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SPONSOR: |
Park |
DATE TYPED: |
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HB |
743 |
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SHORT TITLE: |
State Exemption from Post-Judgment Interest |
SB |
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ANALYST: |
Gilbert |
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APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
|
|
|
$0.1
See Narrative |
Recurring |
General
Fund |
(Parenthesis
( ) Indicate Expenditure Decreases)
LFC Files
General
Services Department (GSD)
Attorney
General’s Office (AGO)
Administrative
Office of the Courts (AOC)
SUMMARY
Synopsis
of Bill
House
Bill 743 amends Section 56-8-4 NMSA 1978, to require the state and its
subdivisions to pay post judgment interest at the rate of 8.75% per year. Judgments rendered on written instruments
having different interest rates are allowed and are computed at rates no higher
than those specified in such instruments.
If judgments are based on tortious conduct, bad faith, intentional or
willful acts, interest rates shall be 15%.
State
and political subdivisions are currently exempt from paying post judgment
interest.
Significant Issues
Under
this bill, the state and its subdivisions remain exempt from paying post
judgment interest in cases where the plaintiff was the cause of unreasonable
delay in the adjudication of the plaintiff’s claims and where the defendant had
previously made a reasonable and timely offer of settlement to the plaintiff.
FISCAL
IMPLICATIONS
The AGO states
that this bill would increase the amount of judgments paid by the state and political
subdivisions by requiring post judgment interest from the date the judgments
are entered until they are paid.
State and
political subdivisions may face substantially increased liability resulting
from the imposition of mandatory post-judgment interest, even when delays in
paying judgment are beyond the public body’s control. For example, in some instances a state agency
may not be able to pay a judgment immediately if the requisite funds have not
been appropriated by the legislature.
TECHNICAL ISSUES
The
General
Services Department (GSD) states that this legislation attempts to overrule
the New Mexico Supreme Court’s holding in Trujillo v. City of Albuquerque,
1998-NMSC-031, 125 N.M. 721, 965 P.2d 305 (1998). In that case, the Court found that plaintiffs
may not recover post-judgment interest against the state. Section 41-4-19(B) provides: “No judgment against a governmental entity or
public employee for any tort for which immunity has been waived under the Tort
Claims Act shall include an award for exemplary or punitive damages or for
interest prior to judgment.” Section
56-8-4(D), as currently written, immunizes the state and its political subdivisions
from post-judgment interest, "except as otherwise provided by statute or
common law."
The
proposed legislation seeks to change current subsection (D) of Section 56-8-4
by adding the words “Subsection B of”.
This change to the statute may give rise to lawsuits seeking clarification
of this new law, which is a question of statutory construction which a court
will review de novo.
This
bill implies that the remaining portions of Section 56-8-4 would now apply to
the state; thereby negating the protection the state currently has from post
judgment awards.
The
New Mexico Supreme Court has recognized the policy reasons that support limiting
damage awards against the government, and as a matter of policy, the New Mexico
Legislature and the Supreme Court have recognized the unique nature of the
duties adopted by the state that set it apart from other litigants. This legislation proposes to change the
policy of the state and may expose the state to increased financial liability.
RLG/ls