SENATE BILL REPORT

ESHB 1643

BYHouse Committee on Judiciary (originally sponsored by Representatives Appelwick, Padden, Inslee, Miller, R. King, P. King, Dorn, Cole, Wineberry, Belcher, Dellwo, Leonard, Heavey, Crane, R. Meyers, K. Wilson,  Wolfe, Rector, Prince, Brekke, Brough, Pruitt, Jacobsen, Fuhrman, Locke, Wang and Ferguson)

Changing provisions relating to prejudgment interest.

House Committe on Judiciary

Senate Committee on Law & Justice

Senate Hearing Date(s):March 23, 1989

Senate Staff:Dick Armstrong (786-7460)

AS OF APRIL 3, 1989

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's 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 4 percent above the interest rate on 26-week treasury bills.

SUMMARY:

Prejudgment interest is provided for judgments not based on a contract or on a tax refund.  Prejudgment interest applies only to past economic and past noneconomic damages.  Prejudgment interest accrues from the date that the defendant receives written notice of the cause of action to the date of judgment.  The interest rate is the usury rate (12 percent or the maximum allowed by law, which is 4 percent over the treasury rate).

Prejudgment interest does not apply to periods where the plaintiff has requested a continuance.  Money advanced to a plaintiff accrues prejudgment interest from the date of notice to the date of payment.

If an offer of settlement is made which is not less than 75 percent of the judgment amount, then prejudgment interest is calculated on the portion which exceeds the settlement offer.

Provisions of the bill apply only to nongovernmental entities.  Attorneys do not receive as compensation any part of the prejudgment interest.  The act applies to judgments entered after the effective date of the act.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested February 16, 1989