AN ACT Relating to civil liabilities and actions; amending RCW 4.84.030, 12.20.060, 12.40.010, 7.06.020, 7.06.040, 4.84.185, 4.24.310, 18.71.210, 51.24.030, 4.22.020, 23A.12.020, 23A.08.025, 24.03.025, 43.84.090, 48.01.050, and 48.05.045; adding new sections to chapter 4.24 RCW; adding a new section to chapter 4.84 RCW; adding a new section to chapter 38.40 RCW; adding a new section to chapter 41.06 RCW; adding a new section to chapter 71.24 RCW; adding a new chapter to Title 48 RCW; creating new sections; repealing RCW 4.84.250, 4.84.260, 4.84.270, 4.84.280, 4.84.290, 4.84.300, 4.24.268, and 4.96.040; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

@bcPart i

Offers of settlement@ec

Sec. 101. Sections 368 and 369, page 201, Laws of 1854 as last amended by section 1, page 337, Laws of 1890 and RCW 4.84.030 are each amended to read as follows:

In any action in the superior court of Washington, the prevailing party shall be entitled to his costs and disbursements((~~; but the plaintiff shall in no case be entitled to costs taxed as attorneys' fees in actions within the jurisdiction of a justice of the peace when commenced in the superior court~~)).

Sec. 102. Section 85, page 237, Laws of 1854 as last amended by section 2, chapter 240, Laws of 1985 and RCW 12.20.060 are each amended to read as follows:

When the prevailing party in district court is entitled to recover costs as authorized in RCW 4.84.010 in a civil action, the judge shall add the amount thereof to the judgment; in case of failure of the plaintiff to recover or of dismissal of the action, the judge shall enter up a judgment in favor of the defendant for the amount of his costs((; and in case any party so entitled to costs is represented in the action by an attorney, the judge shall include attorney's fees of fifty dollars as part of the costs: PROVIDED, HOWEVER, That the plaintiff shall not be entitled to such attorney fee unless he obtains, exclusive of costs, a judgment in the sum of twenty-five dollars or more)).

NEW SECTION. Sec. 103. A new section is added to chapter 4.84 RCW to read as follows:

(1) In any civil cause of action, if a defendant serves on the plaintiff a written offer of settlement which is rejected or which is not accepted by the plaintiff within thirty days and the judgment obtained by the plaintiff is at least ten percent less than this offer, the defendant shall be entitled to recover statutory costs and reasonable attorneys' fees, including interest thereon, incurred from the date of service of the offer and the court shall set off such costs and attorneys' fees against the judgment. If the costs and attorneys' fees total more than the judgment, the court shall enter judgment for the defendant against the plaintiff for the amount of the costs and fees, less the amount of the plaintiff's award.

(2) In any civil cause of action, if a plaintiff serves on the defendant a written offer of settlement which is rejected or which is not accepted by the defendant within thirty days and the plaintiff recovers a judgment in an amount at least ten percent greater than the offer, the plaintiff shall be entitled to recover statutory costs, interest on the judgment, and reasonable attorneys' fees incurred from the date of the service of the offer and the court shall enter judgment for the plaintiff against the defendant for the amount of the costs, interest, and fees so awarded.

(3) Service of an offer of settlement shall be made in the manner provided by superior court Civil Rule 5.

(4) An offer shall not be filed with the court or be made known in any way to the trier of fact until the judgment is presented to the court.

(5) Any offer made pursuant to this section shall not be made prior to one hundred twenty days after filing of the suit, nor later than sixty days prior to the scheduled trial date, and shall not be accepted later than thirty days before the scheduled trial date.

(6) The payment of attorneys' fees and statutory costs under this section may be excused or modified, in the discretion of the court, where the interests of justice so dictate. If payment is excused or modified, the court shall enter written findings setting forth in detail the basis for the decision to excuse payment.

(7) Interest shall accrue on any award under this section from the date of service of the offer of settlement at the rate of interest for judgments under RCW 4.56.110 or 4.56.115.

NEW SECTION. Sec. 104. The following acts or parts of acts are each repealed:

(1) Section 1, chapter 84, Laws of 1973, section 1, chapter 94, Laws of 1980, section 88, chapter 258, Laws of 1984 and RCW 4.84.250;

(2) Section 2, chapter 84, Laws of 1973 and RCW 4.84.260;

(3) Section 3, chapter 84, Laws of 1973, section 2, chapter 94, Laws of 1980 and RCW 4.84.270;

(4) Section 4, chapter 84, Laws of 1973, section 3, chapter 94, Laws of 1980, section 1, chapter 282, Laws of 1983 and RCW 4.84.280;

(5) Section 5, chapter 84, Laws of 1973 and RCW 4.84.290; and

(6) Section 6, chapter 84, Laws of 1973, section 4, chapter 94, Laws of 1980 and RCW 4.84.300.

NEW SECTION. Sec. 105. Sections 101 through 104 of this act apply to actions filed on or after the effective date of this section.

@bcPart II

Small claims court jurisdiction@ec

Sec. 201. Section 1, chapter 187, Laws of 1919 as last amended by section 57, chapter 258, Laws of 1984 and RCW 12.40.010 are each amended to read as follows:

In every district court there shall be created and organized by the court a department to be known as the "small claims department of the district court". The small claims department shall have jurisdiction, but not exclusive, in cases for the recovery of money only if the amount claimed does not exceed one thousand five hundred dollars.

