HOUSE BILL REPORT

HB 877

BYRepresentatives Armstrong, Hargrove, Crane, Appelwick, Prince, Brough, Scott, L. Smith, Wang, Heavey, Meyers, Cooper, Wineberry and Jesernig

Specifying period for which prejudgment interest shall be payable.

House Committe on Judiciary

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (12)

     Signed by Representatives Armstrong, Chair; Crane, Vice Chair; Appelwick, Brough, Hargrove, Heavey, P. King, Niemi, Padden, Scott, Wang and Wineberry.

Minority Report:     Do not pass.  (4)

     Signed by Representatives Lewis, Moyer, Patrick and Schmidt.

House Staff:Bill Perry (786-7123)

AS REPORTED BY COMMITTEE ON JUDICIARY MARCH 6, 1987

BACKGROUND:

Statutes control the rate and duration of interest accrual on judgments. Separate provisions apply to judgments based on certain contracts, to judgments against governmental entities for their tortious conduct, and to all other judgments.

If a written contract itself provides for interest, then any judgment based on the contract bears interest at the contract rate.  Judgments against governmental entities for their tortious conduct, and all other judgments not based on a contract, accrue interest from the date of entry of the judgment and at the usury rate.

The usury rate applicable to judgments is the higher of 12 percent or four percent above the interest rate on 26-week treasury bills.

SUMMARY:

SUBSTITUTE BILL:  Pre-judgment interest is provided for all judgments not based on a contract and not against a governmental entity.  The interest accrues from the time of filing the cause of action upon which the judgment is based.  No pre-judgment interest accrues on future damages, and no part of prejudgment interest may be used to pay attorney fees.  If any part of a judgment is paid before entry of the judgment, interest accrues from filing to payment.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The substitute extends the prohibition on prejudgment interest for future damages to cover all future damages, not just future economic damages.  It also expressly provides for payment of interest on judgments paid before entry.

Fiscal Note:    Not Requested.

House Committee ‑ Testified For:     Mary Ann Ottiger, Washington State Trial Lawyers; Nancy Oster; Diane James.

House Committee - Testified Against: Harold Fosso, State Farm Insurance; Gary Lowe, Washington Association of Counties; Ellen Holm, Group Health Cooperative; Bob Seeber, Restaurant Association; Gary Morris, Washington Hospital Insurance Liability Fund; Bill Hendrick, Boeing Company; Loren Winterscheid, Washington Medical Association; Dick Ducharme, Liability Reform Coalition.

House Committee - Testimony For:     The bill provides an incentive for speedier resolution of cases.  It is not fair for judgment debtors to earn interest on money belonging to the judgment creditor.  Injured plaintiffs incur expenses from the time of the injury.

House Committee - Testimony Against: Current law achieves a balance because future general damages are not reduced to present value.  The bill will provide an incentive for plaintiffs to delay.  This bill will undo some of the good done by last year's tort reform bill in reducing insurance costs.