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A productive year for the legislature

Chief Legislative Counsel

Although dominated by a massive $23 billion state budget deficit and a record-setting (66 days) delay in enacting a state spending plan, the year 2002 produced some significant changes — and near changes — in the law in other areas.

John Burton
Herb Wesson

The most significant change in the area of civil practice came suddenly in the waning days of the session, with the creation (by amendment) and enactment of the Consumer Attorneys of California-sponsored SB 688 (Burton and Wesson), which increases from 28 to 75 days the notice requirement for summary judgment motions.

The measure also increases from one to two years the statute of limitations for filing personal injury, wrongful death and assault and battery lawsuits — a provision made specifically retroactive for suits stemming from the Sept. 11, 2001, terrorist attacks (it is not entirely certain that the bill applies to other causes of action arising prior to its effective date, though that seems likely and is clearly the intent).

Opponents of SB 688 from the insurance industry and employer organizations were so upset by its changes to summary judgment law that they briefly considered — but ultimately rejected — sponsoring a referendum on those provisions.

Unofficially — but no less truly — tied to SB 688 was another bill, SB 800 (Burton and Wesson), which completely overhauled the law relating to construction defect litigation. The product of substantial negotiations between the consumer attorneys and the building industry, SB 800 clarifies in statute what does and does not constitute a construction defect; gives builders the opportunity to cure identified defects before suit can be filed; and overrules case law requiring defects to cause actual damage prior to being actionable in tort [Aas v. Superior Court, (2000) 24 Cal. 4th 627]. The bill was signed into law Sept. 20, and could well prove to be the most significant civil practice legislation of the year.

Arbitration was another area of the law that saw tremendous change in 2002. Spurred by a series of articles in the San Francisco Chronicle, a group of members of the Assembly Judiciary Committee — five Demo-crats and one Republican — early in the year sponsored a six-bill package which would have radically changed arbitrator disclosure and conflict of interest requirements — including one proposal that would have imposed a one-year waiting period before a state judge could become a private judge.

Gray Davis

The scope of the package was whittled down during the legislative process, however, and was further reduced when Gov. Davis vetoed one of the measures — and in so doing negated his signature on one of the others, due to a contingent enactment clause in the bill.

The measures that will take effect Jan. 1 are: AB 2656 (Corbett), which requires arbitrators to begin posting specified information on the internet; AB 2754 (Harman), which requires arbitrators and their clients to cease their relationship if they had financial dealings with each other; AB 2504 (Jackson), which requires the disqualification of any judge who has arranged for or negotiated towards future employment or other compensated service as a dispute resolution neutral arbitrator; and AB 2915 (Wayne), which prohibits "loser-pays" policies for consumers.

Rejected were AB 3029 (Stein-berg), the vetoed measure which proposed to give consumers greater choice in selecting a private arbitrator, and AB 3030 (Corbett), a penalty-setting measure whose effectiveness was tied to the enactment of AB 3029. The governor also vetoed SB 1538 (Burton), which would have prohibited employers from requiring mandatory arbitration agreements as a condition of employment.
A good year for the AOC

However, in the long run, the bill most likely to make the most significant, positive change in the administration of justice in California is SB 1732 (Escutia), which transfers the ownership and financial responsibility of California's 451 courthouses from the counties to the state, paving the way for needed repairs and renovations in many state courthouses.

SB 1732 was one of eight measures sponsored by the Judicial Council that were signed into law, making 2002 an excellent year for the Administrative Office of the Courts and the chief justice.

Other significant measures in the package include SB 1396 (Dunn), which requires each of California's 58 trial courts to prepare and implement a court security plan; AB 2321, which establishes the Judicial Council as the governing body of the courts for the purposes of the Tort Claims Act; and AB 3028, an omnibus civil practice measure. The council also sponsored successful legislation relating to judges' retirement (AB 2879, Strom-Martin) and workers' compensation (SB 2011, Burton).

In fact, the council's only real legislative disappointment — certain to be rectified in the very near future — was in its effort to authorize the conversion of subordinate judicial officer (SJO) positions to judgeships in courts where a shortage of judges has resulted in SJO's being assigned to function essentially as judges.

A third area of substantive legislative success related to consumer protection against the unauthorized practice of law and related fraudulent activities. 2002 saw the enactment of legislation sponsored by the Judicial Council (AB 1698) to add substantial consumer protections to a now-permanent Legal Document Assistants Act; legislation backed by the State Bar to increase the penalty for the unauthorized practice of law — particularly by recidivists — by both non-lawyers and disbarred attorneys (SB 1459, Romero); and legislation sponsored by the Department of Justice (AB 1999, Correa) which authorizes the attorney general, district attorney or city attorney to seek civil penalties not exceeding $100,000 against immigration consultants.

On the other side of the coin, an ambitious effort to clamp down on the operation of trust mills and the sale of other financial planning services (AB 2517, Chan) was put on hold for the year, and may re-emerge next session.

Darrell Steinberg

Finally, a two-year effort by Assembly Member Darrell Steinberg to increase protections for attorneys representing public agencies who "blow the whistle" on improper or criminal activity within those agencies resulted in naught when the governor vetoed his AB 363.

Sparked by the travails of Department of Insurance attorney Cindy Ossias, who risked attorney discipline when she made public information concerning apparent wrongdoing in the department under former Commissioner Chuck Quackenbush, AB 363 initially sought to carve out a straight "whistleblower" exemption for attorneys representing public agencies, similar to that granted line public employees.

The bill was placed on hold for nearly a year, while the various parties — led by the State Bar's Commit-tee on Professional Responsibility & Conduct (COPRAC) — sought to address the issue through clarifying amendments to Rule of Professional Conduct 3-600, but was resurrected in May when the state Supreme Court rejected that amendment on the grounds that it conflicts with existing statutory law.

The bill which went to the governor was very similar to — but not duplicative of — the provisions of the proposed rule, and the governor's veto message was brief and to the point: "While this bill is well intended, it chips away at the attorney-client relationship which is intended to foster candor between an attorney and client. It is critical that clients know they can disclose in confidence so they can receive appropriate advice from counsel . . . . The effective operation of our legal system depends on the fundamental duty of confidentiality owed by lawyers to their clients."

Overall, 2002 was an interesting year producing substantial changes in statutory law relating to the practice of law and our dispute resolution system — but also leaving plenty of issues on the table for 2003.

Stay tuned.

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