H 3657 Session 110 (1993-1994)
H 3657 General Bill, By Wilkes and B.O. Baker
Similar(S 347)
A Bill to amend 40-1-60, Code of Laws of South Carolina, 1976, relating to the
licensing of professional associations, so as to provide that any provision
applying to partnerships relating to accountants requiring certain
qualifications or requirements of a partner shall also apply to a member or
members of professional corporations and that persons licensed as accountants
may operate in any form allowed by law; to amend Section 40-1-190, Code of
Laws of South Carolina, 1976, relating to the examination and education
requirements of certified public accountants, so as to include five years
teaching accounting in a college or university recognized by the Board as one
of the experience requirements; to amend Section 40-1-240, Code of Laws of
South Carolina, 1976, relating to the waiver of examination for a person
certified in another state as a certified public accountant, so as to provide
for foreign reciprocity when such jurisdictions have substantially equivalent
requirements as South Carolina; to amend Section 40-1-270, Code of Laws of
South Carolina, 1976, relating to the filing of certificate of compliance with
continuing education requirements, so as to provide that annually or on or
before the last day of February a certificate of compliance with the
continuing education requirements must be filed with the Board; to amend
Section 40-1-290, Code of Laws of South Carolina, 1976, relating to the
revocation or suspension of a license or permit, so as to provide specific
violations for which the Board may revoke or suspend any certificate of a
certified public accountant or a license of a public accountant;to amend
Section 40-1-570, Code of Laws of South Carolina, 1976, relating to the
licensing of professional associations, so as to provide specific violations
for which the Board may revoke or suspend any license or permit of an
accounting practitioner; to amend Article 1, Chapter 5, Title 15, Code of Laws
of South Carolina, 1976, by adding Section 15-5-50, so as to provide that in
order to bring a negligence action against any accountant, partnership of
accountants, or any accounting corporation, in the course of accountancy
services, the plaintiff must be in privity of contract with the accountant,
partnership of accountants, or any accounting corporation; to amend Article 1,
Chapter 5, Title 15, Code of Laws of South Carolina, 1976, by adding Section
15-5-55, so as to provide for actions brought for money damages against
accountants, partnership of accountants, or any accounting corporation, to
provide for proportionate liability if a judgment is rendered against an
accountant, partnership of accountants, or any accounting corporation; and to
amend Article 1, Chapter 5, Title 15, Code of Laws of South Carolina, 1976, by
adding Section 15-5-60, so as to provide that the non-prevailing party of an
action brought under this Act shall be subject to attorney's fees and costs of
the prevailing party if the court does not determine that the action was
substantially justified.
03/08/93 House Introduced and read first time HJ-28
03/08/93 House Referred to Committee on Labor, Commerce and
Industry HJ-30
A BILL
TO AMEND 40-1-60, CODE OF LAWS OF SOUTH CAROLINA,
1976, RELATING TO THE LICENSING OF PROFESSIONAL
ASSOCIATIONS, SO AS TO PROVIDE THAT ANY PROVISION
APPLYING TO PARTNERSHIPS RELATING TO ACCOUNTANTS
REQUIRING CERTAIN QUALIFICATIONS OR REQUIREMENTS
OF A PARTNER SHALL ALSO APPLY TO A MEMBER OR
MEMBERS OF PROFESSIONAL CORPORATIONS AND THAT
PERSONS LICENSED AS ACCOUNTANTS MAY OPERATE IN
ANY FORM ALLOWED BY LAW; TO AMEND SECTION 40-1-190,
CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO
THE EXAMINATION AND EDUCATION REQUIREMENTS OF
CERTIFIED PUBLIC ACCOUNTANTS, SO AS TO INCLUDE FIVE
YEARS EXPERIENCE TEACHING ACCOUNTING IN A COLLEGE