@bcPart III

Mandatory arbitration@ec

Sec. 301. Section 2, chapter 103, Laws of 1979 as last amended by section 3, chapter 265, Laws of 1985 and RCW 7.06.020 are each amended to read as follows:

(1) All civil actions, except for appeals from municipal or justice courts, which are at issue in the superior court in counties which have authorized arbitration, where the sole relief sought is a money judgment, and where no party asserts a claim in excess of ((~~ten~~)) fifteen thousand dollars, or if approved by the superior court of a county by two-thirds or greater vote of the judges thereof, up to ((~~twenty-five~~)) thirty-five thousand dollars, exclusive of interest and costs, are subject to mandatory arbitration.

(2) If approved by majority vote of the superior court judges of a county which has authorized arbitration, all civil actions which are at issue in the superior court in which the sole relief sought is the establishment, termination or modification of maintenance or child support payments are subject to mandatory arbitration. The arbitrability of any such action shall not be affected by the amount or number of payments involved.

Sec. 302. Section 4, chapter 103, Laws of 1979 and RCW 7.06.040 are each amended to read as follows:

The ((~~qualifications and~~)) appointment of arbitrators shall be prescribed by rules adopted by the supreme court. An arbitrator must be a member of the state bar association who has been admitted to the bar for a minimum of five years or who is a retired judge. The parties may stipulate to a nonlawyer arbitrator. The supreme court may prescribe by rule additional qualifications of arbitrators.

Arbitrators shall be compensated in the same amount and manner as judges pro tempore of the superior court.

NEW SECTION. Sec. 303. Sections 301 and 302 of this act apply to actions filed on or after the effective date of this section.

@bcPart IV

Frivolous lawsuits@ec

Sec. 401. Section 1, chapter 127, Laws of 1983 and RCW 4.84.185 are each amended to read as follows:

In any civil action, the court having jurisdiction may, upon ((~~final judgment and~~)) written findings by the ((~~trial~~)) judge that the action, counterclaim, cross-claim, third party claim, or defense was frivolous and advanced without reasonable cause, require the nonprevailing party to pay the prevailing party the reasonable expenses, including fees of attorneys, incurred in opposing such action, counterclaim, cross-claim, third party claim, or defense. This determination shall be made upon ((~~post-trial~~)) motion((~~, and~~)) by the prevailing party after an order of dismissal, order on summary judgment, or final judgment after trial. The ((~~trial~~)) judge shall consider the action, counterclaim, cross-claim, third party claim, or defense as a whole.

The provisions of this section apply unless otherwise specifically provided by statute. @bcPart V

Civil immunities@ec

NEW SECTION. Sec. 501. The legislature recognizes that Congress in 1981 amended the federal tort claims act to permit persons injured or damaged as a result of national guard training activities to sue the United States and recognizes that Congress has established comprehensive administrative programs to compensate members of the military forces for injuries they may incur while performing training for national defense.

The legislature finds that Congress has recognized that the nation as a whole derives a benefit from the training conducted by the Washington national guard and that the training is conducted in accordance with federal military directives and programs.

In view of this congressional action, it is the intent of the legislature that the state of Washington and its officers, employees, and agents have no risk of legal liability for injuries or damages arising from Washington national guard training or duty when that training or duty is done in furtherance of the national defense.

NEW SECTION. Sec. 502. A new section is added to chapter 38.40 RCW to read as follows:

Neither the state of Washington, its officers, employees, or agents, nor any member of the militia may be held individually liable in any civil action based on fault as defined in RCW 4.22.015 for damages arising out of any of the activities of the military forces of the state of Washington while engaged in training or duty under sections 316, 502, 503, 504, 505, or 709 of Title 32, United States Code.

NEW SECTION. Sec. 503. A new section is added to chapter 71.24 RCW to read as follows:

(1) No cause of action based on fault as defined in RCW 4.22.015 may arise against the state, a unit of local government, or any licensed service provider employed by the state or a unit of local government for the release of a patient from the custodial care of the state or a unit of local government where the release decision was made in good faith and was consistent with appropriate professional standards for the release of such a patient from custodial care.

(2) This section does not relieve a person from giving the required notices under RCW 71.05.330(2) or 71.05.340(1)(b), or the duty to warn where the patient has communicated an actual threat of physical violence against a reasonably identifiable victim or victims.

(3) The duty to warn of or to take reasonable precautions to provide protection from violent behavior only arises under the limited circumstances specified in this section. The duty shall be discharged by the licensed service provider if reasonable efforts are made to communicate the threat to the victim or victims or to seek confinement of the patient under chapter 71.05 RCW.

(4) "Licensed service provider" as used in this section means a person licensed under chapter 18.71, 18.83, or 18.88 RCW.

(5) "Employed" includes a person hired under a personal services contract with the state or a unit of local government.

NEW SECTION. Sec. 504. The code reviser shall place a cross-reference to section 503 of this act in chapter 4.24 RCW.

NEW SECTION. Sec. 505. A new section is added to chapter 4.24 RCW to read as follows:

(1) An appointed or elected official or member of the governing body of a public agency shall not be individually liable for any discretionary decision or failure to make a discretionary decision in his or her official capacity as an official or member unless the decision or failure to decide constitutes gross negligence.

(2) For purposes of this section:

(a) "Public agency" means any state agency, board, commission, department, institution of higher education, school district, political subdivision, or unit of local government of this state including but not limited to municipal corporations, quasi-municipal corporations, special purpose districts, and local service districts.

(b) "Governing body" means the policy-making body of a public agency.

