STAND. COM. REP. NO. 864

 

Honolulu, Hawaii

                  

 

RE:    H.B. No. 1150

       H.D. 1

       S.D. 1

 

 

 

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

 

Madam:

 

     Your Committee on Commerce and Consumer Protection, to which was referred H.B. No. 1150, H.D. 1, entitled:

 

"A BILL FOR AN ACT RELATING TO CONTRACTS,"

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to exempt an owner's agreement with an attorney to file a claim as to identified property or contest the administrator's denial of a claim from the application of section 523A-25, Hawaii Revised Statutes.

 

     Your Committee received testimony in support of this measure from the Collection Law Section of the Hawaii State Bar Association.

 

     Your Committee finds that Act 229, Session Laws of Hawaii 2012, limited compensation for the recovery of property presumed abandoned to ten percent of the total value of the property.  Your Committee further finds that the majority of property held by the Department of Budget and Finance is valued at less than $5,000.  If any difficulties are encountered when attempting to release property from the Department of Budget and Finance, the cost for the claimant to hire an attorney in the majority of unclaimed property cases will increase beyond the ten percent limit rather quickly.  The ten percent limit on compensation for recovery therefore creates a barrier for members of the public who wish to hire an attorney to assist with the recovery of unclaimed funds or property.

 

     Your Committee notes that the Senate companion to this measure, S.B. No. 1265, S.D. 1, which was previously passed by the Senate, contains language that increases the limit on compensation for attorneys to twenty-five percent of the total value of the property, rather than completely removing the limit on compensation.  Your Committee additionally finds that the language in S.B. No. 1265, S.D. 1, is preferable because it ensures that members of the public are still able to retain attorneys to handle the claims process, while also ensuring that attorneys' fees for this process remain at reasonable levels.

 

     Your Committee has heard testimony that a twenty-five percent limit on compensation for attorneys may prohibit certain clients from recovering unclaimed funds or property.  Although your Committee appreciates that there may be difficulties or complexities that arise during the claims process, your Committee is concerned by the notion that an attorney who has been working with a client to recover the client's funds or property will reach the twenty-five percent limit on compensation and cease assisting the client.  Nevertheless, your Committee finds there is merit in allowing judicial discretion to approve owner's agreements with attorneys that provide for compensation that exceeds twenty-five percent, if the agreement is with an attorney to maintain an action in Circuit Court.

 

     Accordingly, your Committee has amended this measure by:

 

     (1)  Replacing its contents with the contents of S.B. No. 1265, S.D. 1, a substantively similar measure, which exempts an owner's agreement with an attorney to file a claim as to identified property or contest the administrator's denial of a claim from the application of section 523A-25, Hawaii Revised Statutes; provided that an owner's agreement with an attorney that provides for compensation shall not exceed twenty-five percent of the total value of the property and inserts an effective date of July 1, 2050; and

 

     (2)  Further amending the measure by:

 

          (A)  Specifying that an owner's agreement with an attorney to maintain an action in Circuit Court under section 523A-16, Hawaii Revised Statutes, may provide for compensation that exceeds twenty-five percent of the total value of the property only upon approval of the court; and

 

          (B)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

 

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1150, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1150, H.D. 1, S.D. 1, and be referred to the Committee on Judiciary and Labor.

 

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,

 

 

 

____________________________

ROSALYN H. BAKER, Chair