OR UNIVERSITY RECOGNIZED BY THE BOARD AS ONE OF
THE EXPERIENCE REQUIREMENTS; TO AMEND SECTION 40-1-240, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING
TO THE WAIVER OF EXAMINATION FOR A PERSON CERTIFIED
IN ANOTHER STATE AS A CERTIFIED PUBLIC ACCOUNTANT,
SO AS TO PROVIDE FOR FOREIGN RECIPROCITY WHEN SUCH
JURISDICTIONS HAVE SUBSTANTIALLY EQUIVALENT
REQUIREMENTS AS SOUTH CAROLINA; TO AMEND SECTION
40-1-270, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO THE FILING OF CERTIFICATE OF COMPLIANCE
WITH CONTINUING EDUCATION REQUIREMENTS, SO AS TO
PROVIDE THAT ANNUALLY OR ON OR BEFORE THE LAST
DAY OF FEBRUARY A CERTIFICATE OF COMPLIANCE WITH
THE CONTINUING EDUCATION REQUIREMENTS MUST BE
FILED WITH THE BOARD; TO AMEND SECTION 40-1-290, CODE
OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE
REVOCATION OR SUSPENSION OF A LICENSE OR PERMIT, SO
AS TO PROVIDE SPECIFIC VIOLATIONS FOR WHICH THE
BOARD MAY REVOKE OR SUSPEND ANY CERTIFICATE OF A
CERTIFIED PUBLIC ACCOUNTANT OR A LICENSE OF A PUBLIC
ACCOUNTANT; TO AMEND SECTION 40-1-570, CODE OF LAWS
OF SOUTH CAROLINA, 1976, RELATING TO THE LICENSING OF
PROFESSIONAL ASSOCIATIONS, SO AS TO PROVIDE SPECIFIC
VIOLATIONS FOR WHICH THE BOARD MAY REVOKE OR
SUSPEND ANY LICENSE OR PERMIT OF AN ACCOUNTING
PRACTITIONER; TO AMEND ARTICLE 1, CHAPTER 5, TITLE 15,
CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING
SECTION 15-5-50, SO AS TO PROVIDE THAT IN ORDER TO
BRING A NEGLIGENCE ACTION AGAINST ANY ACCOUNTANT,
PARTNERSHIP OF ACCOUNTANTS, OR ANY ACCOUNTING
CORPORATION, IN THE COURSE OF ACCOUNTANCY
SERVICES, THE PLAINTIFF MUST BE IN PRIVITY OF
CONTRACT WITH THE ACCOUNTANT, PARTNERSHIP OF
ACCOUNTANTS, OR ANY ACCOUNTING CORPORATION; TO
AMEND ARTICLE 1, CHAPTER 5, TITLE 15, CODE OF LAWS OF
SOUTH CAROLINA, 1976, BY ADDING SECTION 15-5-55, SO AS
TO PROVIDE FOR ACTIONS BROUGHT FOR MONEY DAMAGES
AGAINST ACCOUNTANTS, PARTNERSHIP OF ACCOUNTANTS,
OR ANY ACCOUNTING CORPORATION, TO PROVIDE FOR
PROPORTIONATE LIABILITY IF A JUDGMENT IS RENDERED
AGAINST AN ACCOUNTANT, PARTNERSHIP OF
ACCOUNTANTS, OR ANY ACCOUNTING CORPORATION; AND
TO AMEND ARTICLE 1, CHAPTER 5, TITLE 15, CODE OF LAWS
OF SOUTH CAROLINA, 1976, BY ADDING SECTION 15-5-60, SO
AS TO PROVIDE THAT THE NON-PREVAILING PARTY OF AN
ACTION BROUGHT UNDER THIS ACT SHALL BE SUBJECT TO
ATTORNEY'S FEES AND COSTS OF THE PREVAILING PARTY IF
THE COURT DOES NOT DETERMINE THAT THE ACTION WAS
SUBSTANTIALLY JUSTIFIED.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 40-1-60 of the 1976 Code is amended to read:
"Section 40-1-60. Professional associations may be licensed
and operate as certified public accountants, public accountants,
and accounting practitioners and shall be governed by the provisions of
this chapter and any provision applying to partnerships in such chapter
requiring certain qualifications or requirements of a partner or partners
shall apply to a member or members of the professional association
or professional corporation. And all persons licensed as certified
public accountants, public accountants, and accounting practitioners
may practice and operate in any form or manner provided by
law."
SECTION 2. Section 40-1-190 of the 1976 Code is amended to read:
"Section 40-1-190. The examination described in Section 40-1-170 must be held by the Board board at least once
each year.
The Board board shall advertise the dates of the
examinations at least eight weeks prior to the date set in a newspaper so
as to provide adequate statewide notice. Beginning in 1986 the dates set
in a newspaper must be at least by September first for the November
examination and by March first for the May examination.
The Board board may make use of all or any part of
the uniform certified public accountants' examination or advisory
grading service as it considers appropriate to assist it in performing its
duties.