NEW SECTION. Sec. 506. A new section is added to chapter 4.24 RCW to read as follows:

(1) Any person who renders services without compensation as a member of the staff of a nonprofit sports program shall not be individually liable in any civil action based on fault as defined in RCW 4.22.015 for damages resulting from any discretionary decision or failure to make a discretionary decision in his or her official capacity as a member of the staff unless the decision or failure to decide constitutes gross negligence.

(2) Any person who sponsors or operates a nonprofit sports program shall not be individually liable in any civil action based on fault as defined in RCW 4.22.015 for damages resulting from any discretionary decision or failure to make a discretionary decision of any person who renders services without compensation as a member of the staff of a nonprofit sports program in his or her official capacity as a member of the staff unless the decision or failure to decide constitutes gross negligence.

(3) For purposes of this section:

(a) The term "compensation" does not include any gift or any reimbursement for any reasonable expense incurred for the benefit of a nonprofit sports program.

(b) The term "member of the staff" means any person who is a manager, coach, umpire, or referee; is an assistant to a manager, coach, umpire, or referee; or prepares any playing field for any practice session or any formal game.

(c) The term "nonprofit sports program" means any program that is in a competitive sport formally recognized as a sport, on the date the cause of action to which this section applies arises, by the Amateur Athletic Union, the National Collegiate Athletic Association, or the United States Olympic Committee; that is organized for recreational purposes and whose activities are substantially for such purposes; and no part of whose net earnings inures to the benefit of any private person.

(4) The immunity granted under this section does not apply unless the member of the staff has submitted his or her fingerprints for a background investigation pursuant to and has otherwise complied with the provisions of chapter ---, Laws of 1987 (S-188/87 3rd draft).

Sec. 507. Section 2, chapter 58, Laws of 1975 as amended by section 20, chapter 443, Laws of 1985 and RCW 4.24.310 are each amended to read as follows:

For the purposes of RCW 4.24.300 the following words and phrases shall have the following meanings unless the context clearly requires otherwise:

(1) "Compensation" has its ordinary meaning but does not include nominal payments, reimbursement for expenses, or pension benefits, nor does it include payment made to volunteer part-time and volunteer on-call personnel of fire departments, fire districts, ambulance districts, police departments, or any emergency response organizations.

(2) "Emergency care" means care, first aid, treatment, or assistance rendered to the injured person in need of immediate medical attention and includes providing or arranging for further medical treatment or care for the injured person. Except with respect to the injured person or persons being transported for further medical treatment or care, the immunity granted by RCW 4.24.300 does not apply to the negligent operation of any motor vehicle.

(3) "Scene of an emergency" means the scene of an accident or other sudden or unexpected event or combination of circumstances which calls for immediate action ((~~other than in a hospital, doctor's office, or other place where qualified medical personnel practice or are employed~~)).

Sec. 508. Section 3, chapter 305, Laws of 1971 ex. sess. as last amended by section 4, chapter 68, Laws of 1986 and RCW 18.71.210 are each amended to read as follows:

No act or omission of any physician's trained mobile intensive care paramedic, intravenous therapy technician, or airway management technician, as defined in RCW 18.71.200 as now or hereafter amended, ((~~or of~~)) any emergency medical technician as defined in RCW 18.73.030, or any first responder under RCW 18.73.205, done or omitted in good faith while rendering emergency medical service under the responsible supervision and control of a licensed physician or an approved medical program director or delegate(s) to a person who has suffered illness or bodily injury shall impose any liability upon:

(1) The trained mobile intensive care paramedic, intravenous therapy technician, ((or)) airway management technician, emergency medical technician, or first responder;

(2) The medical program director;

(3) The supervising physician(s);

(4) Any hospital, the officers, members of the staff, nurses, or other employees of a hospital;

(5) Any training agency or training physician(s);

(6) Any licensed ambulance service; or

(7) Any federal, state, county, city or other local governmental unit or employees of such a governmental unit.

This section shall apply to an act or omission committed or omitted in the performance of the actual emergency medical procedures and not in the commission or omission of an act which is not within the field of medical expertise of the physician's trained mobile intensive care paramedic, intravenous therapy technician, ((or)) airway management technician, emergency medical technician, or first responder, as the case may be.

This section shall not relieve a physician or a hospital of any duty otherwise imposed by law upon such physician or hospital for the designation or training of a physician's trained mobile intensive care paramedic, intravenous therapy technician, ((or)) airway management technician, emergency medical technician, or first responder, nor shall this section relieve any individual or other entity listed in this section of any duty otherwise imposed by law for the provision or maintenance of equipment to be used by the physician's trained mobile intensive care paramedics, intravenous therapy technicians, ((or)) airway management technicians, emergency medical technicians, or first responders.

This section shall not apply to any act or omission which constitutes either gross negligence or wilful or wanton ((~~conduct~~)) misconduct.

Sec. 509. Section 1, chapter 85, Laws of 1977 ex. sess. as last amended by section 1, chapter 58, Laws of 1986 and RCW 51.24.030 are each amended to read as follows:

(1) If a third person, not in a worker's same employ, is or may become liable to pay damages on account of a worker's injury for which benefits and compensation are provided under this title, the injured worker or beneficiary may elect to seek damages from the third person: PROVIDED, That the injured worker or beneficiary is not entitled to seek damages against a contractor who is a third person unless: (a) The contractor exercised, or had the right to exercise, control over the portion of the premises on which the worker was injured; or (b) the contractor has breached specific contractual provisions with respect to safety practices affecting the injured worker, which were assumed in a contract with the injured worker's employer and mutually negotiated by the parties to the contract; or (c) the nature of the work is inherently dangerous, irrespective of the exercise of reasonable care, and the contractor knew or had reason to know of the inherent hazards of the work. For purposes of this subsection "contractor" means any person engaged in the construction, alteration, or repair of any improvement upon real property.

