BILL ANALYSIS Ó
AB 993
Page 1
Date of Hearing: April 9, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 993 (Linder) - As Introduced: February 22, 2013
As Proposed to be Amended
SUBJECT : CONTRACTORS: ARBITRATION ALTERNATIVE LICENSEE
DISCIPLINE PROGRAM
KEY ISSUE : SHOULD THE ALTERNATIVE DISPUTE RESOLUTION PROGRAM OF
THE CONTRACTORS STATE LICENSE BOARD BE CLARIFIED AND REVISED?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This non-controversial bill, sponsored by the Contractors State
License Board (CSLB), seeks to clarify and revise its voluntary
arbitration program, which is made available to consumers and
contractors engaged in construction-related disputes as an
alternative to formal license discipline procedures. The
Contractors State License Law provides for licensing and
regulation of contractors by the CSLB. When a dispute arises
over the quality of the work or other contract issues, consumers
may file a complaint with the CSLB. Depending on the nature of
the dispute, CSLB may provide the parties an opportunity to
resolve the problem by arbitration. This bill would make minor
clarifying amendments to the arbitration program which the CSLB
believes will improve its effectiveness, including that
arbitrators do not have the authority to award specific
performance and that complainants may not seek monetary damages
for personal injuries. The bill would also provide greater
detail regarding certain procedures, give arbitrators and the
arbitration association greater control over scheduling and
other aspects of the process, and clarify that existing
arbitration rules apply to these proceedings.
SUMMARY : Revises the statute regulating CSLB contractor
arbitrations. Specifically, this bill :
1)Prohibits an arbitrator from awarding specific performance or
any other non-monetary remedy not authorized under the
article, including monetary damages for personal injury or
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punitive damages. An arbitrator may award any monetary
damages deemed just and equitable, including all direct costs
and expenses for the completion or repair of a project.
2)Removes the pre-existing procedure for receiving the party's
input on the time, date and location of the arbitration
hearing. Instead, the CSLB or arbitration association retains
authority to select the time, date and location of the hearing
based on the party's availability.
3)Provides that if a party chooses to make a recording of the
hearing, they shall supply a copy of that recording to the
arbitrator.
4)Clarifies that an arbitrator can reopen a hearing upon his own
motion only prior to the rendering of an award.
5)Explains that service of any papers, processes, or notices is
complete upon deposit by mail.
6)Prohibits an arbitrator from awarding attorney's fees against
the consumer party.
7)Eliminates the involvement of the arbitrator with regards to
who is responsible for sending a certified letter containing
the award, or providing a copy of any appeal from the denial
or correction of an award. Rather than working through the
arbitrator, such documentation must be directed to and from
the appointed arbitration association.
8)Shifts the responsibility of advising the parties of the names
of industry experts from CSLB to the arbitrators.
EXISTING LAW establishes an arbitration process administered by
CSLB to resolve disputes between contractors and consumers as
set forth in Business and Professions Code section 7085.5,
including the following:
1)Authorizes an arbitrator to grant any remedy or relief deemed
just and equitable and within the scope of the CLSB's referral
to the arbitrator and the requirements of CSLB, including
costs and expenses.
2)Requires a procedure for scheduling the hearing whereby CSLB
or the appointed arbitration association is to provide the
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parties with a list of the times, dates and locations of the
hearing to be held, and requires the parties to notify the
arbitrator of the convenient times and dates.
3)Provides that a recording of a hearing is not required, but
allows a party to pay for a recording to be made, without
obliging this party to share the recording with the
arbitrator.
4)Authorizes the hearing to be reopened on the arbitrator's own
motion, without specifying whether this can be done prior to
or after an award has been rendered.
5)Provides that service of any papers or process in connection
with the proceedings shall be by personal service or by
regular mail on a party at the last known address, but does
not define when service is considered complete.
6)Requires the registrar of contractors to advise the parties
that names of industry experts may be obtained by requesting
this information from the registrar.