A candidate for the certificate of certified public accountant who has
successfully completed the examination required under Section 40-1-170
shall have no status as a certified public accountant, unless and until he
has the requisite experience and has received his certificate as a certified
public accountant. The experience required is two years of
accounting experience under the direct supervision and review of a
certified public accountant or public accountant licensed to practice,
whether in public, governmental, or private employment. either:
(a) two years of accounting experience in public, governmental, or
private employment under the direct supervision and review of a
certified public accountant licensed to practice accounting in some state
or territory of the United States or the District of Columbia;
(b) five years experience teaching accounting in a college or
university recognized by the board; or
(c) any combination of such experience determined by the board to
be substantially equivalent to the foregoing. The experience must
include experience, satisfactory to the Board board, in
applying generally accepted auditing standards to financial statements
prepared in accordance with generally accepted accounting principles.
The Board board may by regulation provide for
granting a credit to a candidate for satisfactory completion of a written
examination in any one or more of the subjects provided in Section 40-1-170 given by the licensing authority in any other state of the United
States if at the time he took the examination he was not a resident of this
State. The regulation must include requirements as the Board
board determines appropriate in order that any examination
approved as a basis for any such credit is, in the judgment of the
Board board, at least as thorough as that included in the
most recent examination given by the Board board at
the time of the granting of credit.
The Board board may by regulation prescribe the
terms and conditions under which a candidate who passes the
examination in one or more of the subjects provided by Section 40-1-170 may be reexamined in only the remaining subjects, with credit for
the subjects previously passed. It may also provide by regulation for a
reasonable waiting period for a candidate's reexamination in a subject he
has failed.
The educational requirement must be a baccalaureate degree from
a college or university recognized by the Board including a minimum of
twenty-four hours or the equivalent in accounting hours.
The Board board shall charge each candidate a fee,
to be determined by the Board board, not in excess of
two hundred dollars for the initial examination provided for in Section
40-1-170.
Fees for reexamination provided by this section are charged by the
Board board in amounts determined by it, but not in
excess of eighty dollars for each subject in which the candidate is
reexamined.
An application for examination or reexamination as prescribed by the
Board board must be submitted and the applicable fee
paid at least five weeks prior to the date of the examination. Beginning
in 1986 the application must be submitted and the applicable fee paid by
September fifteenth for the November examination and by March
fifteenth for the May examination."
SECTION 3. Section 40-1-240 of the 1976 Code is amended to read:
"Section 40-1-240. (A) The board, upon application in
writing, may waive the examination referred to in Section 40-1-170 and
issue a certificate to a person who is the holder of a certificate, or the
equivalent, as a certified public accountant issued under the laws of
any state and who has the qualifications required by this article and
the regulations of the board when the person submits to the board
evidence as to the qualifications it requires.
A nonresident obtaining a certificate in this State under the provisions
of this section shall pay application, certificate, and license fees required
of residents of this State and is subject to regulations and restrictions
required of residents who are recipients of certificates of registration
under this article. or territory of the United States or the District
of Columbia and:
(1) who has the qualifications required by this article and the
regulations of the board; or
(2) when, in the judgment of the board, the requirements for
issuing or granting certificates in the other state, territory, or District of
Columbia are substantially equivalent to the requirements established by
this article and the regulations of the board, and provided further, that
the other state or political subdivision of the United States grants the
same privileges to holders of certificates issued by this State.
(B) The board, upon application in writing, may waive the
examination referred to in Section 40-1-170 and issue a certificate to a
holder of a foreign designation, granted in a foreign country entitling the
holder thereof to engage in the practice of public accountancy provided
that:
(1) the foreign authority which granted the designation makes
similar provisions to allow a person who holds a valid certificate issued
by this State to obtain such foreign authority's comparable designation;
(2) the foreign designation:
(a) was duly issued by a foreign authority that regulates the
practice of public accountancy and the foreign designation has not
expired or been revoked or suspended;
(b) entitles the holder to issue reports upon financial
statements; and
(c) was issued upon the basis of educational, examination, and
experience requirements by the foreign authority or by law; and
(3) the applicant:
(a) received the designation, based on educational and
examination standards substantially equivalent to those in effect in this
State at the time the foreign designation was granted;
(b) completed an experience requirement substantially
equivalent to the requirement set out in Section 40-1-190 and regulations
of the board; and
(c) passed a uniform qualifying examination in national
standards acceptable to the board."