(2) For the purposes of this chapter, "injury" shall include any physical or mental condition, disease, ailment or loss, including death, for which compensation and benefits are paid or payable under this title.

(3) Damages recoverable by a worker or beneficiary pursuant to the underinsured motorist coverage of an insurance policy shall be subject to this chapter only if the owner of the policy is the employer of the injured worker.

Sec. 510. Section 2, chapter 138, Laws of 1973 1st ex. sess. as amended by section 10, chapter 27, Laws of 1981 and RCW 4.22.020 are each amended to read as follows:

The contributory fault of one spouse shall not be imputed to the other spouse or the minor child of the spouse to diminish recovery in an action by the other spouse or the minor child of the spouse, or his or her legal representative, to recover damages caused by fault resulting in death or in injury to the person or property, whether separate or community, of the spouse. In an action brought for wrongful death or loss of consortium, the contributory fault of the decedent or injured person shall be imputed to the claimant in that action.

NEW SECTION. Sec. 511. The following acts of parts of acts are each repealed:

(1) Section 904, chapter 305, Laws of 1986 and RCW 4.24.268; and

(2) Section 2, chapter 190, Laws of 1981 and RCW 4.96.040.

NEW SECTION. Sec. 512. Sections 506 and 510 of this act apply only to causes of action which are commenced on or after the effective date of this section.

@bcPart VI

Corporate director liability limitations@ec

Sec. 601. Section 55, chapter 53, Laws of 1965 as last amended by section 10, chapter 290, Laws of 1985 and RCW 23A.12.020 are each amended to read as follows:

The articles of incorporation shall set forth:

(1) The name of the corporation.

(2) The period of duration, which may be perpetual or for a stated term of years.

(3) The purpose or purposes for which the corporation is organized which may be stated to be, or to include, the transaction of any or all lawful business for which corporations may be incorporated under this title.

(4) The aggregate number of shares which the corporation shall have authority to issue and if such shares are to be divided into classes, the number of shares of each class.

(5) If the shares are to be divided into classes, the designation of each class and a statement of the preferences, limitations and relative rights in respect of the shares of each class.

(6) If the corporation is to issue the shares of any preferred or special class in series, then the designation of each series and a statement of the variations in the relative rights and preferences as between series insofar as the same are to be fixed in the articles of incorporation, and a statement of any authority to be vested in the board of directors to establish series and fix and determine the variations in the relative rights and preferences as between series.

(7) Any provision limiting or denying to shareholders the preemptive right to acquire additional shares of the corporation.

(8) The address of its initial registered office and the name of its initial registered agent at such address.

(9) The number of directors constituting the initial board of directors and the names and addresses of the persons who are to serve as directors until the first annual meeting of shareholders or until their successors be elected and qualify.

(10) The name and address of each incorporator.

In addition to the provisions required under this section, the articles of incorporation may also contain provisions not inconsistent with law regarding:

(a) The direction of the management of the business and the regulation of the affairs of the corporation;

(b) The definition, limitation, and regulation of the powers of the corporation, the directors, and the shareholders, or any class of the shareholders, including restrictions on the transfer of shares;

(d) Eliminating or limiting the personal liability of a director to the corporation or its shareholders for monetary damages for conduct as a director, provided that such provisions shall not eliminate or limit the liability of a director for acts or omissions that involve intentional misconduct by a director or a knowing violation of law by a director, for conduct violating RCW 23A.08.450, or for any transaction from which the director will personally receive a benefit in money, property, or services to which the director is not legally entitled. No such provision shall eliminate or limit the liability of a director for any act or omission occurring prior to the date when such provision becomes effective; and

(e) Any provision which under this title is required or permitted to be set forth in the bylaws.

It shall not be necessary to set forth in the articles of incorporation any of the corporate powers enumerated in this title.

Sec. 602. Section 2, chapter 58, Laws of 1969 ex. sess. as last amended by section 1, chapter 99, Laws of 1980 and RCW 23A.08.025 are each amended to read as follows:

(1) As used in this section:

(a) "Director" means any person who is or was a director of the corporation and any person who, while a director of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan.

(b) "Corporation" includes any domestic or foreign predecessor entity of the corporation in a merger, consolidation, or other transaction in which the predecessor's existence ceased upon consummation of such transaction.

(d) "Official capacity" means: (i) When used with respect to a director, the office of director in the corporation, and (ii) when used with respect to a person other than a director as contemplated in subsection (10) of this section, the elective or appointive office in the corporation held by the officer or the employment or agency relationship undertaken by the employee or agent in behalf of the corporation, but in each case does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, other enterprise, or employee benefit plan.

(e) "Party" includes a person who was, is, or is threatened to be, made a named defendant or respondent in a proceeding.

(f) "Proceeding" means any threatened, pending, or completed action, suit, or proceeding whether civil, criminal, administrative, or investigative.

