such a good job on these things. 

 

That takes care of our Work Session Document (Exhibit F).  We may meet this evening.  I’m still hopeful that we’re going to come up with the construction defect piece yet.  I’m going to ask our policy analyst to take a look at A.B. 133 in its second reprint with a couple of little changes in it relative to some discussion on legal.  Since we’ve not been able to reach consensus from the construction folks, we’ll meet after the Assembly Committee on Elections, Procedures, and Ethics.  The Assembly Committee on Elections, Procedures, and Ethics is meeting at 3:15 p.m., so as soon as they’re out of here, we will be in here and I would anticipate they’ll be out of here by six, but it’s probably going to be a little later.  We are in recess [at 10:30 a.m.].

 

[Chairman Anderson reconvened the meeting at 7:15 p.m.]  I see trial lawyers here but no home builders and that distresses me.  Let’s hope that they’re coming directly.  

 

We can take care of a few issues while we’re waiting.  There were 66 bills referred to our Committee from the Senate, of which we have processed all but 4.  [The Chair gave the status of both Senate and Assembly bills.] 

 

Let’s look at Senator Hardy’s S.B. 136 in the Work Session Document (Exhibit G).   

Senate Bill 136 (1st Reprint):  Makes various changes relating to certain penalties and fines imposed by unit-owners’ associations. (BDR 10-897)

 

Chairman Anderson:

One of the problems with S.B. 136 we dealt with this morning relative to what happens when a unit owner, or the tenants or guests of a unit owner, have to pay a fine and if failure to pay does not threaten the health or welfare of the common interest community. Apparently we have a letter that came from Ms. Scott of the Howard Hughes Corporation [included in the Work Session Document (Exhibit F, page 16)] that solves some of those issues, and I think that we’ll be able to take care of this.

 

Allison Combs:

There were some concerns raised with regard to deletion of language on lines 24 and 25 of page 4, [of S.B. 136] about the fines for “failure to comply”; it’s with “the health and welfare of the common interest community” that these fines would apply under the cap.  I think that the Committee counsel had some input on the letter you received today.

 

Risa Lang:

The deletion of the words in Section 4, paragraph 1(b) [of S.B. 136], relating to the threatening of the health and welfare were also included in the bill we voted on this morning [S.B. 100].  It’s identical to the language in here.  The letter said that it was a technical correction.  It is actually a substantive change, but that was something you voted to take out.

 

Chairman Anderson:

So the objections that we have had to S.B. 136 have been removed, or have been dealt with so we could move on this bill.

 

Assemblywoman Buckley:

I agree.  I think we worked on Section 4, subsection 1(b), extensively this morning and would go with that version.  We didn’t address where the tenant’s guests can’t park, on lines 18 and 19 of page 4, and the new imposition of fines on lines 37 through 45 with joint and several liability.  Are those new?  Can we just take them out?

 

Chairman Anderson:

So this would be an amend and do pass, removing “jointly and severally liable”?

Assemblywoman Buckley:

In Section 4, subsections 1 and 2, take out any new changes, except to the extent this morning that we already voted on them, make it consistent, but keep the due process that is in subsection 3, page 5.

 

Risa Lang:

So remove Section 4, subsection 2, and put back in the language on lines 13,14, 18, and 19?

 

Assemblywoman Buckley:

Yes; I don’t know where the guest would park.

 

Risa Lang:

I think the way Section 4, subsection 2, was set up was just to separate them out as a policy issue, and then instead of fining the tenant or guest, which is what we currently have, you could impose the fine on the unit’s owner to hold them accountable for the actions of their tenant or guest.

 

Assemblywoman Buckley:

That’s strict liability; you didn’t know. 

 

Risa Lang:

We’ll put them back in; you want the tenants and guests to go back the way they were.

 

ASSEMBLYWOMAN BUCKLEY MOVED TO AMEND AND DO PASS S.B. 136 WITH THE AMENDMENTS TO REMOVE SUBSECTION 2, AND RESTORE THE LANGUAGE IN LINES 13, 14, 18, AND 19.

 

ASSEMBLYMAN HORNE SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Ms. Ohrenschall and Mr. Oceguera were not present for the vote.)

 

[The Chair assigned the bill to Mr. Geddes.] 

 

Let’s discuss S.B. 175.

