Senator Tom Harman authored this guest blog post for CJAC.
Today I introduced Senate Bill 393, a bill that will make the appeals process more fair and will send a signal that California welcomes business investment in the state.
In California, plaintiffs are entitled not only to damages awarded in a case but to interest on the damages awarded. If a California defendant pursues a case to appeal, interest may accrue on the judgment during the entire trial and appeals process -- a process which can take an additional two or three years and may result in a huge payment in interest alone.
In today's shaky economy, most key interest rates fluctuate between 4% and 7%. But since 1982, the interest rate in California for prejudgment and postjudgment interest has been fixed at the unreasonable rate of 10% per year.
California's current judicial interest rate results in huge windfalls to plaintiffs and may discourage some defendants from exercising their fundamental right to appeal.
This bill will set the judicial interest rate at the prime rate plus 2%. Doing so will bring California's judicial interest rate up to date and ensure that defendants are paying interest at a rate comparable to market rates.
Senator Tom Harman serves the 35th Senate District, which covers most of Orange County's coastline and includes the cities of Seal Beach, Huntington Beach, Fountain Valley, Costa Mesa, Newport Beach, Irvine, Cypress, La Palma, Los Alamitos, Laguna Beach, Dana Point, portions of Buena Park, Garden Grove, Santa Ana, and Westminster and the unincorporated areas of Rossmoor and Sunset Beach.