(2) A corporation shall have power to indemnify any person made a party to any proceeding (other than a proceeding referred to in subsection (3) of this section) by reason of the fact that he is or was a director against judgments, penalties, fines, settlements and reasonable expenses actually incurred by him in connection with such proceeding if:

(a) He conducted himself in good faith, and: (i) In the case of conduct in his own official capacity with the corporation, he reasonably believed his conduct to be in the corporation's best interests, or (ii) in all other cases, he reasonably believed his conduct to be at least not opposed to the corporation's best interests; and

(b) In the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.

The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself be determinative that the person did not meet the requisite standard of conduct set forth in this subsection.

(3) A corporation shall have power to indemnify any person made a party to any proceeding by or in the right of the corporation by reason of the fact that he is or was a director against reasonable expenses actually incurred by him in connection with such proceeding if he conducted himself in good faith, and:

(a) In the case of conduct in his official capacity with the corporation, he reasonably believed his conduct to be in its best interests; or

(b) In all other cases, he reasonably believed his conduct to be at least not opposed to its best interests;

PROVIDED, That no indemnification shall be made pursuant to this subsection in respect of any proceeding in which such person shall have been adjudged to be liable to the corporation.

(4) A director shall not be indemnified under subsection (2) or (3) of this section in respect of any proceeding ((~~charging improper personal benefit to him~~)), whether or not involving action in his official capacity, in which he shall have been adjudged to be liable on the basis that ((~~personal benefit was improperly received by him~~)) the director personally received a benefit in money, property, or services to which the director was not legally entitled.

(5) Unless otherwise limited by the articles of incorporation:

(a) A director who has been wholly successful, on the merits or otherwise, in the defense of any proceeding referred to in subsection (2) or (3) of this section shall be indemnified against reasonable expenses incurred by him in connection with the proceeding; and

(b) A court of appropriate jurisdiction, upon application of a director and such notice as the court shall require shall have authority to order indemnification in the following circumstances:

(i) If the court determines a director is entitled to reimbursement under (a) of this subsection, the court shall order indemnification, in which case the director shall be entitled to recover the expenses of securing such reimbursement; or

(ii) If the court determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he has met the standards of conduct set forth in subsection (2) or (3) of this section or has been adjudged liable under subsection (4) of this section, the court may order such indemnification as the court shall deem proper, except that indemnification with respect to any proceeding referred to in subsection (3) of this section and with respect to any proceeding in which liability shall have been adjudged pursuant to subsection (4) of this section shall be limited to expenses.

A court of appropriate jurisdiction may be the same court in which the proceeding involving the director's liability took place.

(6) No indemnification under subsection (2) or (3) of this section shall be made by the corporation unless authorized in the specific case after a determination that indemnification of the director is permissible in the circumstances because he has met the standard of conduct set forth in the applicable subsection. Such determination shall be made:

(a) By the board of directors by a majority vote of a quorum consisting of directors not at the time parties to such proceeding; or

(b) If such a quorum cannot be obtained, then by a majority vote of a committee of the board, duly designated to act in the matter by a majority vote of the full board (in which designation directors who are parties may participate), consisting solely of two or more directors not at the time parties to such proceeding; or

(c) In a written opinion by legal counsel other than an attorney, or a firm having associated with it an attorney, who has been retained by or who has performed services within the past three years for the corporation or any party to be indemnified, selected by the board of directors or a committee thereof by vote as set forth in (a) or (b) of this subsection, or if the requisite quorum of the full board cannot be obtained therefor and such committee cannot be established, by a majority vote of the full board (in which selection directors who are parties may participate); or

(d) By the shareholders.

Authorization of indemnification and determination as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination that indemnification is permissible is made by such legal counsel, authorization of indemnification and determination as to reasonableness of expenses shall be made in a manner specified in (c) of this subsection for the selection of such counsel. Shares held by directors who are parties to the proceeding shall not be voted on the subject matter under this subsection.

(7) Reasonable expenses incurred by a director who is party to a proceeding may be paid or reimbursed by the corporation in advance of the final disposition of such proceeding:

(a) Upon receipt by the corporation of a written undertaking by or on behalf of the director to repay such amount if it shall ultimately be determined that the director has not met the standard of conduct necessary for indemnification by the corporation as authorized by this section; and

(b) Either:

(i) After a determination, made in the manner specified by subsection (6) of this section, that the information then known to those making the determination (without undertaking further investigation for purposes thereof) does not establish that indemnification would not be permissible under subsection (2) or (3) of this section; ((~~and~~)) or

((~~(b)~~)) (ii) Upon receipt by the corporation of((:

~~(i)~~)) a written affirmation by the director of his good faith belief that he has met the standard of conduct necessary for indemnification by the corporation as authorized in this section((~~; and~~

~~(ii) A written undertaking by or on behalf of the director to repay such amount if it shall ultimately be determined that he has not met such standard of conduct~~)).

The undertaking required by ((~~(b)(ii)~~)) (a) of this subsection shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make the repayment. Payments under this subsection may be authorized in the manner specified in subsection (6) of this section.