SECTION 4. Section 40-1-270 of the 1976 Code is amended to read:
"Section 40-1-270. Every registered certified public
accountant, public accountant, or accounting practitioner who desires to
continue to practice as such in this State must meet the following
requirements on or before the dates indicated:
(1) Pay pay to the secretary of the Board
board annually on or before July first a license fee, to be fixed
by the Board. board; and
(2) Biennially on or before December thirty-first of each odd-numbered year beginning in 1983, complete the continuing education
requirements, as required by Section 40-1-380. Biennially on or before
the last day of February of each even-numbered year beginning in 1984,
file with the secretary of the Board, on a form or forms prescribed by the
Board for this purpose, a certificate of compliance with the continuing
education requirements necessary for license renewal as required by
Section 40-1-380.
(2) annually, on or before the last day of February each year, file
with the board, on a form or forms prescribed by the board for this
purpose, a certificate of compliance with the continuing education
requirements necessary for license renewals as required by Section 40-1-380.
The Board board, by regulation, may provide a
penalty not to exceed five hundred dollars for each violation for failure
to comply with the provisions of either items (1) or (2) above.
Upon payment of the fee, any penalty required, and filing of the
certificate in proper form, the secretary of the Board
board shall issue a license entitling the applicant to practice in
this State until July first of the following year.
The Board board may, in its discretion, reduce or
waive the above requirements in cases of illness, mental or physical
incapacity, retirement from practice, and similar situations."
SECTION 5. Section 40-1-290 of the 1976 Code is amended to read:
"Section 40-1-290. Any person having a certificate of
registration as a certified public accountant or licensed as a public
accountant, as provided for in this article, may have his certificate or
license revoked or suspended by the Board after a proper hearing as
provided in Section 40-1-310 for any of the following causes:
(a) Conviction of a crime involving moral turpitude under the law of
any state or of the United States or of any other country, in which case
the record of conviction, or a copy thereof, certified by the clerk of court
or by the judge in whose court the conviction is had, shall be conclusive
evidence thereof; and the word "conviction" shall include a
plea of guilty or a plea of nolo contendere;
(b) When a certificate or license has been secured by fraud or deceit;
or
(c) For violation of any rule of conduct promulgated by the Board
under the authority granted by this article or for gross negligence in his
profession. (A) After notice and hearing pursuant to Section 40-1-310, the board may revoke any certificate as a certified public
accountant or license as a public accountant issued under the provisions
of this article; suspend any such certificate or license for a period of not
more than five years; reprimand, censure, or limit the scope of practice
of any certificate holder or licensee; impose an administrative fine not
exceeding $1,000, or place any certificate holder or licensee on
probation, all with or without terms, conditions, and limitations, for any
one or more of the following reasons:
(1) fraud or deceit in obtaining a certificate or license;
(2) cancellation, revocation, suspension, or refusal to renew
authority to engage in the practice of public accountancy in any other
state, territory of the United States, or District of Columbia, for any
cause;
(3) revocation or suspension of the right to practice before any
state or federal agency;
(4) dishonesty, fraud, or gross negligence in the practice of public
accountancy or in the filing or failure to file the certificate holder's or
licensee's own income tax returns;
(5) violation of any provision of this article or any rule or
regulation promulgated by the board under the authority granted by this
article;
(6) violation of any rule of professional conduct promulgated by
the board under the authority granted by this article;
(7) conviction of a felony, or any crime an element of which is
dishonesty or fraud, under the laws of the United States, of this State, or
any other state if the acts involved would have constituted a crime under
the laws of this State. The record of conviction, or a copy thereof,
certified by the clerk of court or the judge in whose court the conviction
is had, shall be conclusive evidence thereof; and the word `conviction'
shall include a plea of guilty or a plea of nolo contendere;
(8) performance of any fraudulent act while holding a certificate
or license under this article; or
(9) any conduct reflecting adversely upon the certificate holder's
or licensee's fitness to engage in the practice of public accountancy.
(B) In lieu of or in addition to any remedy specifically provided in
(A) above, the board may require one or more of the following
requirements of a certificate or licensee:
(1) a quality review conducted in such fashion as the board may
require;
(2) satisfactory completion of such continuing professional
education programs as the board may specify; or
(3) a `quality review' means a study, appraisal, or review of one
or more aspects of the professional work of a person or firm in the
practice of public accountancy, by a person or persons who hold
certificates or licenses and who are not affiliated with the person or firm
being reviewed.
(C) In any proceeding in which a remedy imposed by subsections
(A) and (B) of this section is imposed, the board may also require the
respondent certificate holder or licensee to pay the costs of the
proceeding."
