BILL NUMBER: S3250

SPONSOR: SANDERS
 
TITLE OF BILL:

An act to amend the banking law and the civil practice law and rules, in
relation to the rate of interest to be paid upon judgments and accrued
claims

 
PURPOSE OR GENERAL IDEA OF BILL:

This Bill would reduce the interest paid on judgment and the accrual of
interest on claims.

 
SUMMARY OF PROVISIONS:

This legislation would eliminate the 9* annual rate of interest on judg-
ments and the amount accrued on claims by using the weekly average of
the maturity treasury yield, as published by the board of governors of
the Federal Reserve system, preceding the date of entry of the judgment
awarding damages.
              

 
JUSTIFICATION:

This bill would provide for the legal rate of interest on judgments to
be linked to the prevailing market interest rate in lieu of the current
9% fixed rate. The 9* rate has proven over the past twenty five-years to
over compensate plaintiffs to the detriment of defendants. A floating
rate reflective of the market interest rate is employed in many sister
states and ensures that parties are neither overcompensated in times of
low inflation nor under compensated as is the case during periods of
significant inflation.  The current 9% interest rate significantly adds
to the consumers' cost burden when they are confronted with a judgment
against them.  Reducing the 9% interest rate to the prevailing market
rate would reduce the financial burden on such consumers. It also
prevents and/or discourages judgment debtors from appealing the judgment
because interest still accrues on the judgment during the appeal proc-
ess, which can last 24 months or more.

Passage of this bill will prevent scrupulous judgment creditors from
taking advantage of the 9% annual interest by intentionally delaying
enforcement of said judgment or refuse payments from the debtors to
satisfy the judgment, leaving the debtor vulnerable to not being able to
satisfy the judgment years later or the risk losing property in a subse-
quent foreclosure proceeding. Further, this bill will also help reduce
the burden imposed by an overly generous tort system. Many of our sister
states have enacted comprehensive tort reform thereby attracting busi-
ness development and New York simply cannot afford to retain rules which
result in windfall recoveries in tort cases.

 
PRIOR LEGISLATIVE HISTORY:

2019-2020:A7146.

2017-2018:A.6965/S.4755;

2015-2016:A.5207.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
NONE

 
EFFECTIVE DATE:
This act shall take effect immediately.