(8) ((No provision for the corporation to indemnify a director who is made a party to a proceeding, whether contained in the articles of incorporation, the bylaws, a resolution of shareholders or directors, an agreement, or otherwise (except as contemplated by subsection (11) of this section), shall be valid unless consistent with this section or, to the extent that indemnity hereunder is limited by the articles of incorporation, consistent therewith. Nothing contained in this section shall limit the corporation's ability to reimburse expenses incurred by a director in connection with his appearance as a witness in a proceeding at a time when he has not been made a named defendant or respondent in the proceeding.)) Any corporation shall have power to make or agree to any further indemnity, including advance of expenses, any director that is authorized by the articles of incorporation, any bylaw adopted or ratified by the shareholders, or any resolution adopted or ratified, before or after the event, by the shareholders, provided that no such indemnity shall indemnify any director from or on account of acts or omissions of such director finally adjudged to be intentional misconduct or a knowing violation of law, or from or on account of conduct of such director finally adjudged to be in violation of RCW 23A.08.450, or from or on account of any transaction with respect to which it was finally adjudged that such director personally received a benefit in money, property, or services to which the director was not legally entitled. Unless the articles of incorporation, or any such bylaw or resolution provide otherwise, any determination as to any further indemnity shall be made in accordance with subsection (6) of this section. Each such indemnity may continue as to a person who has ceased to be a director and may inure to the benefit of the heirs, executors, and administrators of such a person.

(9) For purposes of this section, the corporation shall be deemed to have requested a director to serve an employee benefit plan where the performance by him of his duties to the corporation also imposes duties on, or otherwise involves services by, him to the plan or participants or beneficiaries of the plan; excise taxes assessed on a director with respect to an employee benefit plan pursuant to applicable law shall be deemed "fines"; and action taken or omitted by him with respect to an employee benefit plan in the performance of his duties for a purpose reasonably believed by him to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the corporation.

(10) Unless otherwise limited by the articles of incorporation:

(a) An officer of the corporation shall be indemnified as and to the extent provided in subsection (5) of this section for a director and shall be entitled to seek indemnification pursuant to subsection (5) of this section to the same extent as a director;

(b) A corporation shall have the power to provide indemnification including advances of expenses, to an officer, employee, or agent of the corporation to the same extent that it may indemnify directors pursuant to this section except that subsection (12) of this section shall not apply to any person other than a director; and

(c) A corporation, in addition, shall have the power to indemnify an officer who is not a director, as well as employees and agents of the corporation who are not directors, to such further extent, consistent with law, as may be provided by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract.

(11) A corporation shall have power to purchase and maintain insurance on behalf of any person who is, or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the corporation as an officer, employee or agent of another corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this section.

(12) Any indemnification of a director in accordance with this section, including any payment or reimbursement of expenses, shall be reported to the shareholders with the notice of the next shareholders' meeting or prior thereto in a written report containing a brief description of the proceedings involving the director being indemnified and the nature and extent of such indemnification.

Sec. 603. Section 6, chapter 235, Laws of 1967 as amended by section 75, chapter 35, Laws of 1982 and RCW 24.03.025 are each amended to read as follows:

The articles of incorporation shall set forth:

(1) The name of the corporation.

(2) The period of duration, which may be perpetual or for a stated number of years.

(3) The purpose or purposes for which the corporation is organized.

(4) Any provisions, not inconsistent with law, which the incorporators elect to set forth in the articles of incorporation for the regulation of the internal affairs of the corporation, including ((~~any provision for~~)) provisions regarding:

(a) Distribution of assets on dissolution or final liquidation;

(b) The definition, limitation, and regulation of the powers of the corporation, the directors, and the members, if any;

(c) Eliminating or limiting the personal liability of a director to the corporation or its members, if any, for monetary damages for conduct as a director: PROVIDED, That such provision shall not eliminate or limit the liability of a director for acts or omissions that involve intentional misconduct by a director or a knowing violation of law by a director, or for any transaction from which the director will personally receive a benefit in money, property, or services to which the director is not legally entitled. No such provision may eliminate or limit the liability of a director for any act or omission occurring before the date when such provision becomes effective; and

(d) Any provision which under this title is required or permitted to be set forth in the bylaws.

(5) The address of its initial registered office, including street and number, and the name of its initial registered agent at such address.

(6) The number of directors constituting the initial board of directors, and the names and addresses of the persons who are to serve as the initial directors.

(7) The name and address of each incorporator.

(8) The name of any person or corporations to whom net assets are to be distributed in the event the corporation is dissolved.

It shall not be necessary to set forth in the articles of incorporation any of the corporate powers enumerated in this chapter.

Unless the articles of incorporation provide that a change in the number of directors shall be made only by amendment to the articles of incorporation, a change in the number of directors made by amendment to the bylaws shall be controlling. In all other cases, whenever a provision of the articles of incorporation is inconsistent with a bylaw, the provision of the articles of incorporation shall be controlling.

((~~(8) The name of any persons or corporations to whom net assets are to be distributed in the event the corporation is dissolved.~~))

@bcPart VII

Excess insurance for political subdivisions@ec

NEW SECTION. Sec. 701. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Account" means the state excess insurance account created in section 703 of this act.

(2) "Political subdivision" means and includes all cities, towns, counties, school districts, metropolitan municipal corporations, and special purpose districts.

(3) "Excess insurance" means a contract by which the state insures, or procures a third person to insure, a political subdivision against property loss or liability in excess of its primary insurance.

(4) "Primary insurance" means the basic insurance coverage by which a political subdivision insures, or procures a third person to insure, against property loss or liability.

(5) "Risk manager" means the person appointed to supervise the risk management office under RCW 43.19.19362.

NEW SECTION. Sec. 702. The risk manager may offer excess insurance to political subdivisions of the state based upon sound actuarial principles and pricing established by the risk manager.

A contract of excess insurance may be offered by the risk manager for those political subdivisions which meet sound risk management and loss control practices and which have instituted primary coverage, either through pooling arrangements, self-insurance, or an authorized insurer, that meets the underwriting requirements established by the risk manager.