SECTION 6. Section 40-1-570 of the 1976 Code is amended to read:
"Section 40-1-570. After notice and hearing, the Board may
revoke or suspend any license or permit issued under this article, or may
censure the holder of any such license or permit, for any one or any
combination of the following causes:
(a) Conviction of a crime involving moral turpitude, under the law of
any state or of the United States or of any other country, in which case
the record of conviction, or a copy thereof, certified by the clerk of court
or by the judge in whose court the conviction is had, shall be conclusive
evidence thereof; and the word "conviction" shall include a
plea of guilty or a plea of nolo contendere;
(b) When any license or permit has been obtained by fraud or deceit;
(c) For violation of any rule of conduct promulgated by the Board under
the authority granted by this article or for gross negligence;
(d) The revocation or suspension of the license or the permit of any
partner;
(e) The cancellation, revocation, suspension or refusal to renew the
authority of the partnership or any partner thereof to practice accounting
in any other state for any cause other than failure to pay an annual
registration fee in such other state;
(f) The violation of the rules of conduct as promulgated from time to
time by the Board for the regulation of accounting practitioners.
The provisions of subsections (d) and (e) above shall apply only to the
revocation, suspension or refusal to renew a partnership permit issued
under this article. (A) After notice and hearing pursuant to
Section 40-1-310 the board may revoke any license or permit as
accounting practitioner issued under the provisions of this article;
suspend any such license or permit for a period of not more than five
years; reprimand, censure, or limit the scope of practice of any license
or permit holder; impose an administrative fine not exceeding $1,000;
or, place any license or permit holder on probation, all with or without
terms, conditions, and limitation, for any one or more of the following
reasons:
(1) fraud or deceit in obtaining a license or permit;
(2) cancellation, revocation, suspension, or refusal to renew
authority to engage in the practice of public accountancy in any other
state, territory of the United States, or District of Columbia, for any
cause;
(3) revocation or suspension of the right to practice before any
state or federal agency;
(4) dishonesty, fraud, or gross negligence in the practice of public
accounting or in filing or failure to file licensee's own income tax return;
(5) violation of any provision of Article 1 or Article 3 of this
chapter or any rule or regulation promulgated by the board under the
authority granted by this chapter;
(6) violation of any rule of professional conduct promulgated by
the board under the authority granted by this chapter;
(7) conviction of a felony, or any crime an element of which is
dishonesty or fraud, under the laws of the United States, of this State, or
any other state if the acts involved would have constituted a crime under
the laws of this State. The record of conviction, or a copy thereof,
certified by the clerk of court or the judge in whose court the conviction
is had, shall be conclusive evidence thereof and the word `conviction'
shall include a plea of guilty or a plea of nolo contendere;
(8) performance of any fraudulent act while holding a license or
permit under this article; or
(9) any conduct reflecting adversely upon the certificate holder's
or licensee's fitness to engage in the practice of public
accountancy."
SECTION 7. Article 1, Chapter 5, Title 15 of the 1976 Code is
amended by adding Sections 15-5-50, 15-5-55, and 15-5-60 to read:
"Section 15-5-50. (A) This section applies to all causes of
action of the type specified herein filed on or after the effective date.
(B) This section governs any action based on negligence brought
against any accountant or firm of accountants practicing in this State by
any person or entity claiming to have been injured as a result of financial
statements or other information examined, compiled, reviewed, certified,
audited, or otherwise reported or opined on by the defendant accountant
or in the course of an engagement to provide other public accountancy
services.
(C) No action covered by this section may be brought unless:
(1) the plaintiff is:
(a) issuer (or successor of the issuer) of the financial statements
or other information examined, compiled, reviewed, certified, audited,
or otherwise reported or opined on by the defendant; and
(b) engaged the defendant accountant to examine, compile,
review, certify, audit, or otherwise report or render an opinion on such
financial statements or to provide other public accountancy services; or
(2) the defendant accountant or firm:
(a) was aware at the time the engagement was undertaken that
the financial statements or other information were to be made available
for use in connection with a specified transaction by the plaintiff who
was specifically identified to the defendant accountant;
(b) was aware that the plaintiff intended to rely upon such
financial statements or other information in connection with the
specified transaction; and
(c) had direct contact and communication with the plaintiff and
expressed by words or conduct the defendant accountant's understanding
of the reliance on such financial statements or other information.
Section 15-5-55. (A) This section applies to all causes of action of
the type specified herein filed on or after the effective date.
