Connecticut Seal

General Assembly

File No. 567

    February Session, 2018

House Bill No. 5505

House of Representatives, April 18, 2018

The Committee on Judiciary reported through REP. TONG of the 147th Dist., Chairperson of the Committee on the part of the House, that the bill ought to pass.

AN ACT PROMOTING THE EXPEDITIOUS RESOLUTION OF COMMERCIAL CASES IN THE STATE.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective July 1, 2018) (a) As used in this section:

(1) "Commercial case" means a civil action in which a principal claim involves:

(A) Breach of contract or fiduciary duty, fraud, misrepresentation, a business-related tort, including, but not limited to, unfair competition, or a statutory or common law claim arising out of a business dealing, including, but not limited to, (i) sales of assets or securities; (ii) corporate restructuring; (iii) partnership, shareholder, joint venture and other business agreements; (iv) trade secrets; (v) restrictive covenants; and (vi) employment agreements, other than claims that principally involve an alleged discriminatory practice;

(B) Transactions governed by the Uniform Commercial Code;

(C) Transactions involving commercial real property;

(D) Shareholder derivative actions;

(E) Commercial class actions;

(F) Business transactions involving or arising out of dealings with commercial banks and other financial institutions;

(G) Internal affairs of business organizations;

(H) Malpractice by accountants or actuaries, and legal malpractice arising out of representation in commercial matters;

(I) Environmental insurance coverage;

(J) Commercial insurance coverage, including, but not limited to, directors and officers, errors and omissions, and business interruption coverage; and

(K) Dissolution of corporations, partnerships, limited liability companies, limited liability partnerships and joint ventures; and

(2) "Center" means the Connecticut Center for Commercial Claims established pursuant to subsection (b) of this section.

(b) The Chief Court Administrator shall establish, within available resources, a special session of the Superior Court for the resolution of commercial cases involving a claim or claims for money damages in excess of five hundred thousand dollars. The special session shall be known as the "Connecticut Center for Commercial Claims".

(c) Upon written agreement of the parties to transfer a commercial case to the center and the submission of such written agreement to the Chief Court Administrator, or his or her designee, a commercial case satisfying the jurisdictional requirements set forth in subsection (b) of this section may be transferred to the docket of the center. Any party to a commercial case that is transferred to the docket of the center shall be assessed a per diem fee of twenty-five dollars per party for each day that such case is pending on such docket. Assessment of the per diem fee shall commence on the date on which the commercial case is transferred to the docket of the center and shall terminate on the date of the entry of judgment in the commercial case by the center, or, in the case of a commercial case that is transferred by the center back to the regular docket, the date on which the transfer occurs. The Chief Court Administrator, or his or her designee, shall transfer all fees received pursuant to this subsection to the organization administering the program for the use of interest earned on lawyers' clients' funds accounts pursuant to section 51-81c of the general statutes, for the purpose of funding the delivery of legal services to the poor.

(d) Not later than three days following the date on which a commercial case is transferred to the center, the Chief Court Administrator, or his or her designee, shall provide the parties to the commercial case with written notification of a list of names of not less than thirty judges or judge trial referees who are available to preside over the commercial case for the duration of the commercial case. Not later than two weeks after the date on which the Chief Court Administrator, or his or her designee, provides such written notification, the parties shall provide written notification to the center of the names of three judges or judge trial referees that the parties have jointly selected to preside over the commercial case. The Chief Court Administrator, or his or her designee, shall designate one of the three judges or judge trial referees named by the parties to preside over the commercial case. If the parties (1) fail to timely provide the Chief Court Administrator, or his or her designee, with the names of three judges or judge trial referees to preside over the commercial case, or (2) cannot agree on the names of three judges or judge trial referees to preside over the commercial case, the Chief Court Administrator, or his or her designee, shall designate the judge or judge trial referee to preside over the commercial case by selecting a judge or judge trial referee from the list of names provided to the parties pursuant to this subsection. In the event that no judge or judge trial referee, jointly selected by the parties to preside over the commercial case, is in fact available, the Chief Court Administrator shall provide the parties with the opportunity to select another mutually agreed upon judge or judge trial referee to preside over the commercial case.

(e) The judges of the Supreme Court, Appellate Court and Superior Court shall adopt and may, from time to time, modify or repeal rules and forms regulating pleading, practice and procedure in judicial proceedings administered by the center. Such rules shall be for the purpose of simplifying proceedings transferred to the center and promoting the speedy and efficient determination of commercial cases upon the merits. Such rules shall: (1) Provide for an accelerated adjudication process; (2) address pretrial proceedings, discovery and motions; (3) include a mandatory one-day mediation session with a special master, designated by the Chief Court Administrator, who shall be a judge, a judge trial referee or an attorney with expertise in commercial cases; (4) require that a decision on a dispositive motion be rendered not later than thirty days after the date on which such motion was heard; and (5) ensure that any commercial case transferred to the docket of the center be ready for trial not later than nine months following the date of such transfer. Such rules shall not abridge, enlarge or modify the jurisdiction of any court. Such rules shall become effective on such date as the judges specify, but not in any event until sixty days after such promulgation.

