STAND. COM. REP. NO. 3325

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 1933
                                        H.D. 1
                                        S.D. 2




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Judiciary, to which was referred H.B. No.
1933, H.D. 1, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO UNLICENSED CONTRACTORS,"

begs leave to report as follows:

     The purpose of this bill, as received by your Committee, is
to:

     (1)  Authorize the forfeiture to the Department of Commerce
          and Consumer Affairs of tools and similar property used
          in unlicensed contracting activities; and

     (2)  Require reimbursement by unlicensed contractors to
          consumers, or payment to the Contractors Education
          Fund, of moneys paid to an unlicensed contractor.

     Your Committee finds that unlicensed contractors, unlike
licensed contractors, provide consumers no assurance that they
will competently do the job for which they were hired, and often
fail to complete a job or do so inadequately.  Your Committee
further finds that an unlicensed contractor who repeatedly and
illegally takes on contracting jobs should eventually be subject
to the forfeiture of equipment used on an illegal job.

     Your Committee is concerned, however, that third party
owners of equipment used on an illegal job should have a fair and
fast process by which they can claim ownership, and have their

 
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equipment returned, when the equipment has been seized due to its
use by an unlicensed contractor.

     Your Committee believes that consumers who use unlicensed
contractors, particularly those who do so in ignorance, should be
able to recover damages when the work is incomplete or of poor
quality.  Your Committee does not believe that this measure
forecloses consumers from seeking damages under contract law or
other legal theories.  However, your Committee is not convinced
that consumers should be able to recover moneys paid to an
unlicensed contractor regardless of whether the work contracted
for is completed in a timely and competent manner.

     Testimony in support of this measure was submitted by the
Department of Commerce and Consumer Affairs (with proposed
amendments), the General Contractors Association of Hawaii, the
Hawaii Electricians' Market Enhancement Program Fund, the
Plumbers and Fitters Local 675, the Hawaii Construction Industry
Association, the Subcontractor's Association of Hawaii, the
Building Industry Association of Hawaii, the Laborers-Employers
Cooperation and Education Trust, Consumer Lawyers of Hawaii,
Hidano Construction, Pacific Resource Partnership, and the Small
Business Regulatory Review Board (with proposed amendments).

     Upon further consideration, your Committee has amended this
measure by:

     (1)  Adding language limiting use of the forfeiture penalty
          to a second or subsequent offense;

     (2)  Limiting the property subject to forfeiture to property
          directly used by a person in illegal contracting
          activities;

     (3)  Deleting "armamentariums" from the list of items to be
          forfeited, because your Committee believes any medical
          or dental tools used in contracting work will still
          qualify as "tools";

     (4)  Inserting a requirement that the Department of Commerce
          and Consumer Affairs make good faith efforts to notify,
          within a reasonable time period, third party owners of
          materials subject to forfeiture;

     (5)  Reducing to 30 days the time in which the Department
          must issue a decision after receiving a petition for
          remission;

 
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     (6)  Raising the standard of evidence that the Department
          must meet at a forfeiture hearing from a "preponderance
          of the evidence" to "clear and convincing evidence";

     (7)  Deleting a proposed new section which would have
          required an unlicensed contractor to return any money
          received for an illegal job to the person making the
          payment or to the Contractor's Education Fund, as the
          new section was not supported by the interested parties
          and those who hire unlicensed contractors have other
          legal remedies for incomplete or substandard
          performance;

     (8)  Adding a section requesting the Revisor of Statutes to
          substitute numbers for letters used to designate new
          sections; and

     (9)  Making technical, nonsubstantive changes for the
          purposes of clarity and style.

     As affirmed by the record of votes of the members of your
Committee on Judiciary that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
1933, H.D. 1, S.D. 1, as amended herein, and recommends that it
pass Third Reading in the form attached hereto as H.B. No. 1933,
H.D. 1, S.D. 2.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Judiciary,



                                   ______________________________
                                   AVERY B. CHUMBLEY, Co-Chair



                                   ______________________________
                                   MATTHEW M. MATSUNAGA, Co-Chair

 
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