S3751-2011 Actions

• Jan 4, 2012: REFERRED TO BANKS
• Mar 3, 2011: REFERRED TO BANKS

S3751-2011 Meetings

S3751-2011 Memo

BILL NUMBER:S3751

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:

This bill would bring the legal rate of interest on judgments in line
with market rates.

SUMMARY OF PROVISIONS:

This bill would add a new section 7-A to the Banking Law, and amend
section 5004 of the Civil Practice Law and Rules to establish the
interest rate paid on judgments at the weekly average one year
constant maturity treasury yield, capped at 9 percent.  This is
the same standard used by the federal government.

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
over-compensated in times of low inflation nor under compensated as is
the case during periods of significant inflation.

This bill would save money for New York consumers who have commercial
judgments entered against them by corporations and other business
entities. Consumers already shoulder an inequitable burden under
present commercial lawsuit practices because, as noted by the New
York State Consumer Protection Board in 1979, consumers as a general
group do not bring suit or raise counterclaims or even appear to
defend against invalid lawsuits due to the costs of retaining an
attorney coupled with their frequent lack of knowledge regarding
their rights.

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.

Passage of 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 business development and
New York simply cannot afford to retain rules which result in
windfall recoveries in tort cases. In fact, based on the November
2009 figures for New York civil jury verdicts as reported by New York
Jury Verdict Review & Analysis, the current interest on New York
verdicts after 30 days from verdict is $9.8 million.


Using the current market interest rate would result in a savings of
approximately $9.5 million in New York's civil justice system. Such
further results in lower costs of both doing business and living in
New York. Moreover, the State alone would save $2.6 million under
this bill; and New York City would save $1.5 million

LEGISLATIVE HISTORY:

This is a new bill.

FISCAL IMPLICATIONS:

None Noted.

EFFECTIVE DATE:

This act shall take effect immediately.

S3751-2011 Text

 S T A T E   O F   N E W   Y O R K
 
 
                                         3751
 2011-2012 Regular Sessions
 I N  SENATE
 March 3, 2011
 
 Introduced  by  Sen.  GRIFFO -- read twice and ordered printed, and when
 printed to be committed to the Committee on Banks
 

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
 THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM
 BLY, DO ENACT AS FOLLOWS:

 

Section  1.  The banking law is amended by adding a new section 7-a to
 read as follows:

 

S 7-A. RATE OF INTEREST ON MONEY JUDGMENTS. UNLESS OTHERWISE  PROVIDED
 BY  CONTRACT  OR ANY OTHER PROVISION OF LAW, THE INTEREST ON MONEY JUDG
 MENTS SHALL BE CALCULATED AT A RATE EQUAL TO THE WEEKLY AVERAGE ONE YEAR
 CONSTANT MATURITY TREASURY YIELD, AS PUBLISHED BY THE BOARD OF GOVERNORS
 OF THE FEDERAL RESERVE SYSTEM, FOR THE CALENDAR WEEK PRECEDING THE  DATE
 OF  THE  ENTRY  OF THE JUDGMENT AWARDING DAMAGES, EXCEPT WHERE OTHERWISE
 PROVIDED BY STATUTE. IN NO EVENT, HOWEVER, SHALL THE RATE OF INTEREST ON
 ANY JUDGMENT OR ACCRUED CLAIM EXCEED NINE PER CENTUM PER ANNUM.
 

S 2.

Section 5004 of the civil practice law and rules, as  amended  by
 chapter 258 of the laws of 1981, is amended to read as follows:

 

S  5004.  Rate of interest. Interest shall be [at the rate of nine per
 centum per annum] CALCULATED AT A RATE EQUAL TO THE WEEKLY  AVERAGE  ONE
 YEAR  CONSTANT  MATURITY  TREASURY  YIELD,  AS PUBLISHED BY THE BOARD OF
 GOVERNORS OF THE FEDERAL RESERVE SYSTEM, FOR THE CALENDAR WEEK PRECEDING
 THE DATE OF THE ENTRY OF THE JUDGMENT  AWARDING  DAMAGES,  except  where
 otherwise  provided by statute.  IN NO EVENT, HOWEVER, SHALL THE RATE OF
 INTEREST ON ANY JUDGMENT OR ACCRUED CLAIM EXCEED  NINE  PER  CENTUM  PER
 ANNUM.
 

S 3. This act shall take effect immediately.
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD09406-02-1

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