SENATE BILL REPORT

REESHB 877

BYHouse Committee on Judiciary (originally sponsored by Representatives 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

Senate Committee on Law & Justice

Senate Hearing Date(s):March 26, 1987; April 3, 1987; February 24, 1988

Senate Staff:Dick Armstrong (786-7460)

AS OF FEBRUARY 24, 1988

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:

Pre-judgment interest is provided for judgments not based on a contract and not against a governmental entity.  Interest accrues from the date an injured party notifies a defendant of the nature and extent of his or her claim.  If an offer of settlement is made within certain time limits, prejudgment interest is allowed only if the offer was not less than 75 percent of the judgment and then only on the portion of the judgment that exceeds the offer.  No interest accrues during any continuance of the action granted at the request of the judgment creditor.  No pre-judgment interest accrues on future noneconomic 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 notice to payment.

Appropriation:  none

Revenue:   none

Fiscal Note:    none requested