COMMENTS : In support of the bill, the author writes:
The Contractors State License Board's (CSLB's)
Arbitration Program is governed by Business and
Professions Code sections 7085 - 7085.9. The program
provides an alternative dispute resolution process, the
purpose of which is to resolve consumer complaints
equitably and efficiently. Although the relevant law
provides a detailed guide for the arbitration process,
there are practical changes that could improve and
clarify the process for both consumers and contractors.
The sponsor, CSLB adds:
AB 993 seeks to make several changes to CSLB's existing
arbitration program, to clarify and improve the process for
both consumers and contractors.
CSLB's arbitration program provides an alternative dispute
resolution process, the purpose of which is to resolve
consumer complaints equitably and efficiently. Although the
relevant law provides a detailed guide for the arbitration
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process, there are practical changes that could improve and
clarify the process for both consumers and contractors.
Contractors' License Law is currently silent or lacks clarity
on several pertinent issues, including the authority of
arbitrators, the award of attorney fees and other civil
remedies. Statutory changes are needed to provide more
explicit guidance for CSLB Arbitration Program participants.
This Bill Makes Minor Clarifying Amendments To A Dispute Resolution
Process That Consumers May But Are Not Required To Pursue Regarding
Complaints Against a Licensed Contractor. Many of the amendments
are minor, stylistic changes that do not affect the substance of
the rules, but simply refine the existing content. Others provide
practical changes intended to enhance the arbitration program's
objectives.
Most notably, the bill clarifies that arbitrators under the program
do not have the authority to award specific performance. The CSLB
maintains that this is consistent with existing law but has not
been sufficiently clear in the statutory language. Not
surprisingly, CSLB reports that an award of specific performance is
often unsatisfactory because the parties are at odds and because it
is difficult or impossible for an arbitrator to supervise
compliance with the award, leading to continued problems, rather
than expeditious resolution. The practical problem of injunctive
relief is a widely acknowledged shortcoming of private arbitration.
The bill also specifies that consumers may not obtain monetary
damages for personal injury, nor may they recover punitive damages
under the arbitration program.
Similarly, CSLB seeks to modify the rule on awarding attorney's
fees because of the practical applications and effects of the
current rule. Although there is no requirement that either
party be represented by an attorney, the CSLB observes that
contractors are sometimes represented by attorneys and have
sometimes sued consumers to obtain reimbursement of the
contractor's attorney's fees after an arbitration proceeding.
Likewise, the bill clarifies that arbitrators are not to award
attorney's fees against a consumer party. CSLB states that
arbitrators do not often award attorney's fees to an injured
consumer, but that they may be an appropriate aspect of recovery
in some cases.
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The amendments also give the arbitrator greater power to
schedule the arbitration hearing. However, in order to avoid the
potential scenario of an arbitrator imposing a date upon the
parties, the amended version provides that the date the
arbitrator selects must take into account the availability of
the parties. Another practical change concerns recording.
Because it is not required that the proceedings be recorded, the
statute currently provides for the option that either party may
record the arbitration, at their own expense, if they so choose.
In the event a party chooses to do so, it seems appropriate
that the arbitrator be provided with a copy of the recording, as
the bill proposes.
An additional modification would give the arbitrator instead of
CSLB the responsibility for advising the parties of the names of
potential industry experts available to them. Currently, the
statute requires the registrar to assume this responsibility.
However, because the CSLB is not directly involved in each
individual arbitration hearing, CSLB considered it more in
harmony with the delegation of responsibilities that the
arbitrator should assume this responsibility.
It is understood and intended that the CSLB will inform
consumers of the ways in which these changes differ from the
rights, remedies and procedures available in court as part of
its existing obligation to notify complainants of the
consequences of choosing to participate in the arbitration
program.
Finally, the bill clarifies that existing law regarding
arbitrator disclosures and arbitration company obligations
applies to these proceedings by adding various cross-references.
Author's Clarifying Amendments. The author offers properly
clarifying amendments as reflected in the mock-up.
REGISTERED SUPPORT / OPPOSITION :
Support
Contractors State License Board (sponsor)
Opposition
None on file
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Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334