Sec. 2. (Effective from passage) Not later than January 1, 2019, the Chief Court Administrator, or his or her designee, shall submit a report, in accordance with the provisions of section 11-4a of the general statutes, on the establishment of the Connecticut Center for Commercial Claims to the joint standing committee of the General Assembly having cognizance of matters relating to the judiciary.

This act shall take effect as follows and shall amend the following sections:

Section 1

July 1, 2018

New section

Sec. 2

from passage

New section

JUD

Joint Favorable

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 19 $

FY 20 $

Judicial Dept.

GF - Potential Cost

41,587

41,587

State Comptroller - Fringe Benefits1

GF - Potential Cost

15,109

15,109

IOLTA Program

SF - Potential Revenue Gain

Up to 9,000/case

Up to 9,000/case

Note: GF=General Fund; SF=Special Fund (Non-appropriated)

Municipal Impact: None

Explanation

The bill requires the Judicial Department to establish a special court session and results in a potential cost. It is anticipated Judicial will need one clerk at a cost of $41,587 plus fringe benefits to staff the center and the appointment of a judge trial referee (JTRs receive a per diem of $251 per day). As this bill requires the center to be created within available appropriations, the cost indicated above is described as potential.

The bill requires that parties that request a transfer to the special court session to pay a fee of $25 each day per party for each day the case is pending on the center's docket, from the day the case is transferred until judgement is entered or the case is transferred back to the regular docket. The bill specifies that the fees collected from these cases will be transferred to the Connecticut Bar Foundation for the interest on lawyers' trust account (IOLTA) program to fund legal services for the poor. It is anticipated that most of these cases will be resolved within 6 months or less, resulting in fee revenue of less than $9,000 each case to the IOLTA program.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to the number of cases.

OLR Bill Analysis

HB 5505

AN ACT PROMOTING THE EXPEDITIOUS RESOLUTION OF COMMERCIAL CASES IN THE STATE.

SUMMARY

This bill requires the chief court administrator to establish, within available resources, a special court session known as the Connecticut Center for Commercial Claims. The center must handle certain commercial cases involving claims of more than $500,000 that the parties agree to transfer to it.

The bill establishes procedures for the chief court administrator, or his designee, and the parties to choose a presiding judge or judge trial referee for each case. It also requires judges to adopt rules to govern the center's procedures, and the administrator or his designee to report to the Judiciary Committee by January 1, 2019, on the center's establishment.

EFFECTIVE DATE: July 1, 2018, except the reporting requirement is effective upon passage.

CONNECTICUT CENTER FOR COMMERCIAL CLAIMS

Jurisdiction

Under the bill, the center must handle civil commercial cases involving claims for money damages of more than $500,000 with a principal claim involving the following:

Transfer and Fees

The bill allows the parties to a commercial case described above to submit a written agreement to the chief court administrator, or his designee, to transfer the case to the center's docket. If the case is transferred, a party must pay a daily fee of $25 per party for each day the case is pending on the center's docket, from the day the case is transferred until judgment is entered or the case is transferred back to the regular court docket. The chief court administrator, or his designee, must transfer the collected fees to the organization administering the interest on lawyers' trust accounts (IOLTA) program to fund legal services to the poor.

Selecting a Presiding Judge or Judge Trial Referee

Within three days after transferring a case to the center, the chief court administrator, or his designee, must provide the parties with a written list of at least 30 judges or judge trial referees (judges age 70 or older who continue to serve in a limited capacity) available to preside over the case for its duration. The parties then have two weeks to give the center a written list of three judges or judge trial referees that they jointly select. The chief court administrator, or his designee, must choose one of these judges or referees to preside. If none of the three are available, the parties must have an opportunity to jointly select another mutually agreed upon judge or referee.

If the parties do not timely submit a list of names or cannot agree, the chief court administrator, or his designee, must select someone from the original list of judges and referees.

Rules

The bill requires the Supreme, Appellate, and Superior Court judges to adopt procedural rules and forms that simplify the proceedings transferred to the center and promote the speedy and efficient determination of commercial cases on the merits. The bill prohibits the rules from changing the courts' jurisdiction. The rules (1) are effective 60 days after adoption or a later date set by the judges and (2) may be modified or repealed by the judges.

The rules must do the following:

COMMITTEE ACTION

Judiciary Committee

Joint Favorable

Yea

38

Nay

2

(04/02/2018)

TOP

1 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes is 36.33% of payroll in FY 19 and FY 20.