NEW SECTION. Sec. 703. The state excess insurance account is hereby established in the state treasury. The risk manager shall deposit in the account all moneys received from premiums, assessments, and charges under this chapter. The requirements of RCW 43.01.050 shall not be applicable. Moneys in the account may be spent only for the purposes of this chapter. Disbursements from the account shall be on authorization of the risk manager or the risk manager's designee. Interest earnings on the excess insurance account's assets shall be credited to the excess insurance account.

NEW SECTION. Sec. 704. The excess insurance account shall operate on an actuarially sound basis and all premiums, assessments, and charges shall reflect this policy. The risk manager shall apply the principles set forth in RCW 43.19.19361 in managing the account.

The risk manager may apportion to and collect from each participating political subdivision or insurer of a political subdivision its premium, as determined by the risk manager, to purchase excess insurance or administer self-reinsurance programs, including administrative expenses, for coverage authorized by this chapter or other pertinent statutes. To the extent possible, the apportionment shall be based upon factors which reflect the relative risk and loss experience of each political subdivision. The risk manager may assess each political subdivision or insurer of a political subdivision the cost of providing specific risk management services requested by the political subdivision or insurer.

No amount in excess of five million dollars may be paid from the account for the payment and settlement of claims arising out of any single occurrence. If the moneys in the excess insurance account in any year are not sufficient to make all payments required in carrying out the provisions of this chapter, funds may be advanced from other accounts in the state treasury. Prior to any advance to the excess insurance account, approval shall be obtained from the ways and means committees of the senate and house of representatives, if the legislature is in session, or from the legislative budget committee, if the legislature is not in session.

Moneys advanced to the excess insurance account as provided in this section shall be repaid from the excess insurance account in annual installments, with interest. The amount of installments shall be fixed by the office of financial management at such amount as can be expected to liquidate the indebtedness of the excess insurance account in a reasonable amount of time.

NEW SECTION. Sec. 705. The risk manager shall determine within a reasonable time any property or liability loss on property for which the state is liable because of excess insurance and pay to the appropriate political subdivision or insurer of a political subdivision the amount of the loss.

NEW SECTION. Sec. 706. The risk manager may employ such underwriters, actuaries, and other specialized technical personnel as may be necessary to carry out the purposes of this chapter.

NEW SECTION. Sec. 707. A new section is added to chapter 41.06 RCW to read as follows:

The provisions of this chapter shall not apply to persons employed under section 706 of this act.

NEW SECTION. Sec. 708. The risk manager may:

(1) Establish and promulgate rules governing the administration of this chapter.

(2) Ascertain and establish the amounts to be paid into and out of the excess insurance account.

(3) Regulate the proof of claim and extent thereof, and extent of liability.

(4) Issue proper receipts for moneys received and certificates of insurance for coverage provided.

(5) Investigate the cause of all serious personal injuries and report to the governor and the legislature from time to time any violations or laxity in performance of safety or loss control regulations coming under the observation of the risk manager.

(6) Compile actuarial statistics as will afford reliable information upon which to base all rate structures, loss control assessments, and claim administration.

(7) Make an annual report to the governor, with copies to the committees having jurisdiction on judiciary and insurance in the senate and the house of representatives on or before January 10 of each year.

(8) Enter into agreements with the appropriate agencies of other states relating to conflicts of jurisdiction where the contract of insurance is in other states and enter into similar agreements with the provinces of Canada.

NEW SECTION. Sec. 709. The risk manager shall terminate coverage for any political subdivision which fails to comply with the underwriting requirements established by the risk manager regarding insurability, loss control, safety, or financial eligibility.

NEW SECTION. Sec. 710. (1) The risk manager shall be permitted but not obligated to inspect the property and operations of a political subdivision covered by this chapter at any time. Neither the risk manager's right to make inspections nor the making thereof nor any report thereon shall constitute an undertaking, on behalf of or for the benefit of the political subdivision or others, to determine or warrant that such property or operations are safe or healthful, or are in compliance with any law, rule, or regulation.

(2) The risk manager may examine or audit the political subdivision's books and records at any time during the policy period and extensions thereof and within three years after the final termination of excess insurance, as far as it relates to insurance coverage provided under this chapter.

(3) The risk manager shall determine premiums due, deposits required, methods and time of payment, and refunds. The risk manager shall establish reasons, procedures, and methods for cancellation of policies.

Sec. 711. Section 43.84.090, chapter 8, Laws of 1965 as last amended by section 5, chapter 233, Laws of 1985 and RCW 43.84.090 are each amended to read as follows:

Except as otherwise provided by RCW 67.40.025 and section 703 of this 1987 act, twenty percent of all income received from such investments shall be deposited in the state general fund.

Sec. 712. Section .01.05, chapter 79, Laws of 1947 as last amended by section 9, chapter 277, Laws of 1985 and RCW 48.01.050 are each amended to read as follows:

"Insurer" as used in this code includes every person engaged in the business of making contracts of insurance, other than a fraternal benefit society. A reciprocal or interinsurance exchange is an "insurer" as used in this code. Two or more hospitals, as defined in RCW 70.39.020(3), which join and organize as a mutual corporation pursuant to chapter 24.06 RCW for the purpose of insuring or self-insuring against liability claims, including medical liability, through a contributing trust fund shall not be deemed an "insurer" under this code. Two or more local governmental entities, as defined in RCW 48.62.020, which pursuant to RCW 48.62.040, 48.62.035, or any other provision of law join together and organize to form an organization for the purpose of jointly self-insuring or self-funding shall not be deemed an "insurer" under this code. The risk manager under chapter 48.-- RCW (sections 701 through 710 of this 1987 act) shall not be considered an "insurer" under this code.

