BILL ANALYSIS �
SB 865
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Date of Hearing: June 21, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 865 (Negrete McLeod) - As Introduced: February 18, 2011
SENATE VOTE : 36-0
SUBJECT : Contractors: expertise: legal representation.
SUMMARY : Requires the Contractors' State License Board (CSLB)
to indemnify an industry expert (IE) it hires if that individual
is named as a defendant in a civil action. Specifically, this
bill :
1)Requires CSLB to indemnify a hired IE from any judgment
rendered if the IE is a defendant in any of the following
types of civil actions:
a) Defamation;
b) Tortious interference with prospective business
advantage; or,
c) Any other civil cause of action directly resulting from
opinions rendered, statements made, or testimony given to
CSLB, its committees, staff, legal counsel, or other
representatives, or in any proceeding instituted by CSLB or
to which CSLB is a party.
EXISTING LAW :
1)Requires any board under the Business and Professions Code
(B&P Code), including CSLB, to provide legal representation to
any person hired or under contract to provide expertise to the
board in evaluating an applicant or licensee named as a
defendant in a civil action arising out of opinions rendered,
statements made, or testimony given to the board.
2)Provides that any board under the B&P Code, including CSLB, is
not liable for judgments rendered against a hired IE in a
civil action, unless otherwise exempted.
3)Requires the Attorney General's (AG) services to be utilized
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to defend the IE in the civil action and to be charged to
CSLB.
4)Authorizes CSLB to contract with professionals whose skills
are required to aid in the investigation or prosecution of a
licensee, registrant, or applicant for a license or
registration.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "Under
existing law, CSLB is authorized to provide industry experts
with legal counsel to defend against any civil suit resultant
from legal actions filed against a licensee or applicant by
CSLB. However, the law does not authorize CSLB to indemnify
experts who become involved in such suits."
Background . CSLB licenses and regulates over 310,000 licensed
contractors in the state. CSLB administers examinations to test
prospective licensees, issuing licenses, investigating
complaints against licensed and unlicensed contractors, issuing
citations, suspending or revoking licenses, and seeking
administrative, criminal, and civil sanctions against violators.
CSLB's Industry Expert Program (IE Program) recruits and trains
licensed professionals to inspect construction jobs and render
opinions in response to complaints lodged. These IEs are
licensed or registered professionals such as contractors,
engineers, architects, geologists, and accountants, or
interpreters and manufacturers' representatives with specific
skills and expertise that CSLB may require in investigations or
criminal prosecutions. IEs may be called on to participate in
complaint investigation, mandatory or voluntary arbitration,
on-site negotiation, administrative hearings, or license exam
development. In order to qualify to become an IE, applicants
must have a current contractor's license that has been free of
unresolved licensing and enforcement actions for the past five
years.
CSLB pays licensed professionals for their expert opinion.
Currently, CSLB does not have a shortage of IEs. In a CSLB
disciplinary hearing, while CSLB may utilize an IE, applicants
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and licensees are entitled to bring their own witnesses or
experts to refute the IE. If the applicant or licensee
disagrees with the administrator's decision, he or she can take
civil action. In the past few years, there has been one civil
action taken against an IE, in which the judge did not impose
any penalties against the IE.
Support . According to the sponsor, CSLB, "When investigating
consumer complaints, CSLB may ask a member of its IE Program to
inspect a project and render opinions on specific items of
complaint. The IEs provide expert opinion and testimony about
specific complaint items and accepted trade standards. IEs
participate in complaint investigations, mandatory arbitration,
voluntary arbitration, on-site negotiation, administrative
hearings and license exam development.
"Under existing law, CSLB is authorized to provide IEs with
legal counsel to defend against any civil suit resulting from
legal actions filed against a licensee or applicant by CSLB.
However, the law does not authorize CSLB to indemnify IEs who
become involved in such suits. This bill seeks to provide
indemnification so that IEs are not burdened with legal costs in
the event that an enforcement case they participate in is the
subject of a lawsuit."
Double-referred . This bill is double-referred to Assembly
Judiciary Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Contractors' State License Board (sponsor)
California Fence Contractors' Association
California Landscape Contractors Association
Engineering Contractors' Association
Flasher Barricade Association
Marin Builders' Association
Opposition
None on file.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
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