SENATE BILL REPORT

SB 5262

BYSenators Talmadge and Nelson

Revising provisions on civil liabilities and actions.

Senate Committee on Judiciary

Senate Hearing Date(s):January 21, 1987; January 22, 1987

Senate Staff:Dick Armstrong (786-7460)

AS OF FEBRUARY 25, 1987

BACKGROUND:

Legislation enacted during the 1986 session addressed several issues involving modification of the civil justice system (tort reform).  However, the legislation did not directly address the issue of reducing the transactional costs of litigation, such as discovery, offers of settlement, arbitration, frivolous lawsuits and settlement conferences.  Also, the issue of immunities was not addressed in a comprehensive manner.

Legal commentators and other persons involved in the legal system are of the opinion that legislation is needed to reduce court costs, improve the flow of litigation, and decrease existing court congestion.

SUMMARY:

OFFERS OF SETTLEMENT

Provisions relating to offers of settlement are expanded to apply to all civil cases regardless of the dollar amount of the damages.  A plaintiff can make an offer of settlement to the defendant and if the plaintiff recovers a judgment which is at least 10 percent greater than the rejected offer, the plaintiff can recover from the defendant statutory costs, prejudgment interests and attorneys' fees from the time of the service of the offer.  Similar provisions exist for a defendant to make an offer of settlement and recover costs, prejudgment interest and attorneys' fees from the plaintiff.

Procedures and time periods are set forth for making the offer of settlement.

SMALL CLAIMS JURISDICTION

The jurisdiction of the small claims court is increased from $1,000 to $1,500.

MANDATORY ARBITRATION

The mandatory arbitration ceiling for cases in superior court in counties which have authorized arbitration is increased to $15,000.  If two thirds of the superior court judges in the county vote to increase the ceiling, the arbitration ceiling can be increased up to $35,000.  The minimum qualifications for arbitrators are established.  A person must be a member of the Washington State Bar Association who has been admitted to the Bar for a minimum of five years or who is a retired judge.  The parties are permitted to agree to a non-attorney arbitrator.

FRIVOLOUS LAWSUITS

The frivolous lawsuit statute is clarified to carry out its purpose and intent.  A court may determine if an action was frivolous and advanced without reasonable cause upon either a pre-trial or post-trial motion by the prevailing party.

CIVIL IMMUNITIES

The state and its employees are not civilly liable for damages arising out of the negligent activities of the National Guard.

The state, local government and their employees are not civilly liable for the release of a patient from the custodial care of the state or local government if the release was in good faith and according to professional standards.

Appointed or elected officials and members of the governing body of a public agency are not civilly liable for negligent activities performed in the course of their official duties.

Persons who render services to or sponsor nonprofit sports programs recognized by the AAU, NCAA, or the Olympic Committee are not civilly liable for negligent activity performed in the course of their duties.  The immunity does not apply unless the person submits to a criminal background check.

Part-time and on-call volunteers, such as fire fighters and policemen, of emergency response organizations who provide emergency care at the scene of an emergency are not civilly liable for damages resulting from their negligent activities.

The liability of general contractors for injuries to the employees of subcontractors is expressly limited by statute. Liability exists if the general contractor exercised control over the work area, if the general contractor breaches specific contractual provisions, or if the nature of the work is inherently dangerous.

The contributory fault of a decedent is imputed to a claimant in an action for loss of consortium. 

CORPORATE DIRECTORS LIABILITY

Statutes on profit and nonprofit corporations are amended to allow the articles of incorporation to include a provision eliminating or limiting the personal liability of a director for damages caused by any action taken by the director in good faith. Such provisions may not limit a director's liability for acts involving intentional misconduct, such as a knowing violation of the law or knowing breach of the director's fiduciary duty to the corporation.

Indemnification of directors of for-profit corporations in circumstances beyond those currently stated in the statute is allowed if such further indemnification is authorized by the articles of incorporation, or a bylaw or resolution adopted by the shareholders.  Such provisions may not be used to allow indemnification of a director for intentional misconduct. Technical changes are also made to both the for-profit and nonprofit corporation statutes.

EXCESS INSURANCE COVERAGE FOR POLITICAL SUBDIVISIONS

The risk manager for the state is authorized to offer excess liability and property insurance to political subdivisions based upon sound actuarial principles.  Political subdivisions must have primary insurance which meets sound underwriting requirements of the risk manager and they must have instituted sound risk management and loss control practices.

The risk manager is also authorized to employ such underwriters and actuaries as may be necessary to operate the program.  The excess insurance program is to be self-supporting from premiums paid by political subdivisions.  A state excess insurance account is established to operate the program on an actuarially sound basis of premiums collected and losses experienced.

Fiscal Note:      requested