Sec. 713. Section 2, chapter 193, Laws of 1957 and RCW 48.05.045 are each amended to read as follows:

No certificate of authority shall be issued to or exist with respect to any insurer which is owned and controlled, in whole or in substantial part, by any government or governmental agency nor to the risk manager under chapter 48.-- RCW (sections 701 through 710 of this 1987 act).

NEW SECTION. Sec. 714. Sections 701 through 710 of this act shall constitute a new chapter in Title 48 RCW.

@bcPart VIII

Mandatory settlement conferences@ec

NEW SECTION. Sec. 801. The judicial council shall study the effects on the administration of justice to litigants and the superior courts of the state of requiring parties to a lawsuit to participate in mandatory settlement conferences prior to a civil action going to trial. The study shall include, but not be limited to, the following issues relating to the use of mandatory settlement conferences in the superior courts of the state.

(1) The present use of settlement conferences in the state and any associated benefits, deficiencies, and costs.

(2) The use of settlement conferences in courts in other states, together with any benefits, deficiencies, and costs.

(3) Costs of instituting a mandatory settlement conference program in the superior courts.

(4) Cost-savings to the courts, attorneys, and litigants from instituting a mandatory settlement conference program.

(5) Potential of reducing court congestion by eliminating the number of civil actions that are required to be heard by a court or jury.

(6) Whether settlement conferences are an effective use of the time of judges, attorneys, court personnel, and litigants.

(7) Short-term and long-term societal benefits in expediting the procedure to resolve conflicts and disputes and increasing the litigant's understanding and participation in any civil action.

(8) Any other issues the council deems appropriate.

The judicial council shall report its findings and recommendations, including any proposed legislation, to the judiciary committees of the senate and house of representatives by July 1, 1988.

@bcPart IX

Examination of jurors@ec

NEW SECTION. Sec. 901. The judicial council shall study the feasibility of modifying existing practices and procedures for examining prospective jurors to determine their qualifications and any actual or implied bias. The study shall include, but not be limited to, the following issues relating to juror examination:

(1) Determining whether existing juror examination under superior court Civil Rule 47 uses an inordinate amount of time and judicial resources without any corresponding benefits to the parties or the court.

(2) Determining whether the courts should be granted more control over the examination of jurors in order to expedite the examination process.

(3) Reviewing procedures used to examine prospective jurors in other state courts to determine the efficiency and effectiveness of such procedures.

(4) Reviewing procedures in the federal courts for juror examination to determine if they result in cost-savings to the courts and litigants, and if they are a more effective use of the time of judges, attorneys, court personnel, and litigants.

The judicial council shall report its findings and recommendations, including any proposed legislation, to the judiciary committees of the senate and house of representatives by July 1, 1988.

@bcPart X

Appeal evaluation conference@ec

NEW SECTION. Sec. 1001. The judicial council shall study the effects of requiring parties to an appeal of a civil action to participate in mandatory appellate settlement conferences. The study shall include, but not be limited to, the following issues relating to mandatory appellate settlement conferences:

(1) The present use of appellate settlement conferences in courts of this state and associated benefits, deficiencies, and costs.

(2) The use of appellate settlement conferences in courts in other states, together with any benefits, deficiencies, and costs.

(3) Costs of instituting a mandatory appellate settlement conference program in the superior courts.

(4) Cost-savings to the courts, attorneys, and litigants from instituting a mandatory appellate settlement conference program.

(5) Potential of reducing court congestion by eliminating the number of civil actions that are required to be heard by a court or jury.

(6) Whether settlement conferences are an effective use of the time of judges, attorneys, court personnel, and litigants.

(7) Short-term and long-term societal benefits in expediting the procedure to resolve conflicts and disputes and increasing the litigant's understanding and participation in any civil action.

(8) Any other issues the council deems appropriate.

The judicial council shall report its findings and recommendations, including any proposed legislation, to the judiciary committees of the senate and house of representatives by July 1, 1988.

PART XI

MANDATORY DISCOVERY CONFERENCES

NEW SECTION. Sec. 1101. The judicial council shall study the feasibility of instituting mandatory discovery conferences in specified civil actions. The study shall include, but not be limited to, the following issues relating to mandatory discovery conferences:

(1) The existing use of discovery conferences under superior court Civil Rule 26(f) and any associated benefits, deficiencies, and costs.

(2) The use of mandatory discovery conferences in other states, and any benefits, deficiencies, and costs.

(3) Whether existing discovery practices are being used to unnecessarily delay civil actions or to harass opposing parties.

(4) Whether existing discovery practices are unreasonably expensive for the parties.

(5) Whether mandatory discovery conferences would be an effective use of the time of judges, attorneys, court personnel, and litigants.

(6) Whether mandatory discovery conferences would create cost-savings to the litigants and the courts and allow for a more efficient use of court rooms and court personnel.

(7) Any other relevant factors deemed appropriate by the council.

The judicial council shall report its findings and recommendations, including any proposed legislation, to the judiciary committees of the senate and house of representatives by July 1, 1988.

@bcPart XII

Miscellaneous@ec

NEW SECTION. Sec. 1201. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 1202. Sections 501 through 511 of this act are necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.