(B) This section governs any claim for money damages brought
against any accountant; any partnership of accountants or any
accounting corporation registered, licensed, or practicing in this State;
or any employee or principal of such partnership or corporation by any
person or entity claiming to have been injured as a result of the practice
of public accountancy by the defendant accountant or other person or
entity.
(C) No judgment for money damages may be entered against any
accountant, partnership, corporation, employee, or principal described
in subsection (B) (collectively referred to in this subsection as the
`accountant') in an action covered by this section except in accordance
with the provisions of this subsection.
(1) If the party seeking a judgment for damages against the
accountant proves that the accountant acted with the deliberate intent to
deceive, manipulate, or defraud for the accountant's own direct
pecuniary benefit, the liability of the accountant shall be determined
according to the principles that generally apply to such an action.
(2) If the accountant is not proven to have acted with the
deliberate intent to deceive, manipulate, or defraud for the accountant's
own direct pecuniary benefit, the amount of the accountant's liability in
damages shall be determined as follows:
(a) The trier of fact shall determine the percentage of
responsibility of the plaintiff, of each of the defendants, and of each of
the other persons or entities alleged by the parties to have caused or
contributed to the harm alleged by the plaintiff. In determining the
percentages of responsibility, the trier of fact shall consider both the
nature of the conduct of each person and the nature and extent of the
causal relationship between that conduct and the damage claimed by the
plaintiff.
(b) The trier of fact shall next determine the total amount of
damage suffered by the plaintiff caused in whole or in part by the
plaintiff, the defendants, and other persons alleged to have caused or
contributed to the damage.
(c) The trier of fact shall then multiply the percentage of
responsibility of the accountant (determined under (a)) by the total
amount of damages (determined under (b)) and shall enter a judgment
or verdict against the accountant in an amount no greater than the
product of those two factors.
(d) In no event shall the damages awarded against or paid by
an accountant exceed the amount determined under (c). The accountant
shall not be jointly liable on any judgment entered against any other
party to the action.
(e) Except where a contractual relationship permits, no
defendant shall have the right to recover from an accountant any portion
of the percentage of damages assessed against such other defendant.
Section 15-5-60. (A) If the court in any cause of action brought
against an accountant, partnership of accountants, or any accounting
corporation, in the practice of public accountancy, enters into a final
judgment against a party litigant on the basis of a motion to dismiss,
motion for summary judgment, or a trial of the merits, the court shall,
upon motion by the prevailing party, award the prevailing party
reasonable fees and other expenses incurred by that party unless the
court determines that the position of the losing party was substantially
justified. If the court determines that the position of the losing party was
substantially justified, it shall not award fees and other expenses to the
prevailing party. The determination whether the position of the losing
party was substantially justified shall be made on the basis of the record
which is made in the civil action for which fees and other expenses are
sought.
(B) A party seeking an award of fees and other expenses shall,
within thirty days of a final, nonappealable judgment in the action,
submit to the court an application for fees and other expenses that
verifies that the party is entitled to such an award under subsection (A)
and the amount sought, including an itemized statement from any
attorney or expert witness representing or appearing on behalf of the
party stating the actual time expended and the rate at which fees and
other expenses are computed.
(C) The court, in its discretion, may:
(1) determine whether the amount to be awarded pursuant to this
section shall be awarded against the unsuccessful party, its attorney, or
both; and
(2) reduce the amount to be awarded pursuant to this section, or
deny an award, to the extent that the prevailing party during the course
of the proceedings engaged in conduct that unduly and unreasonably
protracted the final resolution of the matter in controversy.
(D) In adjudicating any motion for an order compelling discovery or
any motion for a protective order made in any implied private action
arising under this act, the court shall award the prevailing party
reasonable fees and other expenses incurred by the party in bringing or
defending against the motion, including reasonable attorney's fees,
unless the court finds that special circumstances make an award unjust.
(E) For purposes of this section:
(1) The term `fees and other expenses' includes the reasonable
expenses of expert witnesses, the reasonable cost of any study, analysis,
report, test, or project which is found by the court to be necessary for the
preparation of the party's case, and reasonable attorney's fees and
expenses. The amount of fees awarded under this section shall be based
upon prevailing market rates for the kind and quality of services
furnished.
(2) The term `substantially justified' means that the party's
litigating position has:
(a) a reasonable basis in truth for the facts alleged in the
pleading;
(b) a reasonable basis in law for the theory which it propounds;
and
(c) a legal theory which is reasonably supported by the facts
alleged."
SECTION 8. This act takes effect upon approval by the Governor.
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