 

Senate Bill 175 (1st Reprint):  Makes various changes with respect to security of State of Nevada. (BDR 18-536)

Allison Combs:

Senate Bill 175 is a measure relating to homeland security (Exhibit G).  It was heard on May 9, 2003, and there are some provisions in here that are similar to a bill that was recently passed out, but they are different.  It has an advisory committee, requires reporting of the records that are declared confidential by the director of information services pursuant to Section 4, and requires the report of those records to be sent to the Legislature, as well as a report of the work of the activities of the advisory committee.  There is a definition of terrorism in here, and there were some proposed amendments from several individuals including Assemblyman Carpenter, Lucille Lusk, and Janine Hansen to revise that definition to provide that it mirrors the one in Assembly Bill 441 and Assembly Bill 250. 

 

Chairman Anderson:

Why don’t we remove the terrorism section from this bill in its entirety?  If we are to keep the Governor appointing the advisory committee, I would propose that we move this bill out as an insurance policy; it may be needed to take care of some of the other problems; we definitely don’t need Section 2, lines 19 through 30.  We would replace the act of terrorism with what we worked on in A.B. 441.  Is there any other part of this bill that anybody finds objectionable? 

 

Assemblywoman Angle:

On page 4, lines 17 and 18, wouldn’t we have to remove where it makes reference to the meaning of acts of terrorism?

 

Chairman Anderson:

No, because we’re substituting our definition of the act of terrorism.  We will keep “the Governor may appoint an advisory committee,” and the rest of the bill.

 

Assemblywoman Buckley:

I like the work we did on those other two bills, and I thought we reached good compromises with them; I like that language much better than this.  I’d support the motion to amend and do pass with our definition of terrorism, but reserve my right on the Floor, because I’d rather see all of our hard work adopted; some of this we didn’t spend enough time on.

 

Chairman Anderson:

I’ll take that into consideration; I’d like to get it up and on its way.  In the event we need an amendment, it would be a personal amendment rather than a Committee amendment if there are additional problems with the bill.

 

Assemblyman Carpenter:

Probably not in this bill, but in the one that we were discussing the other day from Senator Raggio [referring to S.B. 38] it seems that there is something lacking in that definition of terrorism because I don’t think it actually would refer to the situation of the Twin Towers, where there was an airplane, or with car bombings; we need to catch those things. 

 

Chairman Anderson:

The bill that’s going to be coming from the Senate Committee on Judiciary is going to be the Assembly’s bill that has Senator Raggio’s name re-amended into it.  I think your concern was the weapons of mass destruction part.  Mr. Horne, did you want to make a comment?

 

Assemblyman Horne:

I was in the Senate Committee on Judiciary this morning and they were discussing that; they amended Senator Raggio’s name onto the bill.  Senator Raggio came in and I was advised that they have no intention of letting this bill die.  I actually made comments on a couple of changes that they were making, dealing with a possible fiscal impact on educating emergency responders, and the like.  They said there would be no problems with this bill’s language and it going through. 

 

Chairman Anderson:

We’ll take a look at the weapons of mass destruction question.  In truth, I know that we’ve worked very hard on the terrorism bills, but we already have, existing in statute, most of the things that need to be done if someone were to use a car bomb.  We would be able to charge them.  I find it difficult to believe that the District Attorney would be at a loss, given the makeup of our statute. 

 

Assemblyman Horne:

Also, they did adopt Lucille Lusk’s proposed amendments that we had chosen.  I think it was language about an act upon the general population, and they took her language regarding a great number of people, or something in that realm.

 

Chairman Anderson:

Shall we move then with S.B. 175, the amendments being to change page 2, remove the bill’s definition of terrorism, put in our definition of terrorism, and go with the bill?

 

ASSEMBLYWOMAN BUCKLEY MOVED TO AMEND AND DO PASS S.B. 175, TO REMOVE THE DEFINITION OF “TERRORISM” AND REPLACE IT WITH THE ASSEMBLY’S DEFINITION OF “TERRORISM.”

 

ASSEMBLYMAN CARPENTER SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Ms. Ohrenschall was not present for the vote.)

 

[The Chair turned the topic of the meeting to S.B. 241.]

 

 

Senate Bill 241 (1st Reprint):  Makes various changes to provisions governing certain claims for constructional defects. (BDR 3-156)

 

Chairman Anderson:

I was looking forward to hearing from you, but apparently that’s not going to happen?  Gentlemen, do we have a deal or not?

 

Robert Crowell, Nevada Trial Lawyers Association:

I have to tell you, Mr. Chairman, with all due respect and a great deal of gratitude to the Committee, we have to report that we do not. 

 

Chairman Anderson:

Mr. Wadhams, do you want to come up and tell us you do not [have a deal]?  We just heard from the trial lawyers.

 

Jim Wadhams, on behalf of the Coalition for Fairness in Construction:

[Introduced himself.]  As I am sure many of you have observed, we have worked many hours with the Nevada Trial Lawyers Association.   We’ve had discussions, negotiations, gotten some dispensation that we appreciate from the Chairman, Vice Chairman, majority leaders, and Speaker to try to keep this issue moving, and, unfortunately, I’m here to report that we were unable to find agreement.

