STAND. COM. REP. NO. 429

Honolulu, Hawaii

, 2025

RE: H.B. No. 981

H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 981 entitled:

"A BILL FOR AN ACT RELATING TO ATTORNEYS' FEES,"

begs leave to report as follows:

The purpose of this measure is to limit attorneys' fees in settlement agreements relating to, or actions brought as a result of, construction defects to ensure that plaintiffs can better afford the repair costs.

Your Committee received testimony in support of this measure from D.R. Horton; Hawaii Laborers and Employers Cooperation and Education Trust; Gentry Homes, Ltd.; Stanford Carr Development, LLC; Building Industry Association of Hawaii; and one individual. Your Committee received testimony in opposition to this measure from Kasdan Turner Thomson Booth, LLLC; and two individuals.

Your Committee finds that attorney's fees can cost a prevailing party a significant portion of the party's settlement amount or monetary award. In some cases, a prevailing party may only receive sixty to sixty-five percent of the settlement amount or monetary award after attorney's fees and costs are deducted. This is particularly concerning if the claim is based on a construction defect since a significant reduction in the settlement amount or monetary award may not leave the plaintiff with enough money to cover the necessary repair costs. In such cases, the plaintiff may actually be in a worse position than before the suit. This measure limits the attorney's fees in cases with construction defect claims to ensure that plaintiffs receive a greater portion of their settlement amount or monetary award.

Your Committee has amended this measure by:

(1) Specifying that attorneys are entitled to their accrued attorney's fees and costs not to exceed twenty-five percent of the recovery amount, rather than specifying that plaintiffs receive ninety percent of the repair cost;

(2) Changing the effective date to July 1, 3000, to encourage further discussion; and

(3) Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 981, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 981, H.D. 1, and be referred to your Committee on Judiciary & Hawaiian Affairs.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,

____________________________

SCOT Z. MATAYOSHI, Chair