A Self-Interested Party
State Representative David Eberhart is a mild-mannered civil engineer from Peoria. In 1995, his fellow Republicans chose him to replace his more colorful colleague, Representative Jeff Groscost, as House majority whip.
Groscost, as many will recall, was booted from his leadership post because he repeatedly failed to file his campaign-finance reports on time.
In contrast, Eberhart follows the letter of the law. But that hasn't stopped him from emulating a time-honored tradition among Arizona legislators: voting for, advocating for, even sponsoring legislation that directly benefits his own business interests.
Most recently, Eberhart raised eyebrows among municipal lobbyists after he spoke up for a bill that could cost cities hundreds of thousands of dollars while potentially benefiting engineers like Eberhart.
Senate Bill 1207--signed into law this year and set to take effect in 1998--prevents public entities from requiring subcontractors to insure projects on which they work.
Traditionally, large public works contracts have required that a subcontractor provide "intermediate indemnity," promising to insure all parties in the event of a claim against them.
The bill was introduced by Senator John Wettaw, Republican of Flagstaff.
During debate in the House Government Operations Committee, supporters of SB1207 (lobbyists for engineers and other businesses) and opponents (mainly municipal lobbyists) both warned that if the other side won, someone would pay a high price.
The bill's supporters, including Eberhart, claimed it was becoming increasingly difficult to find insurers willing to cover their intermediate indemnity, leaving them vulnerable to enormous costs as a result of lawsuits.
The City of Phoenix estimates the new law will cost the city more than $2 million a year in legal and insurance fees.
Janice Burnell--executive director of the Arizona Consulting Engineers Association and one of SB1207's principal supporters--doesn't understand why anyone would question Eberhart's role in supporting the legislation.
Burnell notes, correctly, that Eberhart did nothing illegal.
Under Arizona law, legislators are now included on a list of public officials who can face criminal and civil penalties for engaging in a conflict of interest. But the law defines conflict of interest so narrowly that it effectively exempts lawmakers under just about any conceivable scenario. To have a conflict, a legislator must belong to a group of fewer than ten people that would benefit directly from a proposed law.
That means Eberhart, who is one of thousands of licensed engineers in Arizona, doesn't violate the law when he advocates and votes for legislation relating to engineers.
Tim Hogan, executive director of Arizona Center for Law in the Public Interest, calls Eberhart's actions "a more egregious example of the way that all legislators bring some self-interest to the job."
There's no question Eberhart will benefit from SB1207. In fact, while the Legislature was considering the measure, the City of Glendale and Eberhart's engineering firm--Hendrich, Eberhart and Associates--were defendants in a lawsuit in Maricopa County Superior Court.
They are being sued by Imre Laszlo Barkovics, who contends he was injured in 1994 when his car struck a median near 59th Avenue and Thunderbird in Glendale. Barkovics contends that the median was poorly constructed and poorly marked.
Eberhart's firm was a subcontractor on the median-construction project.
Stuart Goodman, lobbyist for the City of Glendale, says he was surprised to see Eberhart join the debate on SB1207 during the hearing before the Government Operations Committee.
Goodman says that because Eberhart refused to accept liability in the Barkovics case, Glendale refused to award his firm another public works contract, even though city engineers had recommended it.
"And then six months later, there is a bill [before the Legislature] that . . . prohibits this type of indemnity clause," Goodman says.
Eberhart insists he did nothing wrong by speaking in favor of, and voting for, SB1207. After all, he says, it is not retroactive and would not affect the pending litigation.
In fact, Eberhart says, it would not affect him at all. But he stumbles over his own assertion.
"The issue of 1207 is whether the city can shift their own fault, their own negligence, onto an innocent second party," Eberhart says.
And who is the innocent second party?
"Me," he replies.
Eberhart notes that SB1207 passed the House easily. (It did, on a 53-5 vote, with two members not voting.)
He takes offense at the suggestion he had a conflict of interest on SB1207.
Eberhart says, "If you look at my voting record over the last three years, you'll see that I have probably asked to be excused from more votes than anybody else in the body. I take that very seriously and would never intentionally do anything that I thought was a conflict of interest whatsoever."
But before you dismiss SB1207 as an aberration, consider a law passed by the Legislature in 1995. Arizona Revised Statute 12-2602, sponsored by Eberhart, requires anyone taking legal action against a "registered professional"--including architects, assayers, geologists, landscape architects, land surveyors and, yes, engineers--to file an affidavit prepared by an expert who will offer the basis for the claim.
Failure to file such an affidavit is grounds for dismissal of the complaint, according to Eberhart's law.
Eberhart's lawyer cited ARS 12-2602 in an effort to get his client removed from liability in Barkovics v. City of Glendale, et al. The motion to dismiss was denied, and the litigation continues. Eberhart was not available for comment on ARS 12-2602.
Public-interest lawyer Hogan says it's impossible to eliminate all conflicts, but thinks it's reasonable to ask legislators to distance themselves from legislation having a direct impact on their profession or employer.
However, he doesn't see it happening anytime soon.
Hogan adds, "They [legislators] have convinced themselves that nobody does anything out of self-interest."
Meanwhile, the City of Scottsdale is sponsoring a resolution--to be considered this month during the annual meeting of the Arizona League of Cities and Towns--that urges state lawmakers to reconsider SB1207, the indemnity waiver.
A legislative study committee was recently appointed to review the new law and consider options. Appointed to the committee were senators Keith Bee, Patti Noland and Mary Hartley, and representatives Barry Wong, David Armstead and David Eberhart.
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