 

Chairman Anderson:

Two years ago we stayed up until midnight trying to find a common ground for these people, and if they’re not going to do it, I’ll try my hand at it working with the Legal staff and see what we can get out.

 

[The Chair distributed a document entitled “Construction Defects Overview of Assembly Bill 133, Second Reprint (2001 Session of the Nevada Legislature)” (Exhibit H), and a copy of A.B. 133 of the Seventy-first Legislative Session (Exhibit I).] 

 

This document reflects several basic ideas I’ve had; it’s not too dissimilar from the second reprint of A.B. 133 of the Seventy-first Legislative Session.  I had it distributed so the Committee members could review it.  I would suggest that we take this and for those of you who are not familiar with it, look through it; I don’t want anybody to feel pressured to accept it because that’s not my intent.  Clearly, if they can’t fix it, we have constituents who are concerned.  We have homeowners who say they can’t get their houses fixed; we have subcontractors who say they’re pulled illegally into lawsuits and they are economically disadvantaged.  We have a court system that is clogged with construction defect lawsuits for no other reason than there are bad houses being built. 

 

We need to make sure that justice is available to the homeowner, we need to make sure that fairness is available to the people who are good contractors and subcontractors who are doing their jobs, and we need to make sure that the court’s time is well used.  If we can find common ground, then we will.  That means that tomorrow we’ll need to split our time between medical malpractice and this, and work out what we can because this is our last opportunity—there will be no other.

 

Assemblyman Carpenter:

It seems to me that both sides have been working on this quite awhile, so they must have agreement on a number of issues.  If we could get those issues and find out what they don’t agree on, maybe the Committee could do something with them.  We’ve been able to solve some tough issues just talking amongst ourselves and it might be worth it.  I don’t see how we can go away from this session without doing something.

 

Chairman Anderson:

Mr. Wadhams and Mr. Canepa, you’ve been the two principal players.

 

Jim Wadhams: 

We do appreciate the interest this Committee continues to have [in this issue]; we’d be happy to look at this and make any comments that are appropriate in any way the Committee sees fit.

 

Chairman Anderson:

I’ve had discussions with both of you and indicated several of the major issues and ideas that I was concerned about.  I felt that I had spoken on behalf of the Committee relative to what we were looking for and suggested that A.B. 133 of the Seventy-first Session be something of a tool to be utilized to find some common ground.

 

Jim Wadhams:

I cannot emphasize how seriously and intently Mr. Canepa, Mr. Maddox, Mr. Crowell, and our people have worked on this; this has not been done in a casual, cavalier manner.  We have tried to look at what would be comparable to A.B. 133 of the Seventy-first Session but have not focused specifically on that.  We could certainly do that, as well as use the language you distributed.  Even though Mr. Canepa and I spoke until 2:30 a.m., I expect that we would do it again if that were the direction of this Committee.

 

Chairman Anderson:

Do you want to take us through your document where we might find common ground?

 

Jim Wadhams:

I think Mr. Canepa and myself could, with a brief recess, compose something and take the Committee through it so you would see those points of disagreement, but I can’t do that off the top of my head.  I would like to have a few minutes to get organized.

 

Assemblywoman Buckley:

I think the entire Committee wants a “right to repair” bill, and I would suggest that we address this issue first thing tomorrow morning.  If both parties work all night, agree on something, and we find it reasonable—great.  If not, we’ll do it for you.  Rather then break and have you return this evening, this is your last chance.

 

 [The Chair polled the Committee on their desire to recess for an hour and return to hear what both sides agreed to, or to discuss their findings tomorrow.  He noted S.B. 241 would not work into this discussion.] 

 

Chairman Anderson:

I’m going to adjourn the Committee and for those members who want to remain, allow both sides 45 minutes to see if they can prepare a document to share with those members.  We’ll take up this issue tomorrow.  I know both Mr. Wadhams and Mr. Canepa have been working on this a long time; I hate to impose upon you any further. 

Jim Wadhams:

Sleep is not an issue when there’s an opportunity to participate in democracy.

 

Chairman Anderson:

Anybody else who wishes to get on the record?  We are adjourned [at 7:58 p.m.].

 

 

                                                                                    RESPECTFULLY SUBMITTED:

 

 

 

_________________________________

Deborah Rengler,

Transcribing Committee Secretary

 

 

 

APPROVED BY:

 

 

 

                                                                                         

Assemblyman Bernie Anderson, Chairman

 

 

DATE: