HBA-ATS S.B. 776 76(R)BILL ANALYSIS


Office of House Bill AnalysisS.B. 776
By: Bivins
Civil Practices
5/20/1999
Committee Report (Amended)



BACKGROUND AND PURPOSE 

In 1985, the Texas Supreme Court adopted a rule allowing recovery of
prejudgement interest on personal injury, wrongful death, or survival
actions.  In 1987, the 70th Texas Legislature amended the Finance Code to
broaden the statute on judgment interest, establishing a floor and ceiling
for interest rates, shortening the period of interest accrual, and changing
the rate from compounded daily interest to simple interest.  In 1994, the
Supreme Court ruled that the law provided for prejudgment interest on
future damages. 

S.B. 776 eliminates alternate minimum and maximum rates for prejudgment
interest and establishes the rate as the sum of the 52-week U.S. treasury
bill rate and two percentage points.  This bill also prohibits a court from
awarding prejudgment interest on future damages. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 304.003(c), Finance Code, to establish the rate
for prejudgment interest as the sum of the 52-week U.S. treasury bill rate
and two percentage points, by eliminating the alternate minimum and maximum
rates on judgment interest. 

SECTION 2.  Amends Subchapter B, Chapter 304, Finance Code, by adding
Section 304.109,  to prohibit a court from awarding prejudgment interest on
future damages. 

SECTION 3.  Makes application of this Act prospective.

SECTION 4.  Provides that, to the extent of any conflict, this Act prevails
over another Act of the 76th Legislature, Regular Session, 1999, relating
to nonsubstantive additions and corrections in enacted codes. 

SECTION 5.  Emergency clause.
  Effective date: upon passage.

EXPLANATION OF AMENDMENTS

Amendment No. 1:

Amends S.B. 776 by deleting SECTION 1, which amends Section 304.003(c),
Finance Code, providing for the establishment of the rate for prejudgment
interest as the sum of the 52-week U.S. treasury bill rate and two
percentage points, by eliminating the alternate minimum and maximum rates
on judgment interest. 

Amends S.B. 776 by redesignating SECTIONS 2-5 of the original to SECTIONS
1-4, respectively.