H. B. 3051


(By Delegates Spencer, Fleischauer,
Marshall, DeLong, Perdue, Caputo and Manchin)

[Introduced February 13, 2007; referred to the
Committee on Industry and Labor, Economic Development and Small Business then Finance.]



A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new section, designated §21-11-13a, relating to creating a contractor recovery fund; legislative findings; creation of contractor recovery fund control board; granting rule making authority.

Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new section, designated §21-11-13a, to read as follows:
ARTICLE 11. WEST VIRGINIA CONTRACTOR LICENSING ACT.
§21-11-13a. Legislative findings, declaration of public policy and contractor recovery fund.

(a) The Legislature hereby determines and finds that in the past some contractors have not had the necessary qualifications, staff, equipment or facilities to adequately serve the public; that some persons engaged in the contracting business have engaged in unsafe, defective, and unscrupulous conduct relating to their contracting services; that certain citizens of this state have sustained significant financial losses as a result thereof; and that in some of the cases there has been no adequate means to prevent the conduct or protect the interests of the citizens of West Virginia.
(b) The Legislature further determines and finds that there exists a significant problem when a contractor goes out of business or fails to maintain the necessary monetary means to compensate citizens for losses sustained when a contractor engages in business practices that cause citizens or businesses of the affected community, as well as this state substantial financial loss. It is, therefore determined, that the creation of a contractor recovery fund is necessary as a remedial measure to allow both the state and the citizens of this state to recover any taxes which have not been properly remitted to the state and to provide financial relief to citizens and businesses of this state who have suffered financial harm through the failure of a contractor to properly fulfill its responsibilities and obligations in a competent and defect free manner.
(c) Therefore, there is hereby created a special fund in the State Treasury which is to be designated the "contractor recovery fund." The fund shall consist of certain moneys received from any contractor as defined in section three of this article or from grants, gifts, bequests or awards arising out of the settlement or adjudication of a claim. The fund is not to be treated by the Auditor and Treasurer as part of the general revenue of the state. The fund is to be a special revolving fund paid out upon order of the Commissioner of Labor based on the recommendation of the contractor recovery fund control board created in this section, solely for the purposes specified in this section. The commissioner may use up to one percent of funds from the contractor recovery fund for the administrative expenses of operating the contractor recovery fund program.
(d) The contractor recovery fund control board shall consist of the Commissioner of Labor, or his or her designee, the Attorney General's designee representing the office of Consumer Protection and one representative selected by the contractor licensing board. The Commissioner of Labor or his or her designee shall serve as chair and the board shall meet at least once a year during the month of July, and as required by the commissioner. The commissioner may propose rules for promulgation in accordance with article three, chapter twenty-nine-a of this code that are necessary to effectuate the provisions of this section. The commissioner may employ the necessary staff needed to operate the program. The board may prorate the amount paid on claims when the amount of valid claims submitted would exceed thirty-three percent of the fund. However, claims presented by the Division of Labor for taxes and fees shall be paid in full. The board may purchase insurance at a cost not to exceed one percent of the fund to cover extraordinary or excess claims from the fund.
(e) Every applicant for either an original contractor license or renewal of an existing contractor license of the type enumerated in section three of this section shall pay, in addition to any other license fee, an annual contractor recovery fund fee of one hundred fifty dollars. All contractors shall pay the contractor recovery fund payment unless he or she is exempt pursuant to the following:
(1) If the contractor recovery fund reaches or exceeds the amount of three million dollars as of the first day of July of any year, a contractor who, for the three years immediately preceding assessment of the fees, has not had a claim paid against them or against the contractor recovery fund, whose license has not been suspended or revoked and who has not been assessed any civil or criminal penalties, is exempt from payment of the annual contractor recovery fund fee. However, no contractor can submit a claim against the fund unless it has contributed to the fund for at least three years.
(2) If the fund should, as of the first day of April of any year, drop below three million dollars, all contractors, regardless of any previous exemption shall pay the annual contractor recovery fee of one hundred fifty dollars.
(f) The contractor recovery fund control board may consider payment after any contractor surety bond, if applicable, has been exhausted.
(g) When the fund reaches two hundred fifty thousand dollars, the board shall consider claims for payment.
(h) Claims against the fund are not to be made for any act or omission which occurred prior to the first day of July, two thousand seven.
(i) Claims for payment shall be submitted within six months of the date the claim arose or the date the division is made aware of the claim.
(j) The commissioner shall promulgate rules to determine the order of payment and priority of claims, the maximum amount of a claim that can be made against the fund; and the manner in which payment shall be made. All rules shall be promulgated by the commissioner pursuant to chapter twenty-nine-a of this code.
(k) On payment by the board to a claimant from the fund, the board shall immediately notify the contractor against whom a claim was paid and request full reimbursement within thirty days of notification. If a contractor fails to fully reimburse the board within the specified period of time, the commissioner shall immediately and without prior hearing revoke the contractor license of contractor against whom the claim was paid. No applicant with an unpaid claim is eligible for renewal or relicensure until the full amount of the reimbursement plus interest as determined by the board is paid to the fund. Nothing in this section shall limit the authority of the commissioner to suspend, revoke or levy civil penalties against a contractor, nor shall full repayment of the amount owed to the fund necessarily nullify or modify the effect of any action by the commissioner.
(l) Nothing in this section shall limit the right for any person to seek relief through civil action against any other person.
(m) The provisions of this section do not apply to those class of contractors in the business of selling manufactured housing and covered by the state manufactured housing recovery fund established by the Division of Labor pursuant to a legislative rule.
(n) Any person adversely affected by a decision of the board or the commissioner shall be afforded an opportunity for hearing before the board in accordance with section one, article five, chapter twenty-nine-a of this code.
NOTE: The purpose of this bill is to create a contractor recovery fund; legislative findings; creation of contractor recovery fund control board; granting